The Future Of Sustainable Procurement

Environmental shifts over the last 10 years have had a significant impact on our planet. We all know that it’s crucial that we learn to protect our planet on a personal level, but businesses play a role that is just as (if not more) important in creating a sustainable future.

Every department within a business can do its part to ensure it contributes to sustainability, but procurement departments in particular have a real opportunity to bring about positive change. Due to the very nature of their roles and the processes involved in their profession, purchasing professionals can choose to source in a way that fosters sustainable business practice.

Procurement priorities today

It seems that company buyers are becoming increasingly aware of their responsibility to make a change. Since 2013, there has been a sharp increase in sustainability awareness, as found in the 2017 Sustainable Procurement Barometer.

sustainable procurement - priorities

The Sustainable Procurement Barometer (SPB) 2017 shows that the top three priorities for procurement professionals in 2017 were:

  • Cost savings
  • Compliance
  • Risk reduction

This tells us that purchasing departments are still working hard to keep costs low and minimise any supply disruptions, which are both essential elements of their role. The increase in priority for compliance shows a greater consideration for meeting the requirements of accepted practices, standards and legislation. As sustainable practices become more widespread, businesses will continue focus their efforts on complying with industry guidelines and processes.

Although sustainability didn’t quite make it into the top 3, it was still up in the top 5. What’s more, if we take a look at the percentage of organisations that consider Sustainability & CSR (Corporate Social Responsibility) a priority, we can see that 23% (2017) of organisations found it to be a critical priority, which shows an increase from 18%  in 2013.

This indicates a trend of increased awareness and incorporation of sustainable procurement and CSR into business priorities. Businesses are becoming more proactive in their efforts to improve the way we source products, which is evident in findings such as the increase in corporate action to halt deforestation shown by the Supply Change project.

Drivers of sustainable procurementsustainable procurement drivers

The findings of the SPB found that the three biggest drivers for sustainable procurement are brand reputation (63%), risk mitigation (61%) and compliance (57%).

From this, we can see that consumers are driving organisations to source more sustainable products, which has led to brand reputation being the biggest driver of change.

Not only is it a driver, but it’s also a real result of adopting sustainable procurement practices, which is demonstrated by the fact 76% of surveyed organisations reported an improvement in brand reputation after adopting sustainable policies.

The benefits and challenges of sustainable procurement

Sustainable procurement practices are not only good for the environment, but are also good for business. More efficient energy use, waste generation and water consumption all contribute to lowering costs in the short term. The longer sustainable practices are employed, the bigger the rewards can be:

“New initiatives will first experience tactical improvements (e.g., cost savings, reduced disruption risk, compliance). However, as programs mature toward the ‘SP [sustainable procurement] Leader’ profile — whose programs are on average older than non-leaders — they begin reporting strategic upside benefits like increased revenue, improved relationships, and enhanced brand reputation.

HEC/EcoVadis 2017 – 7th Sustainable Procurement Barometer

Other benefits of sustainable procurement include:

  • Consumer satisfaction
    As consumers become more environmentally aware, they’re more likely to buy from companies that practice sustainable procurement
  • Competitive advantages
    Businesses of all sizes can differentiate themselves in an increasingly competitive market to attract new customers and retain existing ones
  • Risk management
    Sustainable practices can offer businesses a degree of protection from negative impacts on their reputation, market share and brand image

However, that’s not to say that a sustainable future poses certain challenges for procurement professionals. According to the SPB, the top issues holding sustainable procurement programs back are:

  • Lack of internal resources (57%)
  • Difficulty tracking supplier sustainability performance (37%)
  • Cost concerns (33%)

One of the biggest obstacles to achieving sustainable procurement is the significant lack of coherent corporate procedures, systems and approaches. In other words, even if businesses can create a strong procurement strategy, without clear controls in place, businesses will struggle to track the benefits of sustainability.

What’s more, the fact that sustainability has only recently become more commonplace in the business world means that there aren’t many accreditations for organisations to use to vet prospective suppliers. This makes it difficult to establish a sustainable supply chain.

The future of sustainable procurement

Businesses that wish to integrate sustainable practices into their procurement processes now have the option to adopt the first international standard for sustainable procurement – the ISO 20400: Sustainable Procurement Standard. The ISO 20400 aims to increase transparency in the supply chain and is the replacement standard for the BS 8903:2010 Principles and Framework for Procuring Sustainably.

This standard is applicable to any organisation, regardless of size or location. It states the following:

This document assists organizations in meeting their sustainability responsibilities by providing an understanding of:
  •  what sustainable procurement is;
  •  what the sustainability impacts and considerations are across the different aspects of procurement activity:
    •  policy;
    •  strategy;
    •  organization;
    •  process;
  •  how to implement sustainable procurement.

Currently, around 65% of the world’s countries have adopted the standard in their procurement practices, according to Action Sustainability:

sustainable procurement

As more businesses adopt sustainable practices by following guidelines like the ISO 20400, sustainable procurement is likely to become more widespread. From this we can assume that procurement departments will continue to contribute to a more sustainable future, which in turn will lead to their organisation’s continued success – so make sure your business isn’t left behind!

 

Does your organisation apply any sustainable practices in procurement? Share your thoughts in the comments section below!

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