Why Sustainable Procurement Matters for Your Business

Here’s a lesson to  be learned

Customers are no longer satisfied with companies that only meet their expectations regarding a product or service. 

They want to see your company beyond that. Now more than ever, people are looking for businesses that show a serious commitment to keeping our planet safe from climate change. 

Okay…but how does this relate to procurement?

Pretty simple: Is with procurement that you obtain the goods your company needs. 

But what if you could still obtain the most favorable deals while at the same time engaging in eco-friendly practices? 

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That’s what sustainable procurement is all about

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Sustainable Procurement

When searching for a product, you usually consider things like price, quality, and delivery times, right?

Well, sustainable procurement takes you a bit further and puts your focus on the social and environmental impact of your business’s procurement operations. 

Think of it as a strategy that keeps working for your financial benefit and in parallel works to bring back to the community and the planet. 

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Core Principles of Sustainable Procurement 

• Transparency: So you want to improve your procurement practices? Start with this Open communication and clear reporting are essential aspects to build trust and demonstrate accountability.
• Ethical Sourcing: You can’t talk about sustainability, without considering the importance of ethics.  Prioritize suppliers who uphold labor rights and ethical practices.
• Life Cycle Assessment: Be careful when assessing the environmental and social impacts of a product or service from production to disposal.
• Collaboration: Work closely with suppliers and stakeholders to drive innovation and shared value.

Why Should You Care about Sustainability?

Just like we mentioned at the beginning, there’s an increasing demand for companies that adhere their practices to eco-friendly standards. So once you decide to change your procurement activities to a more sustainable framework you can expect to see a positive shift in the way your customers see your brand. 

But that’s not all 

Choosing to follow sustainable practices will also benefit your supply chain, especially by building resilience that will serve you as a defense in case any challenge arises later. 

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The Triple Botton Line 

Still, feeling a bit confused about what sustainable procurement really means?

Okay, let’s try to understand it by dividing the concept into 3 crucial categories: 

People, planet, and profit. 

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People

This is where the social dimension of procurement begins to work 

Ideally, what you want here is to create value for the communities you and promote key values like fairness and transparency across your supply chain. 

And yes, this means that you’ll have to keep an eye not only on your own practices but perhaps more importantly on the practices of the suppliers working with your company. 

Are your suppliers paying fair wages? Are they building safe working conditions and respecting workers' rights? 

A good place to start is diversity and inclusion. Supporting suppliers from underrepresented groups or local businesses can have a profound ripple effect on communities, increasing social cohesion and promoting equity.

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Planet

One of the most important pieces of sustainability lies within the planet. 

Every decision you make in your procurement processes, from choosing the right materials to selecting logistics providers can have a measurable impact on the planet. 

Best thing you can do?

Learn about greenhouse gas emissions and see how you and your suppliers can reduce them in your operations. Conserve resources as much as possible and start minimizing waste. 

For your suppliers ask questions like:

Do they prioritize renewable energy? Are your products sourced sustainably, ideally with certifications? Is there a recycling program? What about water management?  

The more questions you ask, the more you’ll discover about the impact of your supply chain. 

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Profit

Because yes, we are all here to make a profit 

Financial sustainability is how you can be sure that your procurement practices are economically viable over the long term. This means looking beyond the initial costs and evaluating metrics like the total cost of ownership. 

Are you investing in products that are durable, energy-efficient, and require minimal maintenance? Do your suppliers offer additional  services like extended warranties or take-back programs? 

While it might feel like an extra load at the beginning of the process, balancing costs with quality and sustainability helps keep profitability while meeting environmental and social goals.

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Ethical Questions to Ask in Sustainable Procurement

• Are you working with suppliers who treat their workers fairly?
• Are your procurement decisions inclusive and free from possible bias?
• Are you actively avoiding partnerships with businesses involved in exploitation or unethical practices?
• Do your procurement policies include clear guidelines for promoting diversity and equity?
• Are you regularly assessing your supply chain for compliance with ethical standards?

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Approaches to Sustainable Procurement

Product-based approach

The simplest way to start implementing sustainable procurement is to choose the kind of materials that have little to zero negative impact on the environment. Look for options that meet global standards or have ISO certifications. If possible stick with products that are recyclable, biodegradable, or made from renewable resources.

