5 arguments for sustainable procurement
During times of global political change and economic uncertainty, it’s understandable if organisations are moving sustainable procurement down their agendas. However, recent developments and longer term studies suggest they might want to do exactly the opposite.
Rather than being a financial drain, the practice of integrating environmental protection, social progress and economic development into procurement strategy showed its strength in 2016. Here are five arguments for sustainable procurement:
1. Better returns and performance
Studies into the long term performance of businesses indicate that financial performance and shareholder value is increased among those organisations ranked as high sustainability.
Research compared 180 companies, 90 which were classified as high-sustainability and another 90 as low-sustainability. These were all organisations that had started environmental, social and governance policies in the 1990s that reinforced a cultural commitment to sustainability, including policies related to customers, product risk and health and safety. Over an 18-year period, the high-sustainability companies dramatically outperformed the low-sustainability ones in terms of stock market and accounting measures. They also performed much better as measured by return on equity and return on assets.
2. Customer and employee loyalty
Being the kind of company that can attract better and more committed employees and have more loyal customers could easily result from a long term commitment to sustainable practices.
As an article in Entrepreneur points out, most consumers decide what to buy and who to buy it from based on their emotions. This means they want to feel good about how they spend their money or where they work, so an organisation that helps them to feel positive about their choice by having sustainability policies in place is likely to create a stronger, long term bond and ultimately, better business stability.
3. Being traceable in a transparent world
Transparency is a major issue for businesses operating in a digitally powered, social media hungry world. The chance of being exposed in public and bad news going global, let along national, is greater than ever before. Rather than try to avoid the challenges it presents, some businesses are embracing transparency, making their sustainable procurement practices easily accessible to consumers and scoring a PR win in the process.
Letting its customers see in detail where their products originated from, seafood brand Chicken of the Sea, launched a digital traceability initiative in 2016 that helps consumers follow their food from ocean to can through an online experience. Chicken of the Sea Trace your Product allows people to enter a can code to find detailed information about the product. A website lists the species of seafood with nutrition information, the region it was caught, the method used, the vessel that caught the fish and the start and end dates of the trip.
4. Reduced fuel use and less CO2
Airline sustainability came under the spotlight in 2016 when the results of a field experiment in partnership with Virgin Atlantic Airways were published. This was designed to encourage pilots to improve fuel efficiency on flights.
Looking at over 40,000 unique flights over an eight month period, captains were encouraged to improve efficiency in three key flight areas, pre-flight, in-flight and post-flight. Over 110,000 captain-level observations were made, with captains given different incentives to reduce their fuel use. The experiment saw pilots save between 266,000 and 704,000 kg of fuel for the airline over an eight month period, with an estimated reduction of CO2 of between 838,000 and 2.22 million kg.
With substantial cost and CO2 savings to be made, all organisations that operate fleets, sky high or otherwise, stand to make big gains by incentivising fuel efficiency.
5. The renewable energy drive is here
With some of the world’s best known companies embracing renewable energy and being regularly acknowledged for this, it appears unlikely that the global trend towards better energy performance will disappear.
Apple was recently named the world’s greenest major tech company for the third consecutive year in a report from Greenpeace. It scored full marks for transparency, renewable energy commitment and procurement and emissions mitigation in the annual report, which measures energy performance across the IT sector. Apple is said to have maintained a strong policy since adopting its 100% renewable commitment in 2012 and provides the clearest and most detailed reporting of the tech giants on the energy performance of its own data centres.