Sustainable procurement

Sustainable procurement (or Green procurement) is a spending and investment process typically associated with public policy, although it is equally applicable to the private sector.

Organizations practicing sustainable procurement meet their needs for goods, services, utilities and works not on a private cost–benefit analysis, but with a view to maximising net benefits for themselves and the wider world.

In doing so they must incorporate extrinsic cost considerations into decisions alongside the conventional procurement criteria of price and quality, although in practice the sustainable impacts of a potential supplier's approach are often assessed as a form of quality consideration. These considerations are typically divided thus: environmental, economic and social (also known as the “triple bottom line").

Sustainable procurement involves a higher degree of collaboration and engagement between all parties in a supply chain. Many businesses have adopted a broad interpretation of sustainable procurement and have developed tools and techniques to support this engagement and collaboration.

Exogenous considerations: the “triple bottom line”

Procurement – the letting of contracts for goods, works and services on the best possible terms – has historically been based on two criteria, price and quality, with a view to maximising benefits for the procuring organisation.

Sustainable procurement broadens this framework to take account of third-party consequences of procurement decisions, forming a "triple baseline" of external concerns which the procuring organisation must fulfil.

Environmental

Environmental concerns are the dominant macro-level justification for sustainable procurement, born out of the growing 21st century consensus that humanity is placing excessive demands on available resources through unsustainable but well-established consumption patterns. these will involve non human factors.

This is a sufficiently influential issue that environment-centric procurement (green procurement) is sometimes seen to stand alone from sustainable procurement. The most straightforward justification for green procurement is as a tool with which to address climate change, but it offers the broader capacity to mitigate over-exploitation of any and all scarce resources.

Examples of green procurement range from the purchase of energy-saving light-bulbs to the commissioning of a new building from renewably sourced timber via organic food being served in a workplace canteen. The ultimate green procurement is the avoidance of the purchase altogether.

In support of Sustainable Development the organization should develop and publish a 'Sustainable Development Procurement Guidelines and Procedures'. When it comes to purchasing products or services, referral to these guidelines would help make the organization become a leader in environmentally responsible purchasing.

Social

Sustainable procurement is also used to address issues of social policy, such as inclusiveness, equality, international labor standards and diversity targets, regeneration and integration.

Examples include addressing the needs – whether employment, care, welfare or other – of groups including ethnic minorities, children, the elderly, those with disabilities, adults lacking basic skills, and immigrant populations.

Economic

On a macroeconomic level, it can be argued that there are economic benefits in the form of efficiency gains from incorporating whole-life costing into decision-making. [Note: in contrast to most arguments from sustainable procurement proponents, these can be purely private benefits accrued by the procuring organisation.]

In addition, the creation of sustainable markets is essential for long-term growth while sustainable development requirements foster innovation. There are also potential global applications: sustainable procurement can favour fair trade or ethical practice, and allow extra investment to channelled towards developing countries.

On a microeconomic level, sustainable procurement offers the chance for economic redistribution. Targets might include creation of jobs and wealth in regeneration areas, or assistance for small and/or ethnic minority-owned businesses.

Applications

Central government

In central government, sustainable procurement is typically viewed as the application of sustainable development criteria to spending and investment decisions. Given high-profile socio-economic and environmental concerns such as globalisation and climate change, governments are increasingly concerned that our actions meet the needs of the present without compromising the needs of the future.

The UK in 2005 pledged to be a performance-leader in sustainable procurement by 2009 and commissioned the business-led Sustainable Procurement Task Force to formulate appropriate strategy. Broad-based procurement strategies are prominent across the EU while it is an increasingly influential concern elsewhere, most notably Canada.

The US federal government requires certain green procurement practices in its buildings and supports the wide and inclusive use of them. The General Services Administration, an independent establishment and government corporation, is responsible for promoting green procurement and provides federal agencies with selling and purchasing guidelines and suggestions. Green procurement is primarily done by federal contracting personnel and program managers – but it is not restricted to such professionals.

