Sustainability and Geopolitical Issues Dominate 2025 Outlook for Direct Spend Categories

As we approach 2025, procurement and supply chain leaders must prepare for a year of transformation across key direct spend categories. 

Chemicals, metals, agricultural commodities and packaging face challenges from sustainability imperatives to geopolitical volatility and technological innovation. Addressing these market dynamics will not only mitigate risks but also unlock opportunities for growth and value creation, according to the GEP Spend Category Outlook Report 2025. 

Chemicals: Driving Sustainability and Innovation 

The chemicals industry in 2025 is set for a pivotal year as it navigates sustainability pressures, supply chain disruptions and fluctuating feedstock costs. 

• Sustainability as a Competitive Edge: 

Regulatory frameworks like the EU’s Deforestation Regulation (EUDR) and growing consumer preference for bio-based chemicals are reshaping the market. Industries such as automotive and healthcare are increasingly demanding sustainable chemicals for innovations like EV batteries. Companies that invest in renewable feedstocks and circular production methods will gain an edge. 

• Resilient Supply Chains: 

Geopolitical instability and reshoring efforts highlight the need for regionalized supply chains. AI-driven visibility tools will become essential to managing risks and optimizing inventory strategies. 

• Cost Management Amid Oil Volatility: 

Oil prices, forecasted to hover between $75 and $90 per barrel, will continue to influence feedstock costs. Adopting dynamic pricing models and collaborating closely with suppliers will help mitigate margin pressures. 

Takeaway: 

Prioritize innovation and sustainability while building supply chains that can quickly adapt to market volatility. 

Metals: Navigating Volatility and Green Energy Demand 

The global metals market will face continued fluctuations, driven by the green energy transition, geopolitical shifts and sustainability goals. 

• Copper and Specialty Metals in Focus: 

The energy transition is spurring demand for copper, lithium and rare earth metals, essential for EVs and renewable infrastructure. Procurement teams should secure long-term contracts and explore hedging strategies to manage cost and supply risks.

• Recycled Metals and Sustainability Goals: 

With sustainability becoming a business imperative, recycled content will play a growing role. Companies must assess the feasibility of integrating recycled materials without compromising quality. 

• Geopolitical Complexity: 

Tensions in regions like Eastern Europe and Asia could impact supplies of critical metals like nickel and platinum. Diversified sourcing and supplier partnerships in stable regions will be key to mitigating risks. 

Takeaway: 

Balance cost optimization with long-term sustainability goals by leveraging innovative sourcing and supplier collaboration. 

Agricultural Commodities: Building Resilience in a Dynamic Market 

Agricultural commodities in 2025 will be shaped by climate unpredictability, biofuel demand and geopolitical influences. 

• Weather and Geopolitical Risks: 

Wheat and rice markets remain volatile, with export restrictions and unpredictable climatic events threatening supply stability. Predictive analytics and diversified sourcing will be essential. 

• Biofuel-Driven Corn Demand: 

The rise of biofuel production is expected to tighten corn markets, underscoring the importance of proactive supply agreements. 

• Sustainability Priorities: 

Procurement teams should prioritize partnerships with suppliers practicing regenerative agriculture to enhance climate resilience and meet sustainability targets. 

Takeaway: 

Invest in predictive tools and sustainable sourcing strategies to navigate an increasingly volatile agricultural landscape. 

Packaging: A Shift Toward Circular Solutions 

The packaging industry is evolving rapidly, driven by sustainability initiatives, regulatory changes and innovation. 

• Plastic Packaging Transformation: 

Innovations in mono-material plastics and recyclable materials will dominate, while regulations push for reduced environmental impact. 

• Circular Economy Adoption: 

Demand for fiber-based solutions and lightweight glass will increase, with investments in eco-friendly packaging materials gaining traction. 

• Operational Efficiency: 

Companies are simplifying SKU portfolios and leveraging total cost of ownership models to streamline costs and improve efficiency. 

Takeaway: 

Focus on sustainability-driven innovation and build strong partnerships with suppliers to meet evolving regulatory and consumer demands. 

Conclusion 

The year 2025 promises to be a year of significant change for procurement professionals managing direct spend categories. Sustainability and resilience are no longer optional but fundamental to success. By adopting advanced technologies, fostering innovation and strengthening supplier relationships, enterprises can turn challenges into opportunities and secure a competitive advantage. 

Want to dive deeper into these trends and actionable insights? Download the full GEP Spend Category Outlook Report 2025 now.