Sustainable Procurement Practice

1. Action Sustainability Inspiring sustainable procurement Sustainable Procurement Practice Shaun McCarthy Director Action sustainability www.actionsustainability.com shaun_mccarthy@harg.demon.co.uk

2. Action Sustainability Inspiring sustainable procurement Sustainable Procurement Practice Welcome www.actionsustainability.com shaun_mccarthy@harg.demon.co.uk

3. Action Sustainability Inspiring sustainable procurement This presentation is about… • Who? • What? • Why? • When? • How? • Where? • Some controversial stuff • The future www.actionsustainability.com shaun_mccarthy@harg.demon.co.uk

4. Action Sustainability Inspiring sustainable procurement Who – Action Sustainability…? Action Sustainability is a social enterprise set up to lead and inspire sustainable procurement. How…? We are a not for profit social enterprise registered as Community Interest Company. We manage events and seminars to promote more sustainable business. We also offer specialist expertise and services to public and private sector organisations interested in improving the impact of their supply chain on society. Who…? We support and facilitate the Strategic Supply Chain Group, a leading authority on sustainable procurement. We aim to extend the boundaries of best practice in this area and advise organisations and government on sustainable procurement policy and strategy. Delivery We provide research, case studies, support, training, benchmarking and consultancy. Our group aims to continuously extend, lead and inspire best practice in sustainable procurement

5. Action Sustainability Inspiring sustainable procurement Who – Strategic Supply Chain Group To lead and inspire sustainable procurement. To lead and inspire good sustainable business practice This is achieved through a series of promotion and awareness events, often working with member organisations and other groups with an interest in this issue. To extend the boundaries of best practice Through research, benchmarking and thought leadership in sustainable procurement. To use our influence with members and their supply chains to have a net beneficial impact on society. To act as the primary source of advice and guidance to government policy makers on sustainable supply chain solutions We help Government to define and shape best practice in sustainable procurement. We support the implementation of the Sustainable Procurement Task Force (link) and the Sustainable Consumption and Production Task Force

6. Action Sustainability Inspiring sustainable procurement Who – Shaun McCarthy…? • Used to be an engineer (got better!) • 20 years buying and selling things (Shell and BAA) • Now: • Director of Action Sustainability • Head of CR for everything BAA buys and everything BAA builds • BAA – 2nd place in BITC Index 2006 • MCIPS and MIEMA • Lead BAA Climate Change/Energy policy • London Sustainable Development Commissioner • Chair London Olympics Sub-Group • Sustainable Procurement Task Force member • Chair Strategic Supply Chain Group www.actionsustainability.com shaun_mccarthy@harg.demon.co.uk

7. Action Sustainability Inspiring sustainable procurement What – Sustainability…? • “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs” • Bruntdland Definition

8. Action Sustainability Inspiring sustainable procurement What – Sustainable Procurement…? Sir Neville Sims Definition “Using procurement to support wider social, economic and environmental objectives, in ways that offer real long-term benefits”. Sir Neville Sims is Chairman of the UK Sustainable Procurement Task Force Task force findings – not UK Government Policy

9. Action Sustainability Inspiring sustainable procurement Why…? Employee expectations Stakeholder demands Benchmarking Customer requirements Risk management Legislation & Standards Business efficiencies Impact Reduction (environmental)

10. Action Sustainability Inspiring sustainable procurement Why – Private Sector…? BAA Stakeholder Survey 2003 Q13. To what extent does a sustainable development approach make growth more acceptable? Business Partners Passenger Reps Business Orgs Employee Reps Suppliers Gov’t Agencies Retailers Media Community Reps MPs, MEPs Local Authorities Pressure Groups

11. Action Sustainability Inspiring sustainable procurement Why – Private Sector…? It's about risk! What lies beneath your supply chain?

