Sustainability, ESG and business purpose are not new concepts, but the way these issues have risen up the agenda in recent years is remarkable. Now we see the rise of ‘sustainable procurement’.
Historically, good business behaviour was driven largely by legislation, whether around pollution, slavery or equal opportunities. What has changed in the last dec- ade is firms realising that they can benefit by taking action independently of legislation.
A sustainable approach can help the planet and its people – but also deliver competitive advantage, through more positive customer sentiment, or a lower cost of capital because of a positive ESG rating.
Organisations initially looked inwards at their own operations. Internal actions to reduce emissions and support other sustainability goals are important. If a business operates factories globally, or is engaged in mining or agricultural operations, then internal opportunities to practice sustainability are significant.
But many organisations can deliver more benefit to humanity by influencing suppliers than they can by purely looking internally. After many years in the procurement profession, procurement specialist Peter Smith’s latest book is ‘Procurement with Purpose – How Organisations Can Change the Way They Spend Money Now to Help Protect the Planet and Its People’.
Bad buying – failures and f*ck-ups
This follows on from his earlier book ‘Bad Buying – How Organisations Waste Billions Through Failures, Frauds and F*ck-ups’. A stand-out title that gets people’s attention, humorously lifting the lid on amazing stories of disaster in business and government around the world.
After graduating from Cambridge, Peter started his career at Mars, then was Procurement Director for Dun & Bradstreet Europe, the Department of Social Security, and NatWest. He was elected a Fellow of the Chartered Institute of Purchasing & Supply and was its President in 2003.
Identified as a Top 25 Thought Leader in procurement, Peter is a well-known commentator on procurement and supply chain management, making several TV appearances regarding PPE purchasing during the pandemic. His passion is how procurement can contribute to wider global issues.
Leverage for impact
Organisations use various approaches to drive sustainable procurement. If you are in a powerful position with your suppliers, you can ‘force’ them to change behaviour through threats and contractual mechanisms. You can build sustainability criteria into how you select suppliers, alongside price, service and other core factors.
If you have less power, or prefer the softer approach, you can persuade, influence and collaborate with suppliers to encourage good practice. You can work together to come up with plans to reduce emissions or address other sustainability issues.
University as a catalyst
Industry collaborations can add extra power and resources to the efforts. The University of Northampton’s Centre for Sustainable Business Practices (CSBP) is the coordinating research partner for The Fresh Produce Impact Hub (FRESHPPACT) bringing together retailers, manufacturers and agribusinesses to identify and address shared priority social and environmental challenges.
Following its successful Sustainability Summit and the launch in May of the Northampton Sustainability Accord, in July the University launched its Sustainability Local Innovation Partnership Agenda Hub (SLIPAH) whose main focus will be to coordinate the collaborative research and knowledge exchange activities required to implement the accord and pursue its sustainability goals.
Expectations and opportunities
The UK’s 2012 Social Value Act required public bodies to incorporate wider ‘social value’ into their procurement activities. The 2015 Modern Slavery Act was another important step. It is no longer enough to just say ‘we ask suppliers to sign our code of conduct’ – you will have to show how you are monitoring supplier performance.
Procurement with purpose does not necessarily mean paying more. Using minority owned firms or social enter- prises can increase your supply chain resilience and save money compared to using larger firms, whilst supporting the local economy.
The University is a leader in the field of business purpose and sustainability, and, with Peter as one of its new External Associates, CSBP is now ready to help local organisations in sustainable purchasing.
So, are you buying bad – or procuring with purpose?
Author & MD Procurement Excellence Ltd CSBP External Associate