As mentioned in another of our articles about CSR, more and more companies are resolving to embrace sustainable development. And where there’s CSR, there’s responsible purchasing. Purchasing is an integral part of an organisation and represents a large part of its revenue.
Sustainable purchasing is gaining momentum; organisations are taking into account the views and needs of all their stakeholders ever more each day. A responsible purchasing policy is therefore a key element of the sustainable development strategy within a company. In this article, we help you understand what sustainable purchasing is, why it’s important and how to integrate it into your company.
What is sustainable purchasing?
When a company makes the decision to integrate CSR into its global strategy, a responsible purchasing policy is one of the key steps in transitioning towards sustainable behaviour.
But how do you define such a policy? Responsible purchasing is about buying goods and services whose life cycle has a positive environmental, social and economic impact, more respectful to people and the planet. Whether it’s recycling, low-impact products, local sourcing or the circular economy, there is a multitude of wide-ranging criteria for responsible purchasing. The environmental impact of the products and services you buy should be analysed over their entire life cycle, from raw material extraction to manufacturing and end of life. The question of overall cost is important.
When we talk about purchasing within a company, we mean every single purchase made by that organisation. Whether it’s the raw material to manufacture products, the manufacturing tools themselves, the printers in offices or the coffee available in the company cafeteria. A sustainable purchasing policy includes a 360-degree view of a company’s procurement decisions, whether upstream with its supply chain or downstream at the end of the product cycle.
What do we mean when we talk about a company’s supply chain? Supply chain exists in all types of companies so it’s particularly important when setting up a purchasing policy. The environmental impact of a manufacturing company’s supply chain accounts for 40-60% of its total environmental impact. For non-manufacturing companies, the figure reaches 80%.
With globalisation, companies are expanding their markets to emerging countries. Their supply chains are consequently becoming more dispersed, globalised and complex, which tends to increase their impact.
What is supply chain sustainability?
According to the UN Global Compact, supply chain sustainability is the management of the environmental, social and economic impacts of a company’s supply chain. It also involves encouraging good governance practices throughout product and service life cycles. It is this sustainable supply chain that works hand in hand with a responsible purchasing policy.
For others, supply chain sustainability can also be viewed as managing environmental and social impacts in and through networks of suppliers, manufacturers, distributors and customers, in line with sustainable development goals. This includes all phases of the supply chain, from raw material extraction to product use and end of life.
Why is sustainable purchasing important?
In recent years, there has been increasing pressure on companies to incorporate sustainable behaviour into their overall strategy. These pressures come from different stakeholders, each with their own role in the market.
A company’s purchases have a bearing on impact measurement. It’s important to include purchasing when measuring a company’s environmental and social impacts because within purchasing there are supply chains that create a positive or negative impact in their own right. This adds to the company’s impact and will have consequences for the company.
The term “due diligence” surely means something to you. It refers to the duty to verify one’s impact. Various laws aimed at introducing impact measurement requirements for companies are currently being considered at both national and European levels. It’s only a matter of time before the legal injunctions become a reality.
Beyond regulations, customers are increasingly informed and aware. Consumer demands are converging towards more responsible consumption and therefore more responsible production. If companies want to keep up with the market, they will have to adapt and tune in to what consumers want.
Investors are also making a shift. We can see a rise in interest in responsible companies. Responsible investment is gaining ground and sectors considered environmentally and socially harmful are being sidelined.
Moreover, there are the demands and expectations of different stakeholders outside of the company. Adopting a responsible purchasing policy has many benefits.
Benefits of a responsible purchasing policy:
- cost control;
- risk control (social, environmental and economic);
- competitive advantage;
- improved image with partners and customers;
- a vector of innovation and value creation (synergies with suppliers and the local economic community).
As you can see, many significant benefits are there for the taking, helping to boost a company’s prosperity. Plus, if responsible purchasing is a better solution for the planet then why not take the plunge?
As explained above, a company decides to create and integrate a responsible purchasing policy as part of the overall implementation of a sustainability strategy. A number of sustainable behaviours do need to be put into practice when you create your roadmap. We’re here to help you with that. As part of our sustainable strategy creation service, BCorp and ESR label services or via your own CSR approach, we help you create and integrate a responsible purchasing policy into your company’s operations, as a key element accompanying your overall strategy. By now you’ll have guessed that responsible purchasing is not a one-off project but rather an essential component of your company’s sustainable and global development.
Responsible purchasing policy is still emerging and developing through the many initiatives underway in the economic arena. Be proactive and take the plunge! Got plans for your company to be more responsible? Get in touch!