Until recently, the perception of Sustainable Procurement was explicitly on the environment. However, businesses are taking a more holistic approach when entering a business relationship and managing their Supply Chains (SCs.)
Sustainable Procurement is currently a practice that incorporates environmental, governance and social elements into Procurement business processes' responsibility whilst still accomplishing the shareholder musts. Its purpose is to bring environmental impact to a minimum and, as a result, to highlight positive social outcomes.
Sustainability denotes ‘undergoing our present needs without compromising the ability of future generations and societies to meet their own across time and geographies,’ the general outlining globally accepted, created in the 1990s by the Brundtland Commission in Norway, and approved by the UN.
Sustainable Procurement encompasses subject matter
· Environment – Carbon footprint, greenhouse emissions, reverse logistics, waste and land use, energy efficiency, hazardous materials legislation, Circular resources, packaging, product quality, end of life disposal.
· Society - Human Rights, fair labour, equality, diversity, employee well-being, work-life balance, education and development, freedom of association, compliance, anti-bribery, SC visibility.
· Governance – Business ethics and integrity, consumer's well-being, fair business conduct, suppliers and customers relationships, data and security shared, transparency, ESG analytics, metrics and compensation goals, anti-bribery and money laundering, local economic impact.
Sustainable Procurement is becoming set in everyday business operations and behaviours; its importance is proven in the interested party prerequisites and top worldwide companies guidelines, non-profit organisations and governments.
The Environmental, Social and Governmental (ESG) framework
Understanding sustainability in SC is by pondering the ESG factors separated of the procedure, from sourcing to delivery. Companies must satisfy fluctuating customers' likings, observe stretching protocols and comply with shareholders.
Most important global businesses agree that sustainable SCs can put forwards economic improvements involving better efficiency innovation and make a difference in the market. Organisations are just now demanding similar behaviour from suppliers; they are pressuring their suppliers’ suppliers to adopt Sustainability.
In Procurement and SC areas, heads define Sustainability as the course of action of making decisions that do good to not only the corporation but society in general, while reducing its impact on the environment, pondering social and environmental factors as well fair commercial and profitable ones.
Recent research demonstrates that robust ESG qualifications lower costs when companies focus on operational productivity and waste reduction. Several organisations are now carrying on outstanding organisational proposals to maximise resource consumption in their processes and compromise, for instance, with their local districts; however, the businesses' environmental and social footprint goes further.
The Triple Bottom Line in Procurement (TBL) is a business concept that suggests that companies go further than reporting only their economic bottom line of financial performance. In addition, the social and environmental impact should be part of their reporting to shareholders. The experts often express in the 3Ps, People, Profit and Planet.
As organisations welcome Sustainability, the move is towards generating value for all shareholders, including employees, suppliers, customers, and broader community supporters. Assessment of the footprint left in society is now a mandatory prerequisite.
Procurement Sustainability is based on the principle that socially responsible products and services are suitable for the environment and society and essential for long-term cost-effectiveness. Many procurement leaders are now recognising their accountability to bring positive improvements.
Several workable steps to take are: recognising their responsibility as Procurement leaders to mainly generate positive changes such as bringing down their carbon footprint, exercising ethical practices in the sourcing of material, cutting down on energy consumption, and restructuring shipping systems.
As a result of improving our ESG performance best practice, we can be good citizens and companies when developing Procurement needs daily and keeping up to date on stakeholder stipulations and demand for more sustainable practices and products.
An example of legislation that requires more Sustainable Procurement practices is the Single-Use Plastics Directive, that aims to prevent and reduce the impact on the environment of particular sorts of plastic products and encourage a changeover to a circular economy. In July 2021 European Union set a single-use plastic directive that bans certain single-use plastics for which alternatives are available.
Consider some other social and environmental factors:
Economic factors: Financing, purchase price, depreciation, running costs, commissions, insurance, taxes and licenses, downtime, repairs and maintenance.
Further comments: accurate and Sustainable Procurement performance measures are vital when managing your company's Sustainability performance with tangible actions and an organised data-driven approach. It is not easy to track your targets and succeed on the supplier level without resources, data accuracy, visibility and traceability of the data collected, which could become significant obstacles on your company's journey towards a Sustainable Procurement implementation.
Is a Sustainable Procurement approach considered in your company?
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