Sustainable Procurement – Introduction

Sustainable procurement is a strategic approach organisations take in relation to buying goods and services, which look at the environmental, social, and economic impact the requirements has through its entire life cycle.

It involves fully assessing the supply base and the environmental outcomes at each stage of the product or service has, from sourcing raw materials, through to manufacturer, delivery to the customer and through to disposal.

The concept is gaining importance as organisations prioritise their sustainability goals and social considerations. By integrating sustainability into their procurement, businesses can optimise their environmental and social effect, and generate economic benefit.

Products or services are sourced and produced in a manner that minimises their impact on the wider environment and reduce the carbon footprint of the organisation.

Other considerations include promoting diversity, using sustainable and recyclable materials and implementing fair trade practices.

This can all make organisations look more attractive to their customer base. Utilising Green Technology to reduce energy usage and be more productive, supporting human rights and ensuring their supply base is free from child labour will make them stand out in a civil society.

Sustainable Procurement – The Tools

These provide a framework and guidance for procurement professionals to assess and prioritise sustainability factors in their purchasing decisions.

By incorporating these tools into their procurement apparoch and processes, organisations can better assess their environmental sustainability and identify areas for improvement.

They help integrate sustainability considerations into the process of selecting suppliers , contract management, and performance evaluation, ensuring that the products and services procured meet the highest sustainability performance and standards.

Sustainable Procurement – The Flexible Framework Tool

This is a valuable self-assessment package that organisations can use to measure, monitor, and improve their procurement practices. This widely-used tool allows organisations to assess their current performance levels and identify the necessary actions for embedding sustainable practices into their procurement process.

They can gain a comprehensive understanding of their performance in terms of sustainability. It enables them to evaluate various aspects, such as environmental impacts, social factors, economic impact, and supplier diversity. This assessment helps organisations identify areas for improvement and prioritise actions based on their sustainability goals.

With the ability to measure and monitor their approach, organisations can make data-driven decisions to reduce their carbon footprint, optimise their suppliers, and minimise the negative impacts on the environment and society. By integrating sustainable principles into their processes, organisations can also gain a competitive advantage, enhance their reputation, and contribute to broader sustainability goals.

Sustainable Procurement – Life cycle impact mapping

This is a crucial concept that aims to identify and assess the social and environmental impacts associated with the various stages a product or service goes through, from raw material extraction to end-of-life disposal. This approach provides a holistic view of the sustainability performance of a product or service.

It is a gateway into sustainability assessment by helping organisations understand the broader implications of their procurement decisions. By mapping out the life cycle stages, organisations can analyse the potential impacts at each stage and prioritise areas for improvement.

This assessment enables organisations to make informed decisions that consider the entire life cycle of a product or service, rather than just focusing on one aspect. By using this tool, organisations can identify opportunities to improve their procurement practices and contribute to sustainable development goals.

Sustainable Procurement – Prioritisation Tool

This assists organisations in early stage strategic planning and provides a structured approach for assessing spend categories. This tool takes into account triple bottom line considerations, broadening the framework to consider the external consequences of procurement decisions.

Organisations can evaluate and prioritise their procurement based on their sustainability impact. It helps them identify and focus on spend categories that have the highest potential to contribute to sustainable development goals and mitigate negative impacts.

The tool considers economic, environmental, and social factors, allowing organisations to analyse the triple bottom line considerations of each spend category. This enables organisations to make informed decisions that not only consider the financial aspect but also the social and environmental implications of their procurement and its ongoing development.

Organisations can strategically plan their procurement approach, ensuring that they align with sustainability goals and contribute to positive outcomes. It acts as a guide, helping organisations make sustainable choices by prioritising spend categories that offer the most significant opportunities for improvement and positive impact.

Sustainable Procurement – Developing the procurement function

Procurement has to play a pivotal role in an organisations’ efforts to achieve their sustainability goals and mitigate negative environmental and social impacts.

By adopting the right approach, organisations can ensure that their procurement activities align with sustainability principles and contribute to positive outcomes. This not only includes the consideration of economic factors but also the environmental and social implications of procurement decisions.

To effectively implement sustainable procurement, organisations can utilise various tools we have already mentioned.

These tools help organisations strategically plan their procurement activities and make informed decisions that promote sustainability throughout the range of suppliers they use.

With a focus on sustainability, organisations can create competitive advantages, and contribute to the overall well-being of society and the planet.

