Sustainable Procurement

It would be unfair to say that sustainability has become somewhat of a ’buzzword’ in the last 12 months – it’s far too important to be dismissed in such a way. What is true, however, is that the word ‘sustainable’ is increasingly on people’s lips as they start to realise it’s impact on the world of business.

Within procurement there is a real sense of urgency about the sustainable agenda, helped along by the work of the Sustainable Procurement Task Force. Public sector spend totals £150 billion every year and for that vast sum of money the government needs to demonstrate real value for money. Over £3 billion on food, £4.5 billion on waste treatment and disposal, 1,000 million gallons of water, six million employees, 7,000 gigawatt hours of energy – the yearly needs of the UK government create a long and expensive list. But the bottom line is the government is committed to becoming more sustainable and somehow has to make this work.

Committed to sustainability
A large proportion of making the sustainable commitment work will sit with public sector procurement. Sustainable procurement needs to support wider economic, social and environmental objectives that will offer solutions for the longer term.

Value for money is not just about cost but also must take on board environmental, ethical and social effects. The government will be expected to lead by example and whilst commitment to sustainable procurement is not embedded in a large proportion of organisations there are some really positive examples of where organisations are doing it and doing it well!

In the 2005 Sustainable Development Strategy, the UK Government stated its ambitious goal to be among the leaders in the EU on sustainable procurement by 2009.  It recognised that the current initiatives alone would not accomplish this desire and so the Sustainable Procurement Task Force (SPTF) was set up. It was jointly funded by the Department for the Environment, Food and Rural Affairs and HM Treasury and was put  under the leadership of Sir Neville Simms, Chairman of Utility company International Power Plc. The task force included representatives from the public and private sectors, trade unions and professional bodies – including CIPS.

A plan for budgets
The National Action Plan published its finding on 12 June 2006 – delivering its plan in such a way to ensure that public sector budgets are spent in a way that “achieves value for money on a whole life basis, while accruing benefits to the organisation, society, the economy and the environment.” The recommendations outlined in the report include:

  • Lead by Example –the government needs to provide clear policy leadership from the top on sustainable procurement. Public sector audit organisations must make clear the are auditing for long-term value for money.
  • Set clear Priorities – a call to the government to rationalise what is seen as too many policies on sustainability
  • Raise the Bar – existing minimum standards within central government must be enforced and extended to the rest of the public sector with further standards being developed in specific areas.
  • Build Capacity – capabilities must be strengthened to help purchasers deal with the lack of guidance on putting sustainability in to practice.
  • Remove Barriers – the task force highlighted  that whole-life costing was not being put into practice and that focus on lower up-front costs and that the Efficiency Programme were perceived as barriers to sustainability.
  • Capture Opportunities – The public sector was advised to engage with suppliers to enable innovative solutions to be developed.

The UK Government will review the National Action Plan and are due to respond late in 2006 (at time of writing no response had been issued). Within days or the report being published the government appointed cabinet secretary Gus O’Donnel to ensure that every UK government department would put together a response to the report’s recommendations. It also announced a pledge to have government offices carbon neutral by 2012.

What cost sustainability?
With all this focus and effort being placed on sustainability there has to be some degree of time spent on dispelling some of the myths about it. Most people will lay claim that it is achievable – but at a higher price or at a lower quality.

Some will cite the example of recycled paper – for small consumer quantities the prices still tend to be higher, but when dealing with the high volume amounts the costs are not that dissimilar. Even if recycled paper isn’t an option, many organisations, including CIPS, are now sourcing paper from sustainable forests. The fact is, some sustainable products will have an initial higher premium – but this will often be recovered through their lower energy usage, water consumption and disposal costs. Given the rising fuel and water costs, this can often help strengthen the argument.

Sustainable strategy
But sustainable procurement shouldn’t and can’t stand alone – it has to fit in with an organisation’s overall strategic procurement approach and there must be a strong placed team to be able to deliver such a strategy. Many procurement teams who don’t have ‘buy-in’ form the Board will find it difficult to bring in a sustainable approach to purchasing as there will be a lack of understanding about what it can achieve and often the organisation as a whole must be able to embrace sustainability across all of its business practices.

Leaders and staff in the public sector are still dealing with the concept that sustainable procurement is a form of effective procurement. The government must ensure that this message is clear and persuasive. It also needs to ensure that all procurement is carried out by professional procurement people, who are experienced, qualified and up to date with current techniques – and they are supported by committed leaders, effective information systems and ongoing professional development. All this is part of laying the foundation for effective procurement. Ensuring that everyone understands what level of priority to give sustainable goals within the whole range of other priorities – especially when there will often be conflict is key – this is about complete sign-up.

The future
In the Foreword to the report, Sir Neville Simms says; “Future generations will neither excuse us or forgive us for ignoring the signals that we can see today. They will not accept that it was too difficult or too costly to keep or economic aspirations in balance with our impact on the environment and the effects our decisions would inevitably have on society. They will wonder why we delayed and took such tentative first steps and why our government was so reluctant to act with conviction and leadership even if the, so called, hard evidence was only slowly being assembled.”

These are very humbling words and as a society we have to take notice on both a personal and commercial level. As a profession, procurement now has a duty to adapt its practices and start playing its part in making a difference.

Further information:
Tel: 01780 756777
Fax: 01780 751610
www.cips.org

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