Analysis

Guide to Sustainable Procurement - from The Chartered Institute of Purchasing & Supply

The following content is presented on ekobai.com courtesy of  The Chartered Institute of Purchaising & Supply (CIPS). CIPS is a UK based non-profit body and the leading organisation representing the field of purchasing and supply chain management. It was established in 1932 and has grown to become the central reference for best practice and codes of conduct in the field worldwide. CIPS has a membership of 54,000 of procurement associated experts, more than half of whom are outside the UK. CIPS has an active program of training and research in the field of sustainable procurement. The following is a brief and practical summary including references for further information. The following Guide is directed at Buyers and Procurement professionals rather than Suppliers

Introduction

Sustainable procurement is an important issue to CIPS. It is at the heart of the CIPS corporate strategy for 2007-2010, and reflects the growing contribution effective sustainable procurement can make to organisations.   There are numerous definitions of sustainability, each reflecting the values and needs of the particular organisation, person or society.  This CIPS Knowledge Summary takes the opportunity to develop sustainable procurement in its business context and detail its application in the purchasing and supply management environment.

Definitions of Sustainable Procurement

CIPS has adopted the definition of sustainable procurement used by the Sustainable Procurement Task Force (SPTF). The SPTF was established as a business-led task force by the UK Secretary of State for the Environment and the Chief Secretary to the Treasury in order to develop a National Action Plan and make the UK a leader in the European Union in sustainable procurement by 2009.
In Procuring the Future1, the output from the SPTF’s Sustainable Procurement National Action Plan, sustainable procurement is defined as:

“a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment."

The definition then elaborates on the meaning of ‘whole life basis’ by stating that “sustainable procurement should consider the environmental, social and economic consequences of design; non-renewable material use; manufacture and production methods; logistics; service delivery; use; operation; maintenance; reuse; recycling options; disposal; and suppliers capabilities to address these consequences throughout the supply chain.

In alignment with the European Union’s Sustainable Development Strategy (EU SDS)1, true sustainable procurement should take into consideration economic, environmental and social factors in analysing the impact of sustainable procurement on the purchasing and supply chain environment. Most debate, research and action have focused on the environmental aspects. This is understandable as an initial step, but any framework for analysis must consider the three pillars of sustainability. To promote this focus, CIPS have segmented the areas as follows:

  • Economic impact of sustainability: e.g. Corporate governance, Ethical trading, Timely payment of suppliers
  • Environmental impact of sustainability: e.g. Biodiversity, Climate Change
  • Social impact of sustainability:Diversity in the workplace, worker’s welfare and rights

CIPS Guidance on Sustainable Procurement

CIPS acknowledges the interrelated nature of economic, environmental and social impacts of sustainability on supply chain activities. Legislation has thus become a main driver for changing behaviour and making private and public sector organisations recognise that addressing environmental issues makes good business sense and is the responsible thing to do. These issues, together with useful hints and tips for energy buyers, are discussed in the CIPS Insight Guide to purchasing energy and carbon footprint impacts.

The effective management of waste is part of the environmental management remit and is covered by the CIPS Environmental Purchasing in Practice guidance document. This publication explains in detail how the environment can be considered at each of the key stages in the purchasing process. Complementary to the CIPS Environmental Purchasing in Practice (PDF) Guide guidance document are many different tools and techniques that can be used, and to see them in relation to purchasing in this way should bring a new level of clarity to the subject. Secondly, it makes the connection between supply chain management and environmental management systems (EMS). An EMS requires an assessment of significant environmental aspects, many of which will lie in the supply chain.

A full list of CIPS guides and documents on sustainable can be found at the end of this document.

• Benefits of Sustainable Procurement

Some of the benefits are as follows:

. Minimise business risk – discussed in greater detail in the full version of this Guide. Further details on the EU SDS (10117/06) can be found here.

. Provide cost savings – through focusing organisations on following a whole life costing methodology when sourcing goods and services. This would include reducing use, reusing and recycling and ultimately reducing the amount of waste going to landfill.
. Enhance corporate image in the marketplace – by demonstrating purchasing and supply management’s value to the organisation.
. Create markets for new products and services – by using technology to develop and market sustainable products that will initially attract consumers who are early adopters and command a premium price in the marketplace.
. Secure the supply of goods and services in the light of increasingly environmental legislation.
. Reduce waste and improve resource efficiency.

CIP’s case study (available in the full Guide) detailing sustainable procurement in the London 2012 Olympic hosting program demonstrates advantages of having a systematic process in place.

The Role of Standards in Sustainable Procurement

Standards play a vital role in promoting sustainable procurement and can be used in the selection of both suppliers and products. Auditable standards such as SA 8000 are internationally accepted and cover areas such as child labour, forced labour, health and safety, discrimination. ISO14001 covers environmental policy, planning and implementation and introduced analysis of environmental aspects such as air pollution and waste generation. There are also a plethora of standards which apply to the product themselves such as fair-trade, FSC and numerous eco/carbon labelling initiatives. 

Conclusion

Other regions, such as the United States, acknowledge that the European Union is the leader in using legislation to promote the sustainable development agenda. Trained and commercially astute purchasing and supply management professionals will continue to recognise the opportunities for sustainable procurement. The 2012 Olympic Games are proof that integrated economic, environmental and social procurement is achievable. CIPS will continue to develop and signpost good practice in sustainable procurement. 

Further Resources

A number of CIPS Knowledge Works documents are available at www.cips.org

Knowledge Summary documents (available to CIPS members and non-members):
A guide to purchasing energy and carbon footprint impacts
Ethical business practices in purchasing and supply management.
Carbon Management Legislation and the Climate Change Bill

Knowledge Insight Guides (available to CIPS members only):
CSR Guide: The Ethical Decision
Corporate Social Responsibility Principles document
Corporate Social Responsibility
Supplier Diversity
Commercial versus Sustainability

Knowledge Now documents (available to CIPS members and non-members):
Carbon footprints in your business

CIPS Australia White Paper (available to CIPS members and non-members):
Socially Responsible Procurement: Corporate Social Responsibility in a supply chain context

Other CIPS documents
4th Assessment Report from the Intergovernmental Panel on Climate Change: www.ipcc.ch
Stern Review on the Economics of Climate Change: www.sternreview.org.uk

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