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Sustainable Procurement

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What is Sustainable Procurement?

Sustainable procurement is the integration of Corporate Social Responsibility (CSR) principles into your company’s procurement processes and decisions while ensuring they still meet the requirements of your stakeholders.

Sustainable procurement integrates specifications, requirements and criteria that are compatible with the protection of the environment and society as a whole. It encompasses many issues beyond, for example, child labor or the use of harmful chemicals that can affect people or the environment.

Commitment to sustainable procurement ensures that a company’s core sustainability values are throughout the life cycle of their products and services. Best practice would be to future-proof your company’s sustainable procurement and investments by implementing sustainable policies that increase their long-term viability.

Policies and strategies for sustainable procurement are based on the need to future-proof themselves primarily around scarcity in supply, the ability to cope with the demand of emerging markets, pressures brought upon by cost and the ability to reduce cost through reductions in energy consumption and waste.

Sustainable procurement can help companies protect their brand reputation as it requires them to develop robust risk management. This enables them to better identify problem suppliers and address weak areas in their supply chain that have the potential to generate scandals and bad publicity. Lastly, sustainable procurement provides opportunities for brand differentiation as it encourages companies to develop more innovative and sustainable products.

Building a Business Case for Sustainable
    Procurement: a 5-Step Guide

Drivers for Sustainable Procurement

  • Cost Reduction: Reductions in the total cost of ownership are linked to reduced energy costs, reduced over-specification, reduced consumption, as well as reduced social and environmental compliance costs.
  • Risk Reduction: Financial impact on brand value from bad supplier practices, such as child labor or local pollution and the economic costs of sustainable procurement disruptions, like non-compliance with environmental regulations.
  • Revenue Growth: Additional revenue through new eco-friendly products and services, price premiums, or income from recycling programs.

Why Choose Sustainable Procurement?

  • 15-30% measurable brand value increase: Sustainable procurement practices result in brand equity (source: World Economic Forum: Beyond Sustainable Procurement)
  • 90% have lower cost of capital: 90% of studies show that effective sustainability standards lower the cost of capital for companies (source: Oxford/Arabesque)
  • 9-16% sustainable procurement cost reduction: Sustainable procurement practices can reduce procurement costs by 9-16% (source: World Economic Forum: Beyond Sustainable Procurement)

Benefits of Sustainable Procurement:

  • Minimizes risks in a company’s business practices;
  • Enables compliance with environmental and social legislations;
  • Enhances consumer perception of the brand;
  • Controls costs by adopting a wider approach to whole life costing;
  • Creates markets for new products and services;
  • Reduces waste and improves resource efficiency;
  • Provides a competitive advantage in world markets;
  • Facilitates access to capital and increases valuation.

Find out how EcoVadis can Help with Sustainable Procurement Practices and Challenges