The Green Revolution in contracting: How CLM supports sustainable procurement 

In the bustling world of business and commerce, a quiet revolution has been taking shape. It’s not the kind that makes headlines for flashy innovations or billion-dollar deals. Instead, it’s a revolution that’s rooted in responsibility, foresight, and commitment to our planet. This is the evolution of “green contracts” and sustainable procurement practices.  

As companies pivot towards greener practices, the role of Contract Lifecycle Management (CLM) software in sustainable procurement has become increasingly significant. Let’s dive into what Forrester calls the Green Revolution and how CLM is becoming the digital backbone of sustainable procurement strategies. 

What are ‘green contracts’?

The concept of green contracts isn’t entirely new. For years, environmentally-conscious organizations have been incorporating clauses related to sustainability in their procurement contracts. However, what started as a niche trend has now blossomed into a widespread movement. The seeds of change were sown by the growing awareness of climate change and the urgent need to act. 

In recent years, green contracts and green purchasing have grown both in complexity and scope. They now often include requirements for renewable energy use, recyclable materials, and even the ethical sourcing of goods. These contracts are no longer just about the end product, but also about the process of creating it. They encourage innovation and the development of new, sustainable technologies. 

How CLM supports sustainable procurement  

So, how does contract management software tie into sustainable procurement?  

It’s simple: CLM software can be programmed to prioritize sustainability criteria. This means that when you’re sourcing suppliers or products, the software can help ensure that your choices align with your company’s environmental goals.  

Sustainable procurement practices have sprouted up in various forms. Companies are now evaluating suppliers based on their carbon footprint, waste management, and energy efficiency. The criteria for selection have expanded beyond cost and quality to include environmental impact.  

This shift is not just altruistic; it’s also economic. Sustainable practices often lead to cost savings in the long run, thanks to efficiency improvements and waste reduction. 

Here are some ways contract management software can support sustainable procurement: 

• Sustainability scoring: Just like rating a restaurant, CLM software can rate suppliers based on their sustainability practices. This helps companies choose partners who are truly green, not just greenwashing. 
• Automated compliance checks: The software can automatically verify that suppliers meet certain environmental standards and certifications, saving you the hassle of manual checks. 
• Renewable clauses: CLM can help companies standardize clauses in contracts that require suppliers to use renewable energy sources or sustainable materials, pushing the entire supply chain towards greener practices. 
• Performance tracking: It’s not just about signing a green contract; it’s about living up to it. CLM software can track supplier performance to ensure they’re meeting the agreed-upon sustainability benchmarks. 

How sustainable procurement unlocks revenue for the business 

The fruits of sustainability are ripe for the picking. Companies that have embraced green contracts are seeing benefits that go beyond the balance sheet. They’re building stronger relationships with suppliers, creating a positive brand image, and engaging customers who value environmental responsibility. 

When companies use CLM software to enforce sustainable procurement, it creates a ripple effect. Suppliers are incentivized to adopt greener practices to maintain business relationships. Over time, this can lead to industry-wide shifts towards sustainability. 

Cultivating the future

What’s truly remarkable is how these practices are branching out to new industries. From construction to fashion, from technology to agriculture, businesses across the spectrum are embracing green contracts. This is not just a fad but a fundamental shift in how companies operate and compete. 

As we look to the future, the evolution of green contracts and sustainable procurement practices is only set to accelerate. Legislation is catching up, with governments around the world incentivizing green practices. The next step is for this mindset to become the norm, not the exception. 

Conclusion

The Green Revolution in contracting is more than just a change in paperwork. It’s a reflection of a deeper transformation in the business world—one that recognizes the interdependence of economic success and environmental stewardship.  

Using contract management software for sustainable procurement is a catalyst for change, steering companies towards a more sustainable future. By leveraging the power of CLM, businesses can ensure that their contracts reflect their commitment to the planet, all while streamlining operations and maintaining compliance. 

As procurement professionals continue to cultivate these practices, they’re not just securing contracts; they’re securing a future for the generations to come. 

Learn more about how to use contract management software for sustainable procurement. Check out our recent webinar, “How to guarantee ESG success as a CLO.”