Sustainable or responsible purchasing can be a powerful tool for catalyzing a more sustainable economy. While green consumerism has yet to fulfill its potential as a driver of improved social and environmental conditions, B2B (business-to-business) and B2G (business-to-government) procurement can have considerable impact in the economy.
Consider Unilever, which has committed to sourcing 100% of its agricultural raw materials sustainably by 2020, or Marks & Spencer’s Plan A commitment that encourages factories to achieve at least 20% energy reduction by 2015, and the 59 members of the Electronic Industry Citizenship Coalition committed to improving the social and environmental performance of their supply chains. As reported in my September newsletter, the Greater London Authority group of public sector organizations is working to embed responsible procurement across its spend of more than £3.4bn a year on goods and services essential to London.
Ethical Corporation surveyed ethical sourcing leaders in 2010 and found that, over the past decade, sustainable supply chain management has brought the rule of law to tens of thousands of factories, ensured payment of minimum legal wages and helped workers recover millions of dollars in unpaid wages. And that is just on the ethical sourcing side. It doesn’t count environmental procurement or social purchasing (e.g. buying from social enterprises or minority-owned firms).
Organizations find that through sustainable purchasing, risks can be better anticipated and managed, costs can be reduced, efficiency enhanced, brand value can be protected and innovation catalyzed.
Sustainable purchasing is an essential tool for acting on a CSR or sustainability commitment and for creating a sustainability tipping point. I have recently worked on a number of tools and guides on sustainable purchasing, including a “how-to” guide I developed for Credit Union Central of Canada. This guide includes a definition, business case and benefits of responsible purchasing. It also includes components and steps for a sustainable procurement program.
I have also pulled together a list of “critical success factors for sustainable purchasing”. It includes the need to have an organizational commitment and a sustainable purchasing policy.
Organizations find it difficult to measure and report on their sustainable purchasing progress. If that’s your experience, have a look at this high level scan of the approaches 11 organizations took to sustainable purchasing metrics and targets. Approaches vary widely, depending on the priorities of the organization. Metrics include volume of spending with minority suppliers, inner-city businesses, or local suppliers; volume of spending on contracts with sustainable purchasing requirements; and number of suppliers which have signed, received or acknowledged a Code of Conduct that sets a minimum sustainability standard.
It’s still the “wild west” out there in terms of measuring and reporting on sustainable purchasing performance. To help reporters, the Global Reporting Initiative is developing guidelines to improve the quality of supply chain performance disclosure.
