The recently-launched ISO 20400 standard, Sustainable Procurement – Guidance, is a powerful new tool for all involved in the business of procurement.
Adopting the voluntary guidelines outlined in the standard will allow procurement professionals and managers to reliably put together a sustainable procurement policy that ensures positive environmental, economic and human rights outcomes for all involved in the procurement process.
The benefits of implementing a sustainable procurement policy go far beyond simply being the right thing to do as a responsible corporate citizen. It allows organisations to demonstrate to others, both within and outside of their industry, that particular values and codes of conduct are being upheld.
These organisations can position themselves as leaders in their industries, impressing key stakeholders and influencing the procurement practices of other organisations as a result.
Risk and reputational management is another key driver for sustainable procurement. Through robust and well-developed policies, organisations can significantly mitigate risk in their supply chains. This, in turn, plays a key role in maintaining a positive brand image and reputation, and avoiding the potential scandal of being unknowingly complicit in unethical or illegal supplier practices.
Recent research from the Supply Chain Sustainability School indicates that greater knowledge of sustainability issues in construction and infrastructure supply chains is increasingly helping to minimise risk and improve how business is done, resulting in better quality outcomes with no additional cost.
Sustainable procurement also contributes positively to a company’s bottom line, especially in the long term. Research from EcoVadis has found that 50 per cent of sustainable procurement leaders increased their revenue from sustainability initiatives – a 33 per cent increase over non-leaders.
So what, exactly, does a good sustainable procurement policy look like? What should purchasers be looking for – and what should product manufacturers and suppliers do to ensure their product measures up?
A good sustainable procurement policy will start with the fundamentals. It should identify the organisation’s most important sustainability goals and how these goals align with the core values of the business.
From there, it is a case of integrating those goals into the procurement policy and strategy, setting sustainable procurement priorities, and making sure that the right people and procedures are in place to enable the organisation to reach the goals it has set.
When developing the specifics of a policy, procurement professionals should focus on identifying the environmental, health and social impacts of a purchase, considering the main impact areas over the full life cycle of the product, from raw material sourcing to disposal.
Choosing specific and measurable criteria for selecting goods and services can be challenging without the benefit of prior knowledge of exactly what makes a product or service “green” or sustainable in the first place. ISO 20400 gives guidance on how to set these criteria, and suggests that third-party certification standards provide good source material to form the backbone of a document.
Once the criteria are established, the second challenge lies in evaluating whether or not the products really live up to their claims. The ISO20400 standard provides guidance on the evaluation procedure, including factors affecting the level of assurance, verification activities, parties involved and which parties bear the cost. Third party labels and certifications are highlighted as providing the highest level of confidence with minimum effort for the purchasing organisation.
Sustainability certifications also contribute to procurement risk reduction. With growing concerns over the hordes of non-compliant products entering into Australia, labels and certifications can also offer a level of assurance on the quality of the product, including its fitness for purpose in addition to its sustainability credentials.
Sustainable procurement will play an increasingly important role in today’s business world, and organisations will need to examine the sustainability credentials of any existing procurement policies in order to reduce risk and stay competitive. Product manufacturers and service providers will also need to make sure that their products are genuinely sustainable and that their claims are cred