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

 

Another milestone in Sustainability Reporting for ECCI

ECCI helped Ayala Corporation in developing their 2011 Sustainability Report for at the conglomerate Level. The report focuses on the Environmental, Economic and Social performance of the group for the past year based on the GRI G3.1 Guidelines. The report was released during the recently held  Sustainability Summit at the Ayala Museum on Friday, October 5, 2012. The report was officially launched by its Chairman, Jaime Augusto Zobel de Ayala. The event was organized by Ayala Corporation to strengthen the sustainability initiatives in the group. Lory Tan, WWF President, Philippines and Adam Brennan, Global Sustainability Manager for Puma where speakers in the event who shared their views on the Climate Adaption Project in the Philippines by WWF and implementing sustainability measure in their organizations respectively. At the end of the Sustainability Summit JAZA’s message was “We all have a big job to do”. This statement by the chairman clears out the vision and direction given by the Chairman to its subsidiaries.

Another milestone in Sustainability Reporting for ECCIIn their third conglomerate sustainability report, it reinforces the group’s commitment in creating shared value to the broader communities in which they operate. It highlights Ayala’s pledge to improve their sustainability impact through their operations, products and services, supply chains, human resources practices, community involvement and management approach.

After helping Globe Telecom’s 2011 Sustainability Report and helping them achieve a B+ level of external assurance, ECCI assisted Ayala Corp to attain GRI Application Level B Check for the report to strengthen the credibility of the report.

Being one of the leading training and consulting companies in Southeast Asia, ECCI has been taking active participation in helping companies developing their Sustainability initiatives and disclosing them through reporting. Some of the key areas where ECCI helps clients are in Energy Management, Carbon Footprint, Sustainability Reporting and CSR.

For more information on ECCI’s Corporate Sustainability & Governance services portfolio, please email info@eccigroup.com

ECCI helps Globe Telecom in achieving External Assurance for its 2011 Sustainability Report

Globe telecom released its 2011 Sustainability Report on April 17, 2012 during its Annual Stockholders Meeting. With “Transformation” as the central theme of the report, it reflects the cultural and network transformation within the company – focused on providing excellent customer experience.

The report is based on GRI G3.1 Guidelines covering the Environment, Economic & Social aspects of its performance.

ECCInternational is the leading process consulting and training company in SE Asia when it comes to Corporate Sustainability & Governance (CSG). ECCI helped Globe Telecom in creating their 2011 Sustainability Report and achieving a B+ level of external assurance. This makes Globe Telecom the first telco company and one in few in Philippines to achieve external assurance for its Sustainability Report.

Globe Telecom has also achieved the distinction of being the first company in the country to have the external assurance done by an AA (Accountability) accredited third party assurance provider. The external assurance of the report was conducted by TUV Rheinland, one of the very few.

Globe Telecom has achieved external assurance for its 2011 report to further strengthen its credibility in the market, emphasize management’s commitment towards sustainability, and increase the level of confidence among its stakeholders.

With the increasing popularity of promoting sustainability, more and more organizations are leaning towards developing Sustainability Reports which give a holistic information on the financial, environmental, and social performance of a company. Meanwhile, external assurance helps protect the interest of stakeholders and provides a level of comfort to key decision makers, allowing them to know that the information they are using for their business decisions are reliable and comply in all material aspects with the relevant reporting frameworks. By taking the lead in this practice area, ECCI has helped companies in Philippines, Vietnam, China and India create their sustainability reports.

View Report or Learn More about ECCI’s CSG services

Technology interventions for Sustainability Reporting

Making an organization’s performance sustainable and tracking their resource consumptions, GHG emission and reporting this to the top management and stakeholders is becoming an ever increasing challenge.

The size and growth of a business has become directly proportional to the extent to which an organization manages its sustainability. Leading companies realize sustainability is not just about “going green” for the sake of going green. To be feasible, sustainability practices and processes must work in concert with core business goals and strategies and improve enterprise profitability.

Though manual methods of collecting and interpreting data exists, evolution of sustainability software solutions has helped the optimal alignment of an organization’s financial and operational performance, and enable organizations to get insight into the opportunities where sustainability is profitable. Some of the advantages that organizations can benefit from are:

  • Reduce cost of measuring sustainability performance
  • Turn strategy and data into actionable insights where sustainability performance improvements also improve profitability
  • Provide sustainability results to the right levels in the organization so information is actionable

GRI (Global Reporting Initiative)  has  certified a number of sustainability software’s and  verified the solutions on criteria’s like completeness of GRI content, appropriate division of the elements or clear distinction between GRI and other reporting frameworks, among others. Some of the GRI certified software’s include:

  • SAP (Sustainability Performance Management) helps in managing multiple sustainability frameworks, Data collection, helps converting sustainability data into actionable information, Aligns sustainability KPIs to corporate objectives and risks
  • SOFI Solution 4 helps companies to integrate sustainability into their core business.
  • Enablon (Sustainability Management Platform)  enables companies to meet their needs in terms of nonfinancial reporting, operational performance and regulatory compliance

While most new areas in industrial development has such globally acclaimed solutions that there are many challenges that companies face  in choosing a solution in the developing economies (ex: Asia and Africa):

  • Accessibility to solution provider
  • Success stories from near shore countries
  • Hesitation to become early adopters
  • Ability to synchronize and synergize solutions already in place in the organization

SUPM (Sustainability Performance Management) of SAP builds on proven management processes and tools developed over decades of managing compliance and improving corporate performance and helps align a company’s operational and financial performance ultimately identifying how to convert sustainability into profitability.

ECC International being one of the leading training and consulting firms in the field of Corporate Sustainability and Governance in South East Asia recently partnered with SAP’s Extended Business Member program to help organizations generate more consistent and accurate sustainability reports and ultimately achieve sustainable performance.