ISO 20400 – Sustainable Procurement: Purchasing Greener and More Sustainable Products from Greener and More Sustainable Companies

Philippine Procurement Today

The overall consumer expenditure in the Philippines increased to ₱ 1,342,297 Million in the fourth quarter of 2015 from ₱ 1,321,980 Million in the third quarter of 2015. Shifting that spending towards more sustainable goods and services can help drive markets in the direction of innovation and sustainability, thereby enabling transition to a green economy.

Traditional procurement focuses upon value-for-money considerations. Nowadays, procurement go beyond the traditional purchasing criteria of price, performance and quality, taking account also of the environmental and social impacts of your purchasing choices, reducing adverse impacts upon health, social conditions and the environment, thereby saving valuable costs for organizations and the community at large.

Society’s Receptiveness on Sustainable Procurement

Thinking about our purchasing decisions and making informed choices can significantly reduce our environmental and social impacts. Our purchasing power can be used to positively influence supply chains, promoting the productive use of resources and materials and the engagement of ethical and socially responsible suppliers.

price

According to 2014 Nielsen Report, 55% of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact. Asian-Pacific region was the most willing to pay more for products with social-good benefits, surpassing the global average at 64%.

These sustainability-minded consumers based their choice of goods and services on:

considerations

Benefits of Responsible Purchasing

Consumers are not the only ones interested in purchasing greener, healthier products. Many organizations from large to small enterprise are looking to make more sustainable choices.

For many of these organizations, responsible purchasing is more than “doing the right thing.” Green purchasing priorities are frequently connected with specific business objectives like:

  • Enhanced Brand Image:An organization that has gone green is seen as a good corporate citizen. This increases its image in the eyes of the public.
  • Customer Satisfaction:An organization that goes green in response to customer concerns increases its levels of customer satisfaction, a key point in customer retention.
  • Reduced Risk:Not only is any company that does not go green risking a run in with the law by failing to comply with green regulations but it is also maintaining more liability than it needs to. Hazardous chemicals are just accidents, and lawsuits, waiting to happen. With green purchasing, you can offset financial and environmental risk, rather than just inheriting it from your suppliers.
  • Cost Reduction:Going green doesn’t cost more. Most of the time it actually saves money, especially when the new products use less energy, generate less waste, and last longer. Plus, sometimes green products work better than their lethal counterparts. Going green can reduce the following costs, among others:
    • hazardous material management costs
    • operational costs
    • repair and replacement costs
    • disposal costs
    • health & safety costs (which often come in the form of liability insurance and expensive settlements)
  • Increased Shareholder Value:A better brand with happy customers who keep coming back and drive up sales while costs keep falling results in significant ROI, interest more shareholders to invest in your company.

ISO 20400 – Sustainable Procurement: Purchasing from Greener and More Sustainable Companies

A purchasing entity, regardless of its location in the world, can now no longer exempt itself from accountability for what occurs at its suppliers. Now, given multiple levels of subcontractors and cross-border procurement, a globally accepted standard will be needed to regulate the best practices of responsible purchasing.

ISO 20400, a standard for Sustainable Procurement provides guidelines on purchasing greener, healthier and more sustainable products from greener and more sustainable companies. Its development started in 2013 with a proposal of France and Brazil. At the moment 33 countries are participating and 7 liaison organizations while 13 countries are observing.

The ISO 20400 Standard is based on several principles, many of which share the intent of SPLC’s Principles for Leadership in Sustainable Purchasing and this includes:

Understanding – Understanding the relevant environmental, social, and economic impacts of its purchasing.

Commitment – Taking responsibility for the relevant environmental, social, and economic impacts of its purchasing by committing to an action plan.

Results – Delivering on its commitment to improve the relevant environmental, social, and economic impacts of its purchasing.

Innovation – Actively promoting internal and external innovation that advances a positive future.

Transparency – Soliciting and disclosing information that supports a marketplace of innovation..

The four main parts of the guidance standard consists of:

sus

Clause 4: Fundamentals

This clause is primarily written for use by top management of an organization to help define the strategy and policies in connection with sustainable procurement. As a result it considers what sustainable procurement is, what the main organizational sustainability issues and drivers are, and how sustainability should be integrated into procurement policies and strategies.

Clause 5: Integrating Sustainability into the Organization’s Procurement Policy and Strategy (Policy and Strategy)

This clause provides guidance about how sustainability considerations should be integrated at a strategic level within the procurement function of an organization to ensure that the intention, direction and key sustainability priorities of the organization are documented and understood by all parties involved in sustainable procurement. This clause is applicable to all but help top management define sustainable procurement policy and strategy.

Clause 6: Organizing the Procurement Function towards Sustainability (Enablers)

Clause 6 is primarily written for use by procurement management and describes the conditions that need to be created and management techniques that should be employed to enable sustainable procurement to be successfully implemented and continually improved. These conditions are key to successfully integrating sustainability considerations into the procurement process described in clause 6. Five enablers are discussed: priority setting, enabling people, governing procurement, engaging stakeholders and measuring performance.

Clause 7. Integrating Sustainability into the Procurement Process (Procurement Process)

This clause addresses the procurement process and is intended for individuals who are responsible for the actual procurement within their organization. This clause may also be of interest to those in associated functions.

When adopting sustainable procurement, it should be integrated into existing procurement process steps like: planning, specifications, supplier selection, contract management and contract review and lessons learnt.

