Last month, Bramwith held our first sustainable procurement event. We invited procurement professionals from a variety of sectors to discuss the challenges they face and how new approaches and tools can benefit their business and customer, as well as society and the environment. A great deal of ground was covered, and some innovative suggestions shared. Below is a selection of these ideas and experiences from our expert panel.
Emma Howcroft, Head of Consumer GB Procurement, GlaxoSmithKline (Chair)
Key learnings and takeaways
Sustainability is everybody’s job and should underpin everything we do.
In the last 20-30 years, procurement has changed from a back-office function to one where CPOs now sit on Senior Leadership teams and on Boards, informing their companies’ strategic direction while creating tangible monetary value.
Sustainability presents an opportunity for procurement to change again and lead the sustainability agenda. We have to accept that we may need to relinquish some of our current processes as these might not be right for the future.
Sustainability needs to move beyond being seen as an additional benefit or marketing practice and be used to underpin business strategy. From now on we should make sustainability our hero strategy.
Sustainability is traditionally positioned under Cost and Innovation but it should also be positioned under Assurance of Supply. Most things on earth are finite so our job as procurement professionals is to make sure we can continue buying the services and products which our organisations need to function.
Tony Bishwadip Roy, Head of Sustainability and Governance at BT
BT consume 1% of the UK's electricity. The company is committed to saving their customers 3 times the amount of carbon that they use themselves.
BT’s supply chain has the biggest carbon footprint so is integral to their sustainability strategy.
Sustainability is important from an investment point of view as 20% of BT’s investor community comes from socially responsible investors who wouldn’t necessarily work with BT without the commitment to sustainability.
The company launched the Better Futures Supply Forum six years ago to create better engagement with suppliers and also launched a sustainability tool for suppliers.
When BT started the Better Futures Supply Forum and Sustainability Toolkit, the majority of their suppliers had low scores on their sustainability KPIs. The company worked with them to help them get where they needed to be, mostly using the resources they already have. Within five years all the suppliers had moved from the lowest score of bronze to gold. The resources help suppliers be more resource efficient with both their materials and their workforce and are subsequently in a position to offer more competitive pricing.
During the tender process, 10% of the judication criteria relates to the company’s sustainability credentials. This is something that the Government also intends to include in their own tender process.
The company’s next steps are to look at sustainability through the lifecycle of a contract. They have introduced a contract clause that requires the supplier to measure the baseline of carbon and commit to saving carbon, either themselves or through the supply chain. This must be independently monitored. One client saved 131k tons of carbon from the lifecycle of one contract. Tony advised that, for BT, this is only worth doing if the contract is 3-5 years long.
Human rights and health and safety are also important considerations for sustainable procurement. BT map and audit their supply chain to understand risks with issues like slavery and excessive working hours.
BT recently launched an initiative called Get Drastic with Plastic to identify opportunities to reduce plastic waste within BT operations.
The company is committed to removing all plastics from BT’s supply chain by 2025.
Nasir Khan, Head of Commercial, Network Rail
There are 20,000 miles of rail track in the UK and 1.7bn passenger journeys are made in a year. It is vital that the network is made more sustainable to serve the UK economy.
Safety is Network Rail’s priority and sustainability has a huge impact on this. Network Rail spends £8bn each year across its supply chain which comprises just under 4000 companies. The company has been using the aforementioned 10% criteria on sustainability in tenders for the last 15 years.
Network Rail also conduct separate sustainability training for all staff with budget responsibilities.
National Rail’s sustainability journey has evolved from focusing on issues like eco-diversity and health and safety to include how the company is serving the community. Examples of this are optimising retail spaces to better serve customers and ensuring diversity and inclusion in recruitment processes, and the design and planning of public spaces.
The company’s energy bills are increasing due to nationwide electrification projects. They are working with providers to move towards sustainable regeneration and are also working with private solar farm developers, tapping directly from local solar farms into the network.
The company is a signatory of the Supply Chain Sustainability School after being introduced to the initiative by a supplier.
The company pay all suppliers seven days from invoice which is highly beneficial for SMEs. They encourage suppliers to follow suit.
Henry le Fleming, Assistant Director, Plastics and Circular Economy Lead, PWC
One of the main challenges of sustainable procurement is to balance negotiating the impact of an increasingly risky world with the business’ need to remain competitive and reduce costs.
In order for sustainable procurement professionals to be able to explain their standpoint to CFOs, they need to be able to measure risk more effectively e.g. quantification tools to monitor the effect that the climate has on the supply chain and business as a whole.
PWC use technology to gain insights into supply chain risk, including a data gathering tool called Ryder. Ryder collects both public and premium content data about companies from across the web in 50 languages which can reveal reputational, structural or operational risks in the supply chain. There are some discrepancies with data quality due to issues like lack of data regarding court cases in India. Also, confidential data is unlikely to be accessible via these platforms. The tools aren’t perfect but they are still very valuable, especially for companies that have a large number of suppliers.
In the future, companies like Ryder and Sedex are planning to include site-specific information which will make them even more useful for sustainable procurement professionals.
PWC also use supplier codes of conduct and site audits to mitigate risk to the supply chain, though audits can be problematic as issues can still be going on behind the scenes or after the visit is over. PWC are planning to use predictive tools to find out the best times to visits sites, and which companies are priorities to visit.
When conducting onsite audits, it is important for different departments such as Finance to be involved to make sure you get the full picture.
We’d like to thank our panel of speakers once again for sharing their experiences and offering such valuable insights about how sustainable procurement processes can be enhanced and improved, no matter what size or sector your business.
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