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Sustainable Purchasing: Reimagining Principles and Practices for Mainstream Adoption
The Sustainable Purchasing Leadership Council (SPLC) aims to advance sustainable purchasing practices among institutional buyers, highlighting the importance of market influence and strategic leadership. The document discusses the challenges of standardization in sustainability practices and emphasizes the need for collaboration, transparency, and coordinated efforts to drive market changes. Key topics include the impact of sustainable purchasing on environmental, social, and economic factors, and various strategies for procurement and supplier engagement.
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Sustainable Purchasing: Reimagining Principles and Practices for Mainstream Adoption
- 2. Moderator: Anastasia O’RourkeSustainable Purchasing Leadership Council @SPLCouncil Panelists from: Shelton Group, Sustainable Purchasing Leadership Council Sustainable Purchasing: Reimagining Principles and Practices for Mainstream Adoption #SB14sd
- 3. Introducing the Sustainable PurchasingLeadership Council Christina Macken Director of Programs christina@purchasingcouncil.org For more information:
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- 8. Managers do thingsright. Leaders do the right thing.
- 9. Opportunity for strategicleadership !9 Analysis by TRUTHstudio based on US Bureau of Economic Analysis 2011 Summary Use Annual I-O Table
- 10. Opportunity: Institutional purchasersshape markets. !10 $
- 11. Opportunity: Institutional purchasersshape markets. !11
- 12. Opportunity: Institutional purchasersshape markets. !12 • demand transparency into the upstream and downstream impacts of goods and services. • incorporate sustainability criteria into purchasing decisions at a scale that can shift markets. • drive down the cost of sustainable products and services so that everyone can afford them. • ensure that end-users understand, like and adopt new products and services. Purchasing organizations are uniquely positioned to:
- 13. Challenge: Lack ofcoordination. !13 $ $ $ $ $ $ $ $ $ $$ $
- 14. Challenge: Lack ofcoordination. !14
- 15. Root Challenge !15 The lackof standardization in how sustainable purchasing is defined, guided, measured, and rewarded.
- 16. !16 A blue skyidea.
- 17. !17 Source: Wikimedia Commons(Creative Commons Attribution-Share Alike 2.0 Generic license. Attribution: Simon Johnston) A big tent.
- 18. !18 Solution: Build acommunity of collaboration.
- 19. !19 Solution: Send coordinatedmarket signals.
- 20. To support andrecognize purchasing leadership that accelerates the transition to a prosperous and sustainable future. Mission
- 21. A collaborative spacewhere a community of purpose convenes to define, pursue, and promote sustainability leadership in institutional procurement. Structure
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- 25. Environmental Impacts Increase these… •biodiversity preservation • climate adaptation • resource optimization • soil health stewardship Decrease these… • acidification • desertification • eutrophication • freshwater pollution • greenhouse gas emissions • habitat depletion • human health impacts • land use change • marine pollution • ozone depletion • radiation pollution • resource depletion • smog • waste • water consumption
- 26. Social Impacts Increase these… •anti-discrimination • community engagement • diversity/equal opportunity • employee engagement • equal remuneration • fair trade • freedom of association • grievance & remedy processes • human rights • indigenous rights • occupational health & safety • right to collective bargaining • sustainable compensation • training and education • worker rights Decrease these… • child labor • forced/compulsory labor • human trafficking • sourcing from conflict zones
- 27. Economic Impacts Increase these… •fair dealings • innovation research / investment • open competition • transparency of information • use of diverse suppliers • use of HUB zones • use of local suppliers Decrease these… • conflicts of interest • corruption (bribery, extortion…) • dividing territories • dumping • exclusive dealing • misleading market claims • monopoly (seller collusion) • monopsony(buyer collusion) • patent misuse • price fixing • product tying • refusal to deal
- 28. Group Exercise Consider andanswer the following questions in small groups: ! Which impacts described is your company addressing and measuring impacts?
- 29. Group Reflection ! ! What canSPLC do to better engage your community and help brands position yourselves as leaders along ESE impacts?
