ISO AND BS8903
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- Melvyn Atkinson
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1 ISO AND BS8903 A COMPARISON OF SUSTAINABLE PROCUREMENT GUIDANCE STANDARDS Intrductin ISO Sustainable prcurement Guidance was published in April 2017, this internatinal standard supersedes the British Standard BS8903 Principles and framewrk fr prcuring sustainably- Guide published in This dcument explains: The key similarities and differences between these guidance standards Imprtant new cntent and guidance prvided by ISO20400 Hw ther internatinal dcuments have influenced the cntent f ISO20400 ISO20400 can best be described as a build upn the slid fundatin f BS8903, bth standards prvide an understanding f: What sustainable prcurement is What the sustainability impacts and cnsideratins are acrss different aspects f prcurement activity: plicy, strategy, rganizatin and prcess Hw t implement sustainable prcurement Bth standards apply t any rganizatin, regardless f its sectr, size and lcatin and any stakehlder invlved in r impacted by prcurement decisins and prcesses. These standards d nt replace legislatin, plicy and ethical framewrks that regulate prcurement activities. Bx 1: ISO and BSI explained ISO is the wrld s largest develper f vluntary Internatinal Standards. Internatinal Standards prvide state-f-the art specificatins fr prducts, services and gd practices, helping t make industry mre efficient and effective. ISO standards are develped thrugh a cnsensus prcess by grups f experts and natinal delegatins frm all ver the wrld; as such they reflect a wealth f internatinal experience and knwledge. 30 cuntries participated in the develpment ISO20400 with a further 12 cuntries bserving. British Standards Institute (BSI) is the UK natinal standards bdy that frms part f the ISO membership. It wrks with business experts, gvernment bdies, trade assciatins and cnsumer grups t capture best practice and structure knwledge. BS8903 was develped by natinal cnsensus by a sub-cmmittee f crss sectr prcurement and sustainability experts. This grup als prvided input int the develpment f ISO20400 with UK representatin thrugh Actin Sustainability CIC n the glbal technical cmmittee. CATHY BERRY 1
2 Table f cntents Table1 belw prvides a cmparisn f cntents fr bth dcuments. BS8903 Sectin 1: General Intrductin 1-Scpe 2-Terms and definitins 3- What is sustainable prcurement? (SP) 4- Why prcure sustainably Sectin 2: Fundamentals 5- Organizatinal plicy 6- Sustainable prcurement plicy and strategy Sectin 3: The prcurement prcess 7- Sustainability cnsideratins in the prcurement prcess Sectin 4: Enablers 8- Leadership and gvernance 9- Peple 10- Risk and Opprtunity assessment 11- Engagement 12- Measurement Annexes & Bibligraphy ISO20400 Frewrd and Intrductin 1-Scpe 2-Nrmative References 3- Terms and definitins 4- Fundamentals Cncept f SP Principles f SP Cre subjects f SP Drivers fr SP Key cnsideratins fr SP 5- Integrating sustainability int the rganizatins prcurement plicy and strategy Cmmitting t SP Clarifying accuntability Aligning prcurement with rganizatinal bjectives and gals Setting prcurement pririties Managing implementatins 6- Organizing the prcurement functin twards sustainability (i.e. Enablers) Gverning prcurement Enabling peple Identifying and engaging stakehlders Setting SP pririties Measuring and imprving perfrmance Establishing a grievance mechanism 7- Integrating sustainability int the prcurement prcess Annexes and Bibligraphy Table 1- Cntents Cmparisn CATHY BERRY 2
3 Mre simply the framewrk f the standard has evlved using a similar structure and frmat Frm BS8903 ISO20400 Figure 1- BS8903 and ISO20400 dcument structures cmpared Whilst BS8903 is UK centric, citing (rather dated) UK examples and influencial UK reprts, the new internatinal standard uses examples sparingly and where used they are deliberately generic t avid cuntry, sectr r categry bias. The standard is applicable t anyne with prcurement related respnsibilities but is easily navigable with distinct sectins aimed at prviding flexible guidance t all levels f staff. See fig 1. Figure 1: Referencing ISO20400 guidance fr differing prcurement respnsibilities CATHY BERRY 3
