(And Seven Things You Can Do to Address Them)

Bain & Company's "Seven Reasons There's a B2B Buy-Sell Gap on Sustainability" article, derived from their 2024 B2B Procurement Study, revealed some fascinating statistics that align with Rho Impact’s day-to-day experience with clients of all shapes, sizes, and stripes. Bain surveyed 500 companies across industries and countries and offered some clues as to the root causes of this Buy-Sell Gap phenomenon.

In this blog post, we’ll be providing some thoughts on each of the seven reasons revealed in the study, as well as some practical tips and tricks B2B Sellers can use to address them.

1) Sustainability is a Top Priority for B2B Buyers - According to the Bain study, as well as the 2024 Procurement Study by the Economist and SAP, ESG is officially the #2 priority for B2B Procurement Executives heading into 2025. Why? Well, the ‘cat’s out of the bag’ on scope 3 emissions being the majority of a company’s emissions footprint (indirect emissions both upstream and downstream on the value chain), accounting for 80-90% of a company’s emissions. This all begins and ends with your supply chain partners. Although you technically can’t control your scope 3 emissions, you certainly can choose who to work with.

To take it one step further, a supplier’s ESG maturity directly impacts a B2B buyer’s ESG performance. This extends beyond greenwashing and reputational risks to ‘boots-on-the-ground’ disruptions to core operations, as well as the ability to meet increasing ESG compliance requirements and regulations. You are your supplier’s keeper in today’s market, and B2B buyers aren’t looking to babysit, they’re looking to partner.

So what can you do to address this B2B Buyer priority?

• Get Third-Party Validation for Your Offering's "Impact Potential" - Demonstrating the effectiveness of your offering in driving environmental or social benefits - both at the industry level and within the context of your B2B Buyer's ESG goals - positions you as a critical partner in advancing public, enterprise commitments. This moves you up the "value" ladder from salesman to sustainability advisor.

• Get Your Enterprise 'ESG House' In Order - ESG supplier requirements, codes of conduct, and baseline performance expectations are "the new normal" for suppliers everywhere. If you can't respond to basic questions regarding your ESG risks, opportunities, management practices, and performance metrics - good luck getting that signature on the dotted line. Your enterprise ESG maturity is critical to differentiating from the masses and solidifying your position as a long-term partner in advancing shared ESG objectives.

2) Buyers are Willing to Look Elsewhere - According to the Bain article, 36% surveyed would change suppliers today if sustainability needs aren't met. 57% surveyed expect to in 3 years. Greater due diligence on sustainable product and service claims as well the proliferation of ESG procurement requirements are the new normal of B2B sales. Your reputation is their reputation. Your sustainability performance is their sustainability performance.

So what can you do to capture your B2B Buyer’s attention (and budget)?

• Properly Frame Your ‘Impact Narrative and Numbers’ - Third-party validation on the environmental or social benefits of your offering provides the data B2B buyers are looking for. Yet any provided numbers without the broader narrative and talk-track is a greenwashing risk and potential liability - both for you and your B2B Buyer. Provide explicit talking points on your offering’s “impact mechanism,” or the thing your product or service specifically does to drive those positive impacts, and how it relates to the B2B Buyer’s enterprise ESG commitments. Properly framing both your ‘Impact Narrative and Numbers’ demonstrates not only how effective your offering is but also how it can be applied within the context of their own impact aspirations and ESG objectives.

• Proactively Demonstrate Your ESG Maturity - Whether it be press releases about new products or partners, thought leadership in trade journals, or your inclusion in industry case studies, proactively demonstrate your ESG maturity through a digital paper trail. This social validation of your ESG maturity will mitigate any B2B Buyer skepticism and perception of greenwashing risk. Documentation from your third-party impact validation, as well as any public examples of the product or service in action for a customer, is critical for closing the deal.

3) Customers Will Pay for Sustainability - 50% of surveyed Buyers would pay a premium of 5% or more. I'd argue this figure is much higher in practice. When enterprise Buyers are monetizing their sustainability efforts - sustainable suppliers are critical partners in translating public commitments into action and results. And on the flip side, from a risk mitigation perspective, any premium price for working with a more sustainable supplier with a more sustainable offering would pale in comparison to the regulatory fines and remediation costs associated with supplier-induced product recalls, human rights violations, labor shortages.

So what can you do to capture this ‘greenium’ pricing from B2B Buyers?

• Quantify the Implications on Buyer Risk Management - There have been countless studies, reports, and news headlines describing the financial consequences of poor ESG Risk Management, especially in terms of Supplier controversies or snafus. Provide examples of similar industries and use-cases to demonstrate the premium pricing is ‘a drip in the bucket’ compared to the reputational risks and associated financial impacts of working with more ‘conventional’ suppliers.

