Best Practice Framework Series #3: Sustainable Procurement Policy, Less is More!
An effective Sustainable Procurement Policy directs staff to meaningfully consider sustainability during procurement practices, alongside the traditional criteria like price, quality, and service. The Policy is often a base for Sustainable Procurement Programs. One of the most common mistakes that organizations face when developing their Programs is allocating too much time and resources into developing their Policy. This cannibalizes valuable time and effort from other important elements like the Strategy and Action Plan or Staffing and Resources.
What a Policy Is and Isn’t
Before understanding Sustainable Procurement Policies, it can be helpful to understand what they aren’t. The best policies set direction for a company’s Sustainable Procurement Program. Too often, Policies become overcrowded with superfluous content, causing confusion or difficulty for staff. When developing your policy, it is important to avoid the following mistakes:
- Too much detail: if Sustainable Procurement Policies contain extraneous information – like tools and procedures (blog to come) – they can become confusing and cumbersome. It is important to make a distinction between policy, tools, and procedures: policy sets direction, tools are instruments to help with information collection, and procedures help guide the implementation of the program.
- Too specific: addressing specific procurement decisions in your policy – like requiring certain Eco-labels – makes the policy sensitive to industry changes. This means the policy will need to be altered frequently, requiring top management’s precious time.
- More than one policy: dividing your Sustainable Procurement Policy into separate policies for environmental, social, ethical, and Indigenous procurement means staff must consult different personnel when making procurement decisions. A good policy will remain open to all elements of sustainability.
Above all, it is important to remember that Policy is not an organization’s entire Sustainable Procurement Program: it is only a small portion of it.
The Policy is often a crucial element of a high performing Sustainable Procurement Program. With a strong foundation, Sustainable Procurement Programs are more likely to be followed and deliver the desired impact.
The most effective Sustainable Procurement Policies include high-level direction and considerations for an organization’s Sustainable Procurement Program. They are an outline to be consulted when making purchases. Every good policy will contain:
- Wholistic consideration of the myriad of sustainability risks and opportunities, including
- Environmental: minimizes environmental harm by reducing GHG emissions, promoting energy efficiency and circularity, etc.
- Social: fosters EDI by purchasing from social value suppliers, non-profits, social enterprises, etc.
- Indigenous: promotes reconciliation by contracting with Indigenous businesses, and creating opportunities for Indigenous Peoples.
- Ethical: minimizes “sweatshop labour” by reducing forced labour, child labour, employment discrimination, etc.
- Allowance for users to prioritize which of the sustainability issues to address based on the purchase being made.
- Guidance for the general level of effort to research sustainability based on products with different levels of spend.
- Reinforcement of the principles of best value and total cost of ownership. In addition to price and quality, purchases should consider long term environmental, social, ethical, and Indigenous costs throughout a product’s life cycle.
Reeve’s Triangle Model
One way to consider a components of a Sustainable Procurement Policy is Reeve’s triangle model, which includes three levels:
- Minimum standards to protect health and safety.
- Responsible sourcing options to mitigate risks and seize opportunities in supply chains.
- Leadership Practices to elevate an organization’s sustainability strategy.
The bottom level of the triangle sets the minimum standards for suppliers, and is an integral element for all policies. This is expressed by the Supplier Code of Conduct, which prevents the organization from doing business with suppliers who exploit their resources. Some examples of clauses in a supplier code of conduct might include minimum wages, payment for overtime, no forced labour, and gender equality.
The middle level prompts companies to source products and services that have sustainability features and benefits. At the core of a good policy is mitigating risks and seizing opportunities in a meaningful way, which can be addressed by purchasing sustainable products and services. For example, companies may choose environmental alternatives, support economic development, or promote inclusion by hiring Indigenous caterers.
The top level of the triangle aims to drive organizations to source from Sustainability Leaders. Sustainable Leaders would be those who offer better products or services, and are on their own sustainability journey. For example, having policies on GHG reduction and climate mitigation, science-based targets, EDI initiatives and community involvement.
The ideal blend of the three elements would be to purchase products with no forced labour, have some sustainability features, and are sourced from suppliers who are their own sustainability journey.
A Sustainable Procurement Policy Content Checklist
A high-quality policy will give direction to staff on procurement decisions:
- Determine the necessity of the purchase.
- Identify risks and opportunities associated with the purchase.
- Prioritize opportunities based on the the company, product, and size of the purchase.
- Ensure sufficient weighting of the sustainability criteria in procurement; ensuring that sustainability is weighted with importance similar to other costs.
- Promote supplier engagement considerations (blog to come) to effectively communicate sustainability expectations to vendors.
- Establish the roles and responsibilities of each department associated to the policy.
- Provide metrics, goals and KPIs to ensure thorough and periodic review of the organization’s Sustainable Procurement Program.
Sustainable Procurement Policies Do Not Act Alone
It is important to keep in mind that even the most high-quality Sustainable Procurement Policy is not going to magically transform your Sustainable Procurement Program. The Policy needs to be complemented by all other elements of Reeve’s Best Practice Framework, like a Strategy and Action Plan, Staffing and Resources, and High-Impact Procurement Opportunities (blog to come). A Sustainable Procurement Policy accounts for only a portion of an entire Sustainable Procurement Program.
If Sustainable Procurement isn’t delivering the results you desire in your organization, contact us at email@example.com to learn more about creating a concise and impactful policy and program. Check back next month to learn about why High-Impact Procurement Opportunities (HIPOs) might be one of the most important components of the Reeve 10 element Best Practice Framework.