Sustainable procurement and reviewing the idea of price

Sustainable procurement
March 2nd, 2021
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On the BSMART television channel, three expert speakers discuss sustainable procurement. This fundamental movement has accelerated on the back of the health crisis, meaning that companies must meet customer expectations in this area now more than ever, while at the same time providing consumers with the facts they need to make informed choices. A delicate balance that challenges the very idea of price.

A tipping point for sustainable procurement

While the idea of sustainable procurement has been gaining ground for many years, this fundamental movement has accelerated on the back of the health crisis. There are increasing signs of this shift as people are becoming more aware of it. As such, Pierre-Olivier Brial, Managing Director of the Manutan Group, talks about "the big [investment] funds that are taking their assets out of the carbon economy and going to companies that they consider more sustainable".

ObsAR's annual survey confirms this trend: Nearly three quarters of the companies surveyed (including an increasing number of SMBs[1] and VSBs[2]) have implemented a sustainable procurement policy. Pierre Pelouzet, President of ObsAR (the French observatory of sustainable procurement) takes a formal stance: "We cannot come out of this crisis the same as we went in because if we keep those same responses, those same behaviours going forward, we're heading for disaster".  

Customer expectations regarding sustainable procurement

Beyond meeting regulatory obligations and staying true to their own beliefs, companies are turning to sustainable procurement to meet their customers' expectations. This is a fact: End customers are becoming increasingly vigilant on these topics, especially the younger generations.

Pierre-Olivier Brial sees this phenomenon in calls for tender: "The section on CSR, and particularly sustainable procurement, is much more in-depth and formalised".  

At Accorhotels, the Procurement Department aims to source products and services that meet sustainable criteria and to make them available across its hotel network, which represents nearly 5000 hotels worldwide. The brand endeavours to offer a sustainable choice wherever possible, ultimately leaving the decision with the customer. In this dynamic, Caroline Tissot, Group Chief Procurement Officer for Accorhotels, feels there is "a real willingness of the customer to support us in taking a more sustainable approach".  

Amongst other things, the hotel group has implemented a number of initiatives which are very well received by their customers. For example, all luxury and premium hotels in France use only organic fruit and vegetables. And in all