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- 31. + Goals for today ■Learn about purchasing ■ Key market trends in B2B ■ Identify challenges and opportunities for collaboration ■ Learn about SPLC & other initiatives ■ Make new connections
- 32. + Today’s Session ■ Welcomeand Introductions ■ Purchasing Briefing: Anastasia O’Rourke ■ Icebreaker Exercise ■ Sustainability is Personal: Suzanne Shelton ■ Exercise: The Role of Branding in Institutional Purchasing ■ Break ■ Suppliers engagement of Purchasers: Anastasia O’Rourke ■ Exercise: Supplier Engagement ■ Introducing the SPLC: Christina Macken ■ Exercise: Prioritizing Impacts ■ Group Reflection: Engaging Brands into SPLC
- 33. + The customer isalways right: A briefing on Purchasing and Procurement Dr. Anastasia O’Rourke Chair Elect, Sustainable Purchasing Leadership Council Sustainable Brands Workshop, June 2 2014
- 34. Opportunity: US Spendingin 2012 2012 US Spending: Source: Sustainable Purchasing Leadership Council, based on BEA Statistics
- 35. + Source: Sustainable PurchasingLeadership Council, based on BEA Statistics
- 36. + Health care Housing Financial servicesand insurance Food services Transportation services Recreation services Education services Communications services Personal care services Hospitality services
- 39. ± 100 millionUS jobs 70% of US employment ± 4 billion Mt CO2e 10% of global GHG
- 40. + Who exactly isthe “buyer”? ■ The owner of the budget: Identifies the need ■ The professional purchaser: Executes the purchase ■ The influencers: Policy makers and others who have a say ■ Operations: Uses/disposes the product or service once delivered ■ Direct Spend ■ Indirect Spend
- 41. + Typical Procurement Cycle Requirem ents Developm ent Assess Market Invite Supplier Offers Select Supplier Agreeto Terms Manage Contract Define need
- 42. + Common procurement methods ■Request for Quotation (RFQ) ■ Invitation for Bid (IFB) ■ Multi-Step Competitive Sealed Bid ■ Request for Proposal (RFP) ■ Request for Information (RFI) ■ Sole source contracts ■ Cooperative agreements
- 43. + Some recent trendsin procurement ■ E-procurement platforms ■ P-cards and de-centralized approaches ■ Group/ Collaborative Purchasing ■ Total cost of ownership/Life Cycle Costing/ Whole of life/ Total value for money. ■ Spend Analysis ■ Strategic Sourcing ■ Sustainable Purchasing: incorporating sustainability into the procurement cycle
- 44. +Interventions Require ments Develop ment Assess Market Invite Supplier Offers Select Supplier Agree to Terms Manage Contract Define need Findinnovations; remanufactured/2nd hand; re-use existing; servicize; don’t buy Develop Sustainability requirements for products, services and/ or suppliers Set-Asides Policies Targets Risk Assessment Spend Analysis Find alternatives; build capacity; signal demand Clearly communicate sustainability criteria & points Evaluate sustainability performance Include measurable sustainability terms Assess sustainability performance, gather data Measure & Communicate Results, Give Recognition Report to Goals
- 45. + Where is sustainabilitybeing emphasized by national governments? On-going contract management 0.05 Auditing and improving supplier performance 0.06 Awarding of contracts 0.11 Contract clauses 0.13 Evaluation of bids/proposals 0.13 Technical specifications 0.19 Supplier pre-qualification 0.07 Supplier development/ Pre-contract engagement 0.08 Needs definition 0.15 Other 0.03 Q: In what stages of the procurement cycle is your national government currently emphasizing SPP/GPP considerations? SOURCE: UNEP 2012: Global Review of Sustainable Public Procurement
- 46. + Exercise 1. How ispurchasing is organized in your organization? 2. How many tier-1 suppliers would you estimate your organization has? 3. What do you wish you knew about purchasing? 4. Does your organization do any sustainable purchasing today?
- 47. + Engagement Strategies: Suppliersengaging purchasers
- 48. + Final Purchasing Decisions (Source:UNEP Global Review of Sustainable Public Purchasing, 2013) Dominant Awarding Rules: National Governments Purchasing
- 49. + What’s a (sustainableproduct) to do? ➢ Researched on over 1000 purchasing policies and guidance documents: • Some set requirements • Some set leadership points • Many on the receiving end suspect that they’re not being fully implemented ➢ So what to do: • If you’re ahead of the curve; but your messaging is getting lost in the mix? • How to differentiate as a purchaser when you and your competitors all work with the same suppliers?
- 50. + Looking into thisfurther ➢ Recently spoke to 12 large organizations: • Purchasers: what they see works, what they’d like to see more of • Suppliers: what strategies they take to differentiate and win • Both: when and how to successfully engage
- 51. + A range ofstrategies are being taken ➢ Offer innovative solutions that truly solves the customer need ! ➢ Meet price requirements and then differentiate ! ➢ Educate your buyers & your own sales team ! ➢ Improve your marketing, tell your story, explain the benefits, validate your claims ! ➢ Co-Create, Adopt and Advocate Leadership Standards ! ➢ Partner and Network with credible organizations
- 52. + Some nuance tothis ➢ Product cycles: length & size of contract changes when/how often you interact/how close is the relationship ! ➢ Sector sensitivities: • Some are spending a lot of time answering questions, others virtually nothing • Some can rely on ecolabels/others can’t ! ➢ Products/Services: different types of contracts and interaction ! ➢ Large enterprise contracts: trickier, cover many thousands of SKUs Harder to differentiate here: need to use recognizable symbols
- 53. + What’s not reallyworking ➢ Adding to the confusion by making spurious & undocumented claims ! ➢ Being too focused on the technical detail in communications, remember: there is a person on the other end ! ➢ Not answering customer questions on sustainability/ not answering them well ! ➢ Charging a premium that makes it hard for the buyer to argue for
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Editor's Notes
- #24 Think carefully about charging a premium and focus on any savings your product enables No translation is needed when you sell on cost efficiencies, reliability,and efficacy Improve your marketing, tell your story, explain the benefits Energy savings, FAQ sheets, tools used to explain it. Tell the story and show the results Validate your claims with credible third party organization/ certifications Enumerate the sustainability benefits being achieved: explain the co-benefits being achieved as part of the commercial offering (GE) Educate your buyers & your own internal stakeholders: Educate purchasers on implications of questions; eg when asking for compostibles: ask them: do you compost? Educate on better use of the products/services, to minimise env, impact Make sure sales associates are strong, well trained and understand how important they are to implementing the process, turn their customers into partners Educate on total cost of ownership and lifetime savings Create an advisory service team whose job it is to train customers eg on different certifications.standards. Sust. practices and why they should care or how to do green team’s successfully Partner With credible organizations & NGOs (Domtar) Participate in multi-stakeholder consortia (such as SPLC) Help Set, Adopt and Lobby for Leadership Standards Don’t just follow the market – stay ahead of it. Set standards, push for stringency Advocate for their adoption Innovate: Through supplier diversity programs, access innovation and a broad pool of ideas and talent TO bring forward a truly innovative solution that solves customer’s needs : harder to do but sometimes with much bigger sustainability gains. Service-ize your products think about use and the whole life cycle