Procurement

The Importance of Ethical and Sustainable Procurement

Business Advice | 3 May 2023 | 1 year ago

There is a lot that goes into running a business, and many business owners simply opt for the quickest and easiest way of doing things. When this comes to procurement, this often means choosing the most cost effective and easiest way of getting goods and services. However, this is unlikely to be the best way of doing things when you take the wider world into consideration.

There has been a growing interest in ethics and sustainability in procurement in recent years, and more businesses are taking note of the impact that their procurement practices are having on others. You will probably have heard a lot about businesses working to reduce their carbon footprint, but there is much more that goes into ethical and sustainable procurement. Below, we have taken a look at what is meant by ethical and sustainable procurement, and the benefits to businesses.

Ethics and Sustainability in Procurement

Ethical and sustainable procurement refers to the process of purchasing goods and services in a way that prioritises ethical and sustainable principles. This means taking the environmental, social and economic impacts of the products and services being purchased into consideration, as well as the practices of the suppliers and manufacturers who produce them.

Ethical Procurement

This means ensuring that suppliers and manufacturers follow ethical standards, such as fair labour practices, respect for human rights and compliance with environmental regulations. Businesses with ethical procurement practices will avoid suppliers who use child labour, forced labour or engage in any form of discrimination or exploitation. It’s about doing what is ethically right as a business, regardless of whether there’s a cheaper or quicker way of doing things.

Sustainable Procurement

This means purchasing products and services that have a lower environmental impact, such as those that are made from sustainable materials, produced using renewable energy or those that are designed to be reused or recycled. Sustainable procurement also involves assessing the entire supply chain and ensuring that suppliers have environmentally responsible practices in place. There might be cheaper or easier procurement options, but being sustainable means putting the environmental impact first. Sustainable procurement practices help to protect the environment by reducing waste, conserving natural resources, and minimising the carbon footprint of a business. This is increasingly important as consumers are becoming more concerned about environmental issues and expect businesses to take action to address them.

Instead of choosing the first products or services that you come across, sustainable procurement means thinking about the environmental impact of doing so, and whether your choice is an ethical one. Ethical and sustainable procurement helps to reduce the negative impact of business activities on the environment and society, while also promoting long term financial sustainability for everyone in the supply chain.

As well as the obvious impact environmentally and socially, procurement practices that are not ethical or sustainable can expose businesses to significant financial, legal and reputational risks. By implementing ethical and sustainable procurement practices, businesses can mitigate these risks and protect themselves from potential negative consequences further down the line.

Though many businesses find ethical and sustainable procurement to be slightly more expensive to begin with, it can lead to cost savings in the long run. This is because these efforts can reduce waste, increase efficiency and improve supplier relationships on a long term basis. Additionally, businesses that prioritise ethical and sustainable procurement may be able to access new markets and customers who value these practices, which would be out of reach otherwise.

Better Reputation

One of the biggest benefits of ethical and sustainable procurement for a business – other than knowing that your business processes are having a positive impact, and knowing that you are doing the ‘right’ thing – is improving your brand image. A lot of businesses are still ignoring the importance of sustainable and ethical procurement, which means that any business that’s playing a part is sure to stand out for the right reasons. You will gain a better brand image which will make customers feel better about using your company. This could lead to more leads, sales and returning customers.

Higher Quality

There’s also the benefit of being able to provide customers with higher quality products and services. Better trade practices tends to be linked to better quality goods and services produced within the law, which is a huge appeal to customers. Not only will you be known as a business that is mindful of ethical and sustainable procurement, but you will be known as a business that delivers in a high quality, reliable and superior way.

The Ethical Choice

For a lot of businesses, procurement decisions are made based on costing, convenience and quality. This makes sense, as running a successful business relies heavily on being able to provide customers with the product or service that they need, and being able to do so reliably. However, it’s important to think about sustainable procurement on a much wider scale.

Aside from business concerns, ethical and environmentally sound practices are simply the right thing to do from a human rights perspective. Not only does sustainable procurement help a business to gain a better reputation and build a positive brand image, it also means operating in a way that considers the environmental and economic impact of everything that the business does. Whilst also benefiting from high quality trade practices, sustainable procurement benefits the world as a whole. The more businesses that take this on board, the more of an impact ethical and sustainable procurement will have.

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