Responsible Procurement

Responsible Procurement

Organisations are increasingly aware of the need to think beyond sales and profits. This means understanding the impact of your business on the community and on the environment. This impact can be positive or negative. For example, a business can be positive when it creates jobs, but negative if there is harm from pollution or housing becomes scarce locally.

Responsible procurement is the process by which environmental, ethical and social considerations are taken into account when making decisions about the products and services you buy for your organisation. It is also known as sustainable or green procurement.

Procurement is sustainable when it allows an organisation to serve its own customers while generating benefits to the organisation, to society and to the economy, while minimising harm to the environment.

Responsible procurement can deliver a number of benefits to your organisation. These include:

Cost savings by buying products that are more efficient and last longer.
Better reputation for your business through support for improving the quality of life in the community.
Improved access to funding from investors and lenders, who are increasingly likely to include good governance and environmental and social issues in their conditions for investing.
Attracting government grants and incentives. For example, there are a number of state schemes to support investment in energy-saving equipment and buildings.
Promoting innovation, by encouraging suppliers to find new, greener products and services that meet your requirements.

Responsible procurement should take into account the whole life of the product. The principle of life-cycle costing helps you to understand the social and environment impact. Life-cycle costing is a technique used to work out the total cost of buying a product, from the moment it starts to be produced to the point at which it is finished or discarded.

Using life-cycle costing, these are some of the questions to ask about products and services before you buy:
Responsible procurement

Leading your organisation to buy products and services in a more responsible way, instead of just thinking about financial costs, can feel daunting. Here are six key success factors that will help you to plan your approach:

Leadership and accountability: Responsible procurement should be championed by your organisation’s most senior executives and managers. Sustainability should be seen as ‘business as usual’, not a separate activity.
Understanding the impact of decisions about buying: Your procurement team should be encouraged to find out more about supply chains and the original source of components and materials. Saying ‘I didn’t know’ is not an acceptable excuse for poor practice.
Managing conflicting priorities: Responsible procurement will sometimes challenge the current way of doing things and create conflict. Understanding this, and finding ways to respond to different points of view, is critical.
Thinking and acting beyond short-term horizons: The rewards of responsible purchasing require a different approach to measurement and may take longer to deliver.
Managing relationships in the supply chain: Responsible procurement requires trust and support not only in your organisation but also across the supply chain. You need to help them to understand your approach and make the necessary changes.
Responsible use of power in supply chains: You can use your power as a buyer to promote positive change beyond your organisation.

Being sustainable is an issue for all businesses, regardless of turnover or sector. Private businesses who strive to be sustainable have a more positive corporate culture, more reliable products and greater long-term profitability.

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