Sustainable Procurement – Social, Ecological and Economic Purchasing

Sustainable procurement incorporates fundamental ecological, economic and social standards in corporate purchasing.

07. July 2021 | Blog

For as long as companies have existed, purchasing departments have been required to procure requirements at the lowest possible cost. For some years now, the principle of sustainability has also played a central role in modern purchasing strategies. Procurement organizations must therefore manage the balancing act between budget, price and sustainability.

 

What is sustainable procurement?

Sustainable procurement takes the principles of corporate social responsibility (CSR) in all purchasing decisions and processes into account.

Corporate Social Responsibility (CSR) is the social responsibility of companies in terms of sustainable business. In practice, many companies use the terms CSR and sustainability largely synonymously. CSR or sustainability encompasses social, ecological and economic aspects. In concrete terms, this means, for example, the economical use of natural resources, protection of the climate and environment, fair trade or responsibility in the supply chain.

In the ecological dimension, climate neutrality plays a particularly important role. In this context, the Greenhouse Gas Protocol provides an important set of standards for the accounting of greenhouse gas emissions and the associated reporting for companies. The GHG Protocol is considered the most widely used standard for greenhouse gas accounting. GHG Protocol standards distinguish three areas, called scopes, to which emissions can be assigned:

  • Scope 1 includes all direct emissions, i.e. greenhouse gases emitted in the organization.
  • Scope 2 includes indirect emissions that occur elsewhere and are imported via energies and operating resources such as electricity, heat, compressed air or cooling.
  • Scope 3 includes greenhouse gases that occur outside the organizational boundaries and Scope 2. These include the emissions from the manufacture, transport of purchased goods or distribution and use of the company’s own products or the disposal of waste. Emissions due to business travel are also included.

To give emphasis to the importance of CSR, especially in the social dimension, the Supply Chain Act is to be introduced in Germany. This makes the viewpoints of CSR legally binding. Companies that buy or produce abroad must thus pay attention to the observance of human rights in all phases of their supply chain.

 

Recognize opportunities & seize Them: The benefits of sustainable procurement

The topic of sustainability initially brings supposed effort with it. Implementing CSR is not always easy and has yet to be anchored in many companies. But are there economic reasons to manifest sustainability in purchasing in addition to the socially responsible aspects?

If sustainability is considered and included in purchasing, this can have multi-layered advantages for companies:.

  • Improving resource efficiency: contributing to environmental and climate protection
  • Compliance with social standards and labor law correct conditions
  • Increasing external perception of companies
  • Differentiation from the competition and thus potential increase in sales
  • Easier access to capital

 

Sustainable procurement with e-procurement

Sustainable procurement incorporates basic environmental, economic and social standards into corporate purchasing. The basis for this is a well-structured supplier management. For an optimal supplier management, in turn, digital tools are suitable. They make it possible to make targeted decisions regarding the qualification, evaluation, development and ultimately the selection of suppliers.

Digital supplier management via e-procurement enables, for example, supplier self-disclosure, master data queries, regular supplier surveys or automated scoring based on pre-qualification. These functionalities offer purchasing organizations the opportunity to make fact-based decisions regarding suppliers and to implement sustainable procurement in concrete terms.

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