Integrate Sustainability all along the operational sourcing process - BASIC

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EFFORT
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IMPACT
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Sustainable procurement is the integration of Corporate Social Responsibility (CSR) principles into your company’s procurement processes and decisions while ensuring they still meet the requirements of your stakeholders. To be successful in your sustainable procurement journey,  it is recommended to:

  • Build a sustainability procurement team and provide training about climate change, sustainable procurement etc..
  • Define your procurement policy. See TMI article on this matter.

Then to have a relevant impact,  the conventional procurement process needs to be enhanced with sustainability-related activities:

Internal Spending & Market Analysis: In addition to the "standard" activities, it is necessary to ensure sustainability transparency throughout the supply chain (tier 1, tier 2, etc.), assess supplier sustainability, define sustainability targets by category and qualify sustainable suppliers.

Tender management: This should include incorporating sustainability questionnaires and assessments into tender documents, as well as analysing and validating suppliers based on their sustainability maturity.

ESG screening & ESG assessments: ESG screening is applicable or new suppliers at the pre-qualification step. For existing suppliers, it is recommended to conduct ESG assessments (in house, EcoVadis). The objective is to measure the integration levels of environmental, social and governance sustainability principles in the organisation's strategies, policies, and activities of your suppliers.

Negotiation & contract awarding: Sustainability targets should be included in supplier negotiations, sustainability performance should be considered in supplier selection, and sustainability key performance indicators (KPIs) should be included in contracts.

Implementation: Once supplier selection has been communicated, ERP systems (suppliers, prices, products/services) updated and operational implementation initiated, it is crucial to monitor sustainability performance through regular audits. This should be integrated into the supplier evaluation process.

ISO 20400:2017, titled "Sustainable Procurement - Guidance," is an international standard issued by the International Organization for Standardization that provides organizations with a framework to integrate sustainability into their procurement processes.

51%

of global businesses have existing sustainable procurement policies and practices which contributes to the resilience of their value chains.
(Stanford Business School - 2023)

48%

of Global Companies experience pressure to embrace greener procurement processes.
(procurement tactics - 2023)

ADDITIONAL RESOURCES

- How to write a sustainable procurement policy

- in 2024, Singapore's National Sustainable Procurement Roundtable published  a supplier's guide to sustainability, which provides comprehensive sustainability principles and guidelines for implementation in procurement.