Supplier-based approach

To make things really work, you are going to have to search for partners that are on the same page with you regarding sustainability. 

When sourcing new products and assessing potential suppliers consider these questions as your roadmap to know if they are the right match or not.

• Do they have sustainability policies in place?
• How do they manage waste and emissions?
• Are they committed to ethical labor practices?

General Benefits of Sustainable Procurement

Keeps good levels of profit 

If your products are sustainable your supply chain is strong and designed to last in the face of challenges, you can reduce the possibility of seeing yourself in an unexpected financial crisis.  

Environmental impact

Prioritizing eco-friendly materials and processes reduces your carbon footprint and helps combat climate change. That sounds like a good deal for our current reality, right?

Social responsibility

We’ve been saying constantly if you put a bit of effort into your procurement practices and change your processes so they can provide benefits to your community and the people around your business, you’ll build a place where social values are considered non-negotiable. 

Improved compliance

Do you want to be prepared for what’s to come regarding supply chain challenges? Start with learning about the importance of compliance. Many regions are introducing stricter regulations around sustainability. Staying ahead of these requirements ensures you’re always in check regarding what’s required from your operations. 

Competitive advantage

Companies that prioritize sustainability often stand out in the market, after all, this is how you show to your customers that you have the same values and concerns in mind. Empathy makes money sometimes. 

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Economic Benefits of Sustainable Procurement

Because you are a business at the end of the day and finances are at the top of your priority list, let’s see in more detail what the economic benefits of choosing sustainable procurement are. 

Cost savings 

If you are capable of sourcing products with sustainability in mind and optimizing your supply chain, you can significantly lower operational costs. Products designed for durability and minimal maintenance further reduce long-term expenses.

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Risk mitigation

And what happens when you have a diverse and thus resilient supply chain? What if you can diversify your supplier base and source following sustainability principles? Well, you certainly reduce your company’s dependency on volatile markets or limited resources. This stability can protect your budget from sudden price spikes or supply chain disruptions.

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Market opportunities

Businesses that demonstrate a commitment to sustainability often attract environmentally conscious customers and investors. This opens up new revenue streams and strengthens your brand loyalty.

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Government incentives

And on top of all that? You’ll find that many governments offer financial incentives, tax breaks, or grants to companies that adopt sustainable practices. These benefits can offset initial investments in green technologies or eco-friendly initiatives.

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Sustainable Procurement Requirements

Set goals

Establishing clear sustainability goals and metrics is fundamental, if you don’t know what is your final direction, how can you be sure that you are heading in the right direction? For example, let’s say that you want to see an increase in your diversity levels in your supplier network. If you don’t set this as a goal, odds are you won’t be able to achieve it. 

Analyze your policies

Take a look around what’s happening right now in your procurement operations. See if sustainability is a key priority, if not, start by updating your policies to include requirements and guidelines to measure your environmental and social performance. 

Engage stakeholders

Okay, so sustainability is important for you, but is your team aware of it? What about your suppliers? And your customers? From the person in charge of sourcing new products to your client, make a habit to communicate your sustainability goals and achievements so there are no doubts about where your company is standing.

Set a sustainability criteria 

Speaking about suppliers…

When searching for one, you probably already know how important it is to set criteria for what you are looking for. Maybe it’s the price, maybe it’s the location, maybe it’s the experience, but more often than not, you already know what your requirements are.

The same applies to finding a supplier who is comfortable following sustainable practices.

Best Practices in Sustainable Procurement

Just like with any other project or change, there’s a slight chance that you’ll find certain issues when deciding to implement sustainability in your procurement department. 

Fortunately, some solutions will facilitate the process:

Stay local

Local suppliers often offer more flexibility and shorter supply chains, which can reduce transportation costs and carbon emissions. Strengthening ties with local businesses will also help you to be seen as an actor that promotes community growth and resilience.

Start small

Starting something new is exciting but if you want an old piece of wisdom keep things controlled at the beginning by focusing on smaller, manageable projects that can serve as pilot programs. Gradual implementation reduces the risk of disruption and allows you to refine processes before scaling up.

Stick with technology

Use digital tools like procurement software to build supply chain transparency and track progress. Platforms that offer analytics and reporting capabilities can help you identify inefficiencies and areas for improvement

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