Responsible Purchasing workshop

Responsible Purchasing workshop Simon Waters Pro Enviro Funded By Delivered by Partnered by

Contents • Definition • What does responsible purchasing look like? • Scope of responsible purchasing • Whole life costing • Example policies • Approach Funded By Delivered by Partnered by

Definition • Responsible Purchasing is: • a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, while minimising damage to the environment.” Funded By Delivered by Partnered by

What does “responsible purchasing” look like? • Good, stable, long term relationships with the suppliers. • Clear, timely, honest communication. • Price calculation and the establishment of sustainable prices, which covers the cost of production, living wages and enables the supplier to make a level of profit. • Clear lead time and on time, in full payments. • Respect for Human Rights in the supply chain • Support to the small groups of farmers and workers in the supply chain • Source: www.responsible-purchasing.org Funded By Delivered by Partnered by

Scope • Responsible Purchasing should consider the environmental, social and economic consequences of: • design • non-renewable material use • manufacture and production methods • logistics • service delivery • ... Funded By Delivered by Partnered by

Scope continued • use of product in life • operation • maintenance • material reuse • recycling options • disposal Funded By Delivered by Partnered by

Whole life costing A barrier to RP is separation of capital and revenue budgets • Purchase cost • Direct running costs • Indirect costs • Administration costs • Training • Recyclability • Refurbishment / maintenance • Cost of disposal Funded By Delivered by Partnered by

Whole life costing example: renewable energy http://www.ofgem.gov.uk/Media/FactSheets/Documents1/fitfs_energy%20prices%20update%20FS.pdf Funded By Delivered by Partnered by

Example Policies • Legal and General • Kirklees Council Funded By Delivered by Partnered by

Legal and General RP policy 1 • Sustainable Procurement Policy • treat suppliers fairly and objectively at all times. • ensure that major supply contracts are reviewed in line with our purchase strategy and that appropriate suppliers have an equal opportunity to win our business at these times. • pay suppliers in accordance with the agreed terms and deal with exceptions in a timely manner. • select suppliers without consideration of the gender of their employees or their ethnic origin. Funded By Delivered by Partnered by

Legal and General RP policy 2 • Sustainable Procurement Policy • select suppliers without consideration of the number of their employees or their location, unless this would create unacceptable risk to Legal & General. • maintain an active programme of engagement of which Legal & General's CSR Guidelines for suppliers form an integral part. • work with our suppliers to support improvements in their social and ethical practices. • continuously improve our knowledge of socially and environmentally responsible supply chain management practices. Funded By Delivered by Partnered by

Kirklees council – Purchasing Policy • It is the policy of Kirklees Council to: • secure the provision and delivery of supplies, works and services that • meet customer expectations • provide value for money and • achieve a reliable supply • incorporate social, economic and environmental considerations into supplier and product selection and management processes • ensure that suppliers are dealt with fairly, honestly, efficiently and professionally • use collaborative procurement where appropriate • ensure purchasing is undertaken in a cost-effective and efficient manner • ensure appropriate accountability, probity, confidentiality, openness, fairness and transparency on the part of officers responsible for • making purchasing decisions. Funded By Delivered by Partnered by

Kirklees council – Purchasing Policy 2 • Section on sustainability • The Council will take account of social, economic and environmental considerations in its procurement decisions. This will include equality and diversity factors. We will seek to work with suppliers to extend sustainability improvements throughout the supply chain Funded By Delivered by Partnered by

Approach • What are the indicators of a good approach to implementing responsible purchasing? • Levels of progress shown: 1 to 5 (from the Flexible Framework, developed as part of “Procuring the future”, 2006) Funded By Delivered by Partnered by

Approach - People • Sustainable procurement champion identified. Key procurement staff have received basic training in sustainable procurement principles. Sustainable procurement is included as part of a key employee induction programme. • All procurement staff have received basic training in sustainable procurement principles. Key staff have received advanced training on sustainable procurement principles Funded By Delivered by Partnered by

Approach - People • Targeted refresher training on latest sustainable procurement principles. Performance objectives and appraisal include sustainable procurement factors. Simple incentive programme in place. • Sustainable procurement included in competencies and selection criteria. Sustainable procurement is included as part of employee induction programme. • Achievements are publicised and used to attract procurement professionals. Internal and external awards are received for achievements. Focus is on benefits achieved. Good practice shared with other organisations Funded By Delivered by Partnered by

Approach – Policy, strategy and communications • Agree overarching sustainability objectives. Simple sustainable procurement policy in place endorsed by CEO. Communicate to staff and key suppliers. • Review and enhance sustainable procurement policy, in particular consider supplier engagement. Ensure it is part of a wider Sustainable Development strategy. Communicate to staff, suppliers and key stakeholders. • Augment the sustainable procurement policy into a strategy covering risk, process interrogation, marketing, supplier engagement, measurement and a review process. Strategy endorsed by CEO. Funded By Delivered by Partnered by

