Information

Sustainable Procurement

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Sustainable procurement is not a new term, but it has increasingly been on the agenda of procurement and supply leaders as pressure from customers, clients, and governments mounts. Developing a sustainable procurement organization requires looking beyond short-term benefits or savings and considering the long-term effects of purchases. When done correctly, sustainable procurement allows organisations to meet their needs and acquire goods and services in a way that not only benefits the organisation but also contributes to the improvement of wider society.

Why bother with sustainable procurement?
There are plenty of drivers for procurement organizations to become more sustainable. A few key ones are:

• Increase profits and enhance social responsibility
• Differentiation from competitors
• Mitigate legal, ethical, and brand image risks
• Keep with increasing consumer expectations

What are some of the benefits of embracing sustainability in your organisation?

 Improved reputation amongst customers and across your business sector

1. Reduced costs through recycling, using more efficient products and services
2. Effective risk management
3. Qualify for business support
4. Improve your chance of winning business with your enhanced sustainability standards
5. Attract like-minded investors

It is no longer enough for businesses to rely on suppliers to provide them with what they want, no questions asked. Organisations benefit greatly from getting to know their suppliers to ensure their demands are not unrealistic and that the suppliers they work with have good, ethical practices.

– Jacques Schramm, Chair, International Organisation for Standardization

How Can Your Business Can Build Sustainable Procurement Processes?

Sustainable procurement may be driven by the guidelines in your location, but a powerful combination of people, processes and the right technology will help you to leverage the most successful approach. Here are some ways you can achieve this:

1. Set your sustainability targets and policies

Effective and sustainable vendor management requires an understanding of and commitment to sustainability from teams across your organisation – particularly your Procurement team. 

Your sustainability targets may be shaped around local legislative targets and requirements, what your business believes in or the issues that your customers most align with. Formalise these targets by creating sustainability policies across your business, ensuring that they are aligned with overall business objectives so they can be more easily adopted. Your contract procurement process should be built around these targets and policies. 

2. Define a Code of Conduct for selecting new vendors

There must be a shared understanding across your organisation of the the types of procurement you want within your business. Creating and sharing a Code of Conduct or decision framework will:

• Standardise the approach used when assessing the market
• Stop your team from investing time on inappropriate third-party vendors
• Create new efficiencies in the tendering process
• Help you to create a Procurement Agreement that is shared across the business

This shared understanding should also inform your Request For Proposals (RFPs) so that they include relevant selection criteria. Outline what you’re looking for in a sustainable vendor, the responsibilities you expect them to take onboard and how their processes should match your social, environmental and economic objectives.

Your Code of Conduct can also be used retrospectively for procurement agreements. Assess your existing vendor base against your criteria, communicate the changes you’re looking to make and ask them questions that align with your new framework to see if they still align with your sustainability objectives.

This will help you to identify any gaps and make changes – such as ending existing relationships to bring on a new vendor – to improve the resilience and diversity of your vendor base.

3. Gather and centralise all compliance certificates and documents

For some organisations, compliance with sustainable procurement practices is non-negotiable. Evidence will be required to prove that the business has considered, evaluated and selected suppliers and procurement contract types that contribute to economic, environmental and social improvements – especially to pass external audits. Some examples of documentation include the ISO 14001 certification that relates to environmental systems and ISO 50001 certifications relating to energy management systems.

Centralising these documents in a contract repository software will help your teams to find the information they need quickly and easily, while giving them instant visibility of compliance statuses for each vendor. It is also important to capture key dates – such as certificate expiry – so that your business can obtain up-to-date information from its vendors and act ahead of time.

4. Agree KPIs with chosen vendors and measure their performance

Sustainable procurement can only be achieved when your chosen vendors commit to a baseline performance as defined by your business. Key Performance Indicators not only keep your vendors accountable for their sustainability efforts, but they also provide an opportunity to track vendor performance and identify areas of improvement.