Sustainable Procurement – part 1 of a new series

Inspired by seeing just how much profile the topic got from an impressive range of speakers at the recent Procurement Leaders event, we’ve decided to make June ‘sustainable procurement month’ here at Spend Matters.

We’ll start today with an overview, then look in more detail at the different elements of the topic. Later this month, we’ll have some interesting case studies, with guest writers, and we’ll finish off with some discussion of whether the procurement profession could and should be doing more in this area.

We’ll also try to ask some challenging questions. Should individuals promote their own personal views? Is it all marketing Bulls*** for most organisations? Is it really just about good, competent procurement – with some trendy branding on top? As usual, our aim is to be useful and interesting; but also thought-provoking.

But to put it in perspective, let’s start with this question – how does sustainable procurement fit with Corporate Social Responsibility (CSR)?  CSR covers a wide range of issues – I still think of it in Mars Group terms where one of the five principles of Mars was, and still is, “mutuality”.  Here's the Mars take on that.

A mutual benefit is a shared benefit; a shared benefit will endure.

We believe that the standard by which our business relationships should be measured is the degree to which mutual benefits are created. These benefits can take many different forms, and need not be strictly financial in nature. Likewise, while we must try to achieve the most competitive terms, the actions of Mars should never be at the expense, economic or otherwise, of others with whom we work.

Our Mutuality Principle has guided us reliably as we have established successful enterprises in new geographies and cultures. It has enabled us to act as a good corporate citizen, to minimize our impact on the environment and to use the natural resources of our planet wisely and efficiently.

That means, simply, that everyone who comes into contact with the firm should benefit from that association. That includes supply chain, customers, consumers, local residents near Mars’ premises, Mars pensioners and ex-staff. It's evident how that covers CSR issues such as being a good corporate citizen, from trying to improve conditions for workers in the Cocoa industry to supporting local charities in Slough. I’m not claiming for a moment Mars is perfect; but this principle has been in place since long before CSR was on everyone’s radar.

We can then look at ‘sustainable procurement’ as being the subset of CSR that relates to activities in the supply chain.  The word 'sustainable’ tends to make us think immediately of environmental issues, but generally accepted definitions and practice suggest there are three sub-headings within sustainable procurement; Environmental, Social and Economic.

Within the heading of ‘environmental' sustainability falls much that arguably is just‘good procurement’.  The profession, or at least the better practitioners, have for many years looked at whole life costs rather than simple price. That of course fits well with consideration of energy or other running costs and end of life costs.  Buying timber-based products from sustainable sources has long-term supply chain risk benefits; but when we get into carbon trading we move into less charted waters.

Social sustainability covers issues such as labour and employment in the supply chain (elimination of child / slave labour), and promotion of equal opportunities for minorities, females or disabled people in the workforce.

The most difficult to get your hands around is probably economic sustainability.  This gets into ‘local purchasing’ (as we heard from Anglo American at the recent Procurement Leaders event), and promotion of small or innovative business. There’s clearly an overlap with ‘social’ here; we might see supporting small minority owned suppliers as fitting into both categories.

So having defined what we’re talking about, in the next post we’ll  get a little more controversial and ask the big “why” question.  Why bother with all this? Is it really worth it for organisations and procurement?

First Voice

  1. Mark Hubbard:

    I keep hearing ‘sustainability’ being used, including a number of discussions at Exeter University Business School. I have reached a position which aligns pretty much with Peters view here. I have boiled it down to ‘how do we continue to maintain supply while taking account of all the macro-economic pressures’ (which, in my head, incorporates CSR requirements as well as broader macro-ecomomic issues). A further twist is that we’ve all been trying to gauge the effect of these things for years, although inexpertly, through the application of the PESTLE tool in Category Management.
    My call to arms, for a practical solution, is to get CSR baked into business requirements, so we really understand those parameters for a purchase, and then use the PESTLE tool properly to search for the likely impacts on what we’re buying. Do that well, and we can dress the approach up suitable to meet current marketing needs!

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