Managing sustainable procurement

Managing sustainable procurement risks and opportunities is a balancing act. Hope Kiwekete discusses the importance of understanding the principles related to sustainable procurement, and provides advice on how organisations should choose and utilise suppliers.

The principles of sustainable procurement are many: accountability, transparency, ethical behaviour, full and fair opportunity, respect for stakeholder interests, respect for the rule of law and international norms of behaviour, respect for human rights, innovative solutions, focus on needs, integration, analysis of all costs and continual improvement.

The first edition of ISO 20400:2017, Sustainable procurement – Guidance, was published in April 2017 by the International Organization for Standardization (ISO). This perspective provides an insight into the “seven core subjects of sustainable procurement” as outlined in ISO 20400. These are: organisational governance, human rights, labour practices, the environment, fair operating practices, consumer issues, and community involvement and development.

Organisations do not adopt ISO 20400 guidelines for certification purposes. However, they obtain value when they assess the environmental, social and economic impacts of their supply chain life cycle and work towards reducing detrimental impacts.

Hence organisations starting on the sustainable procurement journey have to take into account their governance structures. These are critical for decision-making purposes and clarifying supply chain-related accountabilities. Depending on an organisation’s context, governance activities can be a daunting exercise.

Purchasing function can influence social responsibility and integrate it at the governance level as well. The figure below illustrates the clarity of accountabilities for sustainable procurement.

Organisations have to continually conduct due diligence on their key suppliers, analysing human rights risk situations, for example. According to the Global Slavery Index 2018 “globally, there were 5,4 victims of modern slavery for every 1 000 people in the world”. But shockingly, “the prevalence of modern slavery was highest in Africa with 7,6 victims for every 1 000 people in the region”. The guideline is not shy to point out avoidance-of-complicity activities that could either be direct, beneficial or even silent.

ISO 20400 is not silent on issues associated with labour practices. These include employment and employment relationships, conditions of work and social protection, social dialogue, health and safety at work, human development and training in the workplace. Incidentally, when organisations address labour practice issues, they must adhere to the United Nations Sustainable Development Goals, Goal 8 – “decent work and economic growth”.

Safeguarding of the environment is inevitably at the epicentre of sustainable procurement. Published by the United Kingdom’s Environment Agency, Assessing and managing climate change risks in supply chains (2013) poses a key question. “Is your supply chain climate resilient?” It is not too late for anyone involved in supply chain activities to recognise that climate change risks exist. Resource efficiency and cleaner production principles can be adopted to enhance an organisation’s environmental performance, with the supply chain playing a role in good environmental practices.

(In SHEQ Management’s third issue of 2018 I shared information about the ISO 37001:2016 Anti-bribery management systems requirements with guidance for use.)

ISO 37001 requirements can also be integrated into an organisation’s sustainable procurement strategies. The uncertainty around an organisation’s risk exposure, pertaining to its supply chain practices, could be tested by how ethical it is perceived to be by its stakeholders. The probability of unfair practices could be curbed by developing and implementing robust policies around fair operating practices.

Increased consumer awareness demands that organisations be responsive to consumer complaints. Consumers require organisations to be transparent regarding the products and services they offer. There are cases where consumers’ health and safety is compromised, or their personal data is lost. Inevitably these organisations’ reputation is dented.

In South Africa, one of the aims of the Consumer Protection Act 68 of 2008 is “to promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose to establish national norms and standards relating to consumer protection”. There is also the Consumer Goods and Services Ombud appointed in terms of the Consumer Protection Act, where consumers can report their complaints and seek resolutions.

Where practical, organisations source services, raw material and finished products within their communities. Hence, these communities usually benefit from supplier development programmes. Although this corporate social initiative is not entirely new, the ISO 20400 sustainable procurement guideline regards community involvement and development as one of the core subjects of sustainable procurement.

In April 2020, a research report by Accenture titled “Covid-19: Repurpose your supply chain for resilience” provides seven recommendations for companies. One of the seven priorities is “Think local.” The emphasis here is to “think creatively about how to reallocate resources to support local communities across the whole supply chain”.

Where there’s a will there’s a way
Procurement personnel should not only look at the economic aspects of the procurement process but also look at broader sustainability. This is not a simple challenge. Transparency in supply chains and value chains requires all hands on deck. Benjamin Franklin said, “Justice will not be served until those who are unaffected are as outraged as those who are.”

Is your organisation integrating human rights, labour practices, environmental protection, fair operating practices, consumer issues, community involvement and development into your supply chain activities and business in general? If not, it is not too late to adopt and integrate the ISO 20400:2017 Sustainable procurement – Guidance into your supply chain life cycle.