Procurement is crucial in shaping a company’s environmental and social impact. As businesses strive to meet sustainability goals, comply with regulations and improve supply chain resilience, a sustainable procurement policy becomes essential.
A well-structured environmental procurement policy ensures that companies source goods and services responsibly — reducing environmental impact, promoting ethical labour practices and enhancing long-term business efficiency.
In this guide, we’ll explore the importance of sustainable procurement, outline the key steps for creating a policy and discuss best practices for implementation.
What Is A Sustainable Procurement Policy?
A sustainable procurement policy is a formal framework that defines how an organisation integrates sustainability principles into purchasing decisions. It ensures that products, materials and services are sourced in a way that minimises environmental harm, supports ethical labour practices and promotes economic responsibility.
This policy typically outlines:
- Environmental Responsibility — Reducing carbon footprints, promoting resource efficiency and sourcing eco-friendly materials.
- Social Value — Supporting fair wages, ethical labour practices and community development.
- Economic Sustainability — Encouraging long-term cost savings through efficiency, innovation and supply chain resilience.
Related Reading: How to Create a Social Value Policy
Why Sustainable Procurement Matters
A sustainable procurement policy offers a range of benefits, including:
1. Compliance With Sustainability Regulations
Governments and industry regulators require businesses to demonstrate sustainable procurement. For example:
- UK’s Procurement Policy Note (PPN) 06/20 mandates sustainability considerations in public sector procurement.
- The EU Green Deal sets carbon reduction targets for supply chains.
- ISO 20400: Sustainable Procurement Guidance provides best practices for integrating sustainability into procurement.
2. Enhanced Reputation And Competitive Advantage
Companies prioritising sustainable procurement gain a stronger market reputation and attract ethically conscious consumers and investors. Brands with responsible supply chains also secure better business partnerships.
3. Increased Efficiency And Cost Savings
Sustainable procurement reduces waste, energy use and inefficiencies — leading to long-term cost savings. Life Cycle Costing (LCC) helps businesses select products that provide better long-term value rather than just the lowest upfront cost.
4. Improved Supply Chain Resilience
By selecting reliable, ethical and sustainable suppliers, businesses reduce risks associated with:
- Resource scarcity (e.g., raw material shortages).
- Regulatory fines (e.g., non-compliance with environmental laws).
- Reputation damage (e.g., unethical labour practices).
Related Reading: Reduce Risk In Your Supply Chain With Veriforce CHAS Client Services
Key Steps To Building A Sustainable Procurement Policy
1. Assess Your Current Procurement Practices
Before creating a sustainable procurement policy, businesses must evaluate their current procurement approach. Conducting a procurement sustainability audit can identify the following:
- Carbon emissions and environmental impact of supply chain activities.
- Social and ethical risks related to suppliers and subcontractors.
- Current procurement processes that may lack sustainability measures.
Companies can use sustainability assessment frameworks such as:
- The Global Reporting Initiative (GRI) for environmental and social performance tracking.
- ISO 20400: Sustainable Procurement Guidance for best practices in procurement.
This assessment provides a baseline for setting sustainability goals.
2. Define Your Sustainability Goals
Set measurable targets that align with your organisation’s values and compliance obligations. Goals could include:
- Reducing supply chain carbon emissions by 30% within five years.
- Ensuring that 80% of suppliers meet environmental and ethical sourcing standards.
- Achieving zero waste in procurement by 2030.
- Increasing procurement from local or diverse suppliers by 50%.
Businesses should align these goals with global sustainability initiatives, such as:
Setting Key Performance Indicators (KPIs) helps track progress. For example, a measurable target can be reducing carbon footprint per procurement contract.
Related Reading: Calculating Your Business Carbon Footprint
3. Establish Sustainability Criteria For Suppliers
To integrate sustainability into procurement, businesses should establish clear supplier requirements, such as:
- Environmental Standards — Use of recycled materials, energy efficiency and reduced emissions.
- Ethical Sourcing — Fair trade practices, human rights compliance and diversity in supplier selection.
- Regulatory Compliance — Adherence to ISO 14001 (Environmental Management) and ISO 9001 (Quality Management).
Companies can also implement a sustainability scoring system to evaluate suppliers based on these criteria.
4. Implement A Supplier Verification Process
Businesses must ensure suppliers meet sustainability requirements by implementing the following:
- Pre-qualification assessments — Checking sustainability credentials before onboarding suppliers.
- Regular audits — Conducting site visits or requiring third-party sustainability audits.
- Sustainability certifications — Prioritising suppliers with recognised certifications, such as:
- ISO 14001 — Environmental management.
- B Corp Certification — Ethical and sustainable business practices.
- Fair Trade Certification — Ethical sourcing and labour rights.
By working with pre-qualified suppliers, businesses can reduce risks associated with unsustainable practices.
5. Incorporate Sustainability Into Procurement Decisions
A sustainable procurement policy should integrate environmental and social considerations into purchasing decisions. Key approaches include:
- Life Cycle Costing (LCC): Evaluating the long-term costs and environmental impact of products.
- Green Contract Clauses: Requiring suppliers to meet sustainability targets.
- Supplier Diversity Programs: Partnering with minority-owned, female-owned, or small local businesses.
6. Train Procurement Teams And Engage Stakeholders
A sustainable procurement policy is only effective if employees and suppliers understand its importance. Steps to achieve this include:
- Provide procurement teams with training on sustainable sourcing.
- Engage leadership to drive policy adoption.
- Communicate expectations to suppliers through policy documents and workshops.
Companies should also communicate their sustainability commitments publicly to strengthen their brand reputation.
7. Monitor, Report, And Improve
Sustainable procurement is an ongoing process requiring regular performance monitoring. Businesses should:
- Track key sustainability performance indicators (KPIs), such as carbon footprint reduction and waste minimisation.
- Conduct regular audits and supplier evaluations.
- Adjust procurement strategies based on new sustainability challenges.
Transparent reporting — such as ESG reports — enhances stakeholder trust and regulatory compliance.
Related Reading: What Is An ESG Policy And What Should It Include?
A well-structured sustainable procurement policy enhances business efficiency, regulatory compliance and brand reputation. By integrating environmental procurement policies into sourcing decisions, companies can drive meaningful change while ensuring long-term success.
How Veriforce CHAS Supports Sustainable Procurement
Veriforce CHAS helps businesses implement and maintain sustainable procurement policies by providing:
- Supplier Pre-Qualification — Ensuring contractors meet sustainability and compliance standards.
- Risk Management Solutions — Identifying environmental and social risks in supply chains.
- Compliance Tracking — Helping businesses stay aligned with sustainability regulations and certifications.
Partner with CHAS, and strengthen supply chain sustainability, mitigate risks and ensure long-term business resilience. Discover how CHAS can help you build a responsible, resilient supply chain. Get started today.
