Using your purchasing power for good

Businesses of all sizes are considering the impact their purchasing can have on the world around them. Is yours?

Sourcing products and services to meet business needs might seem straightforward. But these days there’s more to it than just getting a good deal. Even buying standard office supplies involves potential risks and trade-offs. Price, quality, service and – yes – sustainability.
Think office furniture containing rainforest trees, or coffee from plantations drenched in pesticides.

Today most business people are aware of the environmental, social and economic challenges we face. And they are wondering what they can do to make a positive contribution.
One of the main opportunities for this is through our purchasing power. Businesses can make purchasing choices that have additional benefits to the wider community. It can increase alignment with your company’s goals and purpose. It can increase job satisfaction, as staff feel more confident that their work is good for their community.

The Sustainable Business Network (SBN) recently started the Sustainable Procurement Leaders Group. It aims to make the nation’s supply chains more sustainable and includes the likes of Fletcher Building, NZ Post, Westpac and AMI. They are working alongside a range of organisations, such as Auckland Transport, Auckland University of Technology, and Te Herenga Waka – Victoria University of Wellington.
The plan is to use the combined purchasing power of these organisations to help New Zealand become a world leading sustainable and resilient economy.

Holly Norton is SBN’s Wellington-based senior project and partnership manager. She facilitates the Leaders Group.
“Businesses know they have huge influence. They can reduce their environmental impact through changes in procurement. They can reconsider what they buy, who from, and how,” she says.
The Group is meeting every quarter. Together they are developing and sharing best practice, tools and resources. The aim is to make a radical shift in New Zealand’s supply chains to a more resilient, sustainable path.

SBN also has a range of sustainable procurement guides1 and resources available free of charge on its website. The resources include a product stewardship procurement clause template. This helps businesses ensure suppliers manage the environmental impacts of the products they supply. And the SBN Directory2 lists suppliers that share a sustainability ethos.

Everybody benefits
Ian Hankins, Westpac NZ’s Chief Financial Officer, says all New Zealanders stand to benefit from sustainable procurement.
“Businesses need to be thinking collectively about how to tackle big issues like climate change. That means setting an example by procuring sustainable products and services.”
Here is a sample of initial advice, generated from the Group’s first meeting:

Step 1: Identify the business need
Take time to understand the core problem you are trying to solve. There are many ways to get to the root of a problem. One is to ask what outcome you are seeking rather than what solution you need. Another is to ask why you need something multiple times until you get a clear answer.

Step 2: Define sourcing strategy
Be clear about your objectives. Have a sustainability strategy. Set targets. Align with global standards, such as ISO 20400 for Sustainable Procurement and The United Nation’s Sustainable Development Goals.

Step 3: Identify suppliers and tenders
Check your requirements for suppliers before proceeding with tendering processes. (For example, you may require suppliers to measure and offset their carbon emissions. You may require them to demonstrate produce stewardship.) Doing this first saves time and money for everyone. It sends a clear signal to the market about your expectations.

Step 4: Evaluate and award
Using predefined assessment criteria reduces room for individual bias. It ensures your organisation’s values are reflected. It signals that you are not making purchasing decisions on price alone. Weighted questions are the most common approach. Most of the members of the Sustainable Procurement Leaders Group weight sustainability between ten percent and 20 percent. Some aspire to increase that up to 50 percent. Some mandate a percentage across all purchases. Others set a minimum, with varying requirements for different purchases. The latter approach is more flexible, but leaves implementation up to individuals.

Step 5: Implement
Include measurable sustainability targets in contacts. Stipulate reporting processes. Detail what happens if targets are missed. Ask for data to help you measure your impact – for example, carbon output, waste or water usage per product.

Step 6: Manage performance and relationships
Build great relationships. Clear communication channels and a high level of trust are key to improving supplier performance. Get acquainted with supplier systems and challenges. It improves understanding and it makes it easier to work together.

Step 7: Review and learn
Continually review and improve. Best practice involves constant reflection. Enable staff and suppliers to give frank feedback safely and easily.   

Andy Kenworthy is communications and campaigns manager for the Sustainable Business Network.  www.sustainable.org.nz