Sustainable Procurement

Procurement may not be talked about often – until it hits the news with a public failure – but it’s one of the largest segments of business today. The spending in procurement has been measured to be as high as 50 percent of a business’ revenue. Purchasing is intrinsic and can have deep influence: your procurement touches or influences virtually every aspect of your organisation, and can impact all your stakeholders. It is a concrete way to embed your company’s values into your activities and products, even before inputs enter your organisation.

Why is sustainable procurement important?

Procurement needs to become more transparent and sustainable in almost every aspect and for every entity, due to legislation around the globe. California’s 2010 law on supply chain transparency led the way, with the UK’s Modern Slavery Act in 2015 extending the topic. Legislation in the EU and other places is extending requirements for disclosure and action. Environment and biodiversity are now solidly in the realm with human rights to be in best practices, and social value is already required in some aspects of UK trade.

 

 

Challenges of sustainable procurement

With the growing awareness of the impact, embedding sustainability in your procurement functions is also seeing a growing number of challenges. The extra standards, both legal and competitive, introduce the risk of losing suppliers, either by choice or (seeming) necessity. Policies and governance need to be coherent and integral across your company. Determining whether sanctions (such as ending a relationship) will apply to a critical supplier is likely to require strong communications and well-considered ethics. Implementing the policies, such as for measuring, data handling, and engagement, require solid tools and security standards.

How to approach sustainable procurement

Setting policies and enabling capabilities for your sustainable procurement programme to proceed must be done at all levels. In the specifics, there are a few key steps for the supply chain to undertake.

• Assess suppliers and supply chain
• Identify risks and potential hotspots and articulate goals
• Tackle engagement strategically, recognising the need for multiple layers and employing various methods
• Implement and measure
• Review and adjust, incorporating external developments and aligning with evolving ambitions