Fair and sustainable supply chains, from theory to practice, from words to deeds. An international standard – ISO 20400:2017
, ‘
sustainable procurement, guidelines
‘ – and some brief reflections.
The procurement process
The procurement(sourcing) process is more complex activity than simple purchasing operations. The organization must set up appropriate procedures, to define a repeatable process for acquiring goods and services. Putting in place systems of rules to be applied (and maintained over time) to a range of relationships, external and internal.
The first stage is the identification of strategic priorities and thus of actual needs. On this basis, specifications are focused, possible stakeholders are identified, existing contracts and opportunities for their revision are examined, and supply conditions are evaluated and negotiated. The relationship with the supplier should come to be marked by continuous improvement under conditions of reciprocity, to the extent possible, seeking to avoid or at least mitigate interdependent relationships.
The strategy
often gives way, however, in fact to short-term tactics exacerbated by the drug of price
. Buying goods and services at the lowest possible costs – and reducing them still further, with unfair trade practices that only the new directive
UTPs
(
Unfair Trading Practices
)
will perhaps be able to curb-it remains the dominant (sub)buying culture. Which inevitably exposes, among other things, to risks of
food fraud (
To whose prevention is dedicated other international standard,
ISO 22380
).
Procurement and social responsibility
The price battle certainly has its own logic, on the surface at least, in some contexts. But it does not generate value and in fact contributes to the instability of markets that cyclically collapse, dragging entire supply chains or their compartments with them. The cost of goods is thus the result of a number of forces only minimally related to the supply chain and product life cycle.
The actual cost Of the good/service indeed includes the social impacts and environmental , as well as the costs of using and managing the goods and their packaging in the post-use phases. Costs largely externalized onto the community and generally ignored by the ‘buyer‘. (1)
Social responsibilities related to procurement are evidenced in the impact of products and services on the environment and the community:
→
greenhouse gas emissions
and contribution to climate change
,
→
deforestation
, environmental degradation
and biodiversity,
→exploitation of workers even minors, of the peasants and their communities, human rights abuses,
→
fraud
, public and private corruption, consumer fraud.
Reflecting on these elements, considering their impact on the overall cost of the product to be purchased means, conversely, addressing sustainable sourcing logic. A crucial topic, where one considers that organizations invest on average about 60 percent of their revenue in overall ‘supply chain‘ management.
ISO 20400, ‘
sustainable procurement
‘
ISO 20400-a guideline published in January 2017 as a result of the work of 52 standards bodies and more than 10 international organizations (including OECD, UN and European Commission)-provides a holistic definition of so-called sustainable procurement. Understood as the process aimed at ensuring the most favorable environmental, social and economic impacts possible throughout the life cycle (of products), with the goal of minimizing its adverse effects.
‘
Sustainable Procurement
[is the] procurement that has the most positive environmental, social & economic impacts possible over the entire life cycle‘ (ISO 20400).
The guidelines
ISO
allow any organization-regardless of size or operational complexity-to ensure and demonstrate with objective data the effective
sustainability
Of its own supplies. So that the value chain can truly be called such, with favorable impact on society and the environment.
ISO 20400, the seven ‘
core subjects
‘
The seven ‘
core subjects’
, the core subjects of sustainable procurement, reflect the sustainability goals already shared globally in the ‘ISO 26000, Guidance on social responsibility‘ standard. Which offer concrete tools, aimed at organizations operating in every economic sector, to help achieve the Sustainable Development Goals (SDGs) adopted by the United Nations Assembly in 2015.
1)
Governance
, structures and decision-making processes
2)
Human rights
, human rights
3)
Labor Practices
, labor relations and conditions
4)
Environment
, environment
5)
Fair operating practices
, fair management and operating practices
6)
Consumer Issues
, specific issues related to of consumers
7)
Community Involvement and Development
, community involvement and development.
ISO 20400, the four operational sections
The procurement process can decide the fate of the organization itself as well as influence that of shareholders (the shareholders) and stakeholders (the social partners concerned). It can indeed reduce the impact on the environment and human rights throughout the supply chain. Manage supplier relationships, reducing the risk of recalls related to defective supplies, indirect involvement in fraud, and blackout related to sudden suspensions of essential supplies. The ‘
sustainable procurement
‘ also protects the reputation of its brands and not least generate social value.
The four sections of the standard under review offer a key to understanding and intervening in each organization’s purchasing culture. To map the ‘supply chain‘ in its entirety and its actual costs, on the basis of which to implement sustainability-driven strategies. With a view to working in close synergy with all stakeholders involved in the supply chain, generating new and more equitable market opportunities. The four sections, to follow.
1)
Fundamental
. The first section describes the basic themes, as well as the guidelines to be followed in the various areas and levels of the organization. Particular attention should be paid to the management of risks and opportunities that are often associated with them (e.g., the reuse of production waste
), to ‘
due diligence
‘, to conflicts of interest.
2)
Policy/strategy
. The second section is aimed at top organizational leadership, which must integrate procurement sustainability goals into the entity’s strategy and policies to ensure their effective achievement. For a standard to work-and regardless of its certification, which is not provided for in this case (since these are guidelines)-all functions, starting with management, must be familiar with it and participate in it.
3) Organization
. The third part considers the organizational conditions and management techniques necessary to successfully implement the defined objective while pursuing continuous improvement.
4)
Process
. The fourth section is devoted to the functions responsible for the purchasing directorates. Functions on which the translation of solemn principles into concrete and measurable activities, which with the help of external audits can be estimated in their effectiveness and efficiency, is incumbent.
Sustainable procurement, the risks of inattention
The fateful ‘weak link’ in the chain often lies upstream of the organization’s area of direct control. And it is, moreover, capable of undermining the entire system, starting with those who delude themselves that they are the ‘deus ex machina’ of it. As is often the case in food safety crises and those that plague the reputation of major brands. There are far too many cases where saving at all costs on supplies turns out to cause immeasurable harm.
The information
on the web and ‘
social media
‘, moreover, is as rapid as it is disintermediated. Unstoppable, in circulating positive and negative news. Today’s consumAtors and the ‘
Millennials
‘ in particular, in turn, are always connected and increasingly attentive
to issues related to socio-environmental sustainability as well as safety. The process of ‘
sourcing
‘ therefore deserves special attention.
#Égalité!
Dario Dongo and Giulia Baldelli
Notes
(1) More insights at
https://www.iapb.org/wp-content/uploads/Sustainable-Procurement-Webinar-Slides-and-Notes.pdf
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
