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Government Contracting Accounting and Compliance Developments Conference
June 7&8, 2012
8:00 AM
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Richard Goode is the Senior Director of Sustainability at Alcatel-Lucent has written a very interesting article outlining five policy considerations that buyers for corporations committed to environmentally conscious practices should value when dealing with contractors. Alcatel-Lucent is a major European telecommunications firm doing business globally beyond Europe in the Americas, Africa, Middle East and Pacific Asia the considerations of green purchasers has a common appeal that contractors would do well to bear in mind.
"Like many companies, Alcatel-Lucent is putting more emphasis -- and resources -- on operating in a dramatically more environmentally sustainable manner. There are obvious steps a company can take, such as implementing energy efficiency measures in their operations, getting employee engagement and measuring and setting goals to reduce green house gas emissions.
But one area ripe for making a company more sustainable that is frequently overlooked is procurement. Too often procurement managers limit their focus to searching for the lowest price.
That is understandable, and in fact vital for a company to remain economically sustainable.
But what companies sometimes fail to realize is the effect their purchasing power has on the behavior of other companies to help them be environmentally sustainable as well. Companies -- in particular large companies -- impact their suppliers, and the expectations they set greatly influences the activities of suppliers and can eventually impact the performance of the industry itself.
There are five simple things every company can do to help it purchase the most environmentally friendly and lowest cost products available (with the right quality), and help raise the bar in terms of sustainability throughout their industry.
1. Ask for Green. When issuing RFPs be deliberate in asking your potential suppliers to provide you with the most environmentally sound product, with the highest quality, at the lowest price. I have often seen language in RFPs that asks for the most energy-efficient product at the same or lower price than a traditional alternative. You won't get it if you don't ask.
2. Develop a Code of Conduct that includes Green. Be clear with what you are looking for in a supplier. Many industry trade groups have codes of conduct that spell out expected behaviors in terms of labor, products, GHG emissions and handling of waste. Point to those, or develop your own, but make it clear that it is more than a pamphlet; it is the way you do business and you expect your suppliers to do business.
3. Educate your supply base. Most large companies have a dedicated Corporate Social Responsibility (CSR) or sustainability professional in place to help navigate the waters of procurement and other parts of the supply chain. However, small- to medium-sized businesses rarely have the luxury to dedicate a full-time staff member to learning about how to operate more sustainably. By sponsoring online training programs you can spell out exactly what you are looking for in a supplier. This helps to raise the bar for the entire industry because you are spreading best practices.
4. Reward good behavior. Keeping tabs on your suppliers, either by encouraging them to respond to the Carbon Disclosure Project (CDP) or through other audit mechanisms. That way you can see which suppliers have made a commitment to operating more sustainably. Reward that good behavior with a larger share of your business.
5. Practice what you preach. Large companies can set the example for an industry. By being open and transparent, responding to the CDP annually and shifting more purchasing to companies that operate sustainably, you send a strong message to your supply base that becoming more sustainable is not a fad, but a way of doing business.
There are many examples of companies whose reputation has been tarnished by its supply base. Managing and auditing your suppliers is a risk-mitigation strategy, but it can be more than that. It can be a demonstration of a genuine commitment to minimizing the environmental impact of your business and to Corporate Social Responsibility in general.
By wisely using the influence your purchasing power gives you, a company can raise the environmental performance of an entire industry. Make sustainable purchasing a priority and ask for the most environmentally friendly alternative at the same price as traditional offerings.
When suppliers don't measure up in terms of their commitment to sustainability, rather than threatening to walk away from them, invest the time to be clear about how you want to do business and work with them to help them meet your expectations. Develop and communicate a code of conduct, train your suppliers, and reward the best performers with more of your business while helping laggards to improve. That's how industry leaders can use their size and influence so that everyone benefits."
