With governments and companies around the world concentrating on ESG i.e. environmental, social and governance parameters, a sustainable supply chain and procurement has become extremely important. Sustainable procurement is a procurement approach that considers social, economic and environmental impacts of procured goods and services in addition to their functional requirements and price. It aims to achieve a balance between economic, social and environmental objectives, leading to benefits for the organization, its stakeholders and society as a whole.
Sustainable procurement involves taking into account the entire lifecycle of the product or service being procured, from the extraction of raw materials, through production, distribution, use and disposal (end of life cycle). The goal is to minimize negative impacts to the environment and society and maximize positive ones.
What is Sustainable Procurement
Sustainable procurement typically involves considering the following factors:
- Environment: The environmental impact of the production and disposal of the goods or services being procured.
- Social responsibility: The labour standards and working conditions of the workers involved in the production of the goods or services.
- Economic viability: The cost-effectiveness and value for money of the goods or services being procured.
- Ethical considerations: The ethical and moral implications of the procurement, such as avoiding products from suppliers that engage in unethical practices or violate human rights.
- Quality and performance: The quality and performance of the goods or services being procured to ensure they meet the required specifications and standards.
- Innovation and sustainability: Encouraging and rewarding suppliers for innovative and sustainable practices in the production and delivery of goods or services.
Why Are Companies Choosing Sustainable Procurement
Companies are choosing sustainable procurement for several reasons, including:
- Reputation: Companies can enhance their reputation and brand image by demonstrating a commitment to sustainability and social responsibility.
- Cost savings: Sustainable procurement can help companies reduce costs and minimize waste by purchasing products and services that are more environmentally friendly and energy-efficient.
- Compliance: Companies may be required to follow sustainable procurement guidelines as part of regulations and laws aimed at promoting sustainability and reducing environmental impacts.
- Stakeholder pressure: Companies may face pressure from customers, employees, investors, and other stakeholders to adopt sustainable procurement practices.
- Risk management: Companies can reduce the risk of negative publicity, legal action and other consequences by avoiding suppliers that engage in unethical practices or violate environmental regulations.
- Competitive advantage: Companies that adopt sustainable procurement can gain a competitive advantage by demonstrating their commitment to sustainability and socially responsible business practices.
How Does Sustainable Procurement Help in Lowering Carbon Footprint
A company can lower their carbon footprint through sustainable procurement by considering the following steps:
- Assessing and tracking their carbon footprint: Measure and track the carbon emissions associated with their procurement activities to identify areas where improvements can be made.
- Selecting suppliers with a low carbon footprint: Choose suppliers who have a low carbon footprint and use environmentally friendly production methods.
- Encouraging suppliers to reduce emissions: Encourage and support suppliers to adopt sustainable practices and reduce their carbon emissions.
- Purchasing energy-efficient products: Choose energy-efficient products and services that have a lower carbon footprint.
- Promoting sustainable transportation: Encourage the use of sustainable transportation methods for the delivery of goods, such as rail or sea freight, which are typically more energy-efficient than road transport.
- Implementing green procurement policies: Implement procurement policies that prioritize sustainable and environmentally friendly products and services.
- Engaging stakeholders: Engage with stakeholders, including customers, employees, and suppliers, to encourage collaboration in reducing the carbon footprint of procurement activities.
How Can a Company Start Sustainable Procurement
A company can start sustainable procurement by taking the following steps:
- Define goals and objectives: Clearly define the goals and objectives of sustainable procurement and the impact it will have on the organization.
- Assess current procurement practices: Assess the current procurement practices and identify areas where improvements can be made.
- Develop a sustainable procurement policy: Develop a policy that outlines the company’s commitment to sustainable procurement and the criteria for selecting suppliers.
- Engage with stakeholders: Engage with stakeholders, including customers, employees, and suppliers, to seek their input and support for sustainable procurement.
- Train employees: Train employees on the principles of sustainable procurement and how to implement sustainable procurement practices.
- Establish partnerships: Establish partnerships with suppliers who are committed to sustainable practices and are willing to work with the company to achieve its sustainability goals.
- Monitor and evaluate performance: Monitor and evaluate the performance of sustainable procurement practices, and make adjustments as needed to continuously improve.
- Communicate progress: Communicate the progress of sustainable procurement efforts to stakeholders, including customers, employees, and suppliers, to build trust and demonstrate the company’s commitment to sustainability.
Sustainable procurement is a process that integrates environmental, governance, and social (ESG) factors of corporate responsibility into procurement processes and decision-making, while ensuring they still meet the stakeholder requirements. It aims for the lowest environmental impact possible and the most positive social results. And within procurement and supply chain, sustainability can be defined as the process of making decisions that benefit not only the organization but society as a whole, while minimizing its impact on the environment. This means considering social and environmental factors alongside purely financial and economic ones.
To understand how to go about sustainable procurement for your organisation and what products you can start with, get in touch with us or check out our entire product range.
