CPO’s Talk Sustainable Procurement Value and Common Myths

Would you like to know what Canadian CPO’s think about the value of sustainable procurement? Interested in the truth about costly myths for moving forward with impactful programs? Read on to find out!

 

The Annual CCSP CPO Panel Peer Exchange was held on June 10th to an audience of over 80 individuals from organizations across Canada. Each year the CCSP is privileged to have Canadian leadership join us for an hour-long webinar to get an annual outlook on the status of Canadian sustainable procurement in the public sector and how CPOs are framing the value of sustainable procurement.

Our expert panelists this year were Karen Jensen, Director of Corporate Procurement at BCLC, Alexander Ralph, Chief Procurement Officer and Director of Supply Chain Management at the City of Vancouver, and Stefane Belleau, Executive and Head of Supply Chain, Strategic Sourcing and Procurement at CBC Radio Canada. And just in case you missed it, we’ve summarized the entire discussion into a quick 3-minute read!

G

How does your CFO value sustainable procurement?

For organizations that have been developing their sustainable procurement programs for some time, purchasing sustainably is about seizing opportunities as much as addressing potential risks in their supply chains. Our CPO Panelists all agreed that the value behind sustainable procurement doesn’t just come from the money saved, but the value added through long-term return on investment. Alex Ralph pointed out that while purchasing sustainably is the morally correct thing to do, research* has shown that every dollar invested into sustainable procurements is stretched and multiplied. Other reasons CFOs are backing sustainable procurement include:

      1. The opportunity to work internally with other departments with similar goals.
      2. Visualize broader areas of impact through a positive ripple effect.
      3. Avoid risks in the supply chain.
      4. Align spending with corporate mandate.

G

“As we are trying more and more to understand priorities and see how we can resonate with our communities, we want to have those success stories of how procurement can resonate in our communities as well.”Karen Jensen

G

Sustainable Procurement Myth-busters

Myth: Sustainable procurement is more costly.

In fact, panelists agreed that through total cost of ownership (including maintenance costs, end of life disposal etc.), it is possible to save money through sustainable procurement. By using TCO, the pricing evaluation is changed, and you are able to see the total cost of a product or service throughout its lifecycle. The evolution of technology has also made green products more affordable and more widely used, so products that were once prohibitively expensive are becoming more reasonable through TCO and initial cost.

Similarly, Stefane Belleau has found that many existing suppliers meet the sustainability criteria without added RFP specifications. When it was once difficult to obtain sustainable options from suppliers, now it is becoming ready-baked into services without an added cost.

Myth: Sustainable procurement increases the length of the procurement process.

In fact, including sustainable procurement specifications into the process is simply adding a few new questions into the research that is already being done at BCLC. For Karen Jensen looking at sustainable requirements doesn’t add any new steps, just new questions. The process of conducting market research, engaging suppliers, and encouraging suppliers to innovate takes the same amount of time with sustainable specifications added in.

 

Our panelists agreed on a key message; sustainable procurement is worth the effort. The ripple effect caused by strong sustainable procurement programs can create valuable ROI and meaningful outcomes for communities. And it doesn’t need to be difficult! Sustainable procurement is quickly becoming standard for procurement processes and can be less costly in the long run. There’s no excuses now; go forth and integrate sustainability into your everyday procurements.

 

*Research to support procurement has strong ROI

https://www.mhlnews.com/global-supply-chain/article/22044397/sustainable-procurement-can-lead-to-cost-savings

https://resources.ecovadis.com/whitepapers/roi-sustainability-responsible-business-practices

 

 

 

Ready, Set, Go Green your Fleet!

 

Green and alternative fuel vehicles are at the front of mind for most organizations across Canada, and with recent innovations in the sector it’s easy to get excited about fleet procurement opportunities. And it’s right on time. Transportation-related emissions make up 23% of Canada’s total greenhouse gas emissions. Light duty vehicles including passenger vehicles and trucks make up 50% of emissions; heavy duty vehicles account for 35%. Reducing fleet emissions is central to Corporate Sustainability Strategies in both the public and private sectors. Every major city in Canada includes Fleet GHG reductions in their Corporate Sustainable Plans and Purchasing has a central role to play in meeting these goals.

