Work with colleagues to understand the primary need, including how the purchase aligns with your organisation’s sustainability goals. Identify sustainability risks, opportunities, and crucial criteria for your purchase decision.
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Getting clear on the underlying business need helps you identify sourcing solutions that can reduce your sustainability risks and improve sustainability performance opportunities.
Collaborate with colleagues to understand their purchasing needs and sustainability objectives. Begin by setting aside specific or technical details and instead ask more fundamental questions: for example, is the need to purchase electric vehicles or is it about decarbonising logistics?
Further refine the need based on, learnings from previous procurement processes, your business' context, and timeline. For instance, at early stages in your sustainability journey, sustainable procurement may need more time and resources. Finally, consider alternative sourcing options such as reusing or renting.
Once you understand your procurement needs, summarise them in a ‘needs statement’. The summary should include your sustainability goals and alternative sourcing opportunities. Then share the statement with colleagues, suppliers, and others to gather feedback and to help inform the next steps in the procurement process.
EXAMPLE: Energy company pivots to meet its need with existing infrastructure
Alliander, an energy distribution company, planned to expand its office space with sustainably certified buildings. However, after clearly defining the core need, it became evident that Alliander’s need was more specifically additional workstations. Suppliers were able to offer creative solutions to the need using existing buildings, which avoided procuring new materials.¹
At this stage your aim is to identify priorities for the procurement that can later be incorporated into your RFx and evaluations. To do this you will need to define your sustainability goals for this procurement. These should be informed by, a review of your organisation's sustainability commitments, input from colleagues, and relevant risks.
To understand the procurement’s potential sustainability risks consider the full life cycle of the product or service. Then make a preliminary list of associated risks and opportunities to improve sustainability. This should draw upon any work already undertaken to EVALUATE RISK in your supply chain and consider previous contract data, where available. Make sure to also review your supply chain's legal risks and assess who has duties of care.
Be prepared to address concerns about conflicting goals, such as cost versus sustainability, by explaining to colleagues how sustainable procurement can add value. For instance, through innovation, efficiency, risk management, supplier relations, and customer loyalty. Life Cycle Costing and Return on Sustainable Investment (ROSI) tools can help to quantify this value.
EXAMPLE: Mining company discovers in-house waste stream that meets its need
A mining company regularly procures new mudflaps for their haul trucks. After considering alternative ways to meet this need, the company discovered that an in-house waste stream — worn-out conveyor belts — could be repurposed to produce mudflaps in a resource-efficient way.3
EXAMPLE: Sustainability prioritisation in Dutch Government procurement: the ambition web approach3
Using an 'ambition web', the Dutch government's central procurement prioritises sustainability, focusing mainly on reducing emissions, minimising raw materials, and mitigating chemical impacts. Secondary ambitions involve human rights and social costs. As a result, in ICT equipment tenders’ evaluation, nearly 87% of the quality score relates to sustainability.
To influence and inform how much attention and consideration sustainability receives during the procurement process, begin planning now for how sustainability criteria and weighting will fit into the procurement’s specifications, award criteria, and contract conditions.
The detail and rigour of your criteria will depend on the resources you have available to evaluate sustainability, such as time, expertise, data, and ability to verify supplier claims. Based on your capacity think about how your team can develop an effective scoring system that assigns weightings to sustainability factors in the procurement process. This preparation is particularly important in public procurement, as your weighting cannot be changed once the call for tender is published. It is also important to plan market engagement activities to test on the feasibility of your scoring system. And get feedback such as, what information and data suppliers are able to provide.
During the planning stage consider ways you can leverag spending power to get a competitive market response that meets your sustainability objectives. For example, joint procurement with other buyers can aggregate spending power to motivate the market to innovate on sustainability.
Longer term relationships can also be used to motivate suppliers. This could be in the form of Framework agreements, popular in public procurement, or listing suppliers in sustainable product catalogs and online marketplaces that gives them access to ongoing opportunities. Such resources can also make it simple for your colleagues to find sustainable products and services.
1 https://www.copper8.com/wp-content/uploads/2018/10/Circular-Procurement-in-8-steps-Ebook.pdf
2 Interview with Sustainability Practitioner, October 26th, 2020
3 https://northsearegion.eu/procirc/pilot-projects/sustainability-criteria-for-workplace-ict-hardware/
This training toolkit by the European Commission provides guidance on conducting a needs assessment, including developing a needs statement. While the steps outlined are intended for public procurement, they can also be applied to private procurement and procurement outside of the European context.
This step-by-step guide by Resource Efficient Businesses (REBus) helps you integrate sustainability across the procurement cycle. The first stage, "Identify Needs", outlines how to define your business need, consider alternative sourcing options, and develop buy-in internally.
This eBook by Copper8 offers practical guidance on integrating circular principles into your procurement cycle by outlining eight steps you can take to minimise waste and maximise value retention of the resources and materials you procure.
Prepare: Step 1 (pages 44 to 55) offers practical guidance on how to get started, including why circular procurement is valuable, what it means to your organisation, and how to get started with a low-risk pilot.
Tender RF(x): Step 5 (pages 86 to 93) focuses on the selection stage of your tendering procedure, including the legal principles you can apply to ensure your sustainability ambitions are reflected in your tender.
Circular Procurement in 8 Steps: Step 5 Selection
Although business and societal success depends on sustainability, most businesses companies struggle with demonstrating the monetary impact of their sustainability efforts as they seek to address ESG issues. In response, the NYU Stern Center for Sustainable Business (CSB) has developed the Return on Sustainability Investment (ROSI) methodology. The ROSI methodology was created to help companies measure the financial returns on their sustainability activities and, thus bridging the gap between sustainability strategies and financial performance and allowing users to build a better business case for current and future sustainability initiatives.
CSB offers in-depth resources on ROSI, including a step-by-step overview; original research publications and an interactive research database; industry case studies on implementing ROSI; Excel tools for testing ROSI focused on risk, talent, and operational efficiency; and a free online course module for building a case for sustainability.
This suite of resources will help you to assess the value created by sustainability strategies, to track sustainability-related financial performance in real time, and to assess the potential ROI of future sustainability initiatives at both the firm and the division level.
This framework was developed by the Working Group on Responsible Purchasing Practices. It acts as a reference point for companies working to improve their purchasing practices, particularly in textile supply chains.
This scanning tool by The GDELT Project is a real-time open data global graph of human society compiled from the world's news media. You can use it to check for negative news coverage of your suppliers in any country and over 100 languages.
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