Supply chain management continues to pose a challenge to businesses in a time when climate change and the use of resource have become key issues for businesses, however, as many large organisations have already adopted some aspects of good sustainable procurement practices is there a need for more guidelines from ISO?
In 2017, ISO will issue the first international standard for sustainable procurement, which according to Jacques Schramm, Chair of ISO/PC 277, the committee developing the standard will “help organizations achieve their sustainability objectives, improve management of supplier relations, improve the sustainability efforts of their supply chain and give them a competitive edge.”
ISO 20400 builds on British Standard (BS) 8903. The second draft of the standard contains guidance for 4 main elements:
- Understanding the fundamentals
- Integrating sustainability into the organisation’s procurement policy and strategy
- Organising the procurement function towards sustainability
- Integrating sustainability into the procurement process
The purpose of ISO 20400 is to assist organisations with the development and implementation of a responsible sourcing strategy, to complement ISO 26000 Guidance on Social Responsibility.
It could reasonably be argued that organisations only engage in sustainable procurement for one of 3 main reasons:
- They are made to do it through legislation
- They feel obliged to do it because of stakeholder pressure
- They want to do it for ethical or commercial reasons
However, there are potentially a number of benefits to sustainable procurement:
- Minimising business risks e.g. risk of a negative response form important stakeholders, identifying and addressing legal, financial and moral risks associated with sustainability in the supply chain.
- Cost savings achieved by focussing on whole life costing methodology when sourcing goods and services
- Enhanced corporate image by demonstrating purchasing and supply management’s value to the organisation
- Building long-term supplier relationships
- Monitoring and improving the sustainable performance of suppliers
The new standard does not contain requirements for suppliers and it isn’t a tool to assess the sustainability performances of suppliers, but it does describe how an organisation can integrate sustainability into the procurement process, and can be applied to small and large companies in any business sector.
When implementing ISO 20400, organisational change will be easier if there is clear support for the change from senior management. Achieving that support may be a significant challenge, particularly within the context of the existing structure of corporate governance. In many large organisations procurement is not an issue regularly discussed or understood at board level.
Opposition may be encountered from inside and outside the organisation. Employees or internal customers may misunderstand the nature of, or reason for change, and existing suppliers may feel threatened. Overcoming this opposition through a programme of education and training will require a commitment of resources that some organisations may be unwilling or unable to undertake.
In having developed ISO 20400 as set of guidelines rather than a standard to which an organisation can be certified, its effectiveness may have been reduced – we will have to wait to see if this standard delivers a meaningful impact on business behaviour.