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Sustainable Procurement: The Ultimate Guide to Going Green
- 1. Sustainable Procurement: The Ultimate Guideto Going Green Tara Dwyer Webinar Coordinator Purchasing & Procurement Zone Sarah O'Brien CEO, SPLC March 15th, 2023 9:30 am PT, 12:30 pm ET, 4:30 pm BST With
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- 3. TO USE YOURTELEPHONE: You must select "Use Telephone" after joining and call in using the numbers below. United States: +1 (415) 930-5321 Access Code: 511-175-395 Audio PIN: Shown after joining the webinar TO USE YOUR COMPUTER'S AUDIO: When the webinar begins, you will be connected to audio using your computer's microphone and speakers (VoIP). A headset is recommended. Click on the Questions panel to interact with the presenters
- 4. Sarah O'Brien CEO, SustainablePurchasing Leadership Council Sustainable Procurement: The Ultimate Guide to Going Green
- 5. POLL #1 (c) 2023Sustainable Purchasing Leadership Council What is your role or type of organization? • Corporate procurement • Public sector procurement • Corporate supplier • Small business supplier • Other
- 6. Agenda • Introductions +Expectations • WHY • The power of sustainable procurement • Drivers of sustainable procurement • HOW • Getting started with sustainable procurement • Strategies for Success • Engaging Stakeholders (c) 2023 Sustainable Purchasing Leadership Council
- 7.
- 8. SPLC leads aglobal community of public and private purchasers, suppliers, advocates, and experts dedicated to driving positive impact through the power of procurement. Powering Procurement for Good (c) 2023 Sustainable Purchasing Leadership Council
- 9. 180+ organizational members,$600B+ in annual spend – focused on the same strategy… (c) 2023 Sustainable Purchasing Leadership Council
- 10. …Leveraging Procurement asa Powerful Engine of Change
- 11. SPLC Provide s Online member community Guidanceand best practices Customized 1-to-1 coaching Peer learning support Deep Dive Learning Events Collaborative market dialogue Research, data and insights Innovation working groups Recognition programs & awards (c) 2023 Sustainable Purchasing Leadership Council
- 12. POLL #2 What isyour level of familiarity with sustainable procurement? • Expert – very familiar • Just starting – not familiar • Some experience, looking to learn more • Supplier hearing demand from customers, need to know more (c) 2023 Sustainable Purchasing Leadership Council
- 13. Defining sustainability +sustainable procurement
- 14.
- 15. The power of sustainable procurement vs ‘sustainability’ Corebusiness process Not a special project or nice-to-have Works with business incentive structure Cyclical More significant and widespread impact (c) 2023 Sustainable Purchasing Leadership Council
- 16. Procurement that… achievesvalue for money. strengthens the organization. CONVENTIONAL PROCUREMENT (c) 2023 Sustainable Purchasing Leadership Council
- 17. Procurement that… achievesvalue for money. strengthens the organization. strengthens the economy. strengthens society. strengthens the environment. CONVENTIONAL PROCUREMENT SUSTAINABLE PROCUREMENT (c) 2023 Sustainable Purchasing Leadership Council
- 18. Sustainable Procurement Environment • Resource efficiency •Pollution prevention • Waste reduction • Climate action • Habitat Society • No forced labor • Health + Safety • Equal opportunity • Fair wages • Employee training Economy • Small business • Local jobs • Fair competition • Supplier diversity • Innovation • Corruption- Purchasing in ways that intentionally strengthen (c) 2023 Sustainable Purchasing Leadership Council
- 19. BENEFITS TO THEORGANIZATION Tangible Intangible ▲ Process efficiency ▲ Supplier relationships ▲ Performance tracking ▲ Employee satisfaction ▲ Innovation (creation of new value) ▲ Customer satisfaction ▼ Regulatory burden ▲ Transparency ▼ Costs ▲ Investor confidence ▼ Business Disruption Risk ▼ Brand Reputation Risk (c) 2023 Sustainable Purchasing Leadership Council
- 20. The importance ofsustainable procurement
- 21. Extreme Weather (c) 2023Sustainable Purchasing Leadership Council
- 22. Modern Slavery 49.6 millionpeople live in modern slavery – in forced labor and forced marriage Roughly a quarter of all victims of modern slavery are children An estimated 17.3 million people are in forced labour exploitation in the private economy, www.antislavery.org
- 23. Waste and overconsumption (c)2023 Sustainable Purchasing Leadership Council
- 24. But…why is itup to procurement?
