What is Sustainable Procurement?- Definition
Sustainable procurement is the adoption and integration of Corporate Social Responsibility (CSR) principles into your procurement processes and decisions while also ensuring, they meet the requirements of your company and its stakeholders.
Sustainable procurement is the practice of incorporating social, economic, and environmental aspects into an organization's procurement processes in addition to standard pricing and quality considerations.
Use this ESG Audit Checklist to screen for high-level ESG risks in order to scope the ESG Due Diligence and head for compliant sourcing and sustainable procurement.
Sustainable procurement guarantees that a company's fundamental sustainability values are upheld throughout the product and service life cycle. Future-proofing your company's sustainable purchases and investments by creating sustainable policies that boost their long-term viability is the best approach.
Sustainable procurement policies and strategies are focused on the need to future-proof itself, especially around supplier shortages, the ability to cope with rising market demand, cost pressures, and the potential to cut costs through reductions in energy usage and waste.
Because it necessitates the development of effective risk management, sustainable procurement can assist organizations in protecting their brand reputation. This allows them to more quickly recognize problematic suppliers and address weak points in their supply chain that could lead to controversies and negative publicity. Finally, because it motivates organizations to develop innovative and sustainable products, sustainable procurement allows for brand differentiation.
Why does Sustainable Procurement Matter?
Effective, sustainable procurement is crucial because it shows that a company is committed to its mission and is building a reputation and confidence among its target customers and partners. The advantages of sustainable procurement can be broken down into four categories.
- Risk & Reputation -A supplier relationship with a company that engages in unethical practices such as child labor or pollution can have a financial and reputational impact on the company.
- Cost Reduction - Long-term procurement partners should avoid cost increases caused by ownership transfers and energy use. Cost savings enable an organization to reinvest in itself.
- Revenue Growth - Consumers who believe in sustainability can help businesses grow their revenue while increasing brand equity and loyalty. Using sustainable procurement partners can also help a company save money.
- Future-Proofing – By developing sustainable procurement practices, an organization can future-proof itself against supply shortages and changes in social, economic, and environmental issues.
Benefits of Sustainable Procurement
- Minimizes vulnerability in a company’s business practices
- Facilitates compliance with environmental and social legislation
- Improves consumer perception of the brand
- Controls cost by using a more comprehensive approach to whole-life costing
- Helps in creating markets for new services and products
- Reduces waste and maximizes resource utilization
- Provides you an edge over competitors in global marketplaces
- Makes access to finance more accessible, and the value of the company rises