Sustainable procurement

Sustainable procurement or green procurement is a process whereby organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a life-cycle basis while addressing equity principles for sustainable development, therefore benefiting societies and the environment across time and geographies. Procurement is often conducted via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works for the best possible price, when aspects such as quality, quantity, time, and location are compared. Procurement is considered sustainable when organizations broadens this framework by meeting their needs for goods, services, works, and utilities in a way that achieves value for money and promotes positive outcomes not only for the organization itself but for the economy, environment, and society.

Sustainable procurement is a spending and investment process typically associated with public policy, although it is equally applicable to the private sector. Organizations practicing sustainable procurement meet their needs for goods, services, utilities and works not only on a private cost–benefit analysis, but also with the intention to maximizing net benefits for themselves and the wider world. In doing so they must incorporate extrinsic cost considerations into decisions alongside the conventional procurement criteria of price and quality, although in practice the sustainable impacts of a potential supplier's approach are often assessed as a form of quality consideration. It has also been proposed that other human rights can be incorporated into the extrinsic costs considered by sustainable procurement models.

These considerations are typically divided thus: environmental, economic and social, but it should go beyond and encompass a series of equity principles for sustainable development, such as intragenerational equity, intergenerational equity, interspecies equity, procedural equity, and geographical equity. These can be seen as the 'sustainability pillars' of procurement, which can be underpinned by one or several instruments for development, such as those proposed by Amartya Sen: (1) economic facilities, (2) social opportunities, (3) protective security, (4) political freedoms and (5) transparency guarantees. And to procure in a sustainable way involves looking beyond short-term needs and considering the longer-term impacts of each purchase. Sustainable procurement is used to ensure that purchasing reflects broader goals linked to resource efficiency, climate change, social responsibility and economic resilience, for example.

This framework is also known as the triple bottom line, which is a business accounting framework. The concept of TBL is narrowly prescribed, and even John Elkington, who coined the term in the 1990s, now advocates its recall. Indeed, procurement practitioners have drawn attention to the fact that buying from smaller firms, locally, is an important aspect of sustainable procurement in the public sector. Ethics, culture, safety, diversity, inclusion, justice, human rights and the environment are additionally listed as important aspects of SPP.

Sustainable procurement involves a higher degree of collaboration and engagement between all parties in a supply chain. Many businesses have adopted a broad interpretation of sustainable procurement and have developed tools and techniques to support this engagement and collaboration.

Procurement – the letting of contracts for goods, works and services on the best possible terms – has historically been based on two criteria, price and quality, with a view to maximizing benefits for the procuring organization. Sustainable procurement broadens this framework to take account of third-party consequences of procurement decisions, forming a "triple baseline" of external concerns which the procuring organization must fulfill.

Environmental concerns are the dominant macro-level justification for sustainable procurement, born out of the growing 21st century consensus that humanity is placing excessive demands on available resources through unsustainable but well-established consumption patterns. Sustainable procurement aims to promote conservation and responsible management of resources by using renewable or recycled materials wherever possible and reducing waste. Sustainable procurement also involves looking at production practices and making sure there are not any negative impacts to the environment such as pollution, biodiversity loss or habitat disruption.

This is a sufficiently influential issue that environment-centric procurement (green procurement) is sometimes seen to stand alone from sustainable procurement. The most straightforward justification for green procurement is as a tool with which to address climate change, but it offers the broader capacity to mitigate over-exploitation of any and all scarce resources. Green procurement introduces into the procurement process a comparison between alternatives based on the criterion of their environmental impact. This comparison is extended to all stages of the procurement process, from the design stage, to the tender evaluation and realization stages.