- 25. Operations Supply Chain Climate Change Deforestation Bribery& Corruption Toxic Waste Living Wages Economic Development Human Health Modern Slavery Biodiversity Discrimination Worker Health & Safety 70-80% of a typical organization’s impacts occur in supplier base/supply chain Resource Conservation (c) 2023 Sustainable Purchasing Leadership Council
- 26. …is uniquely positionedto demand transparency into the upstream and downstream impacts of goods and services. …is capable of incorporating sustainability criteria into purchasing decisions at a scale that can transform markets. Procurement (c) 2023 Sustainable Purchasing Leadership Council
- 27. Every purchase ofgoods or services is a ‘vote’ for the systems currently in place, or for more sustainable and equitable systems. When procurement professionals and the organizations they represent align around shared goals, they can transform markets. (c) 2023 Sustainable Purchasing Leadership Council
- 28.
- 29. Financial Regulators Requiring It Climate requirements, withmore to come Sustainable Finance Disclosure Regulations (SFDR) - EU now requires investors to use standardized definitions of what constitutes sustainable investments, and disclose any material sustainability risk SEC will require Scope 1 & 2 climate emissions and risk disclosure for all publicly traded large companies, and Scope 3 disclosure when material to investment risk. (c) 2023 Sustainable Purchasing Leadership Council
- 30. (c) 2023 SustainablePurchasing Leadership Council
- 31. Human Rights Protections UK,Australia and more have enacted “Modern Slavery” laws Businesses must undertake due diligence to identify and stop uses of slave labor to produce their goods Companies must identify the risk of modern slavery and the actions taken to prevent it Requires a serious assessment of the supply chain - can serve as the foundation for more robust sustainable Modern slavery requirements (c) 2023 Sustainable Purchasing Leadership Council
- 32. Small and Diverse Business Requirements Builds localcommunity wealth Helps disadvantaged populations build businesses Profits the community with tax revenues Supports govt’s existing social objectives (c) 2023 Sustainable Purchasing Leadership Council
- 33. Corporate Commitments 622 ofthe largest 2000 corporations have Net Zero commitments - because of the material risk that climate change poses to their business Committed corporations have over $14 T in annual sales ~80% of their impact is in Scope 3/supply chain If you are a competitor or supplier, you need to understand how to compete with and/or support these commitments Procurement + Supply Chain are going to have to make Net Zero real (c) 2023 Sustainable Purchasing Leadership Council
- 34. Driving meaningful changewith sustainable procurement
- 35. What is thelong-term vision, mission or outcome that you desire? What areas within your organization can you prioritize to address these impacts, enabling you to meet your vision? What specific goals and metrics can you use to demonstrate progress towards the desired outcome? What are the largest impacts of your purchasing? Which of many possible “solution” strategies will work best to execute on these goals with best ROI/TCO Vision Prioritize Impacts Focus Areas Goals and Metrics Solution Strategies Take a Strategic Program Approach (c) 2023 Sustainable Purchasing Leadership Council
- 36. Procurement “Programs” • StrategicSourcing Program • Supplier Diversity Program • Category Management Program • Sustainable Purchasing Program Program Rationale Is Same for All: Adding a strategic planning process ahead of more tactical procurement process enables results that more than pay for the strategic planning process. Analyze Action Plan Implement Measure Results Requirements Development Assess Market Invite Supplier Offers Select Supplier Agree to Terms Manage Contract Tactical Procurement Process Strategic Planning Process for Program Goals (c) 2023 Sustainable Purchasing Leadership Council
- 37. Prioritize for Impact Oncean organization understands its most significant purchasing impacts, it can confidently identify prioritize, and plan the best solutions to those impacts. By committing to strategic action plans that address the most relevant (prioritized) impacts within its purchasing, the organization can (c) 2023 Sustainable Purchasing Leadership Council
- 38. Prioritization Pilot: EnvironmentalImpacts of Higher Education Spend Electricity Food, & Dining Construction & Maintenance Fuels Sanitary & Waste purchasing categories 5 64% of total spending 83% of estimated impacts Insight: Analysis and prioritization sharpens focus and reduces complexity (c) 2023 Sustainable Purchasing Leadership Council
- 39. Opportunistic Activity vs.Prioritized Strategic Program More work, less impact Lack of prioritized focus IMPACT Prioritization (c) 2023 Sustainable Purchasing Leadership Council
- 40. Getting started withsustainable procurement
- 41.
