Going from ‘What’ to ‘How’ in Sustainable Procurement

Authors

• Celine Suarez

  Former Manager, BSR

Making sense of the increasingly dizzying array of product certifications, labels, data and other sustainability initiatives is a challenge, even for experts. While the best of these efforts provide comprehensive, accurate data on a product's many sustainability attributes, it can be exceptionally difficult to synthesize the data and judge the relative "sustainability" of different products. Procurement professionals face the additional challenge of integrating these criteria into purchasing decisions that must also account for traditional considerations like cost, quality, and delivery. Even initiatives such as the Sustainability Consortium, which takes a comprehensive, science-based approach to conveying the full lifecycle of products' sustainability impacts, will need to be applied to thousands of products that companies purchase before the system can realize its full impact. So how can companies start using the information from the Consortium and other initiatives to evaluate things like light bulbs, bath towels, or milk? How can companies begin to unpack and compare the lifecycle sustainability attributes of the products they procure? If a light bulb is Energy Star certified, is that the best indicator of its overall energy efficiency? If a bath towel was made with certified organic cotton, but that cotton was shipped from Uzbekistan to Saskatchewan, is it considered sustainable? If a gallon of milk is hormone-free but made on a factory farm, is it healthier for humans, or is that benefit outweighed by the fact that it's polluting the soil? A single product might be rated on as many as 20 to 30 sustainability metrics covering issues from natural resource extraction, material inputs, manufacturing, carbon footprint, waste, water use, packaging, and more. BSR's Center for Sustainable Procurement (CSP), an initiative funded by Hilton Worldwide, is examining how procurement professionals can more effectively and efficiently integrate sustainability considerations into their day-to-day purchasing decisions.

Getting to 'How'

To start, companies need to align their sustainable procurement approach with their overall CSR/sustainability and business priorities. By understanding how they define a product's "sustainability," companies can prioritize their efforts to reduce the impacts of the products they purchase and align their process with broader corporate sustainability goals. Looking at the full lifecycle of a product, they can focus on the highest impact areas, or "hotspots," that overlap with their own commitments to sustainability. It is important for companies to think about which internal stakeholders outside of procurement influence the kinds of products they buy and start to work with these individuals to consider sustainability impacts in addition to quality and price. Departments such as marketing, merchandising, product design, and operations/facilities may have significant influence on product specifications, which in turn shape choices that can be made by procurement. More critically, those functions may have needs that can be better met through integrated sustainability procurement efforts that expand the process beyond those "doing the purchasing" to other internal decision makers. For example, when a company is designing and building out a new corporate office, sustainability decisions about what gets purchased for that building should be considered at the start. Architects, building managers, and facilities teams should be engaged in the benefits of more efficient heating and cooling systems so that from the beginning of the process, initial costs and operating costs for categories like air-conditioning are balanced by seeking high-performing, efficient units that provide cost savings over time. At the point in which these units are procured, efficiency cost savings should be compared against the price of the unit itself. By looking at all of the decisions that are made and the many internal stakeholders involved that eventually factor into the purchasing process, such as design teams, product developers, internal users of the product, marketing teams, and others, companies can see which areas affect the sustainability profile of the products they purchase and begin to make integrated decisions that will lead to the purchase of products that are better for the environment. Companies then must seek the best available sustainability data for that product. This could be from a third party like the Sustainability Consortium, or another science-based lifecycle analysis approach that covers that product category, which might be available from suppliers or from companies' own analyses. Looking at lifecycle data or analysis for similar products, companies can get a sense for where the most critical sustainability issues will arise and identify products that address these issues. With priorities identified and data in hand, companies can identify the points in the purchasing process where sustainability data can help drive decisions. For example, companies might focus on developing resources like product-comparison programs for their procurement managers or analytical tools that will help quantify the total cost of ownership (estimating direct and indirect costs of a product) of the products by factoring in sustainability criteria. Companies may also develop purchasing guidelines or training programs on how to identify products that meet the internal sustainability criteria so that category managers can talk with current and potential suppliers about creating products that fit this profile.

Reaching the 'How'

At the CSP, we are researching how companies can effectively integrate sustainability into purchasing decisions. We want to find ways to aggregate and translate sustainability data so that procurement professionals make better overall purchasing decisions. We will be addressing two main questions: How do we move forward on product sustainability, knowing the limitations of the current data but also the possibilities created by integrating it into our existing tools and decision-making approaches? What's the best way to use existing product sustainability data and analyses to make informed decisions that promote positive change? We believe it is important for companies to start addressing these questions now, as the learning curve will be steep and there is a danger that the credibility and usefulness of sustainable product and procurement efforts will be questioned if companies don't see tangible business results soon. Over the next several months, BSR will begin releasing case studies and other information that we learn from our pilot projects with the CSP.