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Green Procurement — Everything A Procurement Professional Should Know
Green procurement is becoming a thing nowadays. Many companies are now starting to implement green procurement in their operations. However, what is it?
In this article, you will learn what green procurement is. We will discuss with you what green purchasing is and the challenges facing procurement professionals in green procurement. Once you are done reading this article, you will know what green procurement is. Thus, it will allow you to weigh if you are ready to implement it in your business.
Green Procurement:How did it Start and What is it?
Sustainable development was the key concept of the 1992 Earth Summit held in Rio as governments and international organizations committed themselves to taking initiatives to protect the environment.
Responsible consumption and production of goods are seen as an important part of the strategy to reduce poverty, improve environmental quality, and bring economic growth.
Public procurement of goods and services forms a major part of government expenditure in many developing countries. Due to this, governments and international organizations are responsible to take the environmental impacts of their activities into account.
A move towards favoring goods and services that do not negatively affect the environment not only has a direct positive impact on the environment but also sends a strong message to suppliers and manufacturers to take green initiatives seriously.
Since the Earth Summit in Rio, the response of the private sector, especially huge corporations, has been impressive. With many multinational companies committed to integrating sustainability into their process, many rising businesses followed too.
Green procurement, also known as sustainable procurement, is the approach of companies to integrate environmental, social, and governance goals into the procurement and supply chain.
In simple terms, it is a process of guiding businesses in acquiring materials or services that have less impact on human health and the environment. For you to know more about green procurement, click here.
Whatis Green Purchasing?
Green purchasing, also known as environmentally preferable purchasing (EPP), is the acquisition of a product that has a lesser negative impact and promotes a positive effect on the environment and human health.
Companies that incorporate green purchasing in their procurement process consider where to source for raw materials, production, manufacturing, packaging, distribution, reusing, maintenance, and disposal of a product.
Additionally, green purchasing considers the circular economy. The buyer should ask how long the goods or services will meet the requirement and the extent of reusing goods already produced.
By implementing green purchasing requirements, we help preserve the environment and create competitiveness and innovation in the market.
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4. ChatGPT & AI in Procurement Course
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ChallengesProcurement Professionals Currently Face
1. Professionals have little to no knowledge of sustainability
One of the challenges that procurement professionals face today is their lack of knowledge about sustainability practices in the procurement process. The issue of the lack of knowledge in sustainability arises at all levels of a company.
The lack of understanding may also manifest in managers being unsure about how they can sustainably procure materials or evaluate the eco-friendliness of their current processes.
To implement sustainability in the procurement process, businesses need a team that can accurately process and assess relevant data throughout the procurement. However, many procurement managers and directors do not know how to collect this relevant data.
The best thing you can do is to advocate for education and training courses to prepare and teach your team and other relevant employees about the importance and process of sustainable procurement.
Here in Procurement Tactics, we have developed a course that will enable you to refine your strategy for your procurement. In our Annual Procurement Strategy Course, you will master everything in procurement that will enable you to make the best sustainable strategy for your company.
2. Low internal resources
Funding, time, and other resources are necessary to ensure the best result from your sustainability efforts. Procurement teams need a lot of time to learn the processes needed to carry out sustainability initiatives and habits in the procurement process.
Procurement teams must know how to assess the sustainability of their performance together with their supplier’s performance.
Furthermore, when you are implementing sustainable practices, it takes a lot of time to work toward the desired results. You must know that sustainability cannot be achieved overnight.
Due to this, many businesses feel that they do not have enough time and resources to wait, especially when they have more immediate methods. However, just like in any other aspect, time is an investment that allows you to grow and adopt new skills and practices to have sustainability in your procurement process.
3. Little support from suppliers
The procurement department needs to judge and assess the sustainability of their suppliers in addition to their own efforts to ensure an eco-conscious procurement process.
However, because suppliers are separate from your business, they may have different perspectives or resources available and they might not be able to be open to a new approach. Also, they may not know how to obtain the appropriate data that you need to evaluate your sustainability initiatives.
Just like your company shareholders, your suppliers may not understand or know the significance of sustainability. Thus, telling them may change their mind due to the benefits they may benefit through sustainability.
You also have the choice to source for suppliers who already implemented sustainability in their processes. However, this can be costly, especially for small to midsize businesses.
4. Lack of government support
Businesses that reside in a country where sustainability is supported by the government make it easier to implement sustainability initiatives than those in countries that do not value sustainability.
Lack of governmental support provides fewer incentives for businesses and procurement departments to switch to sustainable methods. Thus, the main reason why many companies in some other countries do not implement sustainability in their processes.
5. High costs
In a study conducted by SCIP.org, 97% of companies reported that support from government policies leads to an increase in costs for their projects.
Additionally, when companies change procedures, there will be a period where expected costs change. Many companies saw increases in their expenses when they switched to a sustainable procurement process. However, you can think of it as an investment for the future of your company and planet which you can benefit from in the long run.
+ What is green procurement?
Green procurement is the approach of companies into considering environmental, social, and economic factors in their procurement and supply chain processes.
+ Why is it important?
It is important to protect the environment and to ensure the future of the following generations.
+What is green purchasing?
Green purchasing is the buying of materials or services that have less impact on the environment.
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