- 42. Aligning with your organization Supports organizational-levelrecognition for the value of sustainable purchasing activities Identifies resources that can help (expertise, exec sponsors, people resources, tools, etc.) Grows your own understanding of your organization Provides visibility to how existing sustainability goals and commitments can be supported in the procurement process (c) 2023 Sustainable Purchasing Leadership Council
- 43. What existing objectivescan you support? When starting out , look for initiatives that can solve problems or support existing goals • Legal compliance – e.g safe working conditions • Economic growth – e.g. buy local, prefer small business • Environmental impact – e.g. waste reduction • Cost savings - many opportunities • Problem solving – address an existing issue like employee health issues (c) 2023 Sustainable Purchasing Leadership Council
- 44. Determine your focusareas • Make a list of contracts that are coming up for bid in the next 6 – 12 months • Determine which ones you want to focus on: • Which are highest spend? • Which are tied to existing organizational goals? • Which may be highest risk? • Which are “low hanging fruit”? Prioritize for impact and efficiency (c) 2023 Sustainable Purchasing Leadership Council
- 45. Remember when settinggoals… Sustainable procurement does not mean switching every product you buy to a more sustainable alternative It means identifying your most impactful spend categories and prioritizing changes to them that will create the most positive (or reduce the most negative) impact Setting prioritized goals enables you to expend LESS EFFORT for MORE IMPACT (c) 2023 Sustainable Purchasing Leadership Council
- 46.
- 47. DETAILED GUIDANCE SOLUTION STRATEGIESTO CONSIDER Strategy Description Example Efficiency Reduced impact through reduced use Implementing a Purchase-to-Pay IT system reduces impacts associated with printing and transporting paper documents. Process change Design the impact out of a process Air pollution from medical waste incineration is reduced by switching to reusable surgical tools that are steam sterilized. Behavior change Implement programs to shift attitudes and practices Voluntary “green office” competitions reduce energy and material consumption, while increasing recycling. Aggregation Achieve price or other efficiencies by consolidating demand Streamlining computer purchase options to 3 laptops and 3 desktop configurations reduces price, service costs, and complexity of vetting sustainability of computers Supplier engagement Engage suppliers and hold accountable for a specific impact Some universities require apparel manufacturers to permit independent audits of factory conditions and provide retribution-free grievance and remedy processes. Product substitution Choose a different product with lower ESE impacts Chemical costs and workers compensation insurance premiums reduced by switching to green cleaning products. Supplier substitution Choose a supplier with lower ESE impacts Making evidence of bribery or extortion automatic grounds for suspension of business with a supplier. Servicizing Convert a product acquisition to a long-term service relationship Instead of owning copiers, establish a pay-per-copy service relationship so that the price of each copy reflects the true cost. In-source In-source a function to better reduce impacts Hiring LEED expertise in-house to optimize and streamline green building across all of org’s construction and renovations. Out-source Outsource when an external party can better reduce impacts Contract out utility bill management to firms that leverage energy market expertise to cut energy and carbon costs. Offsetting Pay for an impact reduction to offset Buying carbon offsets; paying to put land in permanent conservation to offset development of Solution Strategies
