Sustainable procurement looks at how sourcing and supplier management activity supports sustainable development, where economic and social growth is encouraged in ways that does not negatively impact life. Environmental, social, economic and health topics all fall under this banner.
ISO 20040, the quality standard for Sustainable Procurement was introduced in 2017. This gave organizations a framework for understanding and monitoring the impact of their procurement activities on individuals, communities and the environment.
Some organizations focus on the Dow sustainability indexes, which provides a global measurement of corporate sustainability performance across multiple sectors.
Many organizations seek the coveted Industry Leaders title. These organizations are the top performing companies in each of the 60 industries represented in RobecoSAM’s Corporate Sustainability Assessment (CSA) and the Dow Jones Sustainability Indices.
However, many Procurement teams are not embedding sustainable procurement practices in their daily work. These three areas should be a key focus for sustainable procurement activity:
1. Strategy development
Category and sourcing strategies should identify the specific sustainable procurement issues that are most relevant to the category being purchased, and actively demonstrate that research and creative thinking is being used to improve the sustainability impact of the acquisition.
For example, a life cycle sustainability assessment would include the identification of solutions that minimize energy usage, extend pro-social procurement and enhance life opportunities in the communities where the organization buys from.
2. Supplier selection
Supplier selection and evaluation criteria should highlight that prospective suppliers who can evidence proactive development in economic, environmental and social issues (both in their own organization and in their supply chain) will be recognised as part of the competitive bidding process.
For example, there may be a high emphasis and weighting of services suppliers that can demonstrate that their recruitment policies are supporting local workers, creating apprenticeships or enabling SMEs to become a greater proportion of their supply base.
3. Contract management
The ongoing review of supplier operational and business performance should include sustainability improvement as a key element of continuous improvement activity.
For example, a supplier of goods, equipment or materials may work in collaboration with the buying organization to reduce waste in the production, storage and distribution of the items.
By working together with stakeholders, procurement professionals can extend sustainable practises into many elements of the sourcing process and contribute to the organization’s sustainable credentials in its overall supply chain management.
Find out more about how you can improve your sustainable procurement practices in ADR’s Ethics and Sustainability Course, available as an Instructor-Led Classroom or Virtual Classroom Event.