Sustainable procurement

Why Sustainable Procurement Makes Good Business Sense

Sustainable procurement refers to a way of doing business that safeguards the environment for future generations. It’s more than just a trend in the business world, it’s an integral part of any company that wants to succeed in the long term.

That’s because sustainable sourcing is both cost effective and helps companies understand their supply chains. And there are plenty of benefits for businesses who are using sustainable procurement: increased brand credibility, growing customer loyalty, reduced product liability risk, and more.

Sustainable procurement means proactively measuring and managing the sustainability of every part of the supply chain. This means not just considering the environmental impacts (the ‘green’ side) of business activities but also the social impacts (the “people” side) as well as the financial impacts. Sustainable procurement is a way of doing business that aims to reduce or eliminate harm to people and the planet, now and in the future.

The three pillars of sustainable procurement

  1. The environmental pillar includes reducing impacts on the environment, such as greenhouse gas emissions, energy consumption, waste disposal and water use.
  2. The financial pillar incorporates the costs associated with a product’s net operating income.
  3. The social pillar considers the impact on society as a whole through worker rights and compensation in addition to consumer safety.

In order to properly assess these factors, businesses should work together with stakeholders throughout their supply chains in order to monitor performance in all three pillars, as without them, the expected benefits will not be reached.

Our global environmental emergency is not news and companies and governments have generally been slow to react to provide proper, robust and tangible solutions to our planet’s needs. But with careful planning, a business supporting the planet can make healthy profits and support the sustainable development of the world.

The benefits of procuring sustainable goods and services

  • Creating new business opportunities in a growing, global market.
  • Increasing sales revenue (by appealing to new customers).
  • Reducing risks and improving cash flow.
  • Strengthening international competitiveness.
  • Acquiring new technologies, increasing productivity and reducing costs through innovation and competition.
  • Saving on transportation costs (purchasing local raw materials close to the production facility).

Change cannot improve environmental impact and financial output, if it is socially unacceptable, or causes any form of deterioration in people’s lives or well being. For example, closing all motorways would reduce transport pollution, and save lots of money in fuel. However, it would remove the ability for people to move around the country, to work, to see friends and family and would decimate all supply chains, so would not be an option.

To be sustainable, a company should have a clear understanding of what it actually means to be ‘sustainable’, as there is not one specific definition, but many. As with many things in life, the difference between good and bad sustainability is often determined by the company’s purpose and identity.

In order to be a socially responsible company, all stakeholders have to be taken into consideration and act in line with the principle that everyone’s needs must be met. All stakeholders can play an important part in creating a climate that allows them to succeed.

The intended benefits of sustainable procurement

The top priority for a sustainable existence is to improve the quality of our environment and economy.

With a robust and well designed sustainable procurement strategy, cost savings will follow, allowing further investment into creating further efficiencies and ultimately improving a company’s bottom line.

Risk and reputation
The reputation of a company can be damaged by negative coverage of environmental, social and governance performance. In addition to the above, there is a moral obligation and growing expectation for businesses to be responsible.

Revenue growth
Firms which are more sustainable are perceived as being more trustworthy and often outperform others. This builds brand value and competitive advantage, and there is a growing body of research that shows how customers will choose a company based on its reputation for sustainability, even if the price is higher. Furthermore, many companies have found that a strong corporate social responsibility policy has powerful PR benefits, particularly when the decision is made to act publicly rather than internally. This public image also generates positive press coverage and the right kind of publicity can lead to more business.

Cost reductions
Companies with a sustainable procurement strategy can make cost reductions by improving the efficiency of their supply chains, and reducing the use of unnecessary packaging, energy consumption and minimising waste. Such financial savings can then be re-invested back into the company to make further efficiencies and make an impact on the bottom line.

Future proofing
Companies can also future-proof themselves against scarcity. By planning ahead and reducing dependence on non-renewable resources, firms are less likely to be affected in the long term by price volatility and shortages. They often innovate to create new products and services as well as build a more cohesive workforce which can be employed to solve a range of other sustainability challenges.

Governments and legislation
Legal frameworks that safeguard the environment and regulate the distribution of goods and services are a key barometer of a country or region’s commitment to sustainable procurement. Legal frameworks can have a positive impact on the business community and society by:

  • Enforcing targets for sustainable investment and procurement
  • Increasing competition in business, driving sustainability improvements across the industry.
  • Collaborating with the private sector to ensure that new regulations are met.

Meaningful social and economic impact
Decisions that are in the best interest of society as a whole, such as fair wages for workers and an environment which allows for social cohesion, are more likely to be endorsed by stakeholders. Such decisions provide long term job creation, wellbeing and broader economic development.

How to achieve sustainable procurement?

Keep up with changing attitudes
• 60% of companies are more engaged with sustainable procurement than two years ago.
• 33% of consumers choose to buy from brands they believe are doing social or environmental good.
• 89% of companies state that sustainability issues could have a financial impact.
• 25% of employees don’t know how much their organisations spend on sustainability.

Collaboration
• Examine your suppliers and ensure they achieve a common, sustainable goal. With a group effort of businesses, suppliers, agencies and NGOs the end goal becomes far more achievable.
• Examine your competitors. 20% of sustainability professionals believe industry collaboration is the most effective way to achieve sustainability.

Modern Slavery Awareness
• The UK government estimates that there are tens of thousands of people in slavery in Britain today.
• Do not assume your supply chain is slavery free.
• The UN Global Compact, for example, has guidance, tools and resources to assist companies with business practices. It calls on companies to align their operations with 10 universally accepted principles in human rights, labour, environment and anti-corruption.

Meercat’s Sustainability Credentials

Environmental sustainability has run through Meercat’s due diligence and procurement since 2007.

Our suppliers have all undergone a thorough vetting process, ensuring we are offering best practice to our customers. Our products are intertwined with our sustainable agenda.

Green energy is always an option from us, though the customer decides which energy source they purchase.

It is important to us that we collaborate with Net Zero analysts and experts to increase our offering to businesses, councils, forums and Business Improvement Districts.

To discuss this further, please call us on 01444 416529 or email savings@meercatassociates.com

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