How to write an effective sustainable procurement policy
A sustainable policy helps you use fewer resources, be more efficient, and great for cost savings for future success. It’s good for employee health, boosts engagement, encourages innovation, and makes your company look good to customers in the best way.
Key highlights
- Sustainable procurement integrates environmental and ethical factors into purchasing decisions.
- Embracing sustainability aligns with stakeholder expectations, enhancing market position.
- Comprehensive strategy considers environmental impacts across sourcing, production, use, and disposal in the supply chain.
- Building strong partnerships and setting clear sustainability criteria drive positive change.
- Utilizing KPIs for sustainability ensures transparency, accountability, and continuous improvement.
Procurement expenses takes up roughly 40% to 80% of companies’ turnover. Therefore, implementing a sustainable procurement policy significantly contributes to the company’s global sustainable policy results.
The goal of sustainable procurement is to reduce harmful effects and build a supply chain that is stronger and more responsible.
In this article, we’ll explore what sustainable procurement plan is and delve into how it benefits your businesses. We will also provide a step-by-step guide on how to build your own sustainable procurement policy effectively.
Understanding sustainable procurement
Sustainable procurement or green procurement is a smart way to buy goods and services. It’s enhancing purchasing strategies and supplier selection.
It integrates sustainability requirements and criteria into the procurement system and asks companies to reconsider their existing supply chains. It allows a company to ensure that sustainability and circular economy values are incorporated into the entire life cycle of their product or service.
It looks at the environmental impact during the entire life of these products. This includes how raw materials are taken, how things are made, how they are moved, how they are used, and how they are thrown away.
By adding sustainability criteria to procurement practices, businesses gain competitive advantage through waste reduction and lowered emissions. They can also encourage fair labor practices and help suppliers who practice sustainable sourcing. This complete method helps not only the earth but also is instrumental in risk mitigation, improves brand reputation, lowers risks, and saves cost.
The benefits of adopting sustainable procurement
Sustainable procurement practices are not just an option nowadays; it’s vital for success. Consumers are concerned about climate change and they care about how their purchasing process affects the environment and society.
When businesses focus on sustainability, they can win over and keep customers who care about the planet, boosting brand loyalty and market share.
In fact, sustainable procurement helps boost brand value by 15 to 30%. In addition to this, 63% of consumers prefer to buy from companies that are doing their part for environmental responsibility and social impact.
Sustainable procurement can also save money. By making less waste, using effective renewable energy, and ensuring resource efficiency, businesses can cut their costs. These practices can also help avoid problems like resource shortages, price fluctuation, and harm to a brand’s reputation from unsustainable supply chain actions.
Step-by-step guide to building a sustainable procurement policy
Implementing a good sustainable procurement policy needs a clear plan that matches your business goals.
First, you should understand how your current procurement practices work. Then, look for ways to improve them. Next, set clear sustainability goals.
Follow these steps below and your business can develop a clearer, more responsible, and sustainable supply chains.
Step 1: Conduct a baseline assessment of current procurement practices
The first step to sustainable procurement is to look closely at current purchasing methods. This means checking supplier performance based on their impact on the environment and society.
Important factors to evaluate include their environmental policies, carbon footprint, energy consumption, work conditions, and waste disposal practices.
After the assessment is done, find ways to improve. This helps find and reduce any social or environmental risks connected to current purchasing practices.
Step 2: Set clear sustainability goals and objectives
Setting clear and reachable sustainability goals is very important. These goals should incorporate sustainable procurement principles in line with the overall business plan and tackle the biggest environmental and social issues.
Examples of these goals include:
- Reducing carbon emissions from purchasing activities
- Cutting down waste in the overall supply chain
- Supporting fair labor practices in the supply chain
- Increasing the purchase of recycled and sustainable products
To help reach these goals, it’s vital to create an action plan. This plan should have clear timelines, assigned responsibilities, and ways to measure progress. It will guide sustainable practices during all steps of the procurement process.
It’s also key to regularly check and update the sustainability goals and action plan. This helps adapt to changing business needs, new rules, and better practices. This way, you can stay flexible and improve their sustainable procurement processes over time.
Step 3: Integrate sustainability criteria into procurement processes
Integrating sustainability criteria into every step of buying is important. This helps ensure that decisions consider sustainability. It involves creating clear rules to assess suppliers and products based on how they affect the environment and society.
These criteria can include several areas:
- Environmental impact: Carbon emissions, water usage, energy use, waste management, and effects on deforestation.
- Social responsibility: Fair labor practices, human rights, working conditions, and impact on the community.
- Ethical practices: Efforts against corruption, business ethics, transparency, and accountability.
This encourages suppliers to focus on sustainable products and adopt better methods.
Step 4: Engage suppliers on sustainability performance
Engaging suppliers in sustainability is very important for making good changes in the supply chain. This means being clear about what your sustainability goals are, giving training and support, sharing best practices, and working together to lower environmental and social issues.
Building strong relationships with suppliers is key. When there is transparency and trust, everyone is committed to sustainability. It leads to open talks, feedback on how things are going, and working together to solve sustainability problems.
Also, engaging with suppliers helps make the supply chain more transparent.
Step 5: Monitor, report, and improve sustainability outcomes
Monitoring and reporting on sustainability performance are essential aspects of a successful sustainable procurement program. It enables businesses to track progress, identify areas for improvement, and communicate their sustainability efforts to stakeholders.
To effectively monitor sustainability performance, establishing Key Performance Indicators (KPIs) is vital.
Here is an example of KPIs related to sustainable procurement:
| KPI | Description |
| Percentage of sustainable suppliers | Measures the proportion of suppliers that meet established sustainability criteria. |
| Carbon footprint reduction | Tracks the decrease in greenhouse gas emissions associated with procurement activities. |
| Waste reduction | Measures the amount of waste generated through procurement and disposal processes. |
| Supplier diversity | Tracks the percentage of spend with suppliers from diverse backgrounds, including minority-owned, women-owned, and veteran-owned businesses. |
Overcoming challenges in sustainable procurement
While there are many great benefits of sustainable procurement, organizations can face some challenges when trying to implement it.
One common issue is the belief that sustainable products and services cost more money. To change this view, it is important to look beyond short-term costs. Instead, we should focus on the long-term value that comes from saving costs by reducing waste, improving energy efficiency, and lowering risks.
Also, to successfully add sustainability criteria to current procurement processes, companies may need to change their culture and how employees act.
Recognizing and addressing common obstacles
One big problem with using sustainable procurement is that many procurement teams don’t know much about it. This shows how important it is to have good training and education programs. These programs can give teams the skills they need to use sustainable procurement strategies effectively.
Sometimes, people resist change because they worry about having more work or changing their usual processes. To make this easier, it helps to use good change management practices. This means having clear communication, involving all interested parties, and making changes gradually. This can reduce resistance and make the transition smoother.
To deal with these challenges, we need to be proactive, communicate clearly, and offer ongoing support for procurement teams. By building a culture of sustainability and giving the right resources, businesses can get past these obstacles. Then, they can successfully use sustainable procurement practices.
Leveraging technology for better sustainability reporting
Technology is changing the way we do sustainability reporting. Using data tools like DithCarbon can help find patterns and areas that need work that you may not see when looking by hand. This way of using data makes sustainability reports more accurate, clear, and trustworthy. It helps organizations make decisions based on evidence.
Also, many software solutions are made for sustainability reporting. These programs can gather data automatically, make reporting easier, and help meet important standards like the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB).
