Sustainable Procurement

INTRODUCTION

Sustainability focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs. The concept is usually expressed in terms of the triple bottom line: economic, environmental, and social, also known informally as profit, planet, and people.

Initially, organisations focused reactively on compliance, based on regulatory concerns and public pressure. More recently, many organisations have moved towards a more proactive stance, going beyond compliance. These organisations, seeing sustainability as a business opportunity and a way to improve their corporate image, have developed integrated sustainability strategies and have embedded the concept within their core values. This progression is shown in the diagram below.

CURRENT PRACTICE IN HEALTHCARE

Action Sustainability undertook research with key stakeholders in the healthcare industry (providers, suppliers and consultants) in relation to the current state of sustainable procurement of pharmaceutical and medical devices (P&MD). The findings and solutions are discussed below.[1]

Drivers, policy and strategy

PROBLEM: Many healthcare organisations do not see sustainability and sustainable procurement as an overarching and key organisational driver. Clinical outcomes, patient care, efficient use of finances, and reputation are all cited, for obvious reasons, as being paramount. Environmental and social impacts of products do get some attention, but only in specific cases and in an uncoordinated manner, rather than an organisational top-down approach. For example, large energy-using devices (e.g. MRI scanners) in terms of operational spend on energy, or ethical labour standards in the sourcing of low-value items such as gloves. The issue is exacerbated by a fragmentation of policies for sustainability and procurement. There are few examples of coordinated approaches to sustainable procurement and supplier engagement. Many of the stakeholders only speak of environmental issues and few include sustainability in relation to P&MD.

SOLUTION: Healthcare organisations need to develop and then clearly state the case for acting in a sustainable manner and how they are going to do this through their strategies, supported by suppliers through procurement policies. This needs to be driven from the top by strong senior management throughout the organisation so that everyone understands sustainability and how they can contribute.

Leadership

PROBLEM: There is rarely someone at or near the top of the organisation who regularly champions sustainability in procurement beyond compliance issues.

SOLUTION: A senior management champion should be appointed with the responsibility to drive sustainable supply performance.

People

PROBLEM: Awareness of sustainability across healthcare organisations, particularly in relation to P&MD, is low.

SOLUTION: To improve the situation, understanding and competence has to be increased. This is not just procurement staff, but also the clinicians and commissioning groups who ultimately specify what is needed. This can be remedied with suitably focused training and guidance. Procurement and clinical staff are not expected to be experts in sustainability, but they should know the role they play in the decision-making process and understand the issues enough to ask the right questions.

Risk, opportunities and engaging suppliers

PROBLEM: Risk is considered in the procurement of P&MD, but generally in relation to security of supply and product quality. Including sustainability in risk and opportunity analysis is important as it is at the core of any actions to mitigate negative impacts. Furthermore, healthcare organisations do not engage with suppliers on a regular basis, either because of public procurement law, or because items are bought from call-off contracts and there is no incentive to engage. Engaging with your suppliers, particularly those in areas of greater risk or opportunity, allows you to get to the heart of the issue sooner and address the risk or, conversely, unlock the potential for innovative ways of working. In many cases, suppliers have a great story to tell about the sustainability benefits of their products, but are not given a route to demonstrate it to their clients.

SOLUTION: Healthcare organisations should include sustainability more definitively in their risk assessment process and, as an outcome of this, work more closely with suppliers on the sustainability impacts of products.

Measurement

PROBLEM: Unlike categories such as estates and fleet management, there is little in the way of data collection and measurement for sustainability impacts in relation to P&MD.

SOLUTION: A robust top-down approach to establishing objectives, targets, metrics and KPIs is needed along with the necessary culture of gathering reliable data from suppliers. This will require training and awareness raising.

ISO20400

ISO20400 is the international standard for sustainable procurement. The standard provides guidance for any organisation of any size or type that needs to deliver sustainable outcomes through procurement. It is relevant to anybody in an organisation who contributes to procurement decisions and/or works with suppliers (including sub-contractors). It addresses many of the issues uncovered by the Action Sustainability research.

ISO20400 is a guidance standard, not a requirements standard. Furthermore, it is not product related. It does not tell you what products to buy and what not to buy, but it does provide a strategic framework that will enable you to include more sustainable products in your procurement thinking. It also provides good advice on the various types of labels and guides and what to look for. There is a huge difference between types of product standards. The guide helps you to evaluate them. A summary of ISO20400 is shown in the table below.[2]

Section 4 covers the core principles of sustainability and sustainable procurement. It emphasises the need for organisations to understand what drives them to procure sustainably and to set priorities in the context of their own environments.

Section 5 sets out how to adopt sustainability principles into the overall strategy of the organisation and, importantly, how to further adapt the strategy to the procurement context. Procurement strategy should always align with corporate strategy.

Section 6 covers the organisational conditions required to deliver sustainable procurement (the enablers). This covers issues such as governance, leadership, stakeholders, setting priorities at category and supplier level, developing people, and supplier engagement.

Section 7 takes the reader step-by-step through a typical procurement process and provides good advice on how procurement techniques can be used in different circumstances to deliver greater sustainability. Sustainability must be embedded into the whole procurement cycle, from establishing the requirement, to specification of that requirement, developing contract terms, supplier appraisal, contract award, contract management, and end-of-life disposal.

RELATIONS WITH OTHER STANDARDS

ISO20400 is concerned with sustainable procurement. However, it needs to be considered in relation to other standards for a complete approach to sustainability. This is summarised in the diagram below.

Sustainable procurement should be considered in relation to the organisation’s overall corporate social responsibility (CSR) strategy. Supplier codes of practice should be established as well as incorporating sustainability into product specifications. International standards in relation to ethical trading, working conditions, social accountability, and environmental management will help in this respect. Internal and external audits should be established, with international sustainability reporting standards providing guidance.

Finally, standards ensure compliance, but total commitment is required throughout the organisation for an organisation to be fully sustainable. Communication, training and awareness are therefore key considerations.

[1] https://shcoalition.org/current-state-of-sustainable-procurement/

[2] https://www.iso.org/

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