Sustainable Supply Chain

In April, 2017, the International Standards Organization (ISO) released a new standard focused on sustainable procurement.  Here are the three things you need to know.

  1. The purpose of ISO 20400 is to assist organisations with the development and implementation of a responsible sourcing strategy.
  2. ISO 20400 does not contain requirements for suppliers and is not a tool to assess the sustainability performance of suppliers. Rather, it describes how organisations can integrate sustainability into the procurement process.
  3. ISO 20400 uses a holistic definition of sustainability, rather than solely focusing on environmental attributes

So what can small to medium-sized companies do?

Easy strategies include encouraging your suppliers to join training programmes, negotiating with service providers for standardised fees and services for suppliers interested in implementing sustainability management programs. Some suppliers have fully matured sustainability programs, which are well advanced, and inviting these suppliers to share their knowledge would both help to encourage other suppliers to initiate programs, as well as learn.

At the end of the day it pays to encourage your supply chain in sustainable thinking, as opposed to terminating contract due to non-conformance to corporate requirements.

Companies will also need to consider developing a due diligence process to evaluate their supply chain. Often, supplier sustainability performance is conducted through a self-evaluation questionnaire.  Due to constraints on resources, many smaller companies do not develop or implement a due diligence process.  However, for industries involved in fast moving consumer goods, construction, agricultural products, clothing and textile, the need to ensure that a due diligence process is caused primarily due to the risk involved in human rights. If a big company like Nestle can be tainted by cases of bonded and slave labour in their supply chain, the impact of such allegations and findings could be devastating to small and medium sized companies.

The adoption of ISO 20400 is a tangible sign that companies prioritise sustainable procurement, by ensuring a sustainable supply chain.  All critical messages to customers, stakeholders and the wider public.

For further information, contact cheng.phang@zoic.com.au.