OUTLINE: SPLC s Guidance for Leadership in Sustainable Purchasing v1.0

Transcription

1 OUTLINE: SPLC s Guidance for Leadership in Sustainable Purchasing v1.0 1

2 Part 1: What will Guidance v1.0 do and why is it valuable? 2

3 SPLC Guidance Supports Organizations to Implement These Steps of a Strategic Process 3

4 SPLC s Guidance v1.0 Document Supports the Starting and Running of that Strategic Process 4

5 SPLC s Rating System Will Recognize Leadership Achieved through the Strategic Process 5

6 Do any of these sentiments resonate with you? The contract-by-contract, product-by-product approach to making our purchasing more sustainable isn t fully capturing cross-functional synergies or changing underlying systems. It feels like we are always reacting to one hot topic or another, like climate, VOCs, conflict minerals, or human trafficking. We would really like some way to get on a more proactive footing rather than a reactive one. Good purchasing decisions can help the organization achieve its climate action plan, its zero-waste plan, its water conservation plan, etc. But while purchasing has a part to play in all of those plans, the organization doesn t have a plan for comprehensively measuring and strategically managing the impacts of its total purchasing. So, efforts are piece meal. We completed an analysis of our spend-related impacts, but then didn t know what to do next. We need some action planning guidance - much in the way that organizations completing GHG inventories find themselves in need of climate action planning guidance. Unless our executive leadership makes it a priority, we won t get the cooperation we need to make changes that would have the biggest impact. Our leadership doesn t want to commit to a sustainable purchasing policy without knowing what the implications will be, so getting an ambitious program going seems impossible. 6

7 What is a strategic sustainable purchasing process? It s an approach to managing social, environmental and economic supply chain impacts that 1. Analyzes spending in order to prioritize areas needing action 2. Plans a portfolio of specific actions that will be taken over a period of years to address the priority areas (e.g. a 5 year plan) 3. Sets specific performance targets based on the planned actions (e.g. 50% reduction of XYZ by year 5) 4. Identifies responsible parties, resources and timetable for implementation 5. Promotes continuous improvement 7

8 Why is a strategic process valuable? Puts the organization on a proactive-footing with regards to managing all the social, environmental and economic risks in the organization s supply chain Provides a persistent context for strategic cross-functional engagement on supply chain sustainability (as opposed to one-off engagement around specific products or contracts) Helps unify the organization around a common vision Enables better communication with all stakeholders, especially suppliers Can garner executive support in a way that individual product/ service interventions cannot 8

9 How can SPLC s Guidance v1.0 help? Provide guidance on how to build support for developing a strategic sustainable purchasing process structure stakeholder engagement conduct cost-effective and actionable spend analysis identify potential actions for addressing impacts in priority categories select decision-criteria for evaluating and ranking the potential actions evaluate potential actions and select actions for Action Plan set performance goals and metrics implement the plan and supporting policies promote continuous improvement 9

10 How will the Guidance v1.0 be used? For each step in the strategic process, the guide will provide a menu of suggested actions accompanied by brief case studies. Some actions will make more sense for a highly centralized organization while others will be better suited for a decentralized organization. Some will be more appropriate in the public sector than in the private sector. A cross-functional team, or consultants assisting them, can identify the ideas and actions in the guide that are most relevant to the organization s operating context and employ those in developing a highly tailored strategic action plan. 10

11 Guidance v1.0 Chapter Outline Preamble Getting Started A Enlisting Support B C Scoping the Process Structuring Stakeholder Engagement Running the Process 1 Analyzing Spending & Impacts 2 Developing an Action Plan 3 Implementation 4 Measurement & Continuous Improvement Submitting for a Rating (planned for v2.0) Appendices 11

