11.5: Sustainable Procurement Practices
Social responsibility and business ethics are usually regarded as the same concepts. However, social responsibility is one aspect of business ethics. The awareness of social responsibility began with increased public consciousness about the role of businesses and their ethical practices in society. These are the actions of firms that contribute to social welfare, which are classified as corporate social responsibility (CSR). Big corporations make CSR an important element of their strategic management plan and a legitimate business function with the role of corporate social performance, socially responsible investing, and global corporate citizenship (McWilliams, 2015).
Public Procurement Playbook
Watch this video to get a basic understanding of sustainable sourcing.
Source: Henkel. (2021, March 29). 100% responsible sourcing at Henkel [Video]. YouTube. https://youtu.be/krzCa0synL8
Sustainable Procurement
The ultimate goal of public procurement is serving the public’s needs, so it’s good news that governments have been leaders in the field of sustainable procurement, which emphasizes goods and services that minimize environmental impacts while also taking into account social considerations, such as eradicating poverty, reducing hazardous wastes, and protecting human rights (Kjöllerström, 2008). The Public Procurement as a Tool for Promoting More Sustainable Consumption and Production Patterns [opens a PDF file] report, published by the United Nations, is an excellent introduction to the topic of sustainable procurement in the public sector.
Although sustainable procurement is primarily associated with public procurement, private organizations have made significant strides in this area as well. Motivations for going green in the private sector vary. However, one recurring theme is that customers and employees see sustainable companies as more prestigious and so are proud to be associated with them (Network for Business Sustainability, 2013). Indeed, many companies find that recruiting top-notch employees depends on cultivating a reputation as an organization focused on sustainability. This is particularly true for millennials, who “want to work for companies that project values that align with their own,” with environmental sustainability “gaining ground as a key value for the younger generation” (Dubois, 2011, para. 2). This was one major motivation behind the ongoing transformation of Ford’s Dearborn, Michigan headquarters, a massive DBOOM project which you can read about in the Ford Motor Company: Dearborn Research and Engineering Campus Central Energy Plant report from the US Department of Energy.
Public Procurement: Scenarios and Solutions
Huan Li, the Chief Procurement Officer at the Department of Public Services in the city of Bramfield, faces a significant challenge. Huan’s department procures goods and services for various government entities, including schools, hospitals, and municipal offices. Recently, the city council mandated that all procurement practices must align with sustainable procurement principles to minimize environmental impact and promote social responsibility. Huan understands the importance of this directive but is concerned about the practical implications and potential cost increases. Huan must develop a strategy that balances sustainability with budget constraints and operational efficiency.
The Department of Public Services in Bramfield employs over 200 staff members and manages an annual procurement budget of $150 million. The department procures a wide range of products and services, from office supplies and IT equipment to construction services and medical supplies. The citizens of Bramfield, who benefit from these services, expect high-quality and reliable public services. The department’s procurement process involves competitive bidding, vendor evaluations, and contract management to ensure transparency and fairness. Huan’s team works closely with various government entities to understand their needs and ensure the timely delivery of goods and services.
Huan has identified three potential strategies to address the city council’s mandate. The first option is implementing a comprehensive sustainable procurement policy with strict environmental and social criteria for all suppliers. This approach would involve extensive training for procurement staff and suppliers and regular audits to ensure compliance. The second option is to focus on a phased approach, starting with high-impact categories such as construction and IT equipment and gradually expanding to other areas. This would allow the department to manage the transition more effectively and learn from initial implementations. The third option is to collaborate with other municipalities and form a consortium to leverage collective buying power and share best practices in sustainable procurement. This could help reduce costs and increase the impact of sustainable initiatives.
Huan is aware that each option has its advantages and challenges. Implementing a comprehensive policy could lead to significant improvements in sustainability but may face resistance from suppliers and require substantial resources. A phased approach might be more manageable but could delay the overall impact. Forming a consortium could provide valuable support and cost savings but would require coordination and alignment with other municipalities. Huan needs to decide which strategy to pursue to meet the city council’s mandate and ensure the long-term sustainability of Bramfield’s procurement practices.
Discussion Questions:
- What are the potential benefits and challenges of implementing a comprehensive sustainable procurement policy in Bramfield?
- How could a phased approach to sustainable procurement help manage the transition, and what are the potential drawbacks of this strategy?
- In what ways could forming a consortium with other municipalities enhance Greenfield’s sustainable procurement efforts, and what obstacles might arise from this collaboration?
Source: Scenario and questions created with the assistance of Microsoft Copilot.
Checkpoint 11.5
Attributions
“11.5 Sustainable Procurement Practices” is adapted from “Chapter 8: Ethics, Social Responsibility and Sustainability” from Procurement in the Supply Chain World, copyright © 2022 by Angela Reid-Regier and Bryan Snage, licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.
The multiple choice questions in the Checkpoint boxes were created using the output from the Arizona State University Question Generator tool and are shared under the Creative Commons – CC0 1.0 Universal License.
Image descriptions and alt text for the exhibits were created using the Arizona State University Image Accessibility Creator and are shared under the Creative Commons – CC0 1.0 Universal License.
