As sustainability in procurement gains more importance, global requirements are becoming stricter to hold businesses accountable for their environmental and social impacts.
In the EU, the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR) mandate businesses to disclose their environmental, social, and governance (ESG) practices. These regulations also encourage companies to incorporate sustainability into their procurement processes, fostering transparency and accountability.
In the USA, the Securities and Exchange Commission (SEC) has proposed rules for climate-related disclosures, requiring publicly traded companies to provide detailed information about their climate risks and emissions. Meanwhile, in Canada, businesses are expected to comply with sustainability standards.
What is Sustainability in Procurement
Sustainable procurement considers social, economic, and environmental factors in addition to the traditional considerations of price and quality when purchasing goods and services.
A sustainable procurement strategy impacts every aspect of your commercial activities, from what you buy and how you buy it to who you buy from and what happens once the contract is signed.
Some examples of sustainable procurement include:
- Purchasing electricity from renewable sources
- Buying refurbished IT hardware or recycling/reusing existing equipment at the end of its lifecycle
- Transitioning fleet vehicles to ultra-low emission vehicles (ULEVs) or electric vehicles (EVs)
- Using low-carbon construction materials
As sustainability becomes a more prominent global priority, it is increasingly vital for public sector organizations to align their procurement strategies with the evolving values of stakeholders, customers, and employees.
Before initiating any procurement, it’s important to carefully consider whether the goods or services you intend to purchase, as well as the procurement process itself, will maximize sustainability benefits.
A Net Zero emissions Procurement strategy
A net zero emissions procurement strategy is built on three key interdependent principles:
- Integrating sustainability criteria into procurement processes
By incorporating sustainability criteria into procurement, companies can encourage suppliers to adopt environmentally friendly practices and work toward carbon neutrality. For example, businesses can include clauses in contracts that promote emissions reductions throughout the supply chain.
- Measuring the environmental footprint of the supply chain
Measuring the environmental impact - especially greenhouse gas emissions - of the products and services purchased is crucial. By gathering reliable data on emission sources and volumes, companies can effectively target their net zero emissions goals and track progress.
- Fostering innovation and sustainable development
Companies should inspire innovation among their suppliers, especially those designing the products and services of the future. Strategic partnerships focused on sustainability can lead to innovative solutions that benefit both the environment and businesses.
As you can see, implementing a net zero emissions procurement strategy is vital for ensuring a sustainable future and building resilience against climate change. By reducing emissions throughout the supply chain, companies not only minimise their environmental impact but also foster innovation and strengthen their market position as responsible players.
The future of sustainability in public procurement is rapidly evolving as the emphasis on achieving environmental, social, and economic goals continues to strengthen. Suppliers must adapt by adopting modern practices for green supply chains, enhancing transparency, and aligning with international standards. Additionally, they should implement strategies to reduce greenhouse gas emissions and optimise energy efficiency.
