Introduction:
Sustainable procurement is essential for companies with environmental and social aims. As sustainability becomes more important worldwide, businesses are realising that procurement methods affect emissions and resource use. Sustainable procurement entails more than just purchasing eco-friendly products; it demands a holistic approach that incorporates environmental and social factors into every step. The six stages in this article will help organisations adopt sustainable procurement strategies to meet their sustainability goals and manage modern supply chain difficulties.
How procurement affects sustainability?
Procurement can also greatly impact the organization’s emissions. This shows why procurement is going green:
- Scope 3 emissions comprise 70–80% of total emissions. Google has 93%, Shell 88%, and Microsoft 97% (Forrester, 2021).
- Sustainability boosts revenue, brand value (15-30%+), and risk reduction (9-16%) (Ecovadis, 2020).
- Other research shows that high-performing CPOs prioritise CSR problems 13-44% more than others, especially environmental protection (Deloitte, 2021).
- Company-wide CSR efforts boost employee satisfaction and attract top talent (Greener Ideal, 2020).
These 6 stages promote sustainable procurement.
1. Set priorities
Your top sustainable procurement priority? Why measure your sustainability performance? Do customers/investors/suppliers need it? How about your present and future staff?
These questions help you determine direction, method, and accuracy. You might benchmark with your counterparts by reviewing their CDP or annual sustainability reports.
Industry-specific criteria are common. However, starting your sustainable procurement journey requires time and resources, so you must want to do it.
2. Create a business case
Building your business case requires knowing your needs and limits.
Understanding how large a challenge we face is essential to understanding your demands. Imagine you’re Google or Microsoft. Your scope 1 emissions—from manufacturing, for example—are likely low, but your scope 3 emissions are likely high.
Spend analysis lets you decide how to continue in different categories or geographies. Identifying “hot spots” and prioritising your efforts can help since a few vendors may account for most of your cost. These providers may also contribute significantly to your emissions.
Step two is knowing your limits. What data and resources do you have? A sophisticated procurement analytics tool makes monitoring sustainability performance easier than aggregating thousands of transaction rows in Excel. Do you have the skills or resources to master this process or find a solution?
3. Setting goals in sustainable procurement process
Your ultimate goal? Become carbon neutral, net zero? To engage suppliers, understand sustainability activities, and be more responsible?
Setting goals and comparing them to others gives your sustainability plan significance, whether it’s supplier or category-focused. It also shows if you’re on track.
Setting a baseline is crucial for category-level emissions reporting. Calculate spend data and combine it with emissions parameters.
Doing this in-house can be tiresome. Thus, collaborating with a company that controls spend data and can combine it with emissions data will save you hours and tears.
The scorecards and procurement statistics help you identify high-impact vendors to work with.
4. Enlist others in collaboration sustainable procurement
Your organisation prioritises sustainability, but why? Your ESG, marketing, management?
Procurement frequently plays a vital part in sustainability, although it is not the main driver.
Think about collaborators. To grow and see the complete picture, you may need to brainstorm with a partner outside your organisation, someone from another function, or even a competitor.
Sustainable procurement’s future is supplier partnership. Invite your suppliers to join your sustainability efforts.
5. Track your sustainability.
Unless you measure your sustainable purchases, the preparation procedures are useless. Simple procurement sustainability reporting is desired.
- some sustainability KPIs (like carbon footprint),
- which domain specialists, authorities, and the public trust (possibly third-party audited),
- comply with reporting systems like the GHG protocol
- cover spend categories and sources well
- Finally, provide impactful sustainability insights.
How to get precise Scope 3 emissions:
- Increasing primary data availability and quality (e.g., primary supplier data collection and verification)
- Use high-quality secondary data (industry emissions factor averages assist obtain the big picture). Additionally, adding the manufacturing site to secondary data improves accuracy.
- Identifying the most important suppliers in supply chain or category emission hotspots.
Scope 3 emission indicators
- Supplier scorecards: scorecards to evaluate your suppliers. The supplier or an outside party evaluates. These scorecards assist identify risks, highlight supplier disparities, and aid tactical sustainability sourcing. However, supplier scorecards lack significant coverage and category or product-specific views.
- Category indicators show category emissions. Spend data and sustainability data from Ecoinvent, Exiobase, or OpenLCA are used to estimate emissions. Category risk management benefits from this method. It emphasises category effect and strategic sustainability. However, this approach requires at least the manufacturing site and may lack supplier specificity if primary data is scarce.
6. Sharing information internally and publicly in sustainable procurement
Unless used, your findings and insights are like buying beach sand. How can you use results to make business decisions?
In an ideal world, we would consider sustainability and economic consequences when choosing a new supplier or transportation route.
That requires the right people to have these insights. Sustainability analytics helps share data across the company.
For external stakeholders, try including sustainable procurement data into annual reports, creating a separate part, and using it to communicate with customers and investors.
Take action now.
Sustainable procurement is a process. The real labour begins when you evaluate suppliers or measure pollutants.
One thing is certain: sustainability will be the standard of the future, so act today.
Conclusion:
Finally, sustainable procurement is a required change towards more responsible and impactful company operations, not just a trend. The six stages below can help organisations integrate sustainability into their procurement processes, improving environmental performance, supplier relationships, and efficiency. These practices will help firms address stakeholder and regulatory pressure to operate responsibly and position them as leaders in the transition to a more sustainable economy. Integrate sustainability into your buying strategy now to create a greener, more responsible tomorrow.
