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Encouraging your supply chain to go green

Sustainable procurement is an essential element in greening the supply chain and plays a vital role in helping achieve measurable business sustainability. Choosing or remodelling your building and work practices to be more sustainable and environmentally friendly is a great start, but all of this good work can be undone by choosing non-compliant suppliers.

In simple terms, sustainable procurement is about buying goods and services in a way that is responsive to social, economic and environmental factors. This means:

  • the products or services are value for money
  • their environmental performance is life-cycle based, quantifiable and certified
  • considering social aspects like the impact of labour conditions, health and safety concerns and regulatory compliance.

American and European markets have well-established standardised sustainability programs for suppliers and many Australian companies are beginning to adopt these processes as well, resulting in a significant effect on the SMEs who supply them. In very real terms, this means that if your company cannot adequately answer questions about your purchasing process you will not win the business.

Let us look at a working example. Westpac, one of Australia’s big banks, is committed to environmental and social sustainability and their supply chain involves approximately 10,000 suppliers from large multi nationals to small local businesses, delivering goods and services worth about $2.2 billion per year.

In order to be a Westpac supplier the bank will ask 22 question, which include questions about labour and environmental practices. They are also asked if they have adopted similar practices to Westpac when dealing with their own key suppliers. This trend will soon make it mandatory today for all businesses to have a sustainability procurement policy.

Design Victoria suggests that if your suppliers have not embraced the movement towards a more environmentally sustainable product and culture, here are some ways you could encourage them:

  • develop a sustainable procurement policy or checklist based on accepted green buying principles or guidelines
  • make sure all your staff involved in purchasing and procurement are aware of the company’s sustainable procurement policy, plan or checklist
  • compare products and services based on a life-cycle or cradle-to-grave approach
  • utilise existing third party labelling schemes and programs to help you make comparisons and decisions, especially in relation energy and water using appliances and products
  • get to know your suppliers and ensure they know about your sustainable procurement plan early in the process
  • establish which products or services are likely to have the most significant environmental and/or social impact and focus your sustainable procurement plan on those
  • consider the profile and reputation of your suppliers as part of the process, asking specific questions about their compliance with all relevant environmental regulations
  • be as specific as you can when asking suppliers questions without making the process unnecessarily onerous - for example, ask specific questions related to energy using products, water-using products, packaging requirements etc.
  • always ask suppliers for written verification or documentation which supports their environmental claims
  • third party certification is a great way to ensure your supplier is not just green-washing and actually are taking real action.
Developing an open relationship with all your suppliers, contractors and service providers is an essential aspect of any sustainable procurement process and demands that all players in the supply chain are aware of their environmental performance and obligations.

The benefits of becoming an environmentally sustainable supplier will:

  • save resources and waste
  • reduce costs, which means increasing profit,
  • put you in a select supply chain group,
  • attract new clients and employees
  • significantly differentiate your company in the market.


This article was prepared by GreenBizCheck’s Market Research Manager, Holly McCarthy who can be contacted via the GreenBizCheck website.