ASX-listed companies have shown significant improvement in sustainable sourcing practices, according to RMIT University’s new Sustainable Procurement Disclosure Index (SPDI), but scope for further improvement remains.
The SPDI is calculated using 32 standards across governance, economic, social and environmental domains, as set out by the internationally recognised Global Reporting Initiative (GRI), with RMIT University allocating ‘star ratings’ to each of the 182 leading businesses.
The research indicates that 82.5 percent of Australia’s top companies achieved four stars or higher in 2024 – up from almost 47 percent in 2023 – with 55 percent of this number receiving a five-star rating.
Additionally, 65 percent of companies reported on 80 percent or more of the 32 SPDI indicators – showing a strong commitment to the disclosure of procurement performance – which was a huge jump from 11 percent in the previous year.
The findings reveal a general improvement in transparency and disclosure practices, although significant variability persists across industries.
“The 2024 scores show improvement in almost all of the index’s domains, although many challenges remain,” said Professor Charles Lau, who led the SPDI project research.
“2024 saw increased reporting in the governance, economic and social domains, with a slight decline in the environmental domain. This may reflect changing corporate priorities in the last 12 months.”
The decline in the environmental domain was particularly evident in the energy and real estate sectors.
“There was a lot of sector variation in the top 10 companies with the highest disclosure levels, with sectors including consumer staples, financials, industrials, consumer discretionary, communication services, energy and health care represented at the top of the board,” added Lau.
Professor Lau highlighted that differences in industry performance on the SPDI stem from varying procurement practices and the relevance of specific GRI indicators.
“To address these disparities, this report explores the feasibility of sector-specific indices to avoid a one-size-fits-all approach,” he said.
“Additionally, to enhance efficiency and accuracy in data collection, the potential for integrating artificial intelligence tools into the data gathering and analysis process will be investigated.
“These advancements aim to position the SPDI as a benchmark for promoting sustainability reporting in Australia and beyond.”
The SPDI team has also expanded its reach through collaboration with universities across the Asia-Pacific region, including RMIT Vietnam, UiTM (Malaysia), Ningbo University (China), Chulalongkorn University (Thailand) and BINUS University (Indonesia).
These institutions are compiling SPDI ratings for top-listed companies in their countries, contributing to a broader, more regionally-informed index.
“By leveraging regional expertise and expanding its reach, the SPDI initiative strengthens its role as a catalyst for progress in enhancing transparency and accountability in sustainable procurement,” said Lau.
“This collaboration is poised to amplify the SPDI’s impact, fostering greater adoption of sustainable procurement practices across ASEAN countries.”
Want to dive deeper into sustainable procurement? Check out the latest video episode in RSM’s ‘Sustainability Matters’ series, hosted by Nicole Mohan and Elizabeth Ploetz from RSM’s ESG & Climate Services.
Episode five, titled ‘Rethinking Supply Chains to Improve Sustainable Procurement’, explores how sustainability reduces resource depletion and waste, promotes ethical labour practices, and leads to efficiency and cost savings.
Nicole and Elizabeth provide actionable steps for enhancing sustainable procurement practices and building resilient supply chains.
