In a recent survey conducted by EcoVadis and the Stanford Graduate School of Business, 63% of executives said that meeting corporate sustainability goals was “very important” for their organization – an uptick from only 25% in 2019.
69% of the surveyed respondents reported that they’re taking sustainability performance into consideration when selecting new suppliers and renewing contracts.
To that end, creating sustainable purchasing programs – also known as environmentally preferable purchasing (EPP), green purchasing or green procurement programs – is no longer just relegated to the public sector. Now, many private companies are getting in on the action, too.
We’ve rounded up key takeaways from organizations paving the way for greener purchasing practices. Keep reading for inspiration to create a green purchasing strategy for your organization, with actionable tips and best practices to implement whether you’re making an initial plan, a formal program, or even official company policy.
A green purchasing program is a formal plan which documents how to find, evaluate and measure the efficacy of suppliers offering products or services that meet a company’s specific sustainability goals.
Through a green purchasing program, you can not only benchmark typical supplier criteria such as prices, quality and capacity, but also how working with these suppliers will help you achieve your overarching sustainability objectives.
NASPO recommends that you first focus on one type of product you purchase instead of rolling out an entire program for all of your vendors. By doing so, you can identify what works and what doesn’t, better fine-tune the process, and eventually gain more stakeholder approval.
Identify members of your department and relevant people outside of procurement that can offer expertise and that will be affected by any sourcing changes you make. For instance, you may want to recruit people from accounting, finance, IT, operations, shipping and facilities management.
As part of this process, you’ll want to clearly define roles and responsibilities, especially when determining the major decision-makers on your team.
Now it’s time to analyze how your company is performing from a sustainability perspective. What is your current carbon footprint? Where does most of your waste go?
Then, assess the performance of your current suppliers for the product group you’ve chosen to focus on. Look at their environmental impact, the financials and different quality measures. How many of your supplier vendors offer green certifications? Do any of the products you purchase contain harmful chemicals that hurt the environment? What percentage of their products are recycled? How much do they cost? How timely are their deliveries? Do they ever send you defective products?
Purchasing is only a piece of the larger sustainability puzzle. Evaluate your organization’s green initiatives and then identify how your purchasing practices can ladder back up to these initiatives. In other words, look at the larger picture and work backward.
This can be done in tandem with step four, but you’ll ultimately need to identify – and then define – your green purchasing goals for the product category you’re focusing on.
You may want to begin with broad goals, such as:
Using products with fewer toxic ingredients.
Lowering your carbon footprint.
Using more recycled materials.
Leveraging renewable energy to reduce greenhouse gases.
Afterward, choose the broad goal(s) which apply to the product category you’re initially concentrating on and then break these down into SMART goals (specific, measurable, achievable and timely).
Consider Doing Clean Sheet Cost Analyses
To find green procurement program goals which are both cost-effective and improve sustainability, McKinsey & Company suggests you use “resource clean sheets,” a modified form of a clean sheet analysis (also referred to as a cost modeling estimation) which factors in carbon emissions. These granular assessments allow you to measure both the cost and carbon footprint involved in creating a product.
For instance, if looking at a specific product, you would first evaluate the costs for overhead, production and material, and then see what the cost is if you make any adjustments to the materials for sustainability purposes. Next, you would look at the greenhouse gas emissions involved in your current state and what the emissions would be with the same proposed changes.
This will help you identify which change would yield the most cost savings and emission reductions.
Determine the specific criteria you’ll use to evaluate your current vendors and screen future suppliers. These criteria will go hand in hand with your green purchasing goals.
Let’s say that you’ve chosen to start out with your company’s janitorial and sanitation products. For this example, we’ll assume your company has similar sustainability goals to Bosch, which models its sustainability strategy off the United Nations Sustainable Development Goals (SDGs).
