Procurement, supply chain & logistics
Why is this area important to embedding sustainability?
Every organisation procures goods and services to enable it to function effectively and achieve its objectives. These goods and services may include IT equipment, food, building materials, consultancy services and much more besides. As an example of the extent of the impact of procurement practices, the public sector alone spent £150billion on procurement in 2005 – some 13% of UK GDP. The Business Task Force on Sustainable Consumption and Production (SCP) says.
Procurement is a powerful tool for driving action on sustainable consumption and production. Failure to engage procurement will be a major barrier to the delivery of SCP. Government action which stimulates the market is essential if business is to make the shift to deliver better products and services. Business also has an important role to play in its own procurement practice and in its marketing to public sector organisations.
Business Task Force on Sustainable Consumption and Production
What is sustainable procurement?
Sustainable procurement involves taking social and environmental considerations into account alongside financial factors when deciding which product or service to procure. It also involves looking at the costs of a product or service over its whole life, considering running costs, lifespan and disposal costs as well as acquisition costs. Whole life costing is explored further in the Financial management & accounting module.
It can also involve looking at the supply chain for a particular product. This involves considering the impacts of products that accrue before you buy them and after you dispose of them, for example, manufacturing and final disposal impacts. This is increasingly important within the retail sector where ethical supply chain management attracts considerable attention from stakeholders. The most sustainable procurement practices will involve factoring these considerations into your decision-making alongside the impacts that the product has during your ownership of it.
Forum for the Future identify the hallmarks of a leader in supplier relations in their publication 'Are you a leader business?'
The Government’s Sustainable Procurement Action Plan states that “Sustainable procurement is good procurement”. More specifically, it means ensuring that:
- Government supply chains and public services will be increasingly low carbon, low waste and water efficient, and will respect diversity and deliver wider sustainable development goals;
- The central government estate is sustainably built and managed in a way that minimises carbon emissions, waste and water consumption and increases energy efficiency; and
- Properties and roads are sustainably built and managed throughout the public sector.
The Action Plan sets out a series of goals that define how the central government will move towards sustainable procurement. In conjunction with HM Treasury’s 'Transforming Government Procurement', the Action Plan supports the Government’s ambition to be among the EU leaders in sustainable procurement by 2009.
The Sustainable Procurement Action Plan and Transforming Government Procurement also make up the central government response to the report and recommendations of the Sustainable Procurement Task Force. The NHS and local authority responses were published in the autumn of 2007.