It’s all about the chain, gang: Procurement the link to sustainable supply chains
Published on September 14, 2017
We are transitioning to a low carbon, circular and inclusive economy. The latest arrival to the party is the procurement department. And none too soon, given the mammoth challenge ahead to make global supply chains sustainable and ethical. If you’re looking to fill your procurement cart with insights on tackling the challenges, read on for information about two tools and a city with a supply chain vision.
There is now an international standard to guide sustainable procurement: the ISO 20400 lays tracks for a sustainable economy. As a member of the Canadian technical committee that advised on the standard, I can confirm it is a robust, comprehensive – and highly ambitious – framework. Supply management teams should benchmark their own practices against this guidance.
Another handy sustainable supply chain tool is the Best Practice Framework for Sustainable Procurement. I worked with the tool’s creator, Reeve Consulting – a leading Canadian advisor on sustainable purchasing – to update it.
This tool profiles next generation sustainable procurement practices such as Risk, Opportunity and Innovation; Supplier Engagement; and Buyer Collaboration as top strategies to proactively identify transition opportunities.
Both tools recognize that effective sustainable procurement goes beyond screening products for their sustainability attributes. It requires measures to incentivize a diverse and socially beneficial supply chain, and to engage suppliers in continuously improving their sustainability impacts. It is through measures like this that companies such as Unilever seek to decouple their negative environmental impacts from their growth, while doubling their social benefits.
While the private sector is making sustainable procurement inroads, so is the public sector flexing its procurement muscle. Recently the City of Mississauga, a large Canadian city that neighbours Toronto, adopted a Sustainable Procurement Policy and Plan modeled on these best practice tools. Its new sustainable purchasing policy and plan leads the way in several areas. The City of Mississauga:
Commits to a visionary long-term ambition for its supply chain
Social, economic and environmental sustainability is fully embedded in our procurement practices. We have a diverse, inclusive and fairly-paid local supplier base which benefits from our collaborative approach, with new sustainable practices that create value for our suppliers and their customers. Our procurement is a catalyst for social and environmental innovation leading to a low carbon, circular and inclusive economy.
Adopts transformational sustainable procurement policy provisions
- Consider all costs and impacts: Consider the total cost incurred over the Goods or Service life (“Total Cost of Ownership”), value for money achieved (“Best Value”) and the lifecycle benefits and impacts on society, the environment and economy resulting from procurement activities (“Lifecycle Cost”), and seek to be proactive in preventing potential short and long-term environmental and social risks.
- Collaborate and influence: Collaborate with peer organizations to achieve Sustainable Procurement objectives in our shared supply chains. Encourage and support suppliers to continually improve their sustainability practices and outcomes, and the sustainability impacts of their Goods and Services and supply chain.
- Consider procurement alternatives: Seek to reduce demand through efficient use. Consider possible alternatives to buying new Goods, including reuse, sharing between divisions, refurbishing, appropriate order quantity, leasing rather than buying, and consider dividing large and multiple category contracts to provide greater access to bidding opportunities for suppliers of all sizes.
- Address social opportunities: Consider purchasing Goods and Services from social enterprises, which provide employment and training for youth and people with employment barriers (e.g. people with disabilities, new immigrants, chronically unemployed, ex-offenders, etc.); and from suppliers that demonstrate best practices in workplace diversity, inclusion and accessibility (e.g., women, indigenous, minority-owned businesses or businesses owned by persons with disabilities).
These four commitments underscore the City’s innovative approach to fostering an inclusive, circular and low-carbon economy. For more details, check out the City Council sustainable procurement report adopted last June.
In embracing this program, the City joins other leading municipalities across Canada endeavouring to catalyze $65 billion a year on local government and school district procurement – about 5.4 percent of GDP. With international standards, benchmarks and best practice organizations such as the City of Mississauga, procurement departments now have the tools at their disposal to scale and accelerate the new sustainable economy.
Nine billion people living well within the boundaries of the planet by 2050 depend on it.