12 June 2014 | Jean-Louis Moreau
It was 20 years ago that I first
heard a procurement professional mention “sustainable procurement”. It was linked to the emerging notion of “development that meets the needs of the present without compromising the ability of future generations to meet their own needs,” as defined in the Brundtland report. It was perceived as a nice-to-have for rich companies and incompatible with any cost-reduction plans.
Two decades later, the concept has survived by tying together sustainable procurement and corporate social responsibility. It is much more structured, understood, reported and even rated. Suppliers are now a sustainable source of value that generate benefits beyond the organisation to the economy and society as a whole, while minimising adverse environmental impacts.
Whatever the driver, implementing sustainable procurement should always start with the idea of benefits for businesses. Cost reduction, innovative products and services, better compliance and improved brand reputation are among the incentives of becoming more sustainable.
The next step is to define a policy and obtain sign-off from the board. The business needs to understand why it makes sense to be sustainable and see the value provided by engaging in sustainable procurement. For any organisation aiming for an effective, efficient and sustainable approach to procurement, it is essential to develop an organisational procurement strategy that aligns with both its sustainability and corporate strategy.
The strategy underpinning the policy has to include a clear assessment of the impact of sustainability on the most relevant categories. At execution level, the new strategy should be embedded into the procurement cycle (RFxs, standard documents and specific contract clauses) to ensure that suppliers meet your sustainability objectives. The aim is to stimulate their engagement according to their capabilities, requirements and limitations.
Sustainable procurement is about extracting the best from a contract throughout its lifespan by establishing metrics with clear objectives and improving continuously. Relevant sustainable procurement KPIs need to be inserted into your current procurement and SRM dashboards.
Leading organisations have integrated longer-term sustainability considerations into their strategic sourcing and procurement strategies, policies and processes. The also have invested in their people’s competencies in this area.
The direction of travel to a more sustainable future is clearly set. Sustainable procurement is becoming a necessary and rational business choice. Those organisations who do not engage in this transformation will be undoubtedly disadvantaged. If your organisation has not started the journey to sustainability, as a procurement professional you have to take the lead on this major challenge for the future.
If you don’t do it, who will?
☛ Jean-Louis Moreau
is VP global strategic
sourcing at CAE