Sustainable Procurement Checklist: 8 Procurement Clauses Every Sustainability Team Should Know

Key Takeaways

• Involve sustainability teams early in procurement planning.
• Link contract requirements to corporate sustainability objectives.
• Set measurable targets, evidence requirements and reporting frequencies.
• Make sustainability part of supplier performance management.
• Address carbon, modern slavery, supply chain transparency and continuous improvement.
• Ensure commitments made at tender stage are monitored after award.

Delivering on corporate sustainability goals starts with procurement. A practical sustainable procurement checklist can help sustainability and procurement teams turn ESG commitments into clear supplier requirements, contract clauses and measurable actions.

According to the Sustainable Procurement Barometer by EcoVadis, over 70% of companies now view sustainable procurement as a key driver of corporate responsibility. Yet, only 30% of ESG integrations in procurement are “very or extremely effective.” So most organisations have the intent. Far fewer have the mechanisms to deliver it, and the contract is one of the most direct.

This guide will explore eight essential procurement clauses that can help sustainability teams embed ESG commitments into contracts, strengthening your organisation’s sustainable procurement strategy and achieving real impact.

From Policy to Practice

Procurement and sustainability teams are not always fully aware of each other’s targets, requirements and responsibilities.

They may also overlook the opportunity to use supply chain spend as a catalyst for achieving wider sustainability goals.

Sustainability teams need to know the procurement process and exactly where they fit into it:

Understand What Drives Each Team

The process begins with procurement and sustainability teams understanding each other’s goals. In workshops Action Sustainability has run with clients, there are often eureka moments as teams move through the process of understanding each other’s requirements, priorities and timescales.

Both teams need to communicate early in the procurement process. Leaving social value or sustainability requirements until too late makes them harder and more expensive to implement.

Align Policies and Responsibilities

Procurement, commercial and contract management policies should align with the organisation’s ESG or sustainability policy. An organogram or RACI matrix makes it clear who owns what.

This gives both teams greater clarity over who is responsible for implementing sustainability requirements throughout procurement and contract management.

Review the Plan-Source-Manage Process

For large, strategic or above-threshold tenders, carry out an in-depth plan-source-manage review of the procurement process with the sustainability team.

Consider where the team needs to contribute to supply chain requirements during:

• Early supplier engagement
• Pre-qualification
• Onboarding
• Tender development
• Specifications

It also means the sustainability team knows exactly what’s in the contract by the time it’s awarded. They can then engage successfully with the chosen suppliers and subcontractors to make sure agreed commitments and KPIs are fulfilled.

At Action Sustainability, this process helps fill gaps between teams and strengthen working relationships so that organisational ESG and sustainability goals can be delivered more effectively.

The principle is similar to Kintsugi Leadership, where broken pieces are brought together and strengthened. Action Sustainability has helped client organisations apply this collaborative approach to support meaningful social value outcomes and impacts.

8 Procurement and contract clauses to be aware of post-award for effectively managing sustainability

ESG and sustainability teams need to understand the contractual mechanisms that can support delivery of requirements embedded collaboratively during the procurement process.

These eight areas provide a useful starting point.

1. Monitoring and Reporting

Contracts can include a requirement for suppliers to provide regular reports on sustainability performance.

This might include data relating to:

• Waste generated
• Emissions
• Resource use
• Other agreed sustainability measures

Reporting is often linked to quarterly supplier performance management against the 5 Rights of Procurement. Make sure your supplier performance management agendas include sustainability discussions so that these issues remain visible after contract award.

2. Supplier Risk Management

Where it’s not already covered, contracts should include a clause setting out how sustainability-related risks within the supply chain will be managed and mitigated. These risks should be treated in the same way as other risks that could affect successful contract delivery.

Spell out in the contract who identifies each risk and who deals with it.

3. Continuous Improvement and Innovation

A continuous improvement clause can encourage suppliers to improve their sustainability performance throughout the contract. It also gives buyers and suppliers a reason to work on new solutions together.

On a long-term contract, sustainability expectations should rise over time. Giving suppliers room to suggest improvements keeps performance moving.

4. Environmental Compliance

Contracts should include clauses requiring suppliers to meet relevant industry-specific environmental guidelines and regulations. If you use the NEC suite of contracts, Secondary Option X29 on Climate Change provides a framework for clients to set specific climate change and sustainability targets for projects.

It requires a Climate Change Plan from the supplier and allows the use of a Performance Table to monitor and financially incentivise performance against agreed targets. If you’re already on NEC, start there. It saves drafting climate clauses from scratch.

5. Environmental Targets

Contract targets let you track supplier progress against your corporate sustainability objectives.

For example:

• reducing energy consumption
• reducing water consumption
• becoming carbon neutral by a specified date
• eliminating single-use plastics
• meeting other relevant resource reduction targets

Measurable targets make it easier to see progress and drive change throughout the duration of a contract.

6. Embodied Carbon Reduction

For relevant products and materials, consider a clause requiring suppliers to provide evidence of their efforts to assess and reduce embodied carbon emissions.

Whether it’s worth asking for depends on:

• Procurement scope
• Contract value
• Contract duration
• Organisational influence or leverage
• The size and capabilities of the supply chain organisation

The requirement should therefore reflect the context of the procurement rather than being applied in exactly the same way to every supplier.

7. Ethical Sourcing

Ethical sourcing clauses can require suppliers to commit to appropriate practices relating to fair labour conditions and human rights. Requirements can be aligned with standards such as BS 25700.

This helps sustainability teams make sure social considerations are incorporated into procurement and contract management alongside environmental requirements.

8. Supply Chain Transparency

A supply chain transparency clause can require suppliers to provide greater visibility into their own supply chains. This can help organisations identify and address potential sustainability and human rights risks beyond their immediate Tier 1 supplier relationships.

Where these risks are material, greater visibility gives procurement and sustainability teams more information to support effective supplier engagement and contract management.

Put Your Sustainable Procurement Checklist Into Practice

A procurement contract should do more than record commercial terms. It should provide a practical mechanism for turning sustainability ambitions into supplier commitments, measurable targets and ongoing performance management.

At Action Sustainability, we help organisations build ESG principles and ISO 20400 into their procurement processes. Using this sustainable procurement checklist can help procurement and sustainability teams identify where stronger contract clauses, supplier engagement and performance monitoring are needed.

Get in touch with the Action Sustainability Sustainable Procurement team to explore how your organisation can strengthen its procurement strategy, enhance supplier sustainability performance and deliver measurable impact.

Frequently Asked Questions

What is a sustainable procurement checklist?

A sustainable procurement checklist helps organisations make sure sustainability considerations are incorporated throughout procurement and contract management. It can cover supplier engagement, ESG requirements, contract clauses, reporting, KPIs and post-award performance.

What sustainability clauses should be included in procurement contracts?

Start with clauses covering monitoring and reporting, supplier risk management, continuous improvement, environmental compliance, environmental targets, embodied carbon, ethical sourcing and supply chain transparency.

Why should sustainability teams be involved early in procurement?

Early involvement allows sustainability requirements to be considered during supplier engagement, pre-qualification, tendering and specification development. Introducing requirements too late makes them harder and more expensive to implement.

How can sustainability performance be managed after contract award?

Sustainability requirements can be incorporated into supplier performance management through regular reporting, KPIs, performance discussions and monitoring of commitments made during procurement.

How can procurement and sustainability teams work together more effectively?

Both teams should understand each other’s priorities, align relevant policies, clarify responsibilities and collaborate throughout the plan-source-manage process. A RACI matrix or similar framework can help establish accountability.