Sustainable procurement is an essential practice that organizations must adopt to meet the demands of an increasingly environmentally and socially conscious society. The need for sustainable procurement arises from the fact that the way we produce and consume goods and services has a significant impact on the environment and society. The traditional model of procurement, which focuses solely on cost and quality, is no longer adequate in today's world, where the impacts of climate change, resource depletion, and social inequality are becoming more and more apparent.
Procurement practices can significantly impact an organization's reporting of greenhouse gas (GHG). Procurement involves acquiring goods, services, and works, which can, directly and indirectly, impact an organization's emissions. The severity of impact depends on various reporting standards that an organization follows.
An example of the impact of an organization's procurement practices on GHG reporting standards can be seen in the transportation of goods.
Let's consider a retail company that procures goods from suppliers located in different parts of the world. The company is required to report its greenhouse gas (GHG) emissions under the GHG Protocol Corporate Standard. The company's direct emissions, such as emissions from its own operations, would be relatively low, but it would be required to report on a portion of its indirect emissions as well.
One of the indirect emissions the company would need to report on would be emissions from the transportation of goods. As the company procures goods from suppliers in different parts of the world, it would need to report on these goods' emissions from the shipping and air freight. The company can work with its suppliers to estimate the emissions from transportation and include them in its GHG reporting. By considering the impacts of transportation on emissions, the company can improve its GHG reporting and reduce its environmental footprint.
The procurement practices of an organization can have a significant impact on its GHG reporting. By considering the effects of procurement on emissions and implementing sustainable procurement practices, organizations must improve their GHG reporting, reduce their environmental footprint, and contribute to the global effort to mitigate climate change.
In this blog, we'll go through a set of best practices that will enable organizations to take necessary steps towards sustainable procurement. It includes:
1. Measuring and reporting on sustainability performance: (4-6 weeks)
The foundation of organizational sustainability is measuring and reporting on their sustainability performance, both internally and externally, to track progress and identify areas for improvement. Just as a house built on sand is vulnerable to collapse and destruction, sustainable procurement without knowing accurate emissions data is prone to collapse.
2. Developing a sustainable procurement policy: (4-6 weeks)
Organizations should develop a sustainable procurement policy that sets out the principles and objectives of their sustainable procurement program. This policy should be aligned with the organization's overall sustainability goals and objectives.
3. Conducting a sustainability assessment of suppliers: (4-6 weeks for existing suppliers & ongoing)
Organizations should regularly assess their suppliers to evaluate their environmental and social performance. This can include evaluating suppliers on their environmental and social policies, emissions, energy use, and labour practices.
4. Incorporating sustainability criteria into procurement decisions: (3-5+ months)
Organizations should develop a evaluation model which incorporates sustainability criteria into their procurement decisions, such as the environmental and social performance of suppliers, the energy efficiency and lifecycle of products, the waste and emissions associated with transportation and disposal, and the carbon offset cost to stay on track with net-zero goals.
5. Encouraging supplier innovation: (continuous process)
Organizations can encourage their suppliers to develop innovative products and services with lower environmental impacts by providing incentives for sustainable practices.
6. Communicating and collaborating with suppliers: (continuous process)
Organizations should communicate their sustainability expectations to their suppliers and collaborate to improve their environmental and social performance.
7. Continual improvement:
Organizations should continually review and improve their sustainable procurement practices to ensure that they align with the latest sustainability standards and regulations.
By implementing these best practices, organizations can ensure that their procurement practices are aligned with their overall sustainability goals and contribute to the broader sustainable development goals. Sustainable procurement practices can also help organizations improve their reputation, reduce costs and risks, and comply with regulations and standards.
In Corporate Sustainability today, things are easier said than done, especially as there is still much unclarity on many things, such as reporting standards, governmental policies, etc. While the business focuses on what it does best, there is only a handful of activities most organizations can execute on the sustainability front. The game is the plan and prioritize. Consultants can bring a wealth of knowledge and expertise to organizations regarding sustainable procurement and help organizations identify opportunities, set goals, implement sustainable procurement practices, and measure performance. However, in the end, it boils down to basics – How your business sees Sustainable Procurement; a global sustainability challenge, or a reporting mandate.
Prateek Khanzode
Sustainability Enthusiast
P.S. I would love to know your thoughts. Feel free to drop a comment.