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Q&A | February 11, 2022 | 1 Min Read

Building a greener supply chain

To achieve net zero carbon emissions, ServiceNow works with its suppliers on sustainability goals

A growing number of enterprises, including ServiceNow, are implementing not only environmental, social, and governance (ESG) standards, but also the frameworks to measure them over time. Among the executives leading the charge at ServiceNow is Rebecca Marshall, who is coaxing the company’s vast base of suppliers, vendors, and other contracted organizations to implement sustainable practices.

ServiceNow’s goal is to reach net zero carbon emissions by 2030. To help achieve it, Marshall, a vice president of global sourcing and workplace services, negotiates with vendors and suppliers to persuade them to meet science-based benchmarks for reducing emissions.

Marshall talked with Workflow to discuss the complex challenge of creating a more sustainable supply chain. The following interview has been edited and condensed for clarity.

sustainability-in-the-technology-industry-report

The pandemic has forced a lot of companies to focus on ESG, and we’re no different. I think business leaders, investors, and policymakers are drawing parallels between the shock of the pandemic and the potential impact of a climate disaster. To mitigate our risk of losing business due to climate change, and to help protect the planet, we need to build a more sustainable business. And to do that, we need a more sustainable supply chain.

The supply chain represents a huge portion of most companies’ carbon footprint. For ServiceNow, 93% of our carbon footprint is in our value chain, and our suppliers account for a considerable proportion of that. These suppliers provide everything from marketing services, like advertising and events, to hardware for our cloud infrastructure to office supplies. We’ve set a target to bring 65% of our suppliers by spend along on this journey by getting them to commit to science-based targets.

We’re working with a firm called Watershed to measure our carbon footprint and … calculate the emissions associated with our suppliers. Then they use models to evaluate where and how we can reduce our footprint. We use that data to develop our roadmap to reduce the carbon footprint contributed by our supply base.

In addition to partnering with Watershed, we also sent out a survey to our top 150 suppliers asking about their progress toward sustainability goals. Of the 150 companies we surveyed, only 38 responded, and that was after a lot of chasing. I think this demonstrates the challenge of bringing the supply base along on our sustainability journey. Of the suppliers who responded, 33% by spend have formally declared their intent to commit to science-based targets. Since we set a goal of getting 65% to commit, we still have a ways to go.

Our next step will be to develop a roadmap to close this gap. Encouraging engagement with CDP is our immediate goal. CDP is a nonprofit that runs the global disclosure system for investors, companies, cities, states, and regions to showcase and manage their environmental impact. Currently, about half of our suppliers participate in CDP. We’d love to get more of them involved.

[Laughs] Supply chain disruptions have complicated this process. Since many suppliers are struggling to deliver goods and services, the power dynamics between ServiceNow and our suppliers is shifting.

Success hinges on pricing, payment, and willingness: how much we’re paying a given supplier, how much more it will cost them to go green, and whether they’re willing to shift to more sustainable practices.

Some suppliers, like those who provide office supplies, are easier to negotiate with because my team has more leverage. We could always switch to a different provider. But companies that provide specialized services or products, like software, can present a challenge because it’s harder for ServiceNow to simply move to another provider. With those types of suppliers, our primary goal is to influence them through education so they understand the need for more sustainable practices.

Overall, I think it’s important to shift your negotiation style depending on the power you have in a given situation. Supply chain shortages, for example, have shifted power to the suppliers, so we have to show them that we are an agreeable customer to make sure they continue to want to work with us. You also want the suppliers to understand that we’re in this together, that we’re trying to help them succeed.

Fortunately, I have a lot of experience in negotiation and business management. I have held senior roles in procurement in the automotive, defense, and IT industries, and I often give workshops in which I walk people through the six core pillars of negotiation.

First, do your research. Understand the stakeholders involved in the negotiation and what they want—but also take the time to understand the culture and norms of whatever country you’re negotiating in.

Second, improve your power position by convincing the other party that what you want is best for both of you.

Third, learn about all the pieces you have on the board, to ensure you understand all of the elements that could be negotiated. There could be certain parameters of the deal that matter to the other party that aren’t obvious and could be leveraged to get a concession on a parameter that matters to you.

Fourth, establish trust; avoid threats and ultimatums. Create an environment where you’re working together to solve the problem.

Fifth, be bold. Stretch the limits! What’s the worst that can happen?

And sixth, silence can be more powerful than words. People have a tendency to fill empty air with words, but silence is a useful tactic to ensure the other party can’t dodge responding to a difficult point or question!

I think the fifth tip is particularly important when vying for greener policies. If you want to build a more sustainable supply chain, you have to take risks. The only deal you’ll never get is the deal you don’t ask for.

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