What is sustainable procurement?
Sustainable procurement is the process of purchasing goods and services in a manner that not only meets an organisation's needs, but also benefits the environment, society and the economy over the long term. These factors of corporate responsibility are considered in procurement processes and decision-making, alongside ensuring stakeholder requirements are met.
Sustainable procurement is often mistakenly viewed as focusing solely on environmental issues such as CO2 emissions or biodiversity. In reality, it encompasses a much broader approach that integrates a holistic method of considering environmental, social and economic matters when making purchasing decisions.
This is often referred to as the “Triple Bottom Line” and, in terms of sustainable procurement, refers to balancing three elements: People, Planet and Profit. Triple Bottom Line is often used as a framework for assessing a company’s sustainable procurement practices, allowing for better-informed decision-making to encourage enhanced responsible business practices.
Read on to discover specific procurement considerations to implement, and how sustainable procurement can benefit business, people, and the planet
Procurement considerations
When implementing sustainable procurement practices, an organisation must take into account a wide range of considerations, including environmental impact, social responsibility, economic feasibility, supplier sustainability, and long-term value creation. These factors play a critical role in ensuring that procurement decisions align with the organisation’s broader sustainability and corporate responsibility goals.
Aligning procurement policies with recognised international standards such as ISO 20400 (Sustainable Procurement) can help an organisation stay on track to achieving its goals while ensuring they are taking all people, planet and profit elements into consideration.
People: Socially responsible considerations
Socially responsible procurement relates to securing goods or services that prioritise societal benefits through preventing or mitigating adverse social impacts. Considerations within socially responsible procurement include:
- Prioritisation of local suppliers: Purchasing goods from local suppliers who support local employment.
- Providing employment for disadvantaged people: Prioritising suppliers who employ groups such as those with disabilities, or those from marginalised communities.
- Treatment of workers: Choosing suppliers that adhere to fair labour practices such as the absence of modern slavery or child labour, payment of decent wages, and the presence of good working conditions.
Planet: Environmentally responsible considerations
“Green” or environmental procurement relates to securing goods and services that have a minimal environmental impact. Considerations within green procurement include:
- Energy efficiency: Purchasing goods that use the least amount of energy in their production and operation.
- Resource efficiency: Prioritising supplies that use the least number of materials and create the least amount of waste.
- Carbon emissions: Acquiring goods that have minimal associated carbon emissions.
- Pollution reduction: Choosing supplies that have limited pollution associated with them.
- Biodiversity impacts: Selecting products that promote biodiversity net gain, limit biodiversity net loss, or take into consideration habitat disruption.
- Life cycle assessment: Procuring goods that have had their environmental impact life cycle assessed from cradle to grave (including production, transport, usage and disposal).
- Ecolabels: Purchasing goods that have third-party verification of their environmental impact.
Profit: Economically responsible considerations
Economically responsible procurement focuses on long-term economic benefits for an organisation, rather than just immediate costings. It ensures value for money, focusing on efficiency, reliability, and total cost of ownership. Considerations within economically responsible procurement include:
- Bulk-buying: Purchasing goods in large volumes to reduce long-term costings.
- Supply chain management: Having a robust supply chain management system where there are strong relationships with key suppliers will reduce delays and disruptions and therefore overall costs.
- Prioritisation of local suppliers: Sourcing goods from local suppliers who contribute to local employment can help reduce transportation costs, minimise import duties and customs procedures, and improve the responsiveness of supply chains.
- Life cycle costing: Purchase of goods that have had their whole cost life cycle assessed.
- Risk mitigation: Ensuring a robust risk management framework is in place for supply chain management will take into consideration the reliability of suppliers, market changes, and geopolitical factors that may disrupt supply.
What are the benefits of sustainable procurement?
In an age marked by environmental challenges and a heightened sense of social responsibility, sustainable procurement has emerged as a vital strategy for organisations to foster sustainable change within their supply chains.
There are many benefits associated with procuring sustainably, including:
- Improved reputation: Ensuring sustainability is taken into consideration in procurement practices can significantly enhance an organisation’s brand and reputation. Stakeholders such as customers, investors and employees are placing increased value on an organisation’s real-world impact. By demonstrating a commitment to sustainable practices through careful selection of environmentally friendly products, ethical suppliers and socially responsible sourcing practices, organisations can position themselves as leaders in corporate responsibility, ultimately improving their reputation.
- Economic efficiency: Successful implementation of sustainable procurement can improve an organisation’s financial standing by reducing costs and increasing profits. Although more sustainable options will often have higher costs associated in the beginning, they can often lead to long-term savings by improving efficiency, reducing waste, and reducing risks associated with unstable supply chains, and may improve profits through increased and protected reputation.
- Improved supply chain resilience: As mentioned above, prioritising sustainable procurement can reduce risks associated with unstable supply chains. Suppliers that adhere to sustainable and ethical practices are more likely to prioritise transparency, regulatory compliance and long-term viability. By selecting local suppliers, an organisation can minimise the likelihood of supply chain disruptions due to geopolitical issues, natural disasters, etc. Local suppliers offer a greater chance of consistency and improved inventory management, and therefore associated improved business continuity planning, allowing organisations to ensure a resilient supply chain.
- Integration with ESG strategy: Organisations can integrate sustainable procurement into their ESG strategy, aligning purchasing decisions with long-term corporate goals. Sustainable procurement can improve a company’s environmental impact (including Scope 3 emissions), can help them achieve their social goals by adding benefits to society such as local employment, as well as aid in governance-related matters through having oversight of all supply chain practices and a framework for accountability towards targets. Integrating sustainable procurement with ESG efforts reinforces the organisation's reputation, enhances investor confidence, and contributes to long-term resilience and value creation.
- Compliance with regulations and standards: Implementing sustainable procurement practices is increasingly becoming a necessity rather than a choice, as organisations face a growing number of legal and regulatory obligations related to sustainability. Governments, industry bodies, and international institutions are introducing stricter standards that directly affect procurement activities.
Failure to comply with statutory requirements can result in legal penalties, financial losses, reputational damage, and exclusion from bidding on public contracts. By embedding sustainable procurement into their operations, organisations not only avoid these risks but also demonstrate due diligence and accountability in their business practices. For example, public sector bodies in Ireland are guided by the Green Public Procurement (GPP) criteria outlined by the Department of Climate, Energy and the Environment, which encourages, and in some cases requires, the integration of environmental considerations into purchasing decisions.
By embedding sustainability into purchasing decisions, organisations can achieve a balanced approach that considers the long-term impacts on people, the planet, and profitability. As we have shown above, implementing sustainable procurement involves thoughtful consideration of social, environmental and economic factors. From promoting fair labour practices, supporting local economies and reducing carbon emissions to improving supply chain resilience, the benefits of sustainable procurement are wide-ranging and deeply impactful, not only for the organisation itself but also for the planet.
In addition to driving operational efficiencies and cost savings, sustainable procurement can strengthen an organisation’s compliance with emerging regulations, as well as enhance its reputation among its stakeholders. Integrating sustainable procurement into a wider ESG or corporate sustainability strategy, alongside the use of associated frameworks, can also help ensure consistency, accountability, and progress toward long-term corporate objectives.
By adopting these practices, organisations can play a vital role in fostering a more ethical, environmentally responsible and economically sound future.
If you would like to know more about how we can support your organisation with your ESG or sustainability journey, please contact esg@crowe.ie.