Procurement

Sustainability and Procurement

Athena Commercial
November 18, 2021

The recent Climate Change Conference in Glasgow (COP26) andInsulate Britain protests have had everyone talking about climate and sustainability. It’s a huge topic with varying opinions, but it isn’t something that’s going away any time soon. Consumers are now adopting more sustainable lifestyles, purchasing goods from companies that prioritise sustainability and, in some cases, even paying more for goods that have prioritised sustainability.In fact, statistics from Deloitte reveal that over a third of consumers chose brands that use environmentally sustainable practices in order to adopt a more sustainable lifestyle. With figures like that, it’s no wonder that boards are putting sustainability at the heart of their corporate social responsibility (CSR) with directives to ensure a more sustainable supply chain.

 

What is sustainable procurement?

Sustainable procurement is a process whereby organisations integrate sustainable CSR directives into the supply chain and look to further identify ways that their environmental impact can be reduced whilst meeting the needs of the business. Sustainability is largely associated with the environment, but it is also focussed on ensuring the sustainability of people too. Examples of people sustainability practices would include preventing child labour and improving worker safety. Whilst people sustainability is important, the big focus at the moment is environmental sustainability, and this can be achieved through practices such as:

• Sourcing raw materials that are sustainable to the environment, which includes sourcing from local suppliers.

• Contracting with suppliers who share the same sustainability principles and are environmentally conscious

• Utilising sustainable sources of energy in both production and logistics

• Waste reduction through reducing product defects and reusing packaging materials.

Carbon offsetting is another way in which companies can reduce their impact on the environment, but it is an often-controversial method.Carbon offsetting involves compensating for any unsustainable practices that have emitted excessive Co2 emissions through the participation in schemes that look to reduce this same excessive amount through other means.

What are the advantages of sustainable procurement?

People and Environmental Advantages

Of course, the main aim of sustainable procurement is to reduce the impact on the environment, so naturally it will have some environmental advantages. Using more sustainable forms of energy, such as electricity from renewable sources, can help the environment in a number of ways. Firstly, it can reduce the amount of Co2 released into the atmosphere, but this also ensures cleaner air locally which is beneficial for both the environment and its people. Additionally, recycling reduces the impact on landfill, and utilising biodegradable forms of packaging can also help the local environment too. Sourcing your suppliers locally can also have a positive impact, not only through the reduced consumption of energy, but also benefitting the local economy, creating a more prosperous environment for your employees and wider stakeholders to operate in.  

 

Business Advantages

As we touched on earlier, the consumer demand for both ethically and sustainably sourced products is growing, with some consumers even paying more for products that have sustainability at the heart of their supply chain.With this in mind, a business can greatly improve its profitability and general reputation in the market through sustainable procurement.  Likewise, profit margins can also be increased through the reduction of waste. Reducing waste can be achieved through implementing lean manufacturing principles such as utilising local suppliers (reducing logistics costs), Utilising sustainable sources of energy(which are typically cheaper), reducing defects (which increases yield) as well as reusing materials. With sustainability being such a key topic at the moment, it also makes your business more attractive for investment and increases the chances of winning business. Likewise, whilst your business may be looking to source environmentally friendly suppliers, your customers will be too.Sustainable procurement also makes your business more attractive in terms of attaining investment, especially with Eco-investing.

How to get started with sustainable procurement

There is a lot of information to take on board, and many organisations are simply so intimidated by the prospect of the seemingly mammoth task of integrating sustainable procurement into their supply chains, that they don’t bother at all. However, as we mentioned earlier, this is not something that is going away and businesses need to adopt sustainable procurement into their supply chains or they will be left behind. Below, we’ve outlined the initial steps that you can get started with on your sustainable procurement journey.

1) Situation analysis and strategy development

In order to implement some of the sustainable procurement processes into your supply chain, you will need to assess your business’s current processes. Analyse your logistics, production, planning and suppliers. Then, you will need to develop a strategy.

2) Start with internal processes

You’ll want to focus internally first, looking at implementing lean manufacturing processes and start implementing the quick wins. This will certainly improve your stake holder buy in, and allow you to continue with your efforts.

 

3)  Look externally at suppliers

You may have identified suppliers as a quick win instead of starting on internal processes, but this all depends on your business. You may want to send some form of correspondence to your suppliers in order to let them know of your intentions to be more sustainable and your requirements of them going forward. This will allow for a more pleasant relationship with your suppliers, but also provides an easier alternative to negotiating with a new supplier.  

 

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