Why is Ethical Procurement also Responsible Procurement?


I have been asked the question of whether ethical procurement is also responsible procurement. To me the answer is a clear: YES! In this blogpost I will explain why and give you some ideas to what ethical procurement is.

In order to understand what ethical procurement is all about it is essential to understand what responsible procurement is.

The typical challenge for procurement professionals is to understand the impact procurement decisions have on local communities, workers, and the environment, and then take action to ensure a positive impact. Kind of like asking the question: Where did and do you put your foot and what does the footprint look like? At the end of the day, that’s what Responsible Procurement is all about. If you plan well, it can promote sustainability, provide you with cost savings, and protect and enhance your brand. It’s as simple as that.

Responsible Procurement is a new dimension for many procurement organizations. Typically they have based their decisions upon price, quality, and delivery time. Responsible Procurement means taking into account the economical, environmental, and social impact of purchasing choices.

Practically speaking, Responsible Procurement is about defining a set of mutually compatible requirements, specifications, and criteria that favor protection of the environment, social progress, and economic development. You do this by identifying resource efficiency, improving the quality of products and ultimately by optimizing costs.

Responsible Procurement is about balancing what is called the three pillars: social, economic and environmental. So why is there a need to balance these three pillars?

From an environmental point of view, we have to ensure that natural resources that are extracted and processed into goods and services are consumed in a more efficient way – getting more out of less. And by changing the way we produce and consume, we can still limit the impact that climate change is bringing about. From an economic and social perspective, we have to ensure basic human rights and economic development, regardless of age, gender, nationality, religious belief or economic status.

To me ethical procurement is a combination of the two pillars: social and economic. As an example – if procurement professionals for instance accept bribery or corruption – then they do not treat their suppliers fairly. They prevent unhealthy economic development and put up barriers to trade. At the end of the day it does not create a transparent company either.

From a social perspective I think it is essential to consider how procurement professionals should act on behalf of the company in terms of recognizing equality and diversity, observing core labor standards, ensuring fair working conditions, and increasing employment and skills. To support them in doing that I believe guiding documents or policies is a great way to show your stand.

One of the companies which I think you can learn from in terms of policies is Tesco. Check them out here. Do especially check their Code of Business Conduct. Great inspiration to how you can define your expectations towards your procurement professionals.

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TestResponsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue.  Sign up for the newsletter right here.

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