Daily Archives: September 16, 2007

Sustainable Procurement Supply Management Style: Part II

In June, SupplyManagement.com ran a special supplement on Sustainable Procurement that had a number of good articles. In this post, I’m going to summarize some of the more relevant points from the rest of the articles.

This is because sustainable procurement is part of corporate social responsibility – and corporate social responsibility (CSR) contributes positively to a company’s bottom line. According to a recent survey by Sirota Survey Intelligence, if employees are satisfied with their employer’s CSR commitment, then 86% have high levels of engagement, 82% feel their organization is highly competitive, 75% feel their employer is interested in their well being, and 71% rate senior management as having high integrity.

In Sustain or be obsolete, Shaun McCarthy points out that sustainable procurement can boost the economy and bring wider benefits to society. Furthermore, it can build – and sustain – your brand.

In Making a Difference, Siobhan Cameron overviews how five organizations – including HSBC, the Department for Work and Pensions, the Environment Agency, and Legal & General – are tackling corporate social responsibility.

HSBC, by requiring its suppliers to adhere to socially responsible and sustainable business practices, providing them with a code of conduct, encouraging diversity, adopting new technology, and switching to clean energy was the first major bank to become carbon neutral in 2006.

The Department for Work and Pensions obtains 45% of its electricity from renewable sources, made an upfront investment of £1.68 million in 2004-5 to improve energy and water efficiency in order to obtain an estimated annual savings of £966,000, recycles 51% of office waste, and uses fair trade and organic food in its staff restaurants and catering outlets. Furthermore, it was able to make all of these changes without any additional costs to taxpayers, illustrating that sustainability can be a benefit and not a cost.

The Environment Agency, which launched its CSR program in 2002, has been focussed on improving the green performance of its suppliers. In 2006, it audited its top 20 suppliers and found that not only have its suppliers made energy savings, but they have also seen an increase in business as a result of new and improved CSR credentials. Not only has this effort reduced carbon dioxide emissions by 220 tons, but it has resulted in £19.8 million cash savings in one financial year.

As a result of changes made to paper used in marketing material, together with the 210 tonnes of 100 per cent recycled copier paper they buy every year, Legal & General annually saves: 11,000 trees from being cut down, 2 million Kwh of electricity, 22 million gallons of water, 1,800 barrels of oil and 122 tonnes of waste going to landfill.

In Green building blocks, Emma Crates note that the building sector is lagging with respect to sustainable procurement, even though it has a huge opportunity to make a difference.

According to the article, construction is responsible for 52 per cent of the world’s CO2 emissions. In the UK, 17 per cent of all waste is created by building work, with a further 10 per cent coming from manufacturers of building products. And it soaks up 16 per cent of the country’s water.

However, in order to make change, the industry has to stop looking at upfront costs and instead look at the long term savings that sustainable options will generate. For example, biomass boilers are initially more expensive, but are expected to have lower running costs in the long run.

The article also overviews some best practices that the construction industry can deploy to improve their operations. This includes the use of consolidation centers to streamline logistics and reduce the need to store materials on work sites where they can be damaged, the use of video conferencing to reduce the need for managerial travel, the use of eco-friendly site cabins that reduce energy use by up to 40%, and the selection of products using environmental performance.

The article also lists some resources that professionals in the sector can adhere to, including the code for sustainable homes, energy performance certificates, and site waste management plans.

Finally, in A worldwide view, Helen Walker and Stephen Brammer report that sustainable procurement is becoming increasingly encouraged in countries around the world. There’s still a wide degree of variation in the extent to which different countries are adopting particular aspects of sustainable procurement, such as procurement from local suppliers, buying from SMEs, and ensuring the safe movement of a purchased product, but at least it’s a start.