Sustainable Procurement

What it is and how it can help your business

Resources are becoming increasingly scarce, impacting the cost and security of supply. Maximising resource efficiency in both internal processes and across the supply chain is becoming an important factor for small and medium-sized enterprises (SMEs) to stay competitive.

Sustainable purchasing criteria are becoming ever more commonplace in the public and private sectors for all sizes of businesses through pre-procurement questionnaires. As a seller, you may have to meet sustainable procurement criteria to sell your products to your customers. As a buyer, you can use your purchasing power to promote efficient use of resources and materials. Sustainable procurement goes beyond the traditional procurement criteria of price, performance and quality, taking account also of the environmental and social impacts of your purchasing choices, reducing negative impacts while maintaining value.

What is the business case for sustainable procurement?

  • The Public sector: Sustainability criteria for public sector procurement are being driven by Scottish Government and EU policy frameworks. The Scottish Government has produced an Action Plan to help the public sector take account of sustainability and resource efficiency in procurement activities and enable them to demonstrate how this is being achieved. In Scotland, total annual spending on procurement in the public sector amounts to around £9 billion[1]. For Scottish SMEs wanting to sell into the public sector, positive engagement with this agenda must be demonstrated when tendering goods and services.
  • The Private Sector “Business-to-Business”: Sustainable procurement can help you to retain customers and win new ones.  SMEs who supply into a corporate value chain must increasingly adhere to their sustainability policies through pre-qualification questionnaires; big name examples include Marks and Spencers, ASDA, Microsoft, Hewlett Packard, IBM and Virgin. Skanska, a multi-national Swedish construction company, demand that all their suppliers follow their sustainability policy and have environmental management systems that are of a nature and scale relative to the size of their business[2].  The trend is clear, if businesses want to be considered as sustainable and resource efficient suppliers in the private sector, they must adhere to these requirements.
  • The Private Sector “Business-to-Consumer”: Consumers also care about sustainable procurement. In a survey of UK consumers, 60% stated that a company’s environmental record, sourcing and employment policies affect their purchasing decisions[3]. A recent study by ASDA found their customers are demanding a supply of sustainable products at no extra cost[4].  To address this finding, they have teamed up with the sustainable business network, 2degrees, to increase the efficiency of resource use (water, energy and waste) in its supply chain[5]. It is evident that the views of consumers are an increasingly significant driver for businesses to demonstrate sustainability and resource efficiency, which will have knock-on effects on their suppliers to do the same.

Why should I bother?

Demonstrating resource efficiency and environmental management has business benefits beyond simply satisfying the sustainability criteria of pre-qualification questionnaires.  Scottish Government research has identified that wasting resources costs businesses 4% of their turnover every year.  Putting in place the policies and systems required to improve resource efficiencies will benefit your business by decreasing resource use, creating less waste and reducing costs and carbon emissions, while increasing productivity – ultimately improving the bottom line. Managing and monitoring resource consumption can result in savings ranging from 5-30%[5] .  Often, these improvements can be made without major capital expenditure, so financial returns are quick.  More generally, demonstrating commitment to these types of resource efficiency improvement will reduce exposure to financial, regulatory and reputational risks, while differentiating your product(s) through innovation and brand reputation

Where do I start?

The steps on the road to demonstrating sustainable, resource efficient practices are to look for opportunities in your business to:

  • Minimise the impact of your goods or services on your supply chain (e.g. improving processes, waste minimisation, simplifying specifications)
  • Minimise the impact of your supply chain on your business (e.g. suppliers complying with applicable environmental legislation, measuring their environmental impact, minimising packaging, using efficient transport, reducing their carbon emissions, improving resource efficiency)
The implementation of sustainable practices are neither tricky nor particularly time-consuming but do require commitment from all levels within a company.
If you are interested in improving the resource efficiency of your business, then we are offering a free support programme to SMEs.  The Sustainable Process Improvement (SPI) Programme will look at your business operations, identifying areas of improvement so you can take positive action – ultimately improving your business’ long term sustainability.

[1] Scottish Government, Sustainable Procurement Action Plan, 2009. http://www.scotland.gov.uk/Publications/2009/10/sspap

[5]Retail Week, Asda Creates Sustainability Network for Suppliers, 2012.  http://www.retail-week.com/sectors/food/asda-creates-sustainability-network-for-suppliers/5033513.article

 

1 Comment

  1. This was a really great piece of information. As the owner of American Pride Roofing I can appreciate everything that you have said here. Keep up the great work.

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