Purchasing for Sustainability

Sustainability Purchasing Trends and Drivers

Executive Summary

Sustainable purchasing is a growing global trend. Increasingly businesses, governments, non-profits and other organizations are integrating social and environmental objectives into the purchasing process as a means to reduce their environmental footprint, leverage social benefits and foster a sustainable economy. This paper reviews global trends and drivers for sustainable purchasing and multi-lateral and regulatory developments that are advancing sustainability in the marketplace, and provides details on two case studies in sustainable purchasing.

It quantifies the trends in environmental and social purchasing the latter with a focus on fair-trade, diversity purchasing and ethical sourcing. It looks at the emerging role of government and universities in driving the sustainable purchasing agenda and assesses recent trends in sustainable purchasing collaboration, whether industry to industry, industry to non-governmental organization (NGO), or purchaser to supplier. It profiles developments in purchaser networking and capacity building, performance measurement and certification. The drivers for sustainable purchasing are also reviewed, including business drivers such as brand recognition, compliance, risk management, cost and innovation and global drivers encompassing corporate social responsibility (CSR) issues, globalization and offshoring, and the ripple effect of large purchasers such as Wal-Mart. Finally it reviews some of the recent multi-lateral developments and regulatory measures in Canada, UK, US, Europe and Asia that are propelling sustainable purchasing.

Major conclusions are that there is a global trend towards organizations developing sustainability purchasing programs, with many of them doing so as a means of implementing their sustainability or corporate social responsibility programs. Environmental considerations are typically ranked higher than social factors, though priority environmental concerns have human health implications such as toxics. Indeed, the greening of the supply chain was ranked as the number one supply chain issue for 2007. On the social side, fairtrade, diversity purchasing and ethical sourcing are showing strong growth trends. The ethical sourcing experience of large brands is starting to pay off in deep knowledge for how to reward and motivate ethical considerations with suppliers going forward, including a focus on supplier collaboration and capacity building.

Top product areas for sustainable purchasing programs include paper and paper products, janitorial goods and services, electricity, office suppliers, equipment and furnishings, electronics and building materials and services. Top priority concerns of many purchasers are how to screen their suppliers and how to measure the sustainability impacts of their purchases. There are many documented barriers to sustainable purchasing programs, too, including product cost premiums, lack of time and resources, lack of management support and the need for tools, information and training. Governments and universities, i.e. the Sustainability Purchasing Trends and Drivers public sector, are key drivers of sustainable purchasing, universities primarily driven by activist student bodies, and governments by leadership concerns.

Further analysis of sustainable purchasing trends reveals a strong move toward greater collaborations in the supply chain and with stakeholders, whether purchaser to purchaser, purchaser to supplier or purchaser to NGO. As a result of these collaborations, improved awareness, understanding and efficiencies are created. This helps advance a key priority concern of purchasers, which is impact and performance measurement, a trend that will affect how sustainable purchasing evolves in future.

Key business drivers are identified, including brand recognition, risk management, cost, and innovation. Global drivers are also reviewed, such as corporate social responsibility management systems, globalization impacts of outsourcing and offshoring and the large purchaser ripple effect. Finally, the paper profiles some key multilateral and government efforts to advance a sustainable supply chain and reveals that most of the activity is aimed at government procurement or the product manufacturing process.

In all, the paper concludes that sustainable purchasing promises to be a key driver of a sustainable economy. The supply chain will play a leading role in how sustainable production and consumption will evolve in future, affecting the fortunes of the planet and civilization.

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