The Benefits of Sustainable Procurement for your Business

Posted on 27th June 2019

Sustainable procurement is a hot topic for businesses. Social media is rampant with indignant customers rightly calling out companies for unethical business practices, such as clothing brands not paying workers a living wage. The Government has even pledged to create a database of supply chain modern slavery statements to help tackle modern slavery in both private and public sector supply chains.

An increase in regulations and consumer awareness has put sustainable procurement firmly on the boardroom table for strategic consideration. If you are a customer-facing company, taking a proactive approach to improving the visibility of your business practices and accountability of your suppliers is critical to protecting your brand’s reputation.

What is sustainable procurement?

Sustainable procurement is buying goods and services for your business that are environmentally friendly, ethical and responsible. It includes maintenance and disposal (where applicable) as well as the initial purchase. Your procurement decisions should benefit your customers, society and the environment and your business. Elements of sustainable procurement include: 

•            Reducing negative impacts on local communities and the environment

•            Ensuring your supply chain upholds the same standards as your business

•            Managing supply chain risk effectively, for example, supply chain visibility and fair labour practices

•            Managing your supplier contracts successfully

•            Managing demand for your good and services 

The benefits of sustainable procurement

Sustainable procurement starts with a positive partnership with your suppliers. Building trust and monitoring performance and compliance effectively can lead to more profitable relationships with your suppliers and reduced costs for your business. Benefits can be split into two groups: benefits to your company and benefits to the wider community and environment.

Business benefits

•            Improved reputation amongst customers and across your business sector

•            Reduced costs through recycling, using more efficient products and services

•            Effective risk management

•            Qualify for favourable loans, business support or tax relief

•            Improve your chance of winning business with your enhanced sustainability standards

•            Attract like-minded investors

Benefits for the wider community and environment

•            Reduced waste through recycling

•            Improve working and living conditions by sourcing fair trade products and avoiding purchasing goods and services from companies that don’t adhere to sound purchasing or production practices

•            Reduced carbon emissions by using energy-efficient appliances and renewable energy

•           Reduced use of natural resources by purchasing goods and services using recycled materials

Guidelines and Accreditations

If you provide goods or services to or work in the public sector, you will have to adhere to the Government’s sustainable procurement legal framework, which focusses on value for money to organisations and society and minimising environmental damage. It stipulates buying standards, provides training on sustainable procurement and tools to help companies procure sustainably.

Businesses who want to demonstrate their commitment to overall sustainability publicly can undertake accreditations such as ISO 14001, which provides an environmental management framework or enhance their green credentials by taking the Green Growth Pledge.

How technology can provide better insight into your supply chain and support sustainable procurement

Using procurement software can help you show a strategic commitment to sustainability and ensure you incorporate your company ethics and principles into your purchasing decisions. Before you begin any purchasing process, you can build sustainability into business case approval and ensure you realise the expected social, ethical or environmental value in the resulting contract using procurement pipeline management

By including evaluation criteria relating to sustainability in the tender process, you can ensure you choose suppliers who adhere to both your standards and any regulatory requirements for sustainability in their sector. A tender management module in your procurement software will allow you to create custom evaluation criteria, so you only consider suppliers who meet your sustainability requirements. The software also provides a communication portal and an audit trail of all activity relating to each potential supplier.

Once you have chosen your suppliers, the importance of having visibility of your supply chain cannot be understated. Ensuring they source their products sustainably and that they are consciously working to minimise their environmental impact will only be possible if you manage your suppliers effectively. Using supplier relationship software helps you to manage risks and improve visibility of supplier performance. Using automatically generated reports, you can ensure your suppliers are performing according to agreed standards and communicate with them directly from a supplier portal. The software will allow you to profile your suppliers using risk criteria, for example, compliance with the Modern Slavery Act, and set up periodic checks to ensure regulatory compliance. 

If you’d like to find out more about procurement software or sustainable procurement, Atamis can help.

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