Going Beyond Cost with Sustainable Purchasing

Sustainable purchasing is to the acquisition of goods and services that consider environmental, social and economic factors throughout a product’s life cycle. Sustainable purchasing is more about evaluating goods and services in a broader context rather than costs, such as:

• Reducing the effect on health, local culture and the environment
• Purchasing from vendors that support sustainability and comply with environmental norms
• Integrating ESG goals into the supply chain

What Are the Benefits of Sustainable Purchasing?

Here are the environmental, social and economic benefits of sustainable purchasing:

Environmental benefits

• Reducing waste and improving resource efficiency, reducing carbon footprint, cutting scope 3 emissions, supporting greenhouse gas reductions and implementing waste prevention practices.
• Promoting circular and/or regenerative economic solutions.
• Improving the impact of biodiversity to reach individual and global environmental targets.

Social benefits

• Promoting social responsibility and increasing CSR reputation and customer loyalty
• Contributing to creating a fairer society.
• Fostering local production practices

Economic benefits

• Managing risks, reducing costs, increasing revenue and promoting innovation and market differentiation.
• Improve the KPIs of purchasing by reducing compliance risk.
• Improve the organization’s bottom line by reducing waste disposal costs.

How Does Sustainable Purchasing Reduce Scope 3 Emissions?

Procurement plays a critical role in cutting Scope 3 emissions – first, by understanding emission hotspots and then collaborating with suppliers. Here’s how procurement teams with sustainable purchasing can help reduce Scope 3 emissions:

• Create avenues to gather scope 3 emission data based on spend and categories. Ideally, a combination of third-party data, supplier data and spend data (e.g., POs and invoices) is required
• Set up processes to establish an emission baseline to adjust and validate scope 3 emission data
• Try gathering supplier documents on emissions
• Create a mechanism for category managers to put in place emission reduction plans based on category and product-level emission data
• Ensure emission data viability across the source-to-pay processes to ensure sourcing and purchasing decisions are taken with a focus sustainability

What are the Best Practices for Sustainable Purchasing

Sustainable purchasing requires a comprehensive and efficient strategy that considers the entire value chain and engages suppliers, stakeholders and customers to drive sustainable change.

Here are some effective ways to implement sustainable purchasing:

Getting leadership buy-in: Discuss the advantages of sustainable buying with your co-workers and top management. It’s crucial to have co-workers’ support, especially from executives.

Critically evaluate suppliers: Identify suppliers who are low-impact, fair trade or environmentally friendly and those who aren’t. Evaluate the carbon footprint of underperforming suppliers to reduce the environmental impact of the supply chain. Additionally, businesses can use a scorecard to evaluate supplier performance.

Fostering a culture of sustainability: Foster a company culture that values sustainability and encourages employees to make sustainable choices, especially the procurement teams. Additionally, train staff on sustainable purchasing best practices and their importance.

Communicate your achievements: Spreading the word about your success in sustainable purchasing is a powerful way to promote your company’s products or services within and outside of your organization. This can also motivate peers to purchase sustainably.

Encourage environment-friendly practices: Promote suppliers whose businesses provide environmentally sustainable products or services and encourage the development of environmentally friendly practices within suppliers.

To Sum Up

With growing environmental concerns and emerging sustainable methods of production, companies are taking a shift from the traditional ways of purchasing and considering environmental, social and economic factors. Sustainable purchasing improves CSR reputation, boosts customer loyalty, renewable resources’ usage and profitability.