Sustainable Procurement – Defining It’s Importance

This is now the major focus in today’s world, as organisations face pressure to reduce their environmental footprint and address social issues.

By incorporating sustainable practices into their procurement function, organisations can achieve multiple benefits, such as minimising negative environmental impacts, enhancing reputation, and gaining a competitive edge.

Additionally, sound sustainable approach to procurement allows organisations to contribute to economic development, support local communities, and promote responsible sourcing of materials. It helps organisations align their procurement activities with their sustainability goals and broader corporate social responsibility initiatives.

Moreover, it enables organisations to build resilient and transparent partnerships with suppliers and a sustainable supply chain, mitigate risks, and comply with regulatory requirements. By prioritising sustainability in procurement, organisations can make a significant positive impact on society and the environment while ensuring long-term business success.

Sustainble Procurement – Understanding The Baseline

Having a clear baseline is crucial for organisations as it serves as a starting point to assess the current state of their procurement and to identify risks and improvement opportunities. By establishing a baseline, organisations can understand where they currently stand and set realistic goals for improvement.

One way to determine the baseline is through internal approaches, where organisations assess their own sustainable procurement practices and measure their ESG (Environmental, Social, and Governance) footprint.

This involves evaluating the environmental and social effect of their suppliers and identifying areas that need improvement. Additionally, organisations can leverage external data sources and benchmarking to gain insights into the ESG performance of suppliers and compare their own performance against industry standards.

Furthermore, conducting an “ESG teardown” with key suppliers can provide a detailed analysis of the  impact of their supply base from both an environmental social perpsective. This involves examining the practices and policies of suppliers, assessing their adherence to sustainability principles, and identifying areas where improvements can be made. By understanding the ESG performance of suppliers, organisations can make informed decisions about their procurement and collaborate with suppliers to drive positive change throughout the supply chain.

Sustainable Procurement – Core Supplier & Value-Creation Initiatives

This is an essential area for procurement leaders looking to incorporate sustainability practices into their standard sourcing and supplier-management processes. By adopting these strategies and initiatives, procurement teams can not only reduce their effect on the environmental but also enhance their overall value proposition.

One effective way for procurement teams to incorporate sustainability practices is by integrating ESG (Environmental, Social, and Governance) considerations into their sourcing processes. This can be done by including ESG documentation requirements in RFx (Request for Proposal/Quotation/Information) processes, ensuring that potential suppliers provide information on their sustainable practices and performance. By considering suppliers’ ESG footprint during the selection process, procurement teams can promote sustainability and prioritise suppliers that align with their sustainability goals.

Moreover, this can also include evaluating suppliers’ approach to waste reduction and also carbon emissions. Selecting those with a lower carbon footprint, organisations can contribute to reducing overall greenhouse gas emissions and promoting a more sustainable supply programme.

In addition to supplier-focused efforts, procurement teams can also implement demand-side initiatives, such as optimising transportation. By actively seeking out sustainable products and implementing efficient logistical practices, procurement teams can minimise the effect on the environment while driving cost savings.

Sustainable Procurement – Shifting The Organisation

Moving an organisation towards a sustainable procurement function involves several important steps. Firstly, it is essential to develop a comprehensive sustainability strategy that aligns with the organisation’s overall goals and values. This strategy should include specific targets and metrics for measuring progress in sustainable procurement.

Next, procurement teams can evaluate the ESG (Environmental, Social, and Governance) practices of potential suppliers. As outlined above, requesting ESG documentation during the supplier selection process and using it as a basis for comparison will allow procurement to prioritise suppliers with strong ESG practices, ensuring alignment with the organisation’s sustainability goals.

Carbon accounting principles play a crucial role in evaluating supply options. By calculating carbon emissions associated with different suppliers or supply chains, procurement teams can make informed decisions that minimise their effect on the environment. This can be done by using tools such as carbon footprinting, life cycle assessment, and carbon accounting methodologies.

Additionally, resource cleansheeting can provide valuable insights into the impact on the environment of a supplier’s resources and production processes.

Data sources play a vital role in sustainable procurement. Procurement teams should gather information from reliable sources, such as industry reports, sustainability certifications, and supplier assessments. These sources help ensure that potential suppliers meet the organisation’s sustainability requirements.

By following these steps and utilising the necessary tools and data sources, organisations can effectively shift towards a sustainable procurement function that aligns with ESG principles and contributes to a greener and more socially responsible supply chain. A sustainable procurement strategy applies to public procurement as well as the activity in the private sector.