Looking Ahead

Buying greener, healthier, more sustainable products is one way we can all improve our own lives while building a better world. To strengthen this initiative, ISO 20400 was created and launched for a consultation to a wider audience than the experts from the mirror committees of the involved countries. The vote terminates on 2nd of December, 2016 and the final version of the standard is expected to be released on the early 2017. 

References

http://www.triplepundit.com/special/setting-the-standard/sustainable-purchasing-101-tools-buying-greener-products/

https://www.ungm.org/Public/KnowledgeCentre/SustainableProcurement

http://www.greenbiz.com/blog/2013/01/14/how-to-make-balanced-sustainable-purchasing-decisions

http://www.esourcingforum.com/archives/2011/11/29/five-benefits-of-green-procurement/

https://www.jisc.go.jp/international/PC277/E_ISO_DIS_20400.pdf

Paris Climate Agreement: A Turning Point on Climate Change

Climate Change: Vital Signs of the Planet Today

There is now little doubt that climate change is happening. It is seen as the biggest potential threat and environmental challenge of the 21st Century and it affects us all. The group of 1300 independent scientific experts from around the world concludes that there is more than 90% probability that greenhouse gases (GHG) such as carbon dioxide, methane and nitrous oxide, produced by human activity, have caused much of the observed escalation in Earth’s temperatures over the past 50 years. Scientists from the Intergovernmental Panel on Climate carrying out global warming research have recently predicted that average global temperatures could increase between 1.4 and 5.8 °C by the year 2100.

Adoption of Paris Climate Agreement to Roll Back Global Warming

The world needs “a global deal for climate” that keeps the rise of the global average temperature below 2°C.  At Annual Conference of Parties (COP21) held in Paris last December 7th and 8th of 2015, the United Nations Framework Convention on Climate Change (UNFCC) resolved to achieve for the first time, in over 20 years of UN negotiations, a legally binding universal agreement on climate from all nations of the world.

The Paris Agreement is intended to signal the beginning of the end of more than 100 years of fossil fuels serving as the prime engine of economic development and shows the governments from around the world take climate change seriously. The inclusion of both developed and developing countries, including those that depend on revenue from oil and gas production, demonstrate a unity never seen before on this issue.

The purpose is to hold global warming to below 2 °C degrees over pre-Industrial Revolution levels, and to strive for 1.5 °C if possible. Negotiators from nearly 200 countries reached the world’s most significant agreement to address climate change since the issue first emerged as a major political priority decades ago.

Paris Climate Agreement Key Elements

The Role of Business and Industry in COP21

Business has to play a part in the ongoing shift towards a carbon-clean global economic system.  Some companies have already started to do so, either by changing their global strategy, investing in carbon-free energies or through innovations.

Paris Agreement encouraged businesses to commit and to publicly announce actions aiming at reducing emission, overall. Commitments can, for instance, take the form of:

Individual mitigation targets:

  • GHG emission reduction
  • GHG emission reduction in line with the 2°C objective
  • Carbon neutrality
  • Improved energy efficiency target

Targets related to specific themes:

  • Increased produced renewable energy (low‐carbon energy)
  • Increase consumed renewable energy
  • Reduced deforestation
  • Reduced emission from own property/buildings
  • Reduced emission from own fleet
  • Material use reduction
  • Increase the share of recycling

Finance/Investors targets:

  • Carbon accounting implementation
  • Carbon/climate risks assessments & stress testing generalization
  • Green bounds development
  • Portfolio decarbonization

Resilience/adaptation targets:

  • Funding into public and open scientific risk modelling facilities
  • Efforts to adjust business models to minimize vulnerabilities and risks to climate hazards

After COP21: What Needs to Happen for the Paris Agreement to Take Effect?

What occurred on December 2015 at COP21 was the “adoption” of the Paris Agreement by the Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC). Countries still need to take steps so that it takes effect.

timeline

Countries must now actually join the Paris Agreement and become Parties to it.  To do this, each country must now sign and indicate their consent to be bound by the Agreement. On April 22, 2016, all Heads of State can sign the Agreement at a high-level signing ceremony at the United Nations in New York.  The Agreement will then be open for signature for one year, until April 21, 2017. After the one-year signing period, the Agreement will be open for what is called “accession” – a country becomes a Party to an international agreement that other countries have already signed.

PARIS-03

Only after at least 55 Parties to the UNFCCC representing at least 55 percent of total global greenhouse gases sign on and indicate their consent to be bound will the Agreement “enter into force” and will come into effect and be legally binding.

 Pushing Forward

Our world is getting hotter, and we can see the evidence in loss of ice sea, accelerated sea level rises, warming oceans, more intense heat waves, and an increase in extreme events such as wildfires, drought, tropical storms and floods. The impact of global warming and climate change is already being felt across the planet.

Paris Agreement represents a huge leap forward in terms of reducing the effect of global warming. Taking the action needed to bring this deal into force is an essential next step for countries to build on the momentum from COP21. If they do so quickly, countries can ensure that the critically important provisions and requirements of the Paris Agreement are fully put into motion.

References

http://www.iso.org/iso/isofocus_114.pdf

http://ec.europa.eu/clima/policies/international/negotiations/future/index_en.htm

http://time.com/4146764/paris-agreement-climate-cop-21/

http://www.wri.org/blog/2016/01/after-cop21-what-needs-happen-paris-agreement-take-effect

http://climateaction.unfccc.int/assets/downloads/LPAA_-_Private_sector_engagement.pdf