For the increasing number of companies striving for sustainable operations, the new ISO 20400 – Sustainable Procurement Guidance is the latest ‘how-to’ for assessing and improving supply chains across all industries.
The International Organization for Standardization’s new ISO 20400 – Sustainable Procurement Guidance couldn’t be timelier. About 80% of a company’s environmental impacts come from its supply chain rather than internal operations, so evaluating procurement processes is key to fine-tuning sustainability achievements and goals.
Released in April, ISO 20400 is the first internationally agreed upon standard for incorporating sustainability into the procurement process. Most importantly, it highlights the pivotal role a supply chain plays between managing sustainability risks and capitalising on sustainability opportunities.
However, some might argue that sustainability should always have been part of good procurement strategy, governance and process. Sustainability risks (and opportunities) should already be integrated in good risk-management processes. So, what does ISO 20400 provide us that we didn’t already know?
ISO 20400 creates a set of definitions and strategic frameworks, and describes sustainable procurement processes, in a way that can be consistently applied by all organisations. The value of this consistency is often underestimated – a common understanding of sustainable procurement means all organisations can be clear on the scope of activities required to improve performance. In other words, all organisations would be working on the same path towards ever-higher levels of sustainability.
Sustainable procurement – why does it matter now?
If good procurement should have always included sustainability, there is even more imperative to make sure it does so now, because:
- increased negative media attention on social and environmental issues means companies are held accountable for their suppliers’ activities, and the excuse of ‘not knowing’ about your suppliers’ sustainability practices is more likely to be rejected by customers;
- some supply chain risks, particularly breaches of labour rights, were previously thought to be more relevant to developing countries, but recent exposures prove this is incorrect. The Australian Government’s inquiry into a Modern Slavery Act (a proposal that could be similar to Britain’s Modern Slavery Act) provides more evidence that this is an issue within our shores;
- new tools and risk assessment methods provide procurement professionals with better oversight of potential sustainability issues, which ensures sustainability can be integrated within existing processes. Examples include:
- Social hotspot database – an invaluable screening tool for social impacts at the country and sector level.
- Environmental life cycle assessment – scientifically based ‘materiality’ screening to determine which environmental impacts matter for your organisation and where these impacts sit within your supply chain.
- Modern slavery index – country-level statistics on modern slavery risks. The issue is more widespread than many realise.
ISO 20400 – Sustainable Procurement Guidance provides the glue between sustainable strategy, risk-management and more ‘traditional’ procurement. Edge Environment is already seeing significant interest and uptake of the Guideline and is utilising our life cycle assessment capability to provide the whole-of-supply-chain view that is required by the ISO 20400.