 

The 3 pillars of Green Fleets

1. Electrifying the Fleet – i.e. replacing vehicles with electric options and establishing an effective and accessible charging

2. Fueling the Fleet – i.e. purchasing fuel with renewable, biologically derived content (e.g., B20).

3. Optimizing the Fleet – i.e. using technology and driver behaviour to reduce emissions.

 

Participants heard from Calgary’s Jack Nott, Team Lead of Acquisitions, Fleet Services and Vancouver’s Evan Dacey, Acting Branch Manager, Fleet Strategy and Asset Management about their progress on the three pillars. They covered issues such as costs, market maturity, the business case for EV’s, RFX requirements, and provided expert opinions on questions from those in attendance.

 

How to Specify

Rather than prescribing vehicle specifications, Calgary includes performance criteria such as “reduced energy consumption is preferred” — asking vendors to state all available low emissions, alternative fuels and EV options and demonstrate how these options reduce energy use. Having information on all technologies gives Calgary flexibility to negotiate them into the contract and sends a signal to the market. When asked if this reduced the numbers of bidders, Jack said it was quite the opposite.  The number of bidders increased, and every bidder included EV chassis pricing.

 

The Business Case

The upfront capital cost of EVs is a barrier. Considering the total cost of ownership can shift the balance in favour of EVs. In a recent RFP, Calgary found that the Chevy Bolt and Tesla 3 had the lowest total cost of ownership for compact and mid-size cars, respectively based on three simple questions:

 

1. How much is it?

2. How much does it cost to maintain?

3. How much does it cost in fuel to drive it a certain distance?

 

 

Vancouver cited additional benefits that offset the cost of medium and heavy-duty trucks including:

  • Internal carbon price of $150/tonne which effectively increases a department’s operating budget.
  • Worker health benefits associated with noise reduction on the job.

 

Pilots Projects

Another challenge in electrifying the Fleet is limited supply in vehicle categories such as medium and heavy-duty trucks. So, City of Vancouver is conducting pilot projects rather than following a more conventional RFP process.

Here’s how Vancouver approached it:

1. Conducted an RFEOI to better understand the market.

2. Issued an RFA (Request for Application) and pre-qualified three vendors.

 

 

They are now working with three vendors to test 4 chassis models on 2 cube vans and 2 refuse trucks.

 

With so much information, greening fleet vehicles can seem daunting; what we learned from Jack Nott at the City of Calgary, and Evan Dacey at the City of Vancouver is that this is not the case. By asking simple questions of their suppliers, deviating from conventional methods when necessary, and encouraging flexibility from their vendors, Calgary and Vancouver are now piloting innovative technologies instead of piloting policies.

Just Released: The CCSP’s 2020 State of the Nation Report on Sustainable Public Procurement in Canada

The Canadian Collaboration for Sustainable Procurement (CCSP) has just released its Annual State of the Nation Report which showcases the efforts of its 30 member institutions to align their spending with their sustainability commitments. The report highlights that despite the effects that COVID-19 has had on their supply chains and organizational budgets this national community has still managed to advance their social, ethical, Indigenous, and green procurement goals. . In a difficult year, these member institutions shifted to procurements that benefit local and global communities and hopefully inspire other public-sector institutions to join the sustainable procurement movement.

GG

About the State of the Nation Report

The Annual State of the Nation on Public Procurement in Canada highlights the latest sustainable procurement trends, features member success stories from across the country and includes the popular ‘moon chart’, which benchmarks CCSP members progress towards high impact programming that shows demonstratable outcomes. Information for the report was gathered through interviews with CCSP members from November 2020 to February 2021.

GG

Top 5 Sustainable Procurement Trends of 2020

2020 Annual Report on the State of Sustainable Public Procurement in Canada

The public sector saw a shift in priorities this year as COVID-19 affected buying-power, single-use plastics usage, work environments, and prompted discussions of Living Wage policies. Organizations like universities, cities, and crown corporations were forced to refocus their priorities towards emergency response efforts, and sustainable procurement efforts were left with reduced resources. Some trends to emerge from these circumstances include:

  1. The Return of the Disposable: Single-Use Plastics Explode
  2. Living Wage Programs Explode to Help Front-Line Workers
  3. City Councillors Mainstream Buying for Good
  4. COVID Response Efforts Turbo-Charge Buying from Local SME’s
  5. Increased IT Purchasing to Support At-Home Workers

Social and Indigenous procurement was by contrast, boosted by the Black Lives Matter movement and the Canadian pipeline and railway protests. These movements brought forth national conversations on racial inequalities, economic disparity, and reconciliation, and have led to increased attention to opportunities for inclusion in procurement.