- 48. Compare life-cycle costs Approachin action: When LED lighting was still new, and cost significantly more than incandescent or fluorescent bulbs, TCO analysis proved that the cost of labor to frequently swap out conventional bulbs, plus the cost of the additional energy they consumed, meant that LEDs cost less overall Evaluate potential savings on maintenance, replacement, or disposal costs Evaluate savings resulting from energy efficiency (c) 2023 Sustainable Purchasing Leadership Council
- 49. Rely on reputableecolabels, standards, and certification Saves purchaser time in reviewing for specification compliance Avoids greenwashing Can assist in measuring impacts Approach in action: Bon Appetit requires the purchase of seafood defined as “Best Choice” (green) or “Good Alternative” (yellow) by Monterey Bay Aquarium Seafood Watch program’s guidelines for commercial buyers (result: FY17 = $7.3M on sustainable seafood) (c) 2023 Sustainable Purchasing Leadership Council
- 50. Use preferences todrive change Issue a Request for Proposals and award additional points to products meeting sustainability criteria Use this approach if you are unsure about availability or impacts to costs Can use a “notify, prefer, require” approach over several contract cycles Signal (Explain)/Prefer/Require Approach in action: In a request for proposals for office supplies, the State of Minnesota awarded additional points to vendors who operated lower emission delivery trucks. (c) 2023 Sustainable Purchasing Leadership Council
- 51. Avoid over-specification Specifythe need or function (vs. a specific product) to allow for innovative, potentially cost-saving approaches Approach in action: Instead of giving their suppliers a specification to fulfill, Proctor & Gamble brought them a problem statement – “How we do address the issue of Marine Plastic by leveraging P&G’s Brands?” – and empowered them with the autonomy and creativity to collaboratively build the solution. Structure the engagement to drive innovation, yet still retain the right to choose among options presented. You may obtain multiple benefits beyond just your initial goal (c) 2023 Sustainable Purchasing Leadership Council
- 52. Require informative reports Allows you to quantify the impacts of your work Saves you time – you won’t have to gather the information on your own! Use of a common 3rd party platform enables suppliers to report to multiple customers Approach in action: Microsoft requires suppliers to set GHG reduction goals and report their GHG reductions to CDP, a third party GHG reporting system. (c) 2023 Sustainable Purchasing Leadership Council
- 53.
- 54. Coming together todrive the same asks… Makes our jobs easier Increases our positive impact Reduces cost and complexity
- 55. State Gov’t Local Government Federal Gov’t Healthcare K-12Education Higher Education Professional Services Retail Manufacturing Hospitality The Challenge – multiplying asks that don’t align (c) 2023 Sustainable Purchasing Leadership Council
- 56. The Solution –coming together around agreed demands State Gov’t Local Government Federal Gov’t Healthcare K-12 Education Higher Education Professional Services Retail Manufacturing Hospitality (c) 2023 Sustainable Purchasing Leadership Council
- 57. Vision Alignment Aggregation Consistency Capacity Building (c) 2023Sustainable Purchasing Leadership Council
- 58. Exercise your procurement superpowers! (c) 2023Sustainable Purchasing
- 60. /in/dwyertara Q&A Sarah O'Brien TaraDwyer Webinar Coordinator, Purchasing & Procurement Zone /in/sarah-o-brien-sustainable-business/ sustainablepurchasing.org @SPLCounc il CEO, SPLC purchasingprocurementzone.com (c) 2023 Sustainable Purchasing Leadership Council
Editor's Notes
- #10 Purchasers, Suppliers, Advocates, Researchers – a multistakeholder community.
- #15 Imagine that you live in a community of thriving people who are able to meet their basic needs, breathe clean air, drink clean water, be engaged in safe and fairly paid work. And that these conditions exist around the globe, and persist indefinitely.
