Sustainable procurement: a win-win for business and the environment

Have you ever bought anything based on its actual or promised sustainability credentials? I would suggest most of you have or, at the very least, thought about it at some point. Even in your home life, or while out shopping, how many of us think about the environmental, social or governance issues applied to, for example, a jar of coffee, a cotton T-shirt, an electronic item or even a new car?

In an era defined by environmental challenges and social responsibility, the practice of buying goods and services more sustainably (known as sustainable procurement) has emerged as a powerful tool for organisations to drive positive change within the supply chain.

Photograph: iStock/Khanchit Khirisutchalual

Sustainable procurement goes beyond traditional purchasing practices based solely on price, by prioritising environmental stewardship, social equity and governance (‘ESG’), when purchasing goods, products and services throughout the supply chain. Sustainable procurement is often defined as ‘procurement that has the most positive environmental, social and economic impacts on a whole life basis’.

In recent years, British Safety Council has witnessed an increase in the number of health, safety and environmental professionals in our member organisations who are involved in sustainability procurement decisions. This includes ensuring suppliers are rewarded for good sustainability practices, and that products are purchased with sustainability in mind.

Environmental issues, such as pollution, greenhouse gas emissions, deforestation, use of non-recyclable materials, energy usage and end-of-life disposal are all factors that are part of the lifecycle of many products and services within business supply chains. Social issues within the supply chain, such as slavery, forced labour and human trafficking, are also motivating organisations to implement more ethical and sustainable procurement practices.

Many proactive businesses are doing just that and using a model of sustainable procurement and lifecycle thinking when purchasing goods, inviting contractual tenders and managing contractors.

Lifecycle is defined as consecutive and interlinked stages of a product or service system, from raw material acquisition or generation through to design, production, transportation/delivery, use, end-of-life treatment and final disposal of the product. It means taking account of social and environmental considerations at every stage of the lifecycle process and selecting suppliers and products based not solely on cost and quality but also on their environmental impact, ethical governance practices and their contribution to achieving the United Nations’ Sustainable Development Goals (SDGs).

It is widely recognised that many small and medium enterprises (SMEs) feel daunted by the task, or even the concept, of sustainable procurement and lifecycle thinking and ‘greening their supply chain’. Many businesses still adhere to the age-old fall-back practice of engaging the cheapest product, supplier or contractor, and making no assessment of the full sustainability and lifecycle cost of their procurement decisions.

Dr Keith Whitehead C.Env is senior environmental consultant at British Safety Council. Photograph: British Safety Council

However, the landscape of sustainable procurement within the confines of ESG is now accelerating within all sectors, including our personal lives, both directly and indirectly, even if we may not realise it.

Implementing a sustainable procurement model in an organisation’s purchasing system, whatever the level, has many benefits. These can be summarised as:

• If a supplier is associated with (or linked to an organisation with) poor ESG practices, such as failing to prevent child labour or pollution, this could have a negative impact on the brand, reputation and even finances of organisations that procure goods and services from that supplier
• Consumers that value sustainability when making purchasing decisions can improve an organisation’s financial performance and increase their brand equity and loyalty, through higher purchasing levels and improved brand reputation. An organisation can also save money by using sustainable procurement partners in the longer term.
• Developing sustainable procurement practices enables an organisation to future-proof themselves against scarcity of supply and changes in social, economic and environmental factors.
• Reduces the impact of hazardous substances on human health and the environment.
• Encourages innovation when planning how to be more efficient in using natural resources.
• Improves risk management by an organisation working with suppliers who are less likely to encounter risks to their reputation and financial performance due to environmental and social issues.

By embracing sustainable procurement, organisations of any size – and individuals including those reading this article – can help to minimise adverse effects on the planet, support local communities and foster long-term resilience in their supply chains and purchasing decisions.

Photograph: iStock/SolStock

Whether you are procuring goods, products or services at organisational level or on a personal basis, the key principles of sustainable procurement apply. These are:

• Environmental responsibility: sustainable procurement seeks to minimise environmental harm by prioritising eco-friendly products, materials and production processes. This includes sourcing renewable resources, reducing waste generation and promoting resource efficiency throughout the supply chain.
• Social equity: prioritising fair labour practices, human rights protection, and diversity and inclusion within supplier networks. It involves working with suppliers who uphold ethical labour standards, provide safe working conditions and respect the rights of workers across all tiers of the supply chain.
• Economic prosperity: contributing to economic development by supporting local suppliers, small businesses and socially responsible enterprises. It emphasises transparency, fair trade and responsible sourcing practices that promote economic growth, job creation and community empowerment.

British Safety Council’s Five Star Occupational Health and Safety, Environmental Sustainability and Wellbeing Audits incorporate elements of the above principles. Through these audits we have helped our members who are following and being assessed under the five star specification to improve their sustainable procurement processes and overall sustainability performance.

