ISO 20400 – Sustainable Procurement: Definition, Benefits and Key Factors

ISO 20400 – SUSTAINABLE PROCUREMENT – the precursor to CSDDD

ISO 20400 is not an assessment standard, but a set of guidelines providing guidance on the adoption of sustainable procurement. No certificate of compliance is issued, but rather a statement of implementation in accordance with the standard’s guidelines. ISO 20400 supports the development of policies and procedures based on the general principles of sustainability. The implementation of these policies can be validated by accredited third-party organisations.

What is sustainable procurement? Sustainable
procurement involves the integration of social and environmental considerations into procurement policies, procedures and practices. It involves applying a structured and strategic approach to public procurement that delivers ethical, social and environmental benefits. This includes the adoption of criteria and requirements for procurement, such as fair labour practices, environmental protection and the reduction of fossil fuel use. In summary, sustainable procurement refers to the pursuit of a positive impact in the social and environmental spheres through procurement practices.

Benefits of sustainable procurement

1. Risk reduction: Adopting a proactive approach to supply chain management helps to reduce the risks associated with selecting suppliers with inadequate or hazardous practices, which could damage reputation or cause financial losses.
2. Revenue growth: Developing and promoting products and services with environmental and ethical value helps to enhance the organisation’s reputation and profits.
3. Cost reduction: Implementing sustainable practices can reduce energy costs, carbon taxes, waste, and the costs of remedying environmental and social damage.
4. Reduced capital costs: Having a strong sustainable procurement policy enhances the organisation’s ability to attract sustainability financing.
5. Building loyalty and value: The organisation’s staff experience their contribution to social good, take pride in their work, and employer-employee relationships, as well as supplier-customer relationships, are strengthened. The value chain expands and the social good is strengthened.

 

Sustainable Procurement and Reduction of Greenhouse Gas Emissions
Sustainable procurement contributes to the reduction of greenhouse gas emissions, as 50% to 80% of an organisation’s emissions are linked to its supply chain. Implementing sustainable procurement policies and procedures can have a significant impact on reducing the organisation’s overall carbon footprint.

 

Seven key areas of ISO 20400:

1. Organisational governance
2. Human rights
3. Labour practices
4. Environment
5. Fair operating practices
6. Consumer issues
7. Community engagement

 

Sustainable Procurement Policy
ISO 20400 requires organisations to integrate sustainability objectives into their strategic plan and apply them to management practices, processes and policies. The sustainable procurement policy statement sets out the objectives, potential risks in the supply chain and plans to mitigate these risks. This statement must include the following key principles:

1. The organisation’s commitment to sustainable procurement
2. Leadership and accountability for sustainable public procurement
3. Alignment of procurement with organisational objectives
4. Priorities in public procurement
5. Management of the implementation of sustainable procurement processes

 

Transition to sustainable public procurement:

1. Pressure from customers: The growing demand for environmental and social responsibility.
2. Bad publicity: Cases such as the use of child labour, or air or environmental pollution caused by subcontractors, which damage the organisation’s reputation.
3. Regulatory/legislative requirements: Obligations for large companies to conduct sustainable procurement – a responsibility that is passed on to smaller companies
4. Investor and stakeholder expectations: Need to align with investor expectations regarding sustainable practices.
5. Cost reduction: Reducing the life-cycle costs of products and services through sustainable procurement.