Many research studies have confirmed the fact that responsible purchasing is now a powerful lever for company performance and a major challenge for organizations. Fine... but what does responsible purchasing actually mean in a corporate context? What we need is a concise definition, and the ISO 20400* standard can conveniently help us with that. The standard defines responsible purchasing as “procurement that has the most positive environmental, social and economic impacts possible over the entire life cycle.” Going beyond the cost/quality/lead time triumvirate essential to any company strategy for purchasing goods or services, responsible purchasing adds another: environment/ethics/economy. And that changes everything.
Organizations have had a real wake-up call, and now understand that although monitoring their activities was good, addressing environmental and social issues at every stage of the product life cycle is better.
But is that really the only reason?
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5 key factors
Five key factors are driving organizations to adopt Responsible Purchasing policies. The first is quite simply legal compliance. Given the increasingly strict demands of all the world’s regulatory bodies, making the commitment to responsible purchasing is becoming a non-negotiable necessity for ensuring that companies comply fully with legislation. The legal sanctions now being applied to parent companies and their foreign subsidiaries in terms of human rights violations are becoming increasingly punitive. France has been a pioneer on these issues, and its Corporate Duty of Vigilance Law of 2017 is now being emulated across Europe, encouraging EU member states to crack down hard on companies that violate fundamental freedoms.
Secondly, it is in the interest of companies to comply with international standards if they want to be seen as credible and taken seriously. How can you claim to be a leader in your market if you fail to respect the standards that apply to you and your market? So credibility and commitment are also in the mix when it comes to making the transition to responsible purchasing.
Another important factor is that non-governmental organizations (NGOs) now have the resources they need to call out bad practices. With points of contact right around the world, NGOs are very effective whistleblowers with the ability to impact the brand image of an organization negatively in the event of non-compliance, or positively in the event of compliant and virtuous practices. It is obvious that a good reputation attracts customers and confirms investors in their choice.
“Which is why it’s essential to reassure all stakeholders by flagging up our interest and determination to secure our purchases, and the actions we are taking to do so”, says Saint-Gobain Responsible Purchasing Director Cécilia Frasnetti. Reassurance is therefore the fourth key factor in favor of responsible purchasing.
“Last, but not least, Responsible Purchasing is often a source of new opportunities and new business,”continues Cécilia Frasnetti. Mutually committed to taking the path of sustainable development together, companies and their suppliers have every incentive to improve their practices and develop new products or industrial processes that address the issues raised by today’s social and environmental challenges.
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Drawing its values from Corporate Social Responsibility (CSR), the Responsible Purchasing policy is becoming a strategically important asset for today’s organizations. As well as ensuring full compliance with the law, this structured approach makes it possible to engage with sustainable development, improve brand image, and build long-term collaborative partnerships with committed suppliers.
Which rather poses the question: “How do we actually do that?” ISO 20400, the international standard on responsible procurement, answers that question in detail with a precise roadmap that puts the emphasis firmly on collective intelligence.
How do you roll out a Responsible Purchasing policy?
In practical terms, introducing Responsible Purchasing requires the active involvement of company management up to the very highest level. This is no time for thinking in isolation. It simply won’t work. The key to success lies in a high degree of cross-functionality to onboard stakeholders, from purchasing to financial, legal, Management Committee, etc.
Once convinced of the merits of this course of action, management must begin by preparing a code of conduct to clarify its requirements in unambiguous terms.
At the same time, it must construct a risk map that focuses particularly on suppliers with low levels of CSR maturity and/or countries that do not have the same framework in terms of sustainability, employment conditions and societal responsibility. What are working conditions like? Are international standards being complied with? Is the product manufacturing process environmentally friendly?
Once the risks are identified, the investigations can begin with an on-site document review or audit. The purpose of this audit is clear: it is to assess the environmental, employment conditions and legal aspects of production activities. If the results fall short of satisfactory, there are two possibilities: either the supplier has the will and ability to improve, in which case it will receive assistance in doing so, backed by a corrective action plan. Or it has neither the resources nor the will, which will have the effect of terminating the partnership.
Naturally, like any strategy, the Responsible Purchasing policy will be assessed on the basis of performance measurement. The indicators monitored include training for buyers, the application of discriminating CSR criteria, supplier CSR performance and the diversity of the supplier panel (e.g. use made of local suppliers and organizations providing work for disabled people).
And let's not forget that the success of a Responsible Purchasing program depends not only on the resources allocated internally by a company, but also on its ability to unite suppliers around the achievement of its own CSR objectives.
Wood, sand and a circular economy!
So much for the theory. But how does all this work in practice? Let's take the example of wood at Saint-Gobain; a supply sector that was recently audited. The Group has mapped the risks to improve the way it addresses the issues around deforestation and the destruction of biodiversity. As a result, 95.8% of the wood purchased by the Group is now responsibly sourced. Given the risks in certain parts of the world, and especially the risk of deforestation, some countries are no longer included on the list of approved suppliers.
Another example is sand, which we use in the manufacture of glass, glass wool and mortar. Right now, more than 90% of the sand we purchase comes from open-cast quarries. Above those quarries hangs a Sword of Damocles: the increasing scarcity of resources. So the Saint-Gobain Research & Development Department got together with the Purchasing Department to come up with a brilliant idea: sourcing this material from elsewhere, of course, but in a radically different way. One of Saint-Gobain’s mortar production plants in Portugal is located next to a paper mill, which uses its paper waste to generate space heating for its buildings. The only problem is that the boiler produces paper ash. And a great deal of it... So Saint-Gobain has found the solution it was looking for by recovering these ashes and using them instead of freshly excavated sand!
Given today’s new environmental, ethical and economic challenges, there can be no doubt that the Responsible Purchasing policy is a very important lever in company growth and performance. As well as forming an integral part of CSR policy, this strategy is also a building block of the future commitment to decarbonize our industry, reduce its impact on depleting natural resources and shrinking its carbon footprint.
* Introduced in 2017, the international ISO 20400 standard (ISO: International Organization for Standardization) provides companies with guidelines for integrating sustainable procurement into their strategies.
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