Implementation challenges and solutions

While the benefits of sustainable procurement are evident, implementing suitable policies and procedures in this area can pose challenges for organisations and individuals alike. The issues include:

• Supply chain complexity: global supply chains are often very complex, spanning multiple countries and many sectors and industries, making it challenging to trace the origins of products and ensure ethical and sustainable practices throughout the supply chain. To address this, organisations can leverage technology, such as blockchain and supply chain transparency platforms, and conduct third party audits to track and verify the sustainability credentials of suppliers and products.
• Cost considerations: adopting sustainable procurement practices may entail higher upfront costs due to the premium associated with many eco-friendly or ethically sourced products. However, organisations can offset these costs by focusing on long-term value creation, such as reduced operational risks, enhanced brand reputation and increased customer loyalty.
• Stakeholder engagement: sustainable procurement requires collaboration and engagement with a diverse range of stakeholders, including suppliers, employees, customers and communities. Organisations can overcome this challenge by fostering partnerships, conducting stakeholder consultations and incorporating sustainability criteria into supplier contracts and performance evaluations.

To help organisations implement a sustainable procurement model, the International Organisation for Standardisation (ISO) developed the ISO 20400:2017 Sustainable procurement guidance standard to provide advice to organisations, regardless of their area of activity or size, on integrating sustainability within procurement processes.

The guidance is especially useful for organisations seeking to integrate sustainability into their procurement processes, and offers a comprehensive framework for sustainable procurement practices, encompassing environmental, social and economic considerations.

Adopting the model of ISO 20400 can offer numerous benefits to an organisation, including:

• Enhanced sustainability performance: by aligning procurement practices with sustainability objectives, an organisation can reduce its environmental footprint, promote social responsibility and contribute to the achievement of global sustainability goals.
• Risk mitigation: helps organisations identify and mitigate risks associated with their supply chains, such as environmental degradation, human rights violations and unethical labour practices, thereby safeguarding their reputation and operations.
• Cost savings: sustainable procurement practices can lead to cost savings through improved resource efficiency, reduced waste generation and lower operational risks.
• Competitive advantage: embracing sustainability can differentiate organisations in the marketplace, attract environmentally- and socially-conscious customers, and enhance brand reputation.

Key principles of ISO 20400

ISO 20400 is built upon several key principles that underpin sustainable procurement:

• Integration of sustainability: the standard emphasises the need to integrate sustainability considerations into all stages of the procurement process, from planning and supplier selection to contract management and performance evaluation.
• Stakeholder engagement: highlights the importance of engaging with relevant stakeholders, including suppliers, employees and communities, to identify sustainability priorities and address their concerns.
• Transparency and accountability: organisations are encouraged to be transparent about their procurement practices and accountable for the social, environmental and economic impacts of their purchasing decisions.
• Continuous improvement: advocates for a commitment to continuous improvement, encouraging organisations to set targets, measure performance and take corrective actions to enhance their sustainability performance over time.

Organisations wishing to achieve the ISO 20400 standard will need to meet and implement some basic requirements and steps, although this will not necessarily be an onerous task and the process can be as detailed as the organisation wishes it to be. These include:

• Commitment and leadership: senior management commitment is essential to drive the adoption of ISO 20400 throughout the organisation. Leadership support can help prioritise sustainability initiatives and allocate resources effectively.
• Risk assessment and stakeholder engagement: conduct a thorough assessment of the organisation’s procurement practices and engage with stakeholders to identify sustainability priorities and concerns.
• Policy development: develop a sustainable procurement policy that aligns with the principles and requirements of ISO 20400. The policy should outline clear objectives, responsibilities and performance indicators.
• Supplier engagement and evaluation: engage with suppliers to promote sustainability throughout the supply chain. Establish criteria for supplier selection and evaluation, considering their environmental, social and ethical performance.
• Training and capacity building: provide training and capacity-building initiatives to employees involved in procurement activities, equipping them with the knowledge and skills necessary to implement sustainable practices.
• Monitoring and measurement: establish mechanisms to monitor and measure the organisation’s sustainability performance in procurement. Regularly assess progress against targets and take corrective actions as needed.
• Continuous improvement: foster a culture of continuous improvement, encouraging innovation and collaboration to advance sustainability goals within the organisation and its supply chain.

Many organisations have already undertaken similar approaches to improve sustainability within their procurement decisions. These include Balfour Beatty, Morgan Sindall Group, London Universities Purchasing Consortium (LUPC), Southeastern Railway and Anglian Water Service, to name but a few.

In summary

Sustainable procurement is not just a trend; it’s a necessity in today’s global supply chain world. By integrating environmental, social and economic considerations into an organisation’s  procurement practices, businesses are helping to drive positive change, building more resilient and ethically-based supply chains, and contributing towards a more sustainable and equitable future. They will also be contributing the UN’s SDGs.

Sustainable procurement therefore offers a pathway towards a greener, fairer and economically and socially more prosperous society, where the success of a business is measured not only by profit margins but also by its positive impact on people and the planet in the procurement decisions that it makes.

Dr Keith Whitehead C.Env is senior environmental consultant at British safety Council.

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britsafe.org/audit-and-consultancy/all-audits