4 Summary f the key changes within ISO20400: Cmpared t BS8903, the Fundamentals sectin has been split int tw separate clauses; clause 5- Fundamentals and clause 6- Organizatinal and prcurement plicy and strategy. Clause 4-Fundamentals This sectin prvides basic intrductin t sustainable prcurement, it is applicable t all and includes sectins n what sustainable prcurement is, the business drivers, key principles and risk management. Ntewrthy additins include: A mdified definitin and set f principles cmpared t BS8903- ISO20400 defines sustainable prcurement as: Prcurement that has the mst psitive envirnmental, scial & ecnmic impacts pssible ver the entire life cycle. The key principles have been revised and are as fllws: Accuntability Transparency Ethical behaviur Full and fair pprtunity Respect fr stakehlder interests Respect fr the rule f law and internatinal nrms f behaviur Respect fr human rights Innvative slutins Fcus n need Integratin Life cycle apprach Cntinual imprvement A revisin t the scpe f sustainable prcurement which is aligned with the 7 cre subjects and 37 issues identified in ISO2600: 2010 Guidance n Scial Respnsibility. ISO20400 in general places a greater emphasis n scial respnsibility cmpared t BS8903. See fig 2 and bx 2 fr mre detail. Annex A utlines the 37 issues and prvides a useful summary f suggest hw they may translate int actins f expectatins fr prcurement. A recmmendatin that rganizatins analyze their key business drivers and mtivatins fr being sustainable. Every rganizatin is different and will have a different cmbinatin f reasns t practice sustainable prcurement. The standard ffers a range f typical drivers and recmmends that an rganizatin analyses their wn unique set f drivers t help establish their gals and bjectives. Greater emphasis n identificatin and priritizatin f sustainability issues. The standard recgnizes that time and resurces shuld be fcused where mst difference can be made and encurages pririty setting at multiple levels rganizatinal/prcurement department level, categry and supplier level and gds/service level. Additinal emphasis n risk and pprtunity management with a clear requirement fr rganizatins t manage risk within their supply chains. The standard sets ut expectatins that an rganizatin shuld implement a rbust due diligence prcess t prevent, treat, remediate r cntrl ptential and adverse sustainability impacts. It als highlights the need fr rganizatins t exercise its capacity t influence the behaviur f suppliers and ther stakehlders and the need t ensure an rganizatin is nt cmplicit in wrngful acts f ther rganizatins thrugh its prcurement activity. See bx 2 fr mre detail. CATHY BERRY 4
5 Figure 2: ISO26000 Cre subjects prvide the scpe f sustainable prcurement Clause 5: Integrating sustainability int the rganizatin s prcurement plicy and strategy The thinking in this sectin remains cnsistent with BS8903 and deals with develping a plicy and strategy t deliver the rganizatin s prcurement ambitins. Sustainable bjectives shuld be integrated at a strategic level within the prcurement functin t ensure that the intentin, directin and pririties are dcumented and understd by all. ISO20400 highlights hw sustainable prcurement bjectives shuld be aligned with rganizatinal sustainability bjectives intrducing the idea f a glden thread between rganizatinal plicy and prcurement strategy. This sectin is primarily aimed at senir management and like BS8903 it highlights the imprtance f bth management cmmitment and management understanding f hw prcurement can supprt rganizatinal sustainability gals. Clarifying accuntability and respnsibility fr sustainable prcurement is als emphasized. Bx 2: Hw ISO 2600: 2010 Guidance n Scial Respnsibility has influenced the cntent f ISO20400 ISO prvides guidance n hw businesses and rganizatins can perate in a scially respnsible way and has influenced the cntent f ISO The standard helps t define scial respnsibility and translate principles and issues int effective actins based n internatinal nrms f behaviur aligned with the Universal Declaratin f Human Rights, the Internatinal Labur Organizatin s Declaratin n Fundamental Principles and Rights at Wrk and the Ri Declaratin n Envirnment and Develpment. It helps rganizatins cntribute t sustainable develpment by encuraging them t g beynd basic legal cmpliance and prmtes a cmmn understanding f scial respnsibility. Due diligence is an imprtant aspect in ISO2600 and the need t cmplete due diligence is repeatedly stressed in ISO Due diligence is an integral part f decisin-making and risk management and is an imprtant tl in delivering a sustainable prcurement strategy. It is a cmprehensive, practive prcess t identify actual and ptential negative scial, envirnmental and ecnmic impacts f an rganisatins decisins and activities, with the aim f mitigating thse impacts. This includes pssible negative cnsequences resulting frm the actins f suppliers whse activities are linked t thse f the rganizatin. By undertaking due diligence an rganizatin shuld knw abut its ptential negative impacts and shuld exercise its influence t help mitigate such impacts. The cncept f cmplicity als emerges in the standard. An rganizatin culd be cnsidered cmplicit where it stays silent abut, r benefits frm irrespnsible practices f its partners, suppliers r subcntractrs. CATHY BERRY 5
