Picture a world where every product and appliance is environmentally friendly, where every supermarket item is fair trade, where corruption is an urban myth and poverty a long-distant memory. Hard to imagine? Technically, it is possible… if everyone adhered to sustainable procurement.
Every purchasing decision we make has an impact on the environment, economy and society, from the energy we use to power our computers to the conditions of the workers who made our clothes. What an organization purchases and who it purchases from can have far-reaching implications, not only on the supply chain and the end consumer, but on the wider community, affected by the different segments of that supply chain.
But what if we stopped to consider the effects of our purchasing decisions? If public- and private-sector organizations took the time to ensure their purchasing reflects broader goals linked to resource efficiency, climate change, social responsibility and economic resilience, we could surely expect to reduce poverty, improve human rights and mitigate our negative impacts on the environment.
The fancy name for this is sustainable procurement, and it means making sure that the products and services we buy achieve value for money with the lowest environmental impact and most positive social results. This is done by considering the environmental, social and economic effects of our purchasing decisions.
Procurement makes up a large part of any organization’s budget. In the public sector alone, it accounts for around 12 % of GDP and 29 % of government expenditure in the member countries of the Organization for Economic Cooperation and Development (OECD). With such figures to contend with, the procurement profession needs to raise its game like never before – and the new ISO 20400 on sustainable procurement can help it do just that.
For the greater good
Inspired by the concept of buying for a better world, many governments and businesses have already embedded sustainable procurement programmes in their day-to-day activities. These contribute directly to the United Nations’ 2030 Agenda for Sustainable Development which includes targets to promote sustainability in private- and public-sector procurement.
Sharing the load
Consumers are also raising their expectations in terms of environmental responsibility and ethical practice, increasingly calling for more sustainable products made from locally sourced materials. For a company to ignore these factors is to risk losing reputation and business.
The act of making sure that each organization and each stage in the supply chain meet certain sustainability targets – plays a vital role in driving change on a broader scale. For the consumer, this can help build a clearer picture of sustainability, and ensure that the onus of sustainable consumption is not placed solely in their hands.
Sustainable procurement also helps build consumer trust in a brand and in the products and services it sells. In time, this can spur demand for further action and even encourage consumers to take action themselves. Because consumers, too, have a responsibility to understand the consequences of their consumption.
For in truth, a company can only really ask a consumer to make a sustainable consumption choice, when it is making sustainable choices itself.
The standard approach
Government, corporate and societal demand for sustainability has grown to the point that it is becoming a core objective for many organizations around the world. While most organizations rely heavily on their supply chains to deliver sustainable products, convincing suppliers and partners to comply with new constraints and to change their culture and practices is nothing short of a challenge. Enter ISO 20400, Sustainable procurement, the world’s first International Standard from ISO to provide guidance on delivering sustainability objectives through the supply chain. By dissecting how sustainability impacts the different aspects of the procurement activity – such as policy, strategy, organization and process – it aims to help companies make better purchasing choices through the implementation of sustainable procurement processes.
Many would correctly point out that sustainability should always have been part of a good procurement strategy. So what does ISO 20400 bring to the table that we didn’t already know? To begin with, the standard does not purport to hand out a “one size fits all” solution, but provides frameworks and management tools that can be applied by all organizations, regardless of sector, size and location. As a matter of fact, the standard is for anybody who contributes to procurement decisions or deals with suppliers. In some organizations, this can include a large number of people who may work in different departments in different countries and across different time zones.
Combining the strengths of sustainable strategy, risk management and more “traditional” procurement, ISO 20400 highlights the pivotal role a supply chain plays between managing sustainability risks and capitalizing on sustainability opportunities. In its section on fundamentals, it discusses the key principles of sustainable procurement, including accountability, transparency, respect for human rights and ethical behaviour, and their vital importance to organizational success. But the standard also uses the core subjects of social sustainability, taken from ISO 26000, Guidance on social responsibility, to help organizations embed their corporate social responsibility strategy throughout the supply chain by applying procurement processes and expertise.
Just as its social responsibility counterpart, ISO 20400 is a guidance standard rather than a certification standard. This means companies cannot be certified for compliance. Instead, the aim is to provide a benchmark for responsible procurement that meets global consensus and has worldwide recognition. And while it doesn’t replace legislation, the standard does provide a baseline for the effective integration of sustainability concerns into the procurement activity and supply chains.
Value in consistency
For a growing number of companies striving for sustainable operation, the new ISO 20400 offers the key to fine-tuning their sustainability achievements and goals. By using the right procurement techniques, organizations can now introduce sustainability principles into their procurement process in a way that delivers value for money. The standard can also help them get ahead of current and future regulatory requirements.
Released early 2017, ISO 20400 is already stirring interest, with companies of all sizes hurrying to implement its good practice. For example, at the official London launch of the standard’s national adoption, BS ISO 20400:2017, developed by BSI, the ISO member for the United Kingdom, leading UK contractor Balfour Beatty was announced as being one of the first to complete the ISO 20400 assessment.
The value of this consistency is often underestimated, but a common understanding of sustainable procurement means organizations worldwide can tread a common path towards higher levels of sustainability. Private and public procurement can go a long way to healing the world of its environmental woes, unethical labour practices and endemic corruption. Even if just a small number of organizations follow the guidance in ISO 20400, the effect through the supply chain would be exponential and make a difference to the world we live in.
ISO 20400 Building the Business Case for Sustainable Procurement in Australia 2019