- #16 Core business process …repeated every day across dozens to hundreds of purchasing teams and categories in thousands of organizations Not a special project or nice-to-have…as sustainability projects may still be considered in some organizations Works with business incentive structure…customer money in return for desired attributes or production process Cyclical …can drive further with each contract or supplier engagement More significant and widespread impact than operations for most sectors
- #17 … we find that our definition of sustainable purchasing includes goals that are shared with conventional purchasing. Goals for which purchasing organizations typically already have metrics, because they have already been measuring their success against these goals. What is new in sustainable purchasing is the idea that an organization would not only seek internal benefits from its purchasing. [CLICK] It will also seek to generate external benefits to environment, society, and the economy. Most purchasing organizations do not have tried and true metrics for assessing how well they are delivering on these newer goals.
- #18 … we find that our definition of sustainable purchasing includes goals that are shared with conventional purchasing. Goals for which purchasing organizations typically already have metrics, because they have already been measuring their success against these goals. What is new in sustainable purchasing is the idea that an organization would not only seek internal benefits from its purchasing. [CLICK] It will also seek to generate external benefits to environment, society, and the economy. Most purchasing organizations do not have tried and true metrics for assessing how well they are delivering on these newer goals.
- #19 Let’s briefly explore what we mean by external benefits. External env benefits include things like reducing GHG emissions and reducing waste. External societal benefits include eliminating forced labor and providing equal opportunity. External economic benefits include supporting small businesses and fostering innovation. Although procurement impacts all of these areas – this class will be focused on the first column: Environment.
- #20 Connecting to other existing efforts Strategic, maximize effort and impact Measure success to foster ongoing engagement
- #22 The fact is that we are facing some pretty big sustainability challenges, that unfortunately haven’t gone away when COVID-19 arrived – from frequent, large-scale flooding across the country each summer…
- #24 …to the giant Pacific garbage patch located halfway between Hawaii and California, covering an approximate surface area of 1.6 million square kilometers – an area twice the size of Texas and three times the size of France.
- #26 This is the picture that policy makers, NGOs, younger taxpayers, and others are looking at.
- #27 Procurement’s ability/authority to request/require information and insight into products genesis, transport, use, end of life
- #28 … But why is it our job?
- #31 Its where the impact is – as per the above. JPMVC and many others have begun to address S1& 2 but not S3 – where that 80% of climate impact resides!
- #37 Sustainable procurement is a strategic procurement function just like category management or supplier diversity – a step that establishes goals and priorities and can reduce complexity at the tactical level by focusing on greatest opportunities
- #39 Fortunately, new tools that simply weren’t available 15 years ago are making it possible to answer those kinds of questions. This is a spend analysis SPLC conducted for an average US-based higher education institution. What it showed is that just 5 areas of purchasing make up 64% of a school’s spending and 83% of its estimated environmental impacts. This is great news! Because it means that sustainable purchasing can be done strategically, targeting a smaller number of big opportunities to have a positive impact.
- #40 Once an organization understands its most significant purchasing impacts, it can confidently identify prioritize, and plan the best solutions to those impacts. By committing to strategic action plans that address the most relevant (prioritized) impacts within its purchasing, the organization can simplify, focus and effectively deliver results.
- #43 Ensures you support organizational business and sustainability commitments If your CEO has committed to protecting human rights in your supply chain, you need to align all procurement with that goal If your leadership has publicly set a GHG emissions or Net Zero goal, you will have to squeeze huge amount of emissions out of your supply chain and materials All this has to align with existing company commitments on category management, supplier diversity commitments, small business setasides and other critical programs
- #48 A plan can be made up of many different types of strategies. For example, the plan could include an efficiency measure that will reduce consumption and save money, helping to offset the additional cost of making an environmentallly preferrable product substitution.
- #50 Some examples – green seal, eco logo, epeat, EPA safer choice Before requiring a product that meets an ecolabel, standard, or certification, double-check the availability of products that meet the specification
- #53 Also reduces burden on suppliers – since it’s a 3rd party system.
- #56 55