6 Clause 6: Organizing the prcurement functin twards sustainability (Enablers) This sectin is als aligned with the guidance in BS8903. It describes the rganizatinal cnditins, management techniques and cmpetencies needed t successfully implement sustainable prcurement. It has been renamed Organizing the prcurement functin twards sustainability because Enablers des nt translate easily acrss multiple languages. Sub clauses n Gverning prcurement, Enabling peple, Identifying and engaging stakehlders, Setting sustainable prcurement pririties and Measuring and imprving perfrmance bradly mirrr the requirements f BS8903. Ntewrthy changes are: Setting pririties- ISO20400 utlines mre detail n mapping f sustainability issues t purchase categries and mapping suppliers related t critical sustainability issues. The standards apprach priritizatin using differing criteria: BS8903 cnsiders the size f the risk/pprtunity, the scpe t imprve and the leverage an rganizatin has t make the imprvement happen. ISO20400 suggests using relevance (i.e. which sustainability issues apply t the rganizatin and its stakehlders) and significance (analysis f which relevant issues are mst impacted by the activities and decisins f the rganizatin.) BS8903 ISO20400 Size f risk/pprtunity Scpe t imprve Organizatinal leverage Relevance Significance Figure 3: Standards suggest different criteria fr pririty setting The sustainability bjectives utlined in the prcurement plicy and strategy shuld be turned int peratinal pririties fr prcurement thrugh risk management and priritizatin. The identificatin f relevant sustainability issues and the related risks and pprtunities can happen at multiple levels. Strategic Prcurement department Categry Prject Operatinal Surcing strategy Supplier/cntract Sub-categry Sub-package Supplier/cntract Figure 4: Setting sustainability pririties can ccur at multiple levels CATHY BERRY 6
7 Measuring and imprving perfrmance- Bth standards recgnize the need t measure and mnitr the results f sustainable prcurement. BS8903 divides sustainability measures int perfrmance indicatrs (practice measures) and peratinal indicatrs (utcme measures). ISO20400 cites fur indicatrs that can be used t manage perfrmance: 1. Prcess indicatrs: related t the measurement and mnitring f prgress twards the achievement f rganizatinal plicy, bjectives and gals. This is gd fr the early stages f develpment t understand hw many cmpliant cntracts, hw many peple have been trained, hw many suppliers have been engaged etc. 2. Output indicatrs: related t the measurement f the utputs f the sustainable prcurement plicy implementatin and f the sustainable prcurement prcess itself. This wuld include suppliers perfrmance, carbn emissins, waste vlumes, number f lcal emplyees, lcal spend etc. 3. Outcme indicatrs: related t the perfrmance f the rganizatin, especially thse aspects that are affected by the sustainable prcurement prcess. These indicatrs help t understand the cntributin f the supply chain t verall rganizatinal bjectives, such as carbn ftprint, wrkfrce diversity etc. 4. Impact indicatrs: related t significant ecnmic, envirnmental and scial impacts that are: psitive/negative, actual/ptential, direct/indirect, shrt-term/lng-term, intended/unintended. Establishing a grievance mechanism- This is a new requirement that is aligned with the internatinally accepted principles utlined within the UN Guiding Principles n Business and Human rights. A key pillar f this framewrk is the need t ensure access t remedy fr victims f business related abuses. Having effective grievance mechanisms in place is a crucial part in an rganizatin s respnsibility t respect human rights. Such mechanisms can play an imprtant rle in mitigating negative impacts in supply chains by enabling anybdy in the supply chain t raise a grievance and t ensure that it will be prperly and independently investigated. Dialgue based Transparent Legitimate & safe Equitable & rights cmpatible Grievance mechanisms Accessible & easy t understand Predictable Imprvement based Figure 5: Elements f an effective grievance mechanism CATHY BERRY 7
8 Clause 7: Integrating sustainability int the prcurement prcess Once again guidance in the sectin builds upn BS8903, bth standards describe the sustainability cnsideratins that shuld be addressed acrss the varius stages f a typical prcurement prcess. BS8903 uses a 7 stage mdel whilst ISO20400 adpts a 5 stage mdel, the steps and cnsideratins are aligned. BS8903 uses mre illustrative examples and prvides mre guidance n prcurement tls including lifecycle assessment (LCA), carbn measurement, whle life csting and weighted decisin making. Nte that these are referenced in the new standard but nly cst analysis is discussed in mre depth. Figure 6: Prcurement prcess mdels cmpared The main additins in this sectin f ISO20400 are: Cst analysis: Bth standards recgnize the need t make prcurement decisins using wider cst data than upfrnt purchase price. BS8903 encurages buyers t cnsider whle life csting techniques (alternatively knwn as ttal cst f wnership) that include the anticipated csts f the prduct r service ver its expected lifespan. The new standard recmmends a mre extensive analysis (where applicable) t include psitive r negative impacts n sciety that can be mnetized, such as carbn emissins, jb creatin r jb lsses. The diagram in figure 7 is taken frm ISO (Nte that this diagram als intrduces cnsideratin f wider externalities n sciety that cannt easily be mnetized). CATHY BERRY 8
