Sustainable procurement requires organisations to consider social, environmental and governance (ESG) factors alongside financial metrics when making sourcing and buying decisions.
These factors include:
Financial factors: cost of goods and services over their entire life cycle
Environmental factors: waste management, water usage, GHG-emissions, biodiversity and ecological conservation
- Human rights: discrimination; bullying and harassment
- Labour Rights: child labour, forced labour, working hours, wages, freedom of association
- Health and Safety: work-related fatalities, injuries, health impairments of employees
- Community impact: community health and safety, socio-economic development, poverty eradication
Governance: corruption, bribery, protection of information and data security, compliance to relevant regulatory requirements
Incorporating sustainable procurement practices in buying and sourcing decisions necessitate organisations to critically evaluate business-as usual practices in terms of supplier engagement, assessing the true lifecycle cost of raw materials and products and measuring long term value. As such, there is an increased need for leadership buy-in and collaboration between procurement, sustainability and finance professionals to ensure the effective uptake of sustainable procurement practices, and the re-evaluation of performance indicators beyond just cost-reduction for buying organisations.
Increased awareness about the impact of human activity on the environment and the influence of large corporations on broader society have resulted in a shift in buying and investment behaviour around the world. Increased focus on securing a more sustainable future for all has created an urgency to rethink current consumer and business practices and, specifically, to address priorities related to sustainability.
Based on EcoVadis’s Sustainability Procurement Barometer, developed economies lead the way in terms of sustainable procurement. The 2021 Barometer, covering 207 companies across 17 industries, highlights key mechanisms used by surveyed organisations to implement sustainable procurement practices:
Commitment to sustainable procurement:
51% of surveyed organisations have written policies stating their commitment and approach to sustainable procurement.
Defined sustainability criteria for suppliers:
74% of companies have written supplier codes of conduct that define the sustainability criteria that suppliers are required to comply with.
Evaluation of their supplier’s sustainability performance:
52% of surveyed companies use supplier self-assessment questionnaires and 41% implement supplier audit programmes to assess how suppliers perform against specific sustainability criteria.
Incorporate sustainability as part of contracting requirements:
47% of surveyed companies state that they have a specific contract clause relating to sustainability in supplier contracts.
Surveyed companies indicate that the greatest benefits of implementing the above-mentioned practices include improved risk mitigation (63%) and supply chain resilience (45%). Further to this, 63% of companies indicate that their sustainable procurement programmes helped them survive the Covid-19 pandemic.
Read more from the Sustainability Africa 2021 Summit Report