Responsible purchasing approach: the dynamic is launched

What is the definition of a responsible purchasing policy?

Let’s start by clarifying what we mean by procurement strategy or procurement policy. For a company, it is a question of “defining general directions and intentions relating to procurement and supplies, of an organization, as formulated by the management of the purchasing organization” (definition of the AFNOR). Thus, the purchases of a company always meet fundamental economic criteria such as price, quality, delivery times, associated services,... The so-called “responsible procurement” brings other criteria into the purchasing policy by integrating three additional dimensions, relating to the environment, social responsibility and the economy.

Also, environmental criteria (such as energy performance of the product purchased, choice of recyclable packaging, optimization of transport, etc.), those concerning society and ethical issues (such as respect for human rights, rights and working conditions, issues of disability or diversity management) and finally economic impacts (reduction of waste, shelf life of products, ...) are taken into account in the responsible purchasing policy.

This approach then integrates CSR issues throughout the company’s purchasing processes and decisions and impacts stakeholders, and in particular supplier relations.

Who is concerned?

Any company, regardless of its size or sector of activity, can engage in a responsible purchasing approach.

The implementation of the ISO 26000 standard in 2010 and the international standard ISO 20400 on responsible procurement in 2017 encouraged decision-makers to implement a responsible procurement policy.

 

What is the situation in France today?

In its Responsible Purchasing Barometer ObsAR 2022, a survey of more than 250 purchasing departments, the Responsible Purchasing Observatory draws up the following inventory: while 9 out of 10 companies say they are committed or about to engage in a responsible purchasing approach, their level of maturity on the subject remains to be consolidated. Not surprisingly, it is the large private groups that are the most advanced on this issue, while the companies that have not yet embarked on this path are for ⅔ of them SMEs or small communities.

Why should you initiate this dynamic?

One of the main reasons is commitment.  Organizations are becoming increasingly aware of their environmental, ethical and social responsibility. For example, French executives are respectively 26% and 28% to have made or planned to make net zero emission commitments (CEO Survey 2022, PwC). For 83% of the private actors surveyed, it is also the ethical reason that is cited as the main source of motivation in their approach.

Risk control could also involve you in this approach: ethical risks, regulatory risks, supplier risks, ... These risks are numerous and can be better controlled.

Let’s take the example of regulatory risk: climate issues are becoming increasingly urgent, regulations are getting tougher for businesses and it is likely that this trend will be confirmed in the coming years. For example, the European Union has set up the Green Pact, which aims to review each existing national or European law with regard to its environmental impact, via a set of financial incentives or restrictive measures. However, the recent study of PwC Société d'Avocats on the Green Pact for Europe shows a significant ignorance of French companies on this subject. As long as organizations are committed to a responsible procurement approach, they are one step ahead of these growing regulatory risks. Other regulations include the carbon footprint that applies to companies with more than 500 employees, or the decree “5 flux” 2016, which requires companies producing more than 1,100 litres of waste per week and per site to sort and recycle 5 waste streams.

Ethically, the example of the Rana Plaza disaster in 2013 highlighted the strategic nature of supplier relations and gave rise to a French law on the duty of vigilance. While some companies had committed themselves out of ethical conviction, they are now committed by legal obligation.

For the company engaged in a responsible purchasing approach, the impact on its image is not neutral and can be greatly improved.  Consumer expectations of CSR and responsible consumption are growing. For example, the appeal of French consumers for second-hand products has increased by 12% since 2020 (Global Consumer Insight 2021, Strategy&). Making your sustainable purchasing strategy a marker of environmental and societal commitment can be a real asset to customers looking for transparency and commitment. Conversely, a misstep can quickly tarnish the reputation of a brand and have financial repercussions. This explains why 74% of companies surveyed by the Observatoire des Achats Responsables rank customer expectations as a factor explaining their commitment to the approach, behind alignment with their raison d'être (81%) and ethical commitment (83%).

Finally, the positive cost impact of this approach should not be overlooked.

Based on a total cost approach that takes into account the product or service purchased over its entire life cycle, the cost vision is more accurate. In addition, by integrating the criteria of repairability, quality, compatibility with other systems, the life of the purchased products is lengthened, thus reducing costs.

Are you convinced? What difficulties might you face?

While the challenge of the approach seems to be the subject of an awareness for the majority of companies (76% of them say they perceive the issue according to the Observatory of Responsible Purchasing 2022), the stage of formalization is not yet acquired. Indeed, less than half of organizations have mapped their Purchasing and CSR issues (⅓ only excluding large companies), which is an important step in the implementation and credibility of the approach. However, this last step involves a primordial measurement effort, which registers the efforts over time, gives indicators of progress and motivates the teams. However, it seems that this is not yet easy for most companies, even if this is the time factor that is mentioned as the main obstacle to the implementation of the responsible purchasing policy (68% of respondents in the Barometer of the ObsAR 2022).