12. Action Sustainability Inspiring sustainable procurement When…? Better make it soon then……..

13. Action Sustainability Inspiring sustainable procurement How…? What organisations do Respond to customer needs Buy stuff Make/deliver stuff Account for stuff UK Government 4 Priorities Demand management Inventory management Life cycle cost Business planning Sustainable Production & Consumption (more for less) Waste minimisation Environmental impact Sustainable products Responsible marketing CO2 reporting Emissions trading, CCL etc. “Green” energy procurement Energy conservation Energy efficient delivery Energy services Efficient products Consumer information Climate change and Energy Manufacturing efficiency Services minimise resource use Materials use Environment impact of purchases Reporting (triple bottom line) Natural Resource & Env. Enhancement Efficient products Environmental impact Ethical procurement Local suppliers Community partnerships Charitable donations Business ethics Community impact Social implications of products Community impact Social implications of products Sustainable Communities

14. Action Sustainability Inspiring sustainable procurement How…? Buy stuff Demand management Inventory management Life cycle cost Sustainable Production & Consumption (more for less) “Green” energy procurement Energy conservation Climate change and Energy Materials use Environment impact of purchases Natural Resource & Env. Enhancement Ethical procurement Local suppliers Community partnerships Sustainable Communities

15. Action Sustainability Inspiring sustainable procurement How…? Buy stuff Demand management Inventory management Life cycle cost Sustainable Production & Consumption (more for less) Hundreds of end users Hundreds of products Thousands of suppliers “Green” energy procurement Energy conservation Climate change and Energy Countless 2nd, 3rd, 4th tier suppliers Materials use Environment impact of purchases Natural Resource & Env. Enhancement Tens of thousands of transactions Ethical procurement Local suppliers Community partnerships Sustainable Communities Big....Complex...

16. How - Organisation • Big Ticket • Environment • Noise • Air Quality • CO2/Energy • Waste • Other • Environment • Biodiversity • Natural resources • Contamination • Etc. • Corporate • Responsibility • Social • Economic • Ethics • Etc. Corporate Responsibility Board BAA Example • Policy • Strategy • Governance • Talent management Group Areas of Expertise • Policy advice • External representation • Options • Analysis • Policy Businesses CAS Environment • Strategy • Long term • Sustainability • impacts • Implementation advice • Legislation • Strategy framework • Policy communication • Performance reporting • Solutions • Sustainable • Performance Sustainability Team • Guidance • Documents to inform Deliver Sustainable Solutions Supply Chain* • Translate outputs • SC and Capital processes • Advice • Hands on support • Facilities • Planning • Solutions • Define knowledge • To achieve outputs Capital* • Learning & Development • Upskilling project teams Assurance Process reviews Audit Corrective action

17. Action Sustainability Inspiring sustainable procurement How – Process…? Supplier qualification and appraisal Identification of need Specification Financial evaluation Accounting: whole life costing Financial review Contract management and review Tendering and tender evaluation Environmental Purchasing – guidance for organisations CIPS/IEMA/NHS PASA 2002

18. How - Process BAA Example Report the level of performance achieved against the Brief's & CEMP Identify & relate relevant sustainability issues Develop performance requirements in Options Brief Define requirements in Scheme Brief & define scope of works for CEMP Define requirements in Production Plan & produce CEMP Approve CEMP & implement Advice Delivery

19. How - Process BAA Example Identify & relate relevant sustainability issues Develop performance requirements in Options Brief Define requirements in Scheme Brief & define scope of works for CEMP Define requirements in Production Plan & produce CEMP Approve CEMP & implement Report the level of performance achieved against the Brief's & CEMP Advice Delivery Mandatory QMS Procedures: detail the procedures that must be adhered to QMS Standard Forms: list the standard forms that should be used in support of the procedures. Checklists: list the checklists that should be referenced.

20. Action Sustainability Inspiring sustainable procurement How - Risk…? What is risk...........? The really bad stuff that happens if you don’t do something about it Shaun McCarthy 2006

21. L/H = M M/H = H H/H = H L/M = L M/M = M H/M = H L/L = L M/L = L H/L = M Action Sustainability Inspiring sustainable procurement How - Risk…? High Impact Low Likelihood High

22. Treat Terminate Terminate Tolerate Treat Terminate Tolerate Tolerate Treat Action Sustainability Inspiring sustainable procurement How - Risk…? High Impact Low Likelihood High

