Nobody does anything for themselves any more. Everything we do is out-sourced, offshored, franchised, partnered, strategically sourced, procured or even bought. Modern public and private sector organisations try to do what they do well and work with other people who do what they do well that is part of their delivery to a customer. Given the global imperative to deliver ever higher levels of sustainability it would make sense to deliver this through a supply chain wouldn't it?
The case for change is compelling. The publication last year of the Inter-Governmental Panel on Climate Change (which says the planet is getting hotter and will get hotter still with disastrous results) and the Stern Report (which says if we don't do something about it in the next 50 years it will cost 5 times as much to do it later), leave no doubt. To stabilise the global temperature increase to 1.8 degrees C we need to reduce CO2 equivalent emissions by 80% in the next 50 years. Anything less is likely to lead to catastrophic and irreversible climate change, sea level rises leaving most major cities under water, massive migration and wars due to water shortages. The gross carbon emissions of China are now roughly the same as the USA but the emissions per capita are about 20% of the USA, leaving plenty of room for growth as developing nations industrialise and start to demand western lifestyles. It is not just about carbon. The world is consuming resources at an un-sustainable rate. If the rest of the world wanted to live like Western Europe we would need 3 planets to sustain life on earth. If we all wanted to live like North America we would need 6. The UK will run out of landfill capacity within 7 years yet we still waste 30% of things we buy. Social issues are paramount too, we all want the low prices that global procurement provides but we don't want to know about the labour standards that achieve them. Closer to home, 3.8 million children were living in poverty in 2006/7. Are the parents of those children working somewhere in your supply chain? Who is cleaning your toilets, emptying your bins, serving your meals? They don't work for you so why should you care? Or should you?
Myths
There is a lot of rubbish talked about this subject. You may think this is rubbish too, if so please email me (you can email me if you like it too). It is all too difficult, too complicated, EU rules don't allow it, we don't have a policy, haven't demonstrated the business case, don't have time, don't have the resources, customers won't like it, the directors won't approve it, the elected members don't want to know. There is probably more but I think you get my point.
When it boils down to it, this is about the unknown. Procurement professionals like certainty, they deal in costs, exchange rates, margins, discounted cashflows, NPVs, KPIs, SLAs, contracts, clauses, offer and acceptance and other such comfortable, measurable and factual things. The notion of climate change, or landfill, or child poverty does not appear on their radar, it does not compute. The environment profession does not help. During my career I have shown the door to numerous environmentalists who wave their latest voluminous questionnaire demanding that I include it in all my bid evaluations and give it a 10% weighting factor. I still do this as an independent consultant but I say it more politely and send them a bill. The sad fact is that questionnaires do not change the world and rarely make any difference to procurement decisions. It just makes us feel better, like the trip to the gym after a night of excessive consumption.
There are no rules to this game. As an organisation, you need to decide what impacts you will be responsible for and at what stage in the value chain they stop being your problem and start being somebody else's. For example, it is possible to demonstrate that the Jeep Grand Cherokee is the most sustainable vehicle on the planet, a Hummer has a smaller carbon footprint than a Toyota Prius and that a bunch of flowers grown in Kenya has a smaller carbon footprint than one grown in Holland. It just depends on what you decide to measure and how you measure it. You need to decide and it is not easy.
Good practice starts with translating some of the broad principles into more tangible objectives, they will be unique to your business. Only when you have a clear fix on this can you embark on a sustainable procurement strategy that matches the values and strategies of your organisation.
There are also sharks in the pool. Selling organisations (understandably), want to position sustainable solutions as premium products. A construction contractor trying to source sustainable timber was told by his stockist that certified material is available in stock at no extra cost. The same contractor was told by their joinery supplier that products made from certified sustainable timber are available at a 20% premium. What is it about nailing together some bits of sustainable wood and calling it a window frame that makes it 20% more expensive? (I am sure the manufacturing process is more complicated than that but you get my drift.) Beware also the electricity myth. "Green Tariff" electricity is simply a way for a supplier to charge you more for complying with the Renewables Obligation, which is a legal requirement anyway. You do get a nice certificate to go on the wall but you make no difference to the environment. It has been very refreshing to see recently EDF being honest about this, even if it loses them customers in the short term.
Come on if you think you're hard enough
"Fortune favours the brave", or "fools rush in where angels fear to tread"? Or, to quote the immortal Del Trotter "Ee 'oo dares wins Rodders".