12 Structure of Each Chapter 1. Description A description of the part of the strategic process that is the focus of the chapter. 2. Rationale The reason why this part of the process is important to strategic leadership. 3. Challenges An overview of challenges that organizations are likely to face when seeking to exercise leadership in this part of the process. 4. Solutions 1. Success Strategies and Best Practices A menu of options, including strategies appropriate for a diversity of operating contexts, such as private vs public, centralized vs decentralized, etc. 2. Tools, Resources, & Frameworks Existing guidance and aids for implementing solutions to specific challenges. 3. Case Studies Real-world case studies from a variety of operating contexts. 5. Metrics for Success Recommended metrics for effectively capturing improvements on material impacts. 12

13 Part 2: Content Outline for SPLC Guidance v1.0 13

14 Section 1: Getting Started 14

15 A. ENLIST Building support for developing a Sustainable Purchasing Action Plan Building support of leadership (CEO, COO, CFO, etc) Look for ways to tie a strategic sustainable purchasing action plan into leadership priorities (e.g. military = mission readiness and saving lives; city = creating clean and resilient local economy; company = creating business value and managing supply chain-related risks) Building support of sustainability staff Show how a procurement-focused plan will allow the procurement function to contribute more effectively to other sustainability goals (e.g. climate, zero-waste, green jobs, etc) Building support of purchasing staff Demonstrate how it adds value to the organization, advancement opportunities for their careers and additional meaning to their work Building support of program/customer-facing staff Show how sustainable purchasing can deliver better solutions, doesn t necessarily cost more, and can help them be more successful Building support of community Show how sustainable purchasing benefits communities The Guidance v1.0 document will provide brief case studies and generic examples of these strategies, but SPLC s community of pracice will be a good place to find examples of these things for specific contexts (e.g. gov t, biz, centralized, decentralized). 15

16 B. SCOPE Set the scope of spending that the strategic process will seek to optimize from a sustainability perspective. The action planning process outlined in this Guide can be executed in many scopes. While it can be applied to an entire organization s spending, it can also be applied to one division or one facility within an organization. Organizations just getting started with the type of approach outlined in this guide may want to pick a scope that will afford the greatest chance for success. Considerations in picking the right scope could include availability of data, support from senior leadership, staff capacity, and financial resources, among other things. 16

17 C. STRUCTURE stakeholder engagement Structure options Task force Subcommittee of org-wide sustainability committee (Many options; the key is that it s a cross-functional team) Team member candidates Executive leadership team Sustainability/CSR staff Management from business units, operations, and purchasing Key internal customers (facilities, transportation, etc) Key reps for external customers (product design, sales, marketing) Individuals with personal passion and commitment to the cause Communications mechanisms Phasing - Who needs to know what when or be involved in what phases? Observers - Establish regular communication vehicles for those that need to be in-the-loop Staffing and Resources Commitment of internal staff time Consultants? Budget The Guidance v1.0 document will provide brief case studies of ways organizaions have structured their stakeholder engagement in several different environments (gov t, biz, centralized, decentralized, etc). SPLC s community of pracice will be a good place to find addiional examples. 17

18 Section 1: Running the Process 18

19 1. ANALYZE Conduct a sustainability spend analysis Pick methodology, tools, or external expertise Refine scope Wrangle key data The Guidance v1.0 document will provide a high level intro to impact- related spend analysis. Detailed guidance will come in a separate SPLC Spend Analysis Guidebook. Analyze for impacts and opportunities Identify areas of spend responsible for greatest share of impacts, or that offer the greatest opportunities to promote healthy social, economic, and environmental systems Wow. 80% of our impact is in 5 categories! 19

20 1. ANALYZE Consider a wide range of opportunities to promote beneficial practices (+) and mitigate negative impacts (-) on our social, environmental and economic systems.* * Not all will apply to every purchasing category. The list can be quickly narrowed using SPLC guidance and expert advice that idenifies whether status quo purchasing pracices in a given category are likely to be a posiive or negaive influence on the health of our social, environmental and economic systems. 20

