In the past, procurement was primarily concerned with cost reduction, and pursued it with the blinkers on. But attitudes have changed, and procurement is now seen as one of the key weapons in the fight against climate change.
How should it be used? Is it realistic? And can procurement ultimately serve two masters – cost reduction and the planet? We believe the answer is yes.
The dogged cost-reduction attitude has played a role in the current climate crisis; the way of doing business traditionally meant that concerns like pollution or employee welfare weren’t always at the top of the list but commercial priorities are changing to focus on sustainability.
While the notion that sustainable procurement alone can save our planet might seem ambitious, it certainly plays a pivotal role in driving positive change. Procurement drives demand which in turn signals to suppliers to change their products, services, and processes.
Procurement is a piece of a larger puzzle that includes reducing individual consumption, shifting to renewable energy sources, and implementing stronger environmental policies. When combined with these efforts, sustainable procurement can indeed contribute significantly to saving our planet.
For example, a study conducted by McKinsey & Company found that companies adopting sustainable procurement practices reduced their greenhouse gas emissions by up to 20%. If more organizations were to implement similar strategies, the cumulative impact could be tremendous, taking us a step closer to mitigating climate change.
What is sustainable procurement?
Sustainable procurement is a strategic approach to purchasing goods and services that considers the environmental, social and economic impacts throughout the entire supply chain. It involves selecting suppliers who prioritise sustainable practices, such as minimising carbon emissions, reducing waste and promoting ethical labour conditions.
Sustainable procurement aims to minimise negative environmental and social impacts while maximising long-term value. It encompasses factors like life cycle assessment, circular economy principles and collaboration with suppliers to drive innovation and responsible sourcing. By integrating sustainability into procurement decisions, organisations can contribute to a more sustainable future while still achieving their business objectives.
6 ways sustainable procurement can save the planet
Procurement, as a strategic function within organisations, has the potential to contribute significantly to sustainability and environmental conservation efforts. While procurement alone cannot single-handedly save the planet, it can play a vital role in driving positive change and promoting sustainable practices across the supply chain.
Here are ways in which your sustainable procurement practice can contribute to environmental conservation.
- Prioritise Sustainable Suppliers: Procurement teams can prioritise suppliers who adhere to environmentally friendly practices, such as using renewable energy sources, reducing waste and minimising their carbon footprint. By selecting sustainable suppliers, procurement can help drive demand for eco-friendly products and services.
- Collaboration with suppliers to create sustainability: Perhaps there isn’t the sustainable suppliers out there to choose from or you’d rather source from a supplier’s sustainability game isn’t what it should be. Consider working closely with your suppliers to foster innovation and develop more sustainable solutions. Encouraging suppliers to adopt sustainable practices, develop greener products and reduce their environmental impact can have a cascading effect throughout the supply chain.
- Life cycle assessment: Don’t just look one step back in your supply chain. You need to consider the entire life cycle of a product, from raw material extraction to disposal, when making sourcing decisions. By assessing the environmental impact at each stage, procurement teams can select products and services with lower carbon emissions, reduced waste generation, and better end-of-life management.
- Circular economy practices: This is part of life cycle assessment but worth a point on its own. You need to look forward to see what happens when your products or services are in the hands of your customers. The circular economy is a big part of sustainable procurement and perhaps one supplier is better at contributing to this than another. It involves sourcing products and materials that are designed for durability, reuse, repair and recycling. Favour suppliers that embrace circular economy principles, procurement can reduce waste, conserve resources, and minimise environmental degradation.
- Ethical considerations: A big factor in your own brand goals and management is prioritising suppliers who uphold ethical practices that are in sync with your ethical and cultural brand position, including fair labour conditions and responsible supply chain management. You need to do your research. The unknowns in your supply chain represent not only represent a sustainability risk but also a big risk to your brand and therefore your revenue.
- Data-driven decision-making: Procurement can leverage data and analytics to measure and monitor the environmental impact of suppliers, products and services. By tracking key performance indicators related to sustainability, procurement can identify areas for improvement and drive continuous progress.
Doesn’t sustainable procurement cost more?
This is a common misconception. The assumption is sustainable initiatives compete with cost-cutting ones, instead of working alongside them. One of the main reasons why people fall for this falsehood is the upfront cost of many sustainable procurement initiatives. For instance, a printer that uses less power may cost more upfront but will be cheaper over its lifetime. Similarly, smaller, local suppliers may not be able to offer you the same rates as bigger, multinational companies, but they are typically more agile, have cheaper transportation costs and attract the right stakeholders to your organisation.
Procurement has traditionally been seduced by the upfront cost; it’s time to take a more long-term view.
Sustainable procurement needs to be culturally embedded
Sustainable procurement requires a shift in mindset. Priorities have to be explicitly detailed and then embraced by all workers at every level. There’s no use implementing a paperless office if workers are still going to print out hard copies of purchase orders because it’s what they’ve always done. They have to know that the organisation is serious about these initiatives and not simply paying lip-service to appease stakeholders.
The procurement team needs to feel empowered to chase the best deals that also embrace sustainable principles, and this can only be achieved if they know they have the full support of management. Attracting the right stakeholders or collaborating with like-minded businesses in the supply chain won’t happen if efforts at sustainable procurement are half-hearted.
We are your sustainable procurement consultants
Sustainable procurement requires the right software, the right workers with the right training, and the right culture. It requires a business-wide adoption, and that’s precisely what we’ve helped numerous businesses achieve. We’ve seen what works and the most efficient methods of implementation based on the size and needs of the client.
Sustainable procurement can save the planet and strengthen your organisation. Call us now to find out how.