5 years ago, Iceland (the retailer, not the place) decided to stop selling eggs with yellow food dye in the yolks. Their market researchers were very gloomy and predicted a 50% reduction in egg sales. They did it anyway because it is the right thing to do and vastly increased their sales of eggs. Later, the same company tried to offer 100% organic products and failed. Their customers were not ready for this. In May 2008, Farnell will be the first major distributor of electrical goods that I know of to stop buying tungsten light bulbs (they are one of my clients and I have nagged them about this a lot), when stocks run out they will stop selling them. It is hard to describe how difficult this was for them, the whole philosophy of the company is based on customer focus, the customer gets what they ask for, when they want it, no exceptions, no arguments, no higher priority. The notion of telling a customer they can't have something because it is bad for the environment is alien to them. They did it anyway and I congratulate them. I hope this turns out to be an egg story and not an organic story otherwise I will be looking for another client (anybody want some advice?). This company has already had some success, their approach to sustainability has already won them friends with a major global manufacturer who plans to double their turnover through this stockist. They are also seeing bright graduates wanting to work for them because of their more responsible attitude.
Last year, Marks and Spencer broke new ground with their Plan A. This is a marketing led strategy. M&S believe that their customers in 5 years time will want to deal with a more sustainable retailer and they are betting the farm on it. Plan A is focused and well researched. It comprises 5 key aspects of sustainability with bold, 5 year objectives and a 100 point plan to deliver it. Implementation is led by the Chief Executive "because there is no Plan B". The challenge of implementation should not be under-estimated and there are bound to be tears before bedtime but will it help them survive and thrive in today's "difficult trading conditions"? I hope so.
I have the honour to chair the Commission for a Sustainable London 2012, this is an independent watchdog to oversee sustainability of the London 2012 programme and its legacy. Whilst it is my role to be critical, I must give credit where it is due. The project is already changing the construction industry by targeting embodied energy (reducing the Tonnes of carbon to make a Tonne of concrete?) and setting new standards for waste management and use of recycled materials. I hope the delivery of the Games will also set new standards for things like merchandising. I would like to see an end to distribution of stuff that nobody needs, made of something horrible in a factory where conditions are unspeakable, which end up in a bin somewhere to go to landfill that will run out in 7 years.
Does government help?
The leading lights in the public sector are right up there with leading businesses. The Environment Agency has been doing sustainable procurement for longer than anybody. They worry about everything and ask questions, their process is probably too bureaucratic for business but any company that calls a supplier and asks them to stop using Jiffy Bags to deliver goods because they cannot separate the plastic membrane for recycling gets my vote. Similarly, the bold move by NOMS (they used to be called HM Prison Service in the days when government department titles described what they actually do) to issue a call for competition for a zero waste prison mattress (100% recycled, 100% recyclable) is visionary and challenging. The product does not exist today and they will let a contract to somebody brave enough to develop it. This may not be a sexy subject but do you buy for hospitals, hotels, social housing? Where will your old mattresses go in 7 years time when there is no landfill and what might it cost you? Do you think about disposal cost when you bought it?
The glacial pace of government policy does not help. In April 2005, "Securing the Future" was published, the UK Sustainable Development Strategy. It called for a business led Task Force to make recommendations on how the £150Bn public sector spend can be used to influence behaviour. I had the honour to be part of that Task Force. The publication of "Procuring the Future" in June 2006 made a number of excellent recommendations, including the establishment of a Sustainable Procurement Centre of Excellence located in the Office of Government Commerce. The government was due to respond in "Autumn 2006". Having re-defined "Autumn" to May 2007, they concluded that they would "consult with a view to the establishment of a Centre of Excellence". March 2008 saw yet another 80 page consultants report recommending a Centre of Excellence located in the Office of Government Commerce. Sound familiar? I can almost hear Sir Humphrey "in the fullness of time Minister". It has taken 3 years from recognising that public sector procurement has a role to agreeing to establish a support service. However, credit to Defra, they have been providing central government departments with workshops to get them started, so there is hope.
Sustainability is the opportunity of a generation, it requires us to do new, things, take unprecedented risks, innovate and think the unthinkable, and we don't even need to fight a war. Speaking of which, my granddad did his bit in the war, now the world is faced with a similar catastrophic threat and I plan to do my bit too. Do you?
Shaun McCarthy Director, Action Sustainability shaun@actionsustainability.com www.actionsustainability.com Chair, Commission for a Sustainable London 2012 www.cslondon.org