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Green procurement strategy: beneficial for the environment and bottom line

Organizations today feel the necessity to go green as part of their corporate social responsibility. With issues such as global warming gaining wider coverage, corporate world is doing its bit to safeguard the planet. Starting with green buildings and solar power, businesses are extending their green initiative to their procurement strategies as well. This will help in enhancing their brand appeal in the market and also create a positive image among the consumers.

Green procurement strategy involves adopting processes that comply with the company’s green initiatives such as minimizing the usage of plastics, using recycled paper and opting for fuel-efficient mode of transport.

Procurement managers are beginning to choose suppliers based on their efforts to reduce carbon footprint and supply initiatives that fall in line with their procurement goals.

Suppliers too are treading the same path following eco-friendly measures at various levels such as their own sites, supply chain, products and customers.

Choosing a green procurement partner

A company’s supplier-base may include different types of suppliers. The procurement teams have to segment the suppliers into categories based on distinct characteristics, opportunities and risks. So, as part of their strategy, procurement teams adopt a supplier segmentation model that rates suppliers based on aspects such as:

  • Energy consumption
  • Waste management
  • Water pollution
  • Impact on natural resources
  • Carbon footprint

Maintaining supplier code of conduct

After identifying potential suppliers, procurement teams may share with them their requirements to ensure conformance to their standards. Suppliers must be trained on the compliance front and contracts should include a clause on environmental protection measures.

A periodical quality assurance test must be conducted on suppliers to ensure that their efforts are coordinated and in adherence to the procurer company’s norms.

 

Sending a positive signal to the market

Green procurement strategies in addition to reducing the environmental damage also help companies in improving their bottom line over a period of time. As green procurement trends become popular, many more companies could join the green bandwagon. This could also prompt manufacturers and suppliers to adopt or innovate environment-friendly products or measures which will benefit the overall health of the planet.

 

Going the green way

Office Depot, Enel, Panasonic, Mitsubishi and Ricoh are some of the companies that have gone green in their procurement initiatives. Office Depot chooses products based on parameters such as less waste generation, reduced energy and lesser chemical usage.

Enel, a multinational energy company, uses hybrid transport vehicles and it ensures its heavy vehicles are equipped with Euro 5 engines for better energy efficiency. It also screens its suppliers based on environmental aspects. It provides its suppliers a questionnaire to understand their awareness of the “green” issues.

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