23. sustainable procurement strategy and policy management commitment Procurement, Environment/ Energy/ Estates/ Waste sustainable procurement risk assessment Business Improvement Team risk manager budget holders users specifiers sustainable procurement risk management customers finance Action Sustainability Inspiring sustainable procurement How – To get started…? (adapted from slides courtesy of NHS PASA)

24. Action Sustainability Inspiring sustainable procurement How – will it turn out…? BAA Example Air Quality Climate Change Surface Access Water quality Local suppliers Human rights Noise Biod. Waste Materials Cleaning Coaching Baggage systems Construction Architect Consider your impact on specific issues – not “one size fits all”

25. Action Sustainability Inspiring sustainable procurement How – will it turn out…? NHS Example pharmaceuticals cleaning materials employment agency services clinical waste medical consumables patient transport catering services energy • stationery uniforms office furniture signage Environmental Risk Profile

26. Action Sustainability Inspiring sustainable procurement How – Do you know…? BITC Index www.bitc.org.uk

27. Action Sustainability Inspiring sustainable procurement How – Do you know…? Flexible framework Benchmarking how well you are addressing your sustainability issues against how well others are addressing theirs www.actionsustainability.com, shaun_mccarthy@harg.demon.co.uk

28. Action Sustainability Inspiring sustainable procurement How – To measure benefits…? • Tonnes of CO2 abated • No abatement notices for nuisance • Tonnes of waste diverted from landfill • No prosecutions for contamination or biodiversity • Tonnes of aggregate & cement abated from natural sources • Tonnes of HFC/HCFC abated • Volume of timber abated from non-sustainable sources • Quantity of PVC not procured • Quantity of formaldehyde not procured • No red residual risks related to human rights

29. Action Sustainability Inspiring sustainable procurement Where – To get help…? • www.actionsustainability.com • www.bitc.org.uk • www.iema.net • www.cips.org • www.lsx.org.uk • www.forumforthefuture.org • www.wrap.org • www.envirowise.gov.uk • www.londomremade.com • www.thecarbontrust.cu.uk

30. Action Sustainability Inspiring sustainable procurement Where – to get training…? Do you have the right to procure un-sustainably? Organisations in the public and private sector are coming under increasing scrutiny by government, non-government organisations, investors and customers to act responsibly. The biggest area of reputation risk lies beneath the supply chain. Organisations need to understand how to translate their environmental and social values through their supply chains to inspire and embed responsible behaviour. Content This one day programme provides procurement and environment professionals with the capability and confidence to understand and exploit the benefits of procuring effectively and responsibly. This is a practical seminar with expert coaching and case studies. Quality The course is referenced in the Government’s 2006 strategy “Procuring the Future”. This will be the only programme of it’s type to be accredited by the Chartered Institute of Purchasing and Supply www.cips.organd the Institute of Environment Management and Assessment http://www.iema.net/, Delivery The programme is delivered by leading experts in this field. Barbara Morton, Project Manager for the Sustainable Procurement Task Force, and Shaun McCarthy, Chair of the Strategic Supply Chain Group and Chair of the London Sustainable Development Commission 2012 Sustainability Group. www.actionsustainability.com, shaun_mccarthy@harg.demon.co.uk

31. Action Sustainability Inspiring sustainable procurement Some controversial stuff • Minimum standards • Won’t work on their own • Unlikely to be complied with • UK target for 100% BREEAM excellent buildings • 17% achieved

32. Action Sustainability Inspiring sustainable procurement Some controversial stuff • Beware “Greenwash” • UK Green Tariff energy • Just a certificate for your wall • Makes no difference to the environment

33. Action Sustainability Inspiring sustainable procurement Some controversial stuff • ISO 140001 for suppliers • Not the whole solution • One size fits all • May not get you what you need

34. Action Sustainability Inspiring sustainable procurement The Future • How much longer will it be acceptable for organisations to: • Grow their business and increase greenhouse emissions? • Send waste to landfill? • Buy from organisations with poor human rights practices • Deplete natural resources in construction and operations • Disrupt our neighbours

35. Action Sustainability Inspiring sustainable procurement Sustainable Procurement Practice Thank you www.actionsustainability.com shaun_mccarthy@harg.demon.co.uk