• Quantify the Implications on Buyer Value Creation - On the flipside of risk management, there have also been countless studies, reports and news headlines describing how ESG accelerates value creation and financial performance. Provide examples of similar industries and use-cases to demonstrate the premium pricing is ‘a drip in the bucket’ compared to the customer acquisition and revenue generation potential from working together.

4) Buyers Need a Better Sense of Why Sustainability Costs More - Only 34% surveyed fully understand the difference between conventional and sustainable offers. This triple-underscores the criticality of leveraging your 'impact narrative and numbers' as a supplier. Third-party validation (like from Rho Impact) for the positive impacts your offering enables, as well as the way in which it was produced, makes it crystal clear why it's more expensive than the conventional incumbent on the market.

• Third-Party, Sustainable Sourcing and Production Certifications - Just like LEED certified buildings command higher rents, the same goes for products or services certified to a third-party standard. If you source raw materials or produce products in a facility certified to any third-party environmental or social standard, make it explicit. This will substantiate any cost premiums while also providing additional talking points on why both the product (and your company) is the ideal sustainable supplier for them.

• Articulate the Broader Societal Benefits - There are many different types of third-party sustainability certifications - for both products and physical assets - across industries, category types, and geographies. This means it’s highly likely that your B2B Buyer counterpart is not familiar with the certifications you have nor can appreciate the value they provide - both from a product and company level. Articulate the broader co-benefits this certification enables - on both the environment and stakeholders along the value chain - to maximize the commercial value (and opportunities) associated with your certified, sustainable sourcing and production practices.

5) Suppliers Misunderstand Buyers' Priorities - 59% surveyed think customer safety is most important. 70% of buyers cite reducing CO2 emissions. Customer safety is the bare minimum for any business. Net-zero pressures and ESG compliance, on the other hand, have become the greatest risks (and opportunities) to B2B buyers. The Rho Impact Koi Tool provides everything you need to demonstrate how your offering reduces buyer CO2 emissions, by how much, and by when. Make it easy for your buyer to say YES.

So what can you do to better address B2B Buyers’ priorities?

• Provide Emission Reduction Metrics - Whether you’re using the concept of ‘Emission Reduction Potential’ from the free and open-access Prime Coalition x Rho Impact CRANE Tool, or using your ‘Avoided Emissions’ Factor from Rho Impact’s Koi.eco to calculate your annual or cumulative emissions impact - your provision of product emission reduction metrics will go miles in connecting the dots between your product, your B2B buyer’s emission profile, and climate-related company commitments. Check out Project FRAME’s impact measurement resources, in which Rho Impact is a lead contributor, for more information on these types of metrics.

• Review Their Annual ESG Reports - Annual ESG reports provide direct insight into a B2B company’s long-term sustainability goals, ESG commitments, and associated risks and opportunities. Leverage this information to contextualize how your product AND company are able to contribute to the achievement of such goals and the management of associated material issues. Frame your value proposition within the context of these enterprise, public commitments. Your B2B Buyer’s bosses’ boss will thank you.

6) Salesforces are Ill-Equipped - Only 50% of sellers understand the benefits of their own products and only 35% target customers with sustainability commitments. Transforming your salesforce into a 'sustainability force' requires practical and streamlined training. It also requires the support apparatus for your sales team - marketing, communications, external relations, contracting, operations, product, etc - to be moving in the same direction and speaking the same language. Any misalignment of what is promised in the sales process and what is delivered on is a greenwashing risk at best and a lawsuit at worst. All employees must speak sustainability, end of story.

So what can you do to equip your salesforces?

• Train on the Fundamentals - Salesforces need training at a variety of levels - including at the product level, at the industry level, and at the market level. Each product, industry, and market will have various levels of ESG risk exposure, and the specific issues surrounding these risks (and opportunities) will also be unique. A fundamental understanding of ESG at large is critical to navigating these pressures and dominating the competition. For a free and comprehensive “Intro to ESG” course, check out this one developed by the Corporate Finance Institute and Rho Impact.

• Provide Sales Enablement Tools - Speaking the right language at a high level will get your foot in the door. But demonstrating the impact potential associated with the sales deal will get your B2B Buyer’s name on the dotted line. Salesforces can ‘traverse the comprehension gap’ between B2B Buyers and Sellers by quantifying the impact potential per unit of product sold, providing a concrete view of the product (and seller’s) ability to drive commercial and climate impact for the B2B Buyer. Check out this example from Rho Impact’s partner Grenova regarding the commercial role (and value) of these types of tools.

7) Many Buyers are Dissatisfied - 85% of suppliers are embedding sustainability into what they sell but only 53% say those efforts are meeting their needs. Follow the prior ‘6 Things You Can Do’ and become the sustainability champion of your B2B Buyer’s supply chain.

So what else can you do to address dissatisfied B2B Buyers? Partner with Rho Impact.

Reach out to the team at Rho Impact to learn more about the software, services, and science support you need to WIN in the ‘Age of ESG.’