Art of Procurement BTW EP 13: A Chilling Reality: How the Harms of Flawed Incentive Plans Extend Beyond the P&L with Martin Chilcott
Between annual targets and cost-focused KPIs, procurement leaders find themselves in an impossible bind when it comes to decarbonization: they know sustainability matters, yet the very incentive structures designed to reward their performance actively undermine their decarbonization efforts.
In this episode, co-hosts Rich Ham and Philip Ideson speak with Martin Chilcott, Founder and CEO of 2 Degrees Limited and Founder of Manufacture 2030, to explore how procurement incentives could rapidly accelerate corporate decarbonization.
Martin works with global corporations across manufacturing, pharmaceuticals, and automotive industries, and he's seen firsthand how carbon strategies succeed or stall based on the commercial relationship between procurement and their suppliers.
Martin points out an important truth that many procurement leaders understand but struggle to quantify: "Carbon costs exist right now, even if they don't appear on your budget line." He shared concrete examples like Panama Canal disruptions and cocoa price hikes, with climate disruptions already impacting business financials.
The problem, he says, isn't awareness, but short-termism and narrow financial definitions that discourage investment. As Martin says, "If reducing emissions isn’t explicitly worth the effort financially, suppliers won’t make the effort."
The way forward requires fundamental changes to how procurement defines value. By reframing total cost of ownership to explicitly include carbon, implementing longer-term contracts with carbon reduction targets, and building targeted supplier incentives, procurement can make decarbonization both profitable and achievable.
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