21 1. ANALYZE Consider a wide range of opportunities to promote beneficial practices (+) and mitigate negative impacts (-) on our social, environmental and economic systems. Social Social factors affect the social systems on which communities depend, now and in the future. + anti-discrimination + community engagement + diversity/equal opportunity + employee engagement + equal remuneration + fair trade + freedom of association + grievance & remedy processes + human rights + indigenous rights + occupational health & safety + right to collective bargaining + sustainable compensation NOTE: Many purchasing organizaions Environmental Environmental factors affect the natural systems on which life depends, now and in the future. + biodiversity preservation + climate adaptation + resource optimization + soil health stewardship - acidification paricularly those in the public sector - desertification already - eutrophication have robust mechanisms in place - freshwater to promote pollution a - greenhouse gas emissions healthy marketplace. Acknowledging - habitat depletion the value of - human health impacts these mechanisms to our society - land is use a good change way to - marine pollution celebrate + training success and education at the outset - of ozone this depletion process. + worker rights - radiation pollution - child labor - resource depletion - forced/compulsory labor - smog - human trafficking - waste - sourcing from conflict zones - water consumption Economic Economic factors affect the financial systems on which our markets depend, now and in the future. + fair dealings + innovation research / investment + open competition + transparency of information + use of diverse suppliers + use of HUB zones + use of local suppliers - conflicts of interest - corruption (bribery, extortion ) - dividing territories - dumping - exclusive dealing - misleading market claims - monopoly (seller collusion) - monopsony (buyer collusion) - patent misuse - price fixing - product tying - refusal to deal 21

22 2. ACTION PLAN Part 1: Identify potential actions that could improve priority impacts. Enlist suppliers in helping you idenify potenial acions The Guidance v1.0 document will focus on explaining high level strategies like those listed at leb. The Purchasing Category Technical Advisory Groups (TAGs) will develop more in- depth guidance on strategies most applicable to specific categories and specific operaing contexts. 22

23 2. ACTION PLAN Part 2: Identify decision-criteria for evaluating and ranking the potential actions Typical Decision Criteria Project Cost (initial and/or life cycle) Savings Payback, Return On Investment, Net Present Value, Internal Rate of Return Impact reduction potential (absolute or per dollar) Others Existing contracts (terms and expirations) Compatibility with leadership priorities Reporting requirements (GRI, CDP, DJSI, FAR) Rating criteria (STARS, LEED, Green Buy, SPLC rating system) Opportunity to demonstrate leadership Scalability and transferability Benefits/impacts on specific business units Stakeholder support and enthusiasm many more 23

24 2. ACTION PLAN Part 3: Evaluate, select and assign actions to implement Collect data required for a high level evaluation of the decision-criteria for each of the potential actions identified. (Data sources can include: internal staff, peer professionals, peer organizations, suppliers, GPOs, cooperative purchase agreements, government, certifiers, consultants, industry, professional associations, and SPLC s community of practice.) Rank potential actions using decision criteria Select complementary actions (synergies and sequencing) Conduct an in-depth evaluation of the selected actions to support planning decisions Decide plan s time horizon and schedule the actions Assign responsible parties Set informed performance goals, based on the research conducted while selecting and planning specific actions Identify key metrics for tracking progress against performance goals 24

25 3. IMPLEMENT Get executive sign-off on the action plan Communicate the action plan to internal and external stakeholders Provide training to staff involved in or effected by action plan Engage suppliers relevant to planned actions Implement policies Implement projects Establish tracking and reporting mechanisms for measuring progress 25

26 4. MEASURE Collect data for Action Plan s key performance metrics Benchmark against goals and peers (internal or external) Communicate trends with dashboards or quarterly reports Celebrate performance improvements Con$nuous Improvement As the implementaion of your AcIon Plan advances towards compleion, it s Ime to start preparing a new AcIon Plan. To do this, begin again at Step 1: Analyze. Or, if you are ready to expand the scope of your sustainable purchasing program and process, you can begin again at Step A: Enlist and use the success of your iniial run through the process to win support for a broader or deeper program. 26