Devolved and local government

At market-level, sustainable procurement is typically instrumental: authorities seek to address policy through procurement.

Government departments and local bodies can use procurement to address certain chosen agendas in buying solutions that will contribute to community or environmental goals, or to diversity or equality targets.

To help local governments improve sustainability and reduce environmental impacts the California Sustainability Alliance, has developed a Green Procurement Toolkit. Green procurement can help local governments save money, create local green jobs and improve their environmental sustainability.

Under sustainable procurement criteria any procuring organisation must therefore take a broad approach to sustainability, reflecting localised economic, environmental and social needs as well as cross-cutting sustainable development strategies such as Life Cycle Assessment.

ICLEI is a membership organization of local governments who recognize the power of Public Sustainable Procurement to achieve environmental, social and economic benefits. It encourages Public Procurement of Innovation as a means for achieving sustainability. Among its various activities, it offers a Sustainable Procurement Resource Center and a Procurement of Innovation Platform which can be used by procurers or by anyone interested in these topics.

Private sector

Sustainable procurement is as applicable to the private sector as the public sector, and certainly its proponents aspire to seeing its application across all areas of the economy. Influencing procurement practice within a private-sector firm is not straightforward for governments, meaning that the companies themselves often have to be self-motivated to embrace sustainability.

The UK's Sustainable Procurement National Action Plan argues that it is "something the best of the private sector is already doing – whether through enlightened leadership or shareholder pressure". It also argues that government purchasing power (circa £150bn in the UK alone) can apply sustainable procurement principles to present a persuasive case to those in the private sector resisting sustainable procurement practice.

Policy development

On December 8, 2006 the Greater London Authority became the first public-sector body to publish a sustainable procurement policy, promising to award a “distinct competitive advantage” to those companies which demonstrated a commitment to sustainable procurement concerns. The policy reflected the Mayor's enthusiasm for public procurement as a tool for fostering social inclusion, equality and environmental objectives.

The GLA also stated that their policy was "very much as a model for broader government procurement" but this expectation was not fulfilled in the UK Government's Sustainable Procurement Action Plan, published on March 5, 2007. The Action Plan, which incorporated answers to the Sustainable Procurement Task Force, was explicitly environment-oriented in approach (Ch 4.3) with wider social issues scarcely addressed.

This was perhaps surprising, as was press disinterest in the publication. Despite its acknowledged importance among senior politicians and business leaders, publication of the Action Plan received only one national newspaper report, and that was markedly flippant in tone.

Approaches

While there is no strict definition on how organisations implement sustainable procurement, there are two approaches that can be combined:

Product-based

This is where an organisation examines a products movement along the supply chain and assesses the environmental credentials of themselves and of their suppliers. This path is commonly used when an organisation wishes to understand the impact of a product or product range for strategic and marketing purposes. This approach can also provide a vivid picture of supplier processes.

Supplier-based

An organisation may analyse the CSR management systems of a supplier and whether its practices conform with law and with the CSR standards of "buying" organisation. Thus, the organisation measures the environmental and social risk a supplier may impose upon them. Implemented effectively, this method will show whether a supplier meets the environmental standards of the organisation, along with whether suppliers are meeting the requirements of law. In order to assess the CSR Management systems companies can use a variety of tools :

• self-assessment questionnaires
• on site audits programs managed internally or through 3rd parties.

See also

• Sustainable development
• Triple bottom line

External links

• Sustainable Procurement Task Force
• Mayor of London, the London Assembly and the Greater London Authority
• ICLEI Europe Sustainable Procurement Department
• Serco Institute Resource Centre: Sustainable Procurement publications
• European Union Green public procurement (GPP)
• Buy Smart – Information about green procurement
• Switzerland [1]
• British Standard 8903. Principles and framework for procuring sustainably. Guide.
• UNEP [2]