 

Success Stories

The City of Nanaimo began their Urban Clean-Up Program in response to concerns voiced by downtown residents and businesses about the impacts that social issues were having on the urban areas of the city, such as litter and debris. The City reached out directly to the Nanaimo Region of the John Howard Society and together they hired individuals with barriers to employment, such as those who have experienced homelessness or incarceration, to clean up discarded needles and other debris. The program has been successful both for the hired participants, who are receiving a fair wage and work experience, and for the resulting cleanliness of the downtown area.

The Government of Yukon advanced reconciliation through infrastructure procurement by engaging local Indigenous groups and contracting to Indigenous workers . In Yukon, where 23% of the territory’s total population is Indigenous (2016) and 11 out of their 14 First Nations are self- governing, the Government of Yukon has long considered Indigenous peoples as key partners. The project has set new standards for acknowledging Indigenous citizens impacted by infrastructure projects in their communities.

 

The CCSP community has made great strides this year despite unfavourable circumstances and have championed sustainable procurement in Canada for another year. We encourage you to download the full report here and contact Erin Unger, Program Manager for the CCSP should you be interested in learning more about the community.

Respecting the Process of Indigenous Procurement

Are you trying to align your organization’s spending with your reconciliation agenda? Or are you wondering how to get started on Indigenous Procurement? On April 6th, the Canadian Collaboration for Sustainable Procurement (CCSP) hosted its second Peer Exchange of 2021 and delved into these and several other discussion questions with practitioners from the Greater Victoria Harbour Authority and the City of Thunder Bay with almost 80 leaders in procurement and sustainability from across Canada.

As organizations continue to discover the major role that Indigenous businesses play in the Canadian economy, the importance of timely and respectful Indigenous Procurement becomes very real. The CCSP has recently restructured its sustainable procurement model and definition to include a 4th pillar, Indigenous Procurement, to reflect the unique aspect of this work. One of the fundamental elements of an Indigenous Procurement program is having a easily understood definition of what characterizes an Indigenous business. While different organizations have varying definitions of an Indigenous Business, the commonly accepted definition is as defined by the Government of Canada for the purposes of their work in this areas is is “An Indigenous firm is one which is 51% owned and controlled by Indigenous persons.”

Judy Kitts, First Nations Engagement Officer at the Greater Victoria Harbour Authority (GVHA) began her presentation by providing an overview of their definition and how GVHA actively pursues opportunities with Indigenous businesses. Judy stressed the importance of helping Indigenous supplier to navigate their way through the RFP process. Judy has created an Indigenous Business Directory of 35 businesses whom she stays in touch with regularly to maintain strong relationships. As with many organizations, COVID-19 has reduced the GVHA budget and therefore Judy has found new ways to champion Indigenous businesses, such as:

 

      1. Continuing to build and maintain relationships with Indigenous suppliers, even when there is no immediate plan to procure.
      2. Leave positive public reviews for Indigenous businesses on business review sites like Yelp.
      3. Encourage other regional institutional buyers to direct award to Indigenous businesses in their Indigenous Business Directory.

Dan Munshaw, Manager of Supply Management at the City of Thunder Bay reiterated the importance of the 4th CCSP sustainable procurement pillar, and the investment Indigenous procurement requires to further growth. Dan attributed the trust he has built with several Indigenous communities to at least three key steps:

      1. Do your homework; Learn about your local, regional and national Indigenous communities, and the historic and modern treaties that manage land claim agreements.
      2. Get out of the office; Take time to build relationships and attend local Indigenous celebrations or pow wows.
      3. Practice two eyed seeing; Commit to unlearning colonial practices and views and educate yourself on Indigenous values.

A common message both Judy and Dan shared is that policy without action will accomplish little, and in fact it might even negatively impact your relationships with the Indigenous businesses you hope to procure from. The key to sustained success is a relationship built on trust: thoughtful actions and advocacy within your organization for Indigenous businesses is a must.