How Business Spend Management Can Drive Financial and ESG Impact for Your Organization
Originally Published June 15, 2021 – Updated November 18, 2021.
The bar for companies is now higher than it has ever been. Companies are being held accountable to more than financial compliance and shareholder value. Meeting ESG standards is now an essential metric of business success. We see greater importance on diversity (DEI), corporate governance and sustainability throughout the supply chain to measure the business’ carbon footprint. As such, companies must find new ways to achieve longevity while mitigating harm to society.
Customers and investors value sustainable business practices
Companies that engage in unethical or illegal business practices are now held accountable through compliance and regulatory measures, whereas these indiscretions typically went unexposed before. In addition to causing harm to general society, such practices negatively impact brand reputation and ultimately harm the bottom-line. As defenders of company risk, CFOs and finance leaders recognize how negative press from ESG (Environmental, Social, Governance) negligence can rapidly destroy brand value that’s taken years to develop. Any potential damage to the brand can quickly lead to drops in sales and shareholder value.
Investors are following suit and doubling down on these expectations. 2020 was a pivotal year for environmental, social, and governance (ESG) investing, with record inflows into ESG products rising 140% in 2020, per Moody’s Investors Service.
Furthermore, Blackrock Capital has demanded that its portfolio companies aim to be carbon neutral by 2050. In fact, one in three dollars in the assets under professional management is invested in ESG strategies.
Finance leaders are prioritizing ESG for the good of the business and the world
Concerns from customers and investors have resulted in a flurry of discussions among CFOs around how to simultaneously prioritize ESG goals and profitability. Finance leaders oversee company spend, payments, and cash which puts them in an influential position to ensure ESG compliance. Now, finance teams are taking notice and changing the way they do business. In fact, one in four earnings calls mention ESG.
Despite claims to improve a business's ESG posture, there’s a gap between good intentions and tangible action. This is likely because, for years, traditional ESG programs were run in parallel from the core business processes around supplier and spend decisions. These silos slowed progress and left leaders frustrated.
Business spend as a lever for business sustainability
Here at Coupa, we help businesses use their spend to make a positive impact in the world while also boosting their bottom lines.
That’s why I’m thrilled to share that we’ve developed a wide range of capabilities across our leading Business Spend Management platform to help organizations maximize the impact of their spend across their business, local communities, and the planet. Through Sustainable Business Spend Management (BSM), every dollar an organization transacts can be spent smarter.
We understand that companies are looking to operationalize ESG and seek to make an immediate impact in the world. BSM equips decision-makers to address ESG factors by:
1. Reducing carbon footprint and improving impact to the planet
Coupa’s BSM platform enables businesses to use a powerful mix of AI and digital twin capabilities to model supply chain scenarios, optimize business operations, and make more impactful decisions.
For example, to reduce carbon and greenhouse gas (GHG) emissions, businesses can optimize vehicle routing to reduce miles traveled, as well as utilize our inventory management software to curtail unnecessary travel from moving inventory. Coupa’s BSM platform can also help organizations better manage water consumption, reduce use of single-use plastics, improve recycling, and, in the process, ensure inventory management optimization. Once model(s) are created, Coupa helps source suppliers quickly. Going from design to bid to execution has never been easier.
2. Directing spend to diverse and sustainable suppliers in an instant
Coupa makes it easy for businesses to find, select, and source from diverse-owned businesses and/or sustainable businesses and products. Finding diverse and sustainable suppliers has been historically difficult.. Coupa solves this problem by directly embedding diversity and sustainable tags and filters into catalog search results — providing customers with an easy way to improve and increase their spend with more diverse and/or sustainable businesses.
3. Gaining access to deeper supplier diversity data
Coupa’s BSM platform provides best-in-class supplier diversity and sustainability data — drawing from hundreds of sources, hundreds of thousands of suppliers, and over a million certifications — surfacing the tangible insights businesses need to make more informed spend decisions in real-time.
Through advanced Coupa Analytics, customers are also able to better report, measure, and optimize their spend with diverse suppliers. Reports can be custom built and tailored to individual business needs and ESG KPIs.
In turn, suppliers can more easily claim diversity status and complete and house all supporting documentation and forms needed to verify status. Having certification information upfront in their supplier profile helps them get discovered by new customers. It also helps buyers and suppliers not only respond to requests quicker, but improve their working relationship.
4. Obtaining visibility into business ESG impact
Coupa also helps businesses easily measure and optimize the impact they are making on ESG with their spend. For companies that report on diversity activity and spending, these capabilities are crucial to help them easily understand their diverse spend posture, as well as act to improve it if they are not meeting goals.
Coupa’s newly launched Diversity Dashboard is one of the most valuable features to customers, providing insights into exactly how many diverse suppliers they work with, and how much of their spend in dollar amounts is going to these businesses. The dashboard also draws from a powerful community of data, showing how many suppliers a business works with that might be diverse to encourage the organization to reach out to the supplier to verify status.
Any business that is looking for diverse suppliers can use our publicly accessible Diverse Supplier Directory.
Additionally, Coupa provides key sustainability insights, enabling businesses to measure the environmental impact of paperless invoices — showing exactly how many trees, water, oil, and carbon is saved by going paperless.
Thousands of companies are using Coupa to spend smarter together, and we want to empower every organization on the planet to leverage the power of their spend to make a more sustainable impact.