Approach – Policy, strategy and communications • Review and enhance the sustainable procurement strategy, in particular recognising the potential of new technologies. Try to link strategy to EMS and include in overall corporate strategy. • Strategy is: reviewed regularly, externally scrutinised and directly linked to organisations’ EMS. A detailed review is undertaken to determine future priorities and a new strategy is produced beyond this framework. Funded By Delivered by Partnered by

Approach – Procurement process • Expenditure analysis undertaken and key sustainability impacts identified. Key contracts start to include where appropriate general sustainability criteria. Where possible contracts to be awarded on the basis ofvalue-for-money, not lowest price. • Detailed expenditure analysis undertaken, key sustainability risks assessed and used for prioritisation. Sustainability is considered at an early stage in the procurement process of most contracts. Whole-life-cost analysis adopted. Funded By Delivered by Partnered by

Approach – Procurement process • All contracts are assessed for general sustainability risks and management actions identified. Risks managed throughout all stages of the procurement process. Targets to improve sustainability are agreed with key suppliers. • Detailed sustainability risks assessed for high impact contracts. A life-cycle approach to cost/impact assessment is applied. • Life-cycle analysis has been undertaken for key commodity areas. Sustainability KeyPerformance Indicators agreed with key suppliers. Progress is rewarded or penalised based on performance. Barriers to sustainable procurement have been removed. Best practice shared with other organisations. Funded By Delivered by Partnered by

Approach – Engaging suppliers • Key suppliers spend analysis undertaken and high sustainability impact suppliers identified. Key suppliers targeted for engagement and views on procurement policy sought. • Detailed suppliers spend analysis undertaken. General programme of supplier engagement initiated, with senior manager involvement. • Targeted supplier engagement programme in place, promoting continual sustainability improvement. Two way communications between procurer and supplier exists with incentives. Supply chains for key spend areas have been mapped. Funded By Delivered by Partnered by

Approach – Engaging suppliers • Key suppliers targeted for intensive development. Sustainability audits and supply chain improvement programmes in place. Achievements are formally recorded. CEO involved in the supplier engagement programme. • Suppliers recognised as essential to delivery of organisations’ sustainable procurement strategy. CEO engages with suppliers. Best practice shared with other/peer organisations. Suppliers recognise they must continually improve their sustainability profile to keep the clients business. Funded By Delivered by Partnered by

Approach – Measurement and results • Key sustainability impacts of procurement activity have been identified. • Detailed appraisal of the sustainability impacts of the procurement activity has been undertaken. Measures implemented to manage the identified high risk impact areas. • Sustainability measures refined from general departmental measures to include individual procurers and are linked to development objectives. Funded By Delivered by Partnered by

Approach – Measurement and results • Measures are integrated into a balanced score card approach reflecting both input and output. Comparison is made with peer organisations. Benefit statements have been produced. • Measures used to drive organisational sustainable development strategy direction. Progress formally benchmarked with peer organisations. Benefits from sustainable procurement are clearly evidenced. Independent audit reports available in the public domain. Funded By Delivered by Partnered by

Summary • Responsible Purchasing requires: • Commitment to sustainability • Recognition that barriers exist to be overcome in moving towards RP/sustainability • Recognition that environmental pressures are exercising themselves on the supply chain • Recognition of what can be done and what good practise looks like • A structured approach Funded By Delivered by Partnered by

Questions Funded By Delivered by Partnered by

Responsible Purchasing and Transport - sample action areas Simon Waters Pro Enviro Funded By Delivered by Partnered by

Construction • Transport: • Delivery of material to sites, taking of waste from site • Logistical planning to reduce trips • Vans/company cars • Fuel cards, driver training • Responsible purchasing • During planning stage, decide which environmental controls need to be addressed, e.g.: • Erosion control of engineered slopes • Habitat surveys • Building materials to be used... • ...although constricted by design Funded By Delivered by Partnered by

Food processor • Transport: • Contract hauliers/own transport • Fleet management, fuel purchase, driver training • Vans/company cars • Fuel cards, driver training • Responsible purchasing • Seeds, compost, fertiliser, tractor fuel, electrical energy for process/lighting Funded By Delivered by Partnered by

Utility broker • Responsible purchasing • Green energy, sourcing information for customers, education of customers on green energy pricing plans Funded By Delivered by Partnered by

Medical practise • Transport: • Employee and company cars • Fuel cards, driver training • Responsible purchasing • Source of medicines, natural remedies Funded By Delivered by Partnered by

Palletised transport of goods • Transport: • Contract hauliers/own transport • Fleet management, fuel purchase, driver training • Vans/company cars • Fuel cards, driver training • Responsible purchasing • Green energy, pallets from sustainable forests Funded By Delivered by Partnered by

Packaging • Transport: • Contract hauliers/own transport • Fleet management, fuel purchase, driver training • Vans/company cars • Fuel cards, driver training • Responsible purchasing • Materials from which packaging is made • Recyclable? • Is source of material renewable? • Energy used in production/recycling Funded By Delivered by Partnered by

Questions Funded By Delivered by Partnered by

Responsible Purchasing workshop