Meeting voluntary standards to maximise the triple bottom line

Penny Godfrey, general manager at Millstream.

Sustainable procurement and careful management of supply chains are vital to achieving a triple bottom line ‘people, planet and profit’ approach, says Millstream's Penny Godfrey.

Sustainability has become a buzzword synonymous with environmental change, particularly within the construction, engineering and infrastructure sectors. It has much deeper business implications however, with many adopting a triple bottom line approach of ‘people, planet and profit’. While reducing our carbon footprint and utilising green resources are key priorities that continue to move up the agenda, social and economic sustainability remain significant issues. 

Sustainable procurement and careful management of supply chains are vital to achieving the ‘three Ps’ for organisations. This applies to firms of all sizes and across all sectors, from public sector buyers to private suppliers, whether they be a small civil engineering firm or an international construction contractor. It is a holistic approach to sustainability that incorporates considerations of consumer issues, fair operating practices, labour practices and human rights alongside the green agenda. All connected by responsible governance.

The International Organisation for Standardization worked for four years to develop ISO 20400: 2017 guidance on sustainable procurement. It involved 52 countries and their national standards organisations, all under the umbrella of ISO (PC277). The ideal set out by the standard is: “procurement that has the most positive environmental, social and economic impacts possible over the entire life cycle”.

While only guidance on sustainable procurement, rather than enforced legislation, it provides useful insight into implementing practical sustainability. It is cognisant of how sustainability impacts the different levels of the procurement activity from policy, strategy, organisation and process and does not replace legislation, policy and ethical frameworks that regulate procurement activities.

So why does this standard matter? How does it benefit organisations and the wider industry? 

Earlier this year, Balfour Beatty was the first company in the world to be assessed against ISO 20400 and highlighted the value of knowing what best practice is. Aaron Reid, head of sustainable procurement at Balfour Beatty, said at the time: “The standard gives us a clear framework to determine ‘what good looks like’ in terms of sustainable procurement and how we compete against it. The assessment itself was robust, practical and coherent. It held a mirror up to us as a business, enabling us to uncover areas of existing good practice to be shared and areas for improvement to focus upon.”

Here it is worth highlighting that different sectors will be impacted by different aspects of sustainability. As demonstrated by Balfour Beatty, construction has particular responsibilities in relation to the environment but health and safety is also key as are local employment issues.  It is about maximising an organisation’s positive economic, environmental and social impact in the communities in which it operates. 

Given the standards are a voluntary code, many organisations may think this isn’t worth the effort. In particular, private SMEs and those who are time poor or lack the procurement knowledge perhaps don’t see the need or value to adopt these best practices. However, it’s not just about box ticking. Adopting such standards makes good business sense. Procuring sustainably can mitigate risks, be a differentiating factor, improve industry standards, and maximise benefits for the organisation, its customers and suppliers, local community and to some extent, the wider world. For those procuring on behalf of the public sector or looking to win more work in this sector, where efficiency and transparency are key considerations, sustainable procurement will bring specific benefits and help stand businesses apart from competitors during the tender process. 

The ‘three Ps’ - people, planet, profit - can only be achieved through collaboration and engagement between all parties across a supply chain. We are already seeing a sea change towards the principals that the new ISO guidance embodies however we’ll have to wait and see the real impact, particularly given its not mandatory. Standards are reviewed every five years so adopting these best practices now puts you a step ahead of the competition and well placed to take on any legislative regulations should they come into play in the future. 

Penny Godfrey is general manager at procurement specialists, Millstream, providers of services including MyTenders and Tenders Direct.