Sustainable procurement – why bother?

So having defined in our first post in this series what we’re talking about when we mention “sustainable procurement”, today we’ll  get a bit controversial and ask the “why” questions.  Why bother with all this?   Why do we do it? Is it just because it makes us feel good?

No. In fact, we would argue that “because it makes us feel good” is a really bad reason for doing sustainable procurement.

Go back to basics - we are all responsible to the owners of the organisation we work for.  In the private sector, that is our shareholders. In the public sector things can get a little more clouded, but you’re ultimately funded by ‘the citizen’, I would argue that ‘the public’ are the owners.

So, logically, we should always act in our organisation in a manner that aligns with what our owners want us to do.  Just like all our activities, anything in the sustainable procurement field should flow from the wishes of the owners.  That doesn’t mean we can’t put ideas and business cases up for approval. But anyone who buys from a more expensive supplier just because they have a nice ‘green’ approach, without that being formally approved by the owners of the business, is arguably wasting money that isn’t theirs to waste. We might even argue it is fraud.

What I do in my own time, with my own money is up to me (I make huge amounts of compost for my vegetable growing, for instance, and keep the house heated to 17 degrees.  We’re reasonably ‘green’ we like to think).  But if you work for someone else.. that’s different. It’s not your call.

So, having stirred things up, let’s ask why the owners of the organisation might wish to ‘do something’ in this field. Here are some valid reasons.

  • Regulatory / quasi regulatory requirement (the government tells me to).
  • It drives efficiency, reduces costs = increases profit.  That can be long or short term. Short term through immediate cost reduction. Longer term – by introducing more local suppliers which  eventually improves the competitiveness of the market.
  • It brings marketing benefits – an improved product in the eyes of the consumer, or more chance of winning work in the B2B environment e.g. scoring better on public sector tenders because of sustainable procurement initiatives.  That will then drive ‘shareholder value’ and return, and again this can be short or longer term.
  • A focus on CSR may make the organisation a more attractive place to work, helping with recruitment and retention. That would be another valid reason for the ‘owners’ to support these activities.

So if we look at things from this pretty hard- headed point of view, it explain why some firms focus on particular elements of the full sustainability jigsaw; it is because they see the benefit in those areas. Premier Foods for instance have placed a lot of emphasis on having the first branded bread with “100% British Wheat”. Now we might argue that is a good risk management approach (can’t trust these French wheat growers to deliver, you know...) or reducing food miles (although there are some complex issues in that equation; tomatoes flown in Spain can still be more ‘sustainable’ than those grown in the UK because they need so much less artificial heat or fertilisers).

Hovis 100% British Wheat 'Cropumentary' by klbfrank09

But the benefit to Premier is the customer reaction to this move – a significant sales increase. That doesn’t make them cynical, just smart. Doing something, probably with minimal cost, that is perceived as a product improvement by the customer is very sensible!

So I’m all for this realistic, results focused approach.  I’m also cynical about organisations who say “it’s just the right thing to do”. I don’t accept that as a shareholder.  What do you mean? Does that apply to other business decisions? Why have you built a new factory?  “It’s just the right thing to do”. Nonsense. There must be a business case.

Here is M&S with their admirable ‘Plan A’ initiative.

We're doing this because it's what you want us to do. It's also the right thing to do.”

Now M&S have got that the right way round.  We’re doing it because you, the potential M&S customer want us to do that, so you will therefore buy more from us and make more profit for our shareholders.  OK, ‘its’ also the right thing to do’ creeps in there but we’ll forgive that in the context of the first reason.

So in terms of procurement, as with all strategic decisions, aligning yourself with the wider organisational goals is key.  And don’t think that ‘sustainable procurement’ is soft and fluffy. In our view, it has to be based on hard-headed ‘business’ justifications if it is to succeed.

First Voice

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