9 Figure 7: Overview f lifecycle csting analysis recmmended by ISO20400 Market analysis: Whilst bth standards reinfrce the need t gain a thrugh understanding f the existing and future capability f the supply market t understand the extent t which the supply chain can cntribute t sustainability gals and cmmitments. ISO20400 encurages buyers t cnsider the psitin f their rganizatin within the market t assess the influence r leverage it may have t prmte mre sustainable utcmes. The market engagement matrix belw can help buyers develp their prcurement apprach by cnsidering market influence and sustainability ambitin. Verificatin f sustainability requirements: The standard has been cnsiderably strengthened arund this tpic. ISO20400 stresses sme useful guidance here: It is imprtant t understand and decide what certificatins, marks r labels culd r shuld be used t cmply with specific sustainability criteria. Referencing the requirements r CATHY BERRY 9
10 partial requirements and nt the certificatins, marks r labels themselves may allw ther suppliers t cmpete wh have nt been frmally awarded such certificatins and ensures that cmpetitin is nt inadvertently limited. Each requirement shuld be verifiable and the evaluatin prcedure shuld be utlined in the tender dcument There are many types f evaluatin prcedures such as dcumentatin review, testing, inspectins, audits, certificatin, management systems, assessment, sustainability claims, labels and declaratins. They ffer different levels f assurance and can be carried ut by an independent external bdy r rganizatin (third-party), an external bdy n its behalf (secnd-party) r the supplier r its representative (first-party). When defining the evaluatin prcedure fr each requirement, the rganizatin shuld be clear n what activities shuld be carried ut, by whm and wh bears the cst. Cst shuld be balanced in relatin t the level f assurance desired. Sme useful infrmatin is included n eclabels that are a vluntary methd f envirnmental perfrmance certificatin. There are numerus envirnmental labels available that can seemingly prvide simple cnfirmatin fr nn-experts that prducts bearing a label meet with a range f envirnmental standards. It s imprtant t understand what each label represents. 3 cmmn types f envirnmental labels exist: ISO 'Type I' labels invlve a third party assessment f a prduct based n a number f criteria / issues invlved in the envirnmental impact f a prduct r material thrughut its life cycle. Well knwn examples include the EU Eclabel and the Blue Angel ISO Type II labels are envirnmental claims made by the supplier themselves, with n evaluatin by a third party ISO Type III label have n standards t meet. It is a third party validatin f an EPD (envirnmental prduct declaratin) f the prduct based n quantitative data frm an LCA (Life Cycle Assessment). It enables cmparisns with ther prducts intended t fulfil the same functin. Nte ther labels address single sustainability issues. They may be public e.g. Energy Star fr energy cnsumptin. Or private, run by NGO s, industry grups r stakehlders, Frest Stewardship Cuncil (FSC) is a well-knwn example. These can als be used effectively t target specific requirements. Cntract Review: Finally bth standards reflect n the need t review and learn frm the cntract. BS8903 stresses the Plan, D, Check, Act apprach cnsistent with ISO 14001, which is a crnerstne f cntinuus imprvement. The new standard recmmends the develpment f a debrief dcument t feed int the next prcurement and surcing strategy. It als advises that best practice invlves publishing lessns learned in detail s that ther rganizatins can learn frm them. The Olympic Learning Legacy suite f materials prvides an excellent example here. Cathy Berry is a Senir Cnsultant with Actin Sustainability and UK lead authr f ISO Actin Sustainability (headed by Shaun McCarthy) represented the UK n the Internatinal Delegatin t ISO PC 277 Fr mre infrmatin abut any f ur prducts r services, please cntact the team: tby@actinsustainability.cm Tel: Fax: Address: 1st flr, 2 Angel Square, Lndn EC1V 1NY CATHY BERRY 10
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