Consumers are more environmentally conscious than ever about the products they buy. As a result, sustainable procurement has become more important to a wide range of companies after proving that it offers significantly more value than the traditional procurement process. Here are some fascinating facts about this initiative.
What is sustainable procurement?
Sustainable procurement encompasses virtually everything your company purchases, such as goods and services like vehicles, office supplies, energy systems, and consulting services that aim to reduce the overall environmental impact of your supply chain. It also helps your company identify areas in your supply chain that require alignment with global sustainability principles such as environmental, social and governance (ESG).
By adopting sustainable procurement practices, your company will achieve value for money while meeting some key criteria of the Sustainable Development Goals (SDGs).
Moreover, sustainable procurement practices embedded in corporate policies ensure that the goods and services your company purchases have the lowest environmental impact and achieve the most positive social outcomes.
Why does sustainable procurement matter?
Sustainable procurement is important for many reasons.
First, it reflects your company’s core values. It ensures that your company’s sustainability values are embedded throughout the life cycle of your products and services, which increases their long-term viability.
Second, it integrates corporate social responsibility (CSR) principles into your company’s procurement processes and decisions, keeping you ahead of increasingly stringent regulations. Incorporating sustainability principles into the procurement process improves employee engagement and, in some cases, can attract and retain talents.
Finally, your business is future-proofed as you meet the needs of your stakeholders and customers, for whom ESG is a key decision factor when purchasing a product. Sustainable sourcing also meets the requirements of most investors, especially international financial groups, who are now aligned with sustainability principles.
How can procurement be sustainable?
Below are some steps you can consider to ensure the sustainability of your company’s procurement processes:
- Inventory the company’s supply chain policies and initiatives – This requires an inventory of your supply chain policies, including product life cycle processes, and an assessment of current risks and opportunities related to your core values and principles.
- Establish Sustainable Procurement Goals and Objectives – This defines ESG metrics and policies that can be integrated into the company’s standard procurement processes. This can include supplier selection as well as procurement and supply management processes.
- Integrate priority sustainable purchasing practices into the organization – Your company can select a set of sustainable purchasing practices and implement them. Decarbonizing emissions-intensive areas of the supply chain could be an example.
- Scale up and roll out successful initiatives – Pilot projects that are successful can be scaled up or expanded in scope. Your company should document all processes and provide ongoing training to procurement staff on sustainable sourcing principles and how to apply them.
- Track performance against targets – Your company should track progress against targets for a variety of reasons, including reporting to stakeholders or investors, contributing to planning, enhancing your company’s reputation, engaging employees, and more.
What are the benefits of sustainable procurement ?
The top five benefits of sustainable procurement can be summarized as follows:
When you adopt sustainable procurement practices, the likelihood of your company being involved in illegal practices such as child labor, illegal extraction of natural resources, or even the use of chemicals harmful to our bodies and the environment decreases.
Sourcing goods and services sustainably increases brand equity, which benefits your company’s reputation. First, it allows your company to develop robust or overall risk mitigation and procurement metrics, which is a valuable contribution to your overall business strategy. Second, it helps your company identify the strengths and weaknesses of your suppliers and other supply chain processes that could cause negative publicity for your company. Finally, it can provide opportunities for innovation and new branding by packaging your products and services as sustainable.
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