Author: Jeni Christensen, MCIPS, MSCM.
While Australia is often thought of as an early adopter and innovator, sustainable and ethical procurement is an area in which this country is lagging behind. There is a focus on product stewardship and end-of-life strategies, but targeting procurement practices seems to have slipped through the cracks.
The United Kingdom introduced the Modern Slavery Act last year, making it an offence for British companies to procure products arising from slavery, servitude, forced labour or exploitation. It’s part of the UK’s commitment to ensure sustainable procurement is strongly embedded, particularly within its public sector.
But the situation in Australia is disappointing. We need to ensure procurement professionals understand the ethics and embrace international obligations when it comes to selecting and managing suppliers, as well as demonstrating integrity in their own actions – including managing conflicts of interest. There are, however, some signs this is changing.
The Victorian Government Procurement Board (VGPB) has been working on procurement reform since February 2013, targeting five policies – governance, market analysis and review, market approach, contract management and contract disclosure. A transitional implementation plan, under the auspices of the Financial Management Act, was meant to have come into effect as of 1 January last year.
Essentially, the aim was to enhance procurement by upskilling capacity, capability and further emphasis on value- for-money. The policies focused on the removal of the previous threshold-based procurement approach in favour of one based on risk and complexity.
In addition to the five policies, VGPB has published ‘good practice’ guides and templates, including a ‘Guide to Environmental Impact’ and consideration for ‘Disposal of Assets’ as part of the new approach to the management and disclosure of contracts. But many Victorian government departments are focusing only on the five that have been mandated, leading to a lack of consistency across the board. Adding to the problem is that there are delays in the transition process – which is noted as still ongoing in 2016.
Sustainable procurement is very much government-led and supported by legislation in the UK, to embed monitoring, measuring and reporting. Australia also needs a government catalyst for change, to promote the benefits and gain organisational buy-in to support and develop robust strategies in this area and professionalise procurement, leading to what we believe is the ‘holy grail’ – the appointment of a chief procurement officer.
What is sustainable procurement?
It’s a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value- for-money on a whole-of-life basis. This means generating benefits not only to the organisation, but also to society and the economy, while minimising damage to the environment.
How do we implement sustainable procurement in Australia?
Australia needs organisational buy-in and support to embed a policy of sustainable procurement for goods and/or services, including capital projects to drive Environmental Sustainable Design (ESD).
Sustainable procurement needs to be strongly embedded within tenders and specifications; however, this is a ‘balancing act’ and needs to be discussed upfront with a project manager before commencing the procurement process.
The benefits of ethical sourcing and sustainable procurement are manifold:
- labour standards (International Labour Organisation), including diversity, fair hiring practices, human rights
- health and safety – good working conditions
- the environment – waste prevention and management of end of life/disposal, and
- business ethics
- value-for-money (not lowest cost).
Value-for-money considerations should include the price and quality of a product and service, and may include, but are not limited to, goods and/or services that contain recyclable content, are recyclable, minimise waste and greenhouse gas emissions, conserve energy and water and minimise habitat destruction and environmental degradation and are non-toxic.
The UK system is mature and embedded. There’s clearly an opportunity for Australian business to make a stand.
Jeni Christensen is a Melbourne-based procurement professional.