Purchasing greener cleaning products helps with two SDGs: good health and well-being, and clean water and sanitation. One of your specific green procurement goals is to purchase cleaning products that do not contain ingredients that are harmful to humans or animals.
To analyze your current jan/san suppliers and establish qualification criteria for future suppliers, you’ll look for specific, third-party green certifications. That way, you can avoid doing business with suppliers who mislead about the “greenness” of their product.
Check out the EPA’s Recommendations of Specifications, Standards and Ecolabels for a list of green certifications to consider. Though this list is designed for federal purchasers, it provides recommended certifications and specifications for different product types that you can use as well.
Outside of requesting specific certifications, you can also reference the Responsible Purchasing Network’s Vendor Sustainability Questionnaire, which lists questions to ask suppliers and more criteria for your vendors.
If you have contracted suppliers, you will want to update your contract requirements to include the new standards you’ve identified.
NASPO recommends including the following items in your contracts:
State the standards suppliers need to reach. Clearly articulate your green procurement goals and the certifications that validate if their products meet them.
Request that new suppliers provide proof of these green certifications.
Update your contract language allowing current suppliers to offer alternative green solutions if they’re in the midst of an existing contract term.
Make it mandatory for new vendors to provide training on how to use their products, if needed.
If you haven’t already, make sure to reach out to the suppliers you’re already working with and let them know about the changes you want to make, including updates to their future contractual language. Update your RFPs and RFQs to include the new requirements for this product category. This will give them the opportunity to submit a new bid and show you if they meet the new qualifications you’re seeking, or decline renew the contract so if they don’t.
By now, you’ve measured your current state and determined your desired future state for a particular product category. Use this information to establish minimum key performance indicators (KPIs) so you can measure the success of your program implementation (at the start, just for this product type). For instance, you may want to measure:
The product costs.
Your carbon footprint.
Your percentage of recycled content or toxic ingredients.
The number of vendors you’re using before you implement the policy and afterward (especially if vendor consolidation is top of mind).
Then, determine how often you will measure these KPIs, whether it will be weekly, monthly or quarterly. Choose the cadence which best fits the product category at hand.
Next, choose a final review date where you’ll evaluate the overall progress and potential success of your green procurement program implementation.
Before you start your new sustainable procurement program, reach out to any employees who need to know about the initial phase. Provide enough time and training so that people are less resistant to change and aren’t caught off guard. Explain how this change will benefit them individually and the company as a whole.
The key is to only communicate with people you need to communicate with, and to do it clearly and with transparency. Since this is only the first phase of the program, you’ll likely experience some trial and error and may face some bumps along the way. Work out any initial issues and be prepared to answer relevant questions before rolling out the green purchasing policy more broadly to reduce friction and ensure buy-in from the majority of your team.
Now, it’s time to start the first iteration of your program using the product category you’ve selected. Once you begin requesting new bids, set up meetings with key stakeholders to check in on how things are going, identify rooms for improvement, and troubleshoot as necessary. If you experience any small successes, consider advertising them to other people in your company. You can drum up enthusiasm for your department’s new focus on sustainability and encourage other departments to follow suit.
After the designated amount of time has passed for the final evaluation of your green purchasing program trial, meet as a team and dive into the details. Look at your reports and KPIs. Evaluate what went right and what didn’t. Determine ways to streamline processes.
Use your learnings from this first phase to identify ways to include more product categories in your more widespread purchasing program (if not all of them) and then develop a more comprehensive program for other supplier types. Finally, draft your official statement of purpose which summarizes why you’re adopting this program and what your goals are.
Execute your solidified program and you should start to see results, whether you reduce your carbon footprint, use more energy-efficient technologies, or dispose of less waste in your local landfills. No purchasing program is perfect, but there’s always room for improvement. At SmartSolve, we’re continually working to improve our green purchasing practices and using this guide as a blueprint for our continued growth.
Executing green purchasing strategies is one of many ways you can make your company more sustainable. Check out these posts for more actionable ideas: