Sustainable procurement

Sustainable procurement is a process whereby organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a life-cycle basis while addressing equity principles for sustainable development, therefore benefiting societies and the economy across time and geographies while remaining within the carrying capacity of the environment. Procurement is often conducted via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works for the best possible price, when aspects such as quality, quantity, time, and location are compared. Procurement is considered sustainable when organizations broadens this framework by meeting their needs for goods, services, works, and utilities in a way that achieves value for money and promotes positive outcomes not only for the organization itself but for the economy, environment, and society.

Sustainable procurement is a spending and investment process typically associated with public policy, although it is equally applicable to the private sector. Organizations practicing sustainable procurement meet their needs for goods, services, utilities and works not only on a private cost–benefit analysis, but also with the intention to maximizing net benefits for themselves and the wider world. In doing so they must incorporate extrinsic cost considerations into decisions alongside the conventional procurement criteria of price and quality, although in practice the sustainable impacts of a potential supplier's approach are often assessed as a form of quality consideration. It has also been proposed that other human rights can be incorporated into the extrinsic costs considered by sustainable procurement models.

These considerations are typically divided thus: environmental, economic and social, but it should go beyond and encompass a series of equity principles for sustainable development, such as intragenerational equity, intergenerational equity, interspecies equity, procedural equity, and geographical equity. These can be seen as the 'sustainability pillars' of procurement, which can be underpinned by one or several instruments for development, such as those proposed by Amartya Sen: (1) economic facilities, (2) social opportunities, (3) protective security, (4) political freedoms and (5) transparency guarantees. And to procure in a sustainable way involves looking beyond short-term needs and considering the longer-term impacts of each purchase. Sustainable procurement is used to ensure that purchasing reflects broader goals linked to resource efficiency, climate change, social responsibility and economic resilience, for example.

This framework is also known as the triple bottom line, which is a business accounting framework. The concept of TBL is narrowly prescribed, and even John Elkington, who coined the term in the 1990s, now advocates its recall. Indeed, procurement practitioners have drawn attention to the fact that buying from smaller firms, locally, is an important aspect of sustainable procurement in the public sector. Ethics, culture, safety, diversity, inclusion, justice, human rights and the environment are additionally listed as important aspects of SPP.

Furthermore, a commonly proposed framework for sustainable procurement, especially in developing countries, clarifies decision making as a balance between efficiency, social objectives, risk management and governance considerations. The framework focuses primarily on efficiency considerations. The sustainability initiatives must operate within the efficiency constraints rather than replace them, as procurement agencies remain accountable for prudent use of public funds. Social considerations form a second dimension of the framework incorporating objectives such as labour standards, inclusion of small and local enterprises, gender sensitive procurement and broader social welfare impacts. The third dimension emphasizes on risk reduction management, a necessary step to manage financial, operational, and compliance related risks arising from the integration of sustainability in procurement processes. Lastly, there is an emphasis on transparency and accountability to ensure effective implementation.

Sustainable procurement involves a higher degree of collaboration and engagement between all parties in a supply chain. Many businesses have adopted a broad interpretation of sustainable procurement and have developed tools and techniques to support this engagement and collaboration.