By Shaun McCarthy, February, 28 2014. Supplymanagement.com
I am writing this from the lounge at Heathrow Terminal 5 waiting to board a flight to Brazil. I will be spending the next four days negotiating the content of an ISO standard for sustainable purchasing with representatives from 16 nations. I have tried to set out the key principles we will be negotiating. Wish me luck!
Using procurement to deliver sustainable outcomes
The document should consider procurement as a strategic process and a way of delivering business objectives through a supply chain. The standard needs to set out how sustainability objectives of an organisation are addressed at the early stage of the procurement process through strategic procurement techniques such as market analysis, forward commitment, life cycle assessment, risk management, whole-life costing, scenario modelling, social return on investment and more.
Focus on impacts material to the procurer
The sustainability requirements of an organisation need to be clearly defined and materiality understood in consultation with stakeholders. This aligns well with the GRI reporting process. We do not agree that the ISO 26000 principles should be prescribed. They are one (good) example but may not be applicable to all procuring organisations.
‘Sustainable supply’ not ‘sustainable supplier’
The focus of the standard should be on sustainable supply, not sustainable supplier. This means using procurement techniques to deliver the outcomes required by the buying organisation’s corporate responsibility objectives or policy outcomes for public sector. It should not primarily focus on the sustainability practices of the supplier in their own organisations unless this represents a risk to the purchasing organisation (e.g. labour standards).
Prioritisation should be of the essence to the standard. Sustainability impacts and risks should be mapped against categories of supply and high priority impacts/categories should be addressed first. This should be done with a wide range of internal stakeholders, also taking into consideration corporate policy and external stakeholder requirements. This is clearly set out in BS 8903.
Demand management should be key to the standard. The most sustainable way to procure is not to buy at all or to keep demand to a minimum by operating the business more efficiently. There needs to be an organisational link between procurer and user of goods, works and services.
Embedding sustainability into current procurement practice
It is important for the standard to address achieving more sustainable outcomes through the current procurement practices of an organisation. It is not telling you to buy better, it should set out how to deliver sustainability through a variety of procurement processes for all sizes and types of organisations.
Tier one is not the only one
The standard is not just about the first tier of suppliers. It must reference management of the overall supply chain where there are often significant risks (such as labour standards) or opportunities (for example positioning local SMEs in lower tiers of the supply chain).
The process should encourage innovation related to more sustainable goods, works and services, through effective market research and use of outcome specifications.
Develop a competitive, sustainable supply chain
There should be emphasis on maintaining or improving the competitive market. For example, if a supplier with lower sustainability capacity is selected for other commercial or technical reasons, they should be required to develop a programme of work to improve during the contract. This will improve the pool of competitive suppliers who can deliver sustainable outcomes.
Full and fair opportunity
Local procurement, minority businesses, SMEs etc. are often significant stakeholder priorities and should be supported through the supply chain where appropriate. However, this needs to be set in the context of full and fair opportunity and not positive discrimination.
☛ Shaun McCarthy is director at Action Sustainability