January 10, 2023

An introduction to sustainable procurement

Sustainable Procurement

What is sustainable procurement, and what do modern companies and other organisations need to know and do about it?

In this blog post, we'll dive into what sustainable procurement means, and why you have so much to gain from implementing it. It is, indeed, a major improvement for most companies and organisations. Sustainable procurement is also an important step towards starting with carbon accounting, a broad and transparent approach to sustainability.

What is sustainable procurement?

Sustainable procurement means that you integrate Corporate Social Responsibility (CSR) and Sustainability principles into your company's procurement processing. Procurement decision-making and activity will be conducted with sustainability as a key element, while still meeting other stakeholder demands.

In essence, it means using the power of procurement to deliver more sustainable outcomes, while still providing growth and profit

Sustainable procurement is sometimes also referred to as sustainable purchasing.

Sustainable procurement practices

Sustainable procurement takes not only the protection of the environment into consideration, but also its effects and implications on our society. With this multifaceted approach, sustainable procurement stands out from other practices known as "green procurement", where only environmental aspects are being considered.

Some examples are:

  • Finding sustainable suppliers
  • Using responsibly sourced production material
  • Reducing waste and pollution
  • Creating a healthy work environment
  • Identifying regulations and how/where they apply to your business
  • Ensuring that the full product life cycle has minimal negative impact

Benefits - why sustainable procurement?

Sustainable procurement has several more advantages than the positive effects on the environment and society as a whole, and the practices are relevant for organisations in both the commercial and public sector. 

Some of the benefits are:

  • Reduced financial risks
  • Reduced procurement costs
  • Lower WACC (weighted cost of capital)
  • Creating a future-proof organisation
  • Improved regulatory compliance
  • Competitive advantages
  • Increased brand value
  • Improved customer perception

As you can see, there are many upsides to a sustainable procurement approach. It's highly likely that environmental and social concerns will grow even more important in the future, also increasing the benefits of sustainable procurement.

The triple bottom line (TBL, 3BL)

The triple bottom line consists of the environment, ethics/society and economy (planet, people, profit). In sustainable procurement, these three key factors need to be balanced. A TBL approach is a good way to make sure your procurement strategy takes all relevant aspects into account. In this section, we will provide you with an overview of what the triple bottom line entails.

Environment (planet)

For organisations and individuals alike, fighting global environmental challenges is a central part of sustainability. The environmental side of sustainability procurement practices include:

  • Reduced emissions and pollution
  • Reduced waste
  • Ecology protection
  • Energy performance
  • Resource efficiency and resource protection

Ethics/society (people)

Ethical business practices are another important aspect of running a sustainable company. This part of the triple bottom line refers to human capital and fair business practices, including factors such as:

  • Improving local communities and quality of life
  • Improving working conditions
  • Human rights, e.g., eliminating child labour
  • Diversity
  • Inclusiveness

Economy (profit, prosperity)

The third part of the triple bottom line is economical sustainability. Economical sustainability is not just about the organisation itself - it also considers its impact on the entire society. A few of the key factors are:

  • Cost-reduction and cost-control
  • Minimising business risks
  • Regulation compliance
  • Delivery timeframes
  • Quality control

Sustainable procurement and carbon accounting

It is also a quick, effective step towards getting started with carbon accounting. With the right partner (and the right technology) you can get the full picture, and start your journey towards broad-scale sustainability. A key thing to have in mind is this: planet and profit are not opposites.

In today’s business climate, companies that are ahead of the curve when it comes to things like sustainable procurement and carbon accounting are considered cutting-edge. Sustainability is an investment that will put you ahead of the rest of the pack. It will improve the world we live in and your business at the same time.

Sustainable procurement strategy

Setting up a sustainable procurement strategy means going the whole way from analysis to execution and follow-up. How much can the organisation improve, how fast, and what can be done to achieve the goals effectively? 

Keep in mind that sustainable procurement should be applied throughout the supply chain. If a supplier with a lower sustainability capacity is employed, it could be a good idea to create a programme to improve it during the partnership. This goes in line with the intention of sustainable procurement, as it is supposed to bring global advancements, not merely improvements in single organisations.

To build an appropriate and winning strategy, you need the right environmental insights. That is where tools like modern tools using cutting-edge technology can help set the foundation for realstic and feasible procurement strategies and policies. It can help overcome the complexities and accelerate your green transition.

Sustainable procurement policy

Getting an internal sustainable procurement policy in place is also an important early step. It allows your business to efficiently work towards a more sustainable procurement of materials and services. Everyone across the organisation will be aware of the policy, and better aligned with the overall sustainability goals.

How do you get started with sustainable procurement?

How to get started is, of course, one of the most common questions from companies wanting to begin their sustainable procurement journey. Relevant benchmarks need to be set, and a deep analysis needs to be performed. 

Sustainable procurement practices, carbon accounting and other related concepts can seem complicated, both in theory and execution. Therefore, it can be a good idea to find an expert partner that can help you tailor just the right solutions for your company and get you started on your sustainability journey.

Want to learn more? Contact us!

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