The advantages of sustainable purchasing and how to implement this concept
Having emerged in the 1990s, the concept of sustainable purchasing is relatively new.
What started with the option to purchase ecologically correct products grew and involved social responsibility, overcoming the idea that the purchasing department only purchases recyclable products, involving social and economic impacts, in addition to environmental ones. Learn more!
Sustainable purchasing: Protect society and your brand
Also known as green purchasing, the term sustainable purchasing refers to the policy of considering social and environmental factors when choosing a supplier by the purchasing department, and looking beyond price.
In this type of procurement, materials need to meet corporate needs, but other factors are also considered, such as:
- Longer life of the purchased item: take into account the durability of the material, from the extraction of the raw material to the end of its useful cycle – step by step, from “cradle to grave”;
- Greater electrical and hydraulic efficiency in the production and use of the material: suppliers that maintain effective programs to mitigate water and energy use in their production processes;
- Less use of natural resources: evaluate practices aimed at environmental preservation, such as: conscious exploration and controlled management of natural wealth or reduction of greenhouse gases generated in their factories;
- Less waste generation: management focused on avoiding waste of raw materials or reducing paper consumption are practical examples of how to reduce waste;
- Possibility of recycling or reuse: selective garbage collection or the transformation of waste into inputs or new products reduce disposal – and may even generate revenue for the organization.
It is good to stress that consumers are increasingly choosing companies that prioritise social and ecological responsibility. And in times of technological advances and social networks, they follow companies closely, even using the Internet to express their dissatisfaction with organizational actions they consider unethical – which can negatively affect the brand image.
Obstacles and advantages of sustainable purchasing
It is undeniable that there are barriers to the adoption of sustainable purchasing practices in companies, but they should not be seen as a deterrent for this type of purchasing to take place and generate advantages for the purchasing company and society in general.
The list below points out the main obstacles a company should overcome and shows how this concept benefits organizations.
Sustainable Purchasing Barriers
The main difficulties in implementing a sustainability program are:
- Break the traditional behavior of the purchasing department, focused on lower costs;
- Search for and find sustainable suppliers;
- Ensure that suppliers who claim to be sustainable are indeed sustainable;
- Compare the cost-benefit offered by the traditional supplier with the sustainable one;
- Include factors such as social and ecological responsibility in supplier selection criteria.
To overcome these obstacles the purchasing team needs to gather information that proves the benefits of sustainable purchasing for the organization. It must also count on a wide range of suppliers that meet the requirements of a sustainable process effectively and with the best values.
Sustainable Purchasing Advantages
Companies around the world are already investing in the development of sustainable purchasing. Besides the ethical issue, benefits lead to this option – see the main ones:
- Increase in revenue: sustainable companies can innovate and create new products, increase the price of green label products and services, get income from recycling;
- Risk reduction: working only with suppliers that also value ethics and social and ecological responsibility, the chance of problems with what was agreed in the contract decreases, as well as the risks of having their brand hit by negative practices (such as child labor);
- Easier to be in Compliance: the adoption of sustainable practices, helps the company to be in compliance with the government regulations in force;
- Competitive advantage: compared to other companies in the industry that do not adopt sustainable procurement, the organization creates a competitive advantage, gaining improved consumer insight and improving brand image – according to the World Economic Forum, sustainable companies can have a 15 to 30% increase in brand value!
Adopting Sustainable Purchasing Practices
In times of Industry 4.0, the purchasing department has been undergoing many transformations, which demonstrate its capacity to adapt and adopt new practices, such as the proposals for sustainable purchasing.
We list down below a simple step by step to make the purchasing process sustainable.
1- Definition of a sustainability policy
It is up to the organizational management to decide if this will be the direction of the company. If so, the guidelines and requirements for social-environmental responsibility that will guide all corporate actions must be developed. A good idea is to create a sustainability committee with people from various sectors, and the purchasing sector at the center of this team.
2- Review of Purchasing Planning
Reevaluate the purchase planning, considering the possibility of renting, reusing or sharing resources – with this practice, it is possible to avoid the production of a new product/material, saving natural resources.
The decision should be made by analyzing whether the asset is for temporary use and how often it will be used (today and in the future) – it helps in this reflection, to know the difference and indication of Opex and Capex in your business.
3- Setting criteria and selecting suppliers
The purchasing department should establish criteria consistent with the organizational sustainability policy, for approval of new suppliers and evaluation of existing ones.
One of the most important and complex parts, since every supplier (new or already approved) will need to be submitted to a careful analysis that evaluates commercial aspects and also: social and environmental practices adopted, reputation in the market, risks it offers to the environment, etc.
4- Supplier management
In sustainable purchasing, professionals in the area need to monitor suppliers, making sure they are respecting good social-environmental practices informed during the selection process. This monitoring will ensure greater transparency to the sustainable purchasing process, allowing the whole process to be evaluated and improvements implemented.
How to know if a supplier is sustainable
The selection of suppliers has always been one of the most important steps in the procurement sector.
Creating a spreadsheet with the main items to be evaluated in each supplier – always guided by the social-environmental policies of your organization – is a way to facilitate the process of qualifying your suppliers – see the spreadsheet we prepared to help you in this task.
There are several questions for analysis. We highlight some that should be verified with each supplier company:
- Biodiversity: in this regard, among other items, the company must be assessed whether it has an Environmental Policy, uses recycled packaging (whether paper or wood, do they have a forestry certification?), has received an environmental fine in recent years, respects all care with the environment (within its premises and surroundings), etc;
- Working conditions: if it has a social-environmental education and accident prevention program, if the employees receive benefits and work legally, among other aspects;
- Hydraulic and electrical efficiency: how it is monitored and what actions are taken to reduce consumption;
- Social Responsibility: if you have or collaborate with social projects, hire local labor, encourage employees to do volunteer work, have actions aimed at the health of the employee, family, local community and/or original people, are some examples;
- Digital Security: how you take care of the digital protection of your environment, if you are in compliance with LGPD;
- Reputation: how the company is seen in the market – social networks is a great source of research.
Although social aspects are more difficult to measure, progress is already being made with the establishment of standards such as SA8000. It provides for the company’s actions in the social field, just as ISO 14001 deals with environmental management – and as supplier companies meet these requirements, they can attach them to documentation proving their social and environmental commitment.
Changing the culture of the company and the purchasing department, moving towards sustainable purchasing is a complex but increasingly urgent job, in view of the behavior change of consumers who, in general, prefer a conscious organization – even if they pay a little more for products and services.
Corroborating this statement, Roberto Azevedo, a Brazilian diplomat who was in charge of the World Trade Organization (WTO) for seven years, says that the world’s major investment funds do not just analyze organizational accounting. They also consider criteria such as social, corporate and environmental responsibility of companies. “This kind of evaluation is a trend that is evolving,” Azevedo says.
Implementing the concept of sustainable procurement is a job that requires great commitment from procurement professionals, but you can simplify it by downloading our supplier qualification spreadsheet according to criteria such as sustainability and social responsibility.
With the support of Soluparts, which specializes in indirect material procurement with offices around the world and access to the main suppliers on the planet, it is possible to optimize the purchasing process in your company, leaving time for the manager to devote to other tasks – talk to our experts and learn how!
And your company? Is it prepared for sustainable purchasing? We’ll prepare a Quiz for you to find out. Click and start now – it’s fast and convenient!