What is Sustainable Procurement?

BITCI News - Jul 20, 2015

global_sustainability-green-globe-v4019046Sustainable Procurement is an approach to purchasing products and services that takes into account the economic, environmental and social impacts of an organisation’s buying choices, at all times. Committing to a policy of sustainable procurement is about ensuring that the values that are core to the business are transferred through the organisation’s supply chain into the life-cycle of the organisation’s products and services.

‘Procurement’ refers to the acquisition and management of (but not limited to) people, buildings, land, transport, energy, water, materials, food, waste and outsourced services.

‘Sustainable Procurement’ is not simply about choosing not to use sweatshop labour or illegal tropical timber or chemicals that damage our health and the environment. Rather, Sustainable Procurement encompasses the planning for a changing climate, a resource and carbon-constrained future and a socially-beneficial, supportive and inclusive society.

Best practice in Sustainable Procurement is about future proofing both the chain of supply and the company’s investments, in order to make them all viable in the long term.

Common characteristics of sustainable products include: superior energy and water efficiency; lowest hazardous material content available; longer life and greater upgradability; reduced packaging and waste; increased recycling capability. These characteristics usually translate into lower running and disposal costs, which in turn result in direct financial savings and proactively protect the reputation of the brand.

Ensuring excellence in the manufacturing (and other) processes that result in the company’s products (and services) are key steps on the journey towards embedding and integrating sustainability into the culture of the business and the fabric of the company’s operations.

What are the drivers & business Case for Sustainable Procurement?

The drivers of a policy of Sustainable Procurement are usually a combination of the following three:

  1. Risk Management: with the potential positive impact on corporate reputation and/or ability to mitigate any regulatory non-compliance, potential resource depletion or disruption of supply.
  2. Cost Cutting: via energy consumption reductions, reduction in the costs of recycling and packaging production.
  3. Value Creation: developing new green products and leveraging suppliers’ environmental innovations. (Sustainable Procurement: a Crucial Lever to End the Crisis (HEC, 2009).

In the past companies such as Skanska, Marks & Spencer, United Utilities, TNT, Siemens & Adidas said they had developed their sustainable procurement policy and strategy due to:

  • The need to future proof the organisation, particularly around the scarcity of supply and being able to meet the demand from new, emerging markets.
  • Pressures of cost and being able to reduce same through energy consumption reductions and reductions in the amount of waste being sent to landfill.
  • The need to protect the reputation of the brand. Taking sustainable procurement seriously requires an in-depth risk management exercise and addressing areas of weakness mitigate against the risks of scandal and ensuing bad publicity.
  • The need to differentiate the brand. Seeking to procure as sustainably as possible creates opportunities from having to develop products and services that are more sustainable, often innovative and also relevant to new markets and revenue streams.

For examples of best practice in Sustainable Procurement please visit our CSR best practice database

Support available to Members of Business in the Community Ireland

If your company would like support with the development of a sustainable procurement policy and strategy please contact your Account Manager.

If you are not a member yet and would like to join the Network please contact Joe O’Donnell.