Sustainable procurement


Sustainable procurement is a process whereby organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a life-cycle basis while addressing equity principles for sustainable development, therefore benefiting societies and the economy across time and geographies while remaining within the carrying capacity of the environment. Procurement is often conducted via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works for the best possible price, when aspects such as quality, quantity, time, and location are compared. Procurement is considered sustainable when organizations broadens this framework by meeting their needs for goods, services, works, and utilities in a way that achieves value for money and promotes positive outcomes not only for the organization itself but for the economy, environment, and society.
Sustainable procurement is a spending and investment process typically associated with public policy, although it is equally applicable to the private sector. Organizations practicing sustainable procurement meet their needs for goods, services, utilities and works not only on a private cost–benefit analysis, but also with the intention to maximizing net benefits for themselves and the wider world. In doing so they must incorporate extrinsic cost considerations into decisions alongside the conventional procurement criteria of price and quality, although in practice the sustainable impacts of a potential supplier's approach are often assessed as a form of quality consideration. It has also been proposed that other human rights can be incorporated into the extrinsic costs considered by sustainable procurement models.
These considerations are typically divided thus: environmental, economic and social, but it should go beyond and encompass a series of equity principles for sustainable development, such as intragenerational equity, intergenerational equity, interspecies equity, procedural equity, and geographical equity. These can be seen as the 'sustainability pillars' of procurement, which can be underpinned by one or several instruments for development, such as those proposed by Amartya Sen: economic facilities, social opportunities, protective security, political freedoms and transparency guarantees. And to procure in a sustainable way involves looking beyond short-term needs and considering the longer-term impacts of each purchase. Sustainable procurement is used to ensure that purchasing reflects broader goals linked to resource efficiency, climate change, social responsibility and economic resilience, for example.
This framework is also known as the triple bottom line, which is a business accounting framework. The concept of TBL is narrowly prescribed, and even John Elkington, who coined the term in the 1990s, now advocates its recall. Indeed, procurement practitioners have drawn attention to the fact that buying from smaller firms, locally, is an important aspect of sustainable procurement in the public sector. Ethics, culture, safety, diversity, inclusion, justice, human rights and the environment are additionally listed as important aspects of SPP.
Furthermore, a commonly proposed framework for sustainable procurement, especially in developing countries, clarifies decision making as a balance between efficiency, social objectives, risk management and governance considerations. The framework focuses primarily on efficiency considerations. The sustainability initiatives must operate within the efficiency constraints rather than replace them, as procurement agencies remain accountable for prudent use of public funds. Social considerations form a second dimension of the framework incorporating objectives such as labour standards, inclusion of small and local enterprises, gender sensitive procurement and broader social welfare impacts. The third dimension emphasizes on risk reduction management, a necessary step to manage financial, operational, and compliance related risks arising from the integration of sustainability in procurement processes. Lastly, there is an emphasis on transparency and accountability to ensure effective implementation.
Sustainable procurement involves a higher degree of collaboration and engagement between all parties in a supply chain. Many businesses have adopted a broad interpretation of sustainable procurement and have developed tools and techniques to support this engagement and collaboration.

Triple bottom line considerations

– the letting of contracts for goods, works and services on the best possible terms – has historically been based on two criteria, price and quality, with a view to maximizing benefits for the procuring organization. Sustainable procurement broadens this framework to take account of third-party consequences of procurement decisions, forming a "triple baseline" of external concerns which the procuring organization must fulfill.

Environmental

Environmental concerns are the dominant macro-level justification for sustainable procurement, born out of the growing 21st century consensus that humanity is placing excessive demands on available resources through unsustainable but well-established consumption patterns. Sustainable procurement aims to promote conservation and responsible management of resources by using renewable or recycled materials wherever possible and reducing waste. Sustainable procurement also involves looking at production practices and making sure there are not any negative impacts to the environment such as pollution, biodiversity loss or habitat disruption.
This is a sufficiently influential issue that environment-centric procurement is sometimes seen to stand alone from sustainable procurement. The most straightforward justification for green procurement is as a tool with which to address climate change, but it offers the broader capacity to mitigate over-exploitation of any and all scarce resources. Green procurement introduces into the procurement process a comparison between alternatives based on the criterion of their environmental impact. This comparison is extended to all stages of the procurement process, from the design stage, to the tender evaluation and realization stages.
Examples of green procurement range from the purchase of energy-saving light-bulbs to the commissioning of a new building from renewable sourced timber or organic food being served in a workplace canteen. Sometimes, the ultimate green procurement is the avoidance of the purchase altogether. For example, Seafood Watch lists which commonly consumed fish species are at risk of extinction or population decline, steering conscious consumers towards species with stable populations which can be consumed without threatening their existence or disrupting the ecosystem. Transparency around production can help companies and individuals make more sustainable purchasing choices. In the fashion industry, more consumers and companies are aware of the damage textile dye pollution does to waterways and the communities that rely on them, and as a result, companies and individuals can seek out producers who use natural or nonhazardous dyes.
In support of sustainable development the organization should develop and publish 'Sustainable Development Procurement Guidelines and Procedures'. When it comes to purchasing products or services, referral to these guidelines would help make the organization become a leader in environmentally responsible purchasing.
Although various corporate giants have publicly acknowledged adopting sustainable procurement and reducing their carbon footprint, they have miserably failed to match their promises. The most widely discussed examples include Disney's initiative to introduce sustainable paper sourcing policy in 2012 and 3M promising to reduce its greenhouse gas emissions.

Social

Sustainable procurement is also used to address issues of social policy, such as inclusiveness, equality, international labor standards and diversity targets, regeneration and integration.
Examples include addressing the needs – whether employment, care, welfare or other – of groups including ethnic minorities, children, the elderly, those with disabilities, adults lacking basic skills, and immigrant populations. Criteria for Socially Responsible Procurement can be applied to every stage of a supply-chain e.g. from mining to assembly and distribution.

Economic

Often differences in the purchase price between a non-sustainable and sustainable alternative are negligible. Yet even where the sustainable option costs more upfront, savings of energy, water and waste over the lifetime of the product or service can provide significant financial savings. On a macroeconomic level, it can be argued that there are economic benefits in the form of efficiency gains from incorporating whole-life costing into decision-making.
In addition, the creation of sustainable markets is essential for long-term growth while sustainable development requirements foster innovation. There are also potential global applications: sustainable procurement can favor fair trade or ethical practice, and allow extra investment to channeled towards developing countries.
On a microeconomic level, sustainable procurement offers the chance for economic redistribution. Targets might include creation of jobs and wealth in regeneration areas, or assistance for small and/or ethnic minority-owned businesses.

Sustainable procurement policy and development

State government

For central governments, sustainable procurement is typically viewed as the application of sustainable development criteria to spending and investment decisions. Given high-profile socioeconomic and environmental concerns such as globalization and climate change, governments are increasingly concerned that our actions meet the needs of the present without compromising the needs of the future.
Public spending, which accounts for an average of 12% of GDP in OECD countries, and up to 30% in developing countries, wields enormous purchasing power. Shifting that spending towards more sustainable goods and services can help drive markets in the direction of innovation and sustainability, thereby enabling the transition to a green economy. Through Sustainable procurement practices, governments can lead by example and deliver key policy objectives. Sustainable procurement allows governments to mitigate key issues such as greenhouse gas emissions, improve resource efficiency, recycling, among others. The key international organizations already increasingly recognize public procurement as a means of changing the unsustainable patterns of consumption and production.
The United Nations, including its many affiliated agencies, recognize their own responsibilities in contributing to more sustainable patterns of development, maintaining a market behavior which is credible, inspirational and exemplary, and proving that UN agencies stand behind the principles they promote. Through the development of procurement criteria that support sustainability principles, requisitioners and procurers can send strong signals to the market in favor of goods and services that promote sustainability. The United Nations agency destined to develop and promote resource efficiency and more sustainable consumption and production processes, including the promotion of sustainable resource management in a life cycle perspective for goods and services in both developed and developing countries, The United Nations Environmental Programme, UNEP, drafted sustainable public procurement implementation guideline to aid in the consideration of society, economy, and the environment in procurement processes.
  1. Project set up and governance structure establishment
  2. * In the project organization and set up in pilot country of Mauritius, the NFO set up monthly and biweekly newsletters on the purpose of public procurement which was then used as a communication device for later projects, activities, and events, along with other relevant information
  3. Assessment, review, and prioritization
  4. * Recommended method of assessing the effectiveness of public procurement plans is conducting interviews with procurers as to assess the degree of training and knowledge. Recognize and understand the obstacles in the implementation of SPP in their respective administration as well as identifying products and services which are considered a priority for the well-functioning of such projects and policies. Some of the main obstacles in implementing SPP are informational, financial and managerial.
  5. Sustainable public procurement policy and action plan
  6. * Drafting an SPP plan is necessary for the successful implementation of policies. It creates a clear path and provides a direction on sound basis on which to build coherent and efficient strategies. The SPP Action Plan should contribute to the country's sustainable development in terms of environmental protection, economic development, health, welfare, etc. In the UNEP pilot country of Chile, working to enhance previous e-learning platform for contracting managers from across the country, the UNEP agreement with the sovereign nation was modified replacing two different workshops for roughly 50 people each with the generic term "training" and the new materials for the electronic platform are currently being developed as to provide the entire Chilean public administration easier access.
  7. Implementation
  8. *Nations interested in applying the SPP approach in the development of domestic policies and would like to receive funding for the implementation of the various programs must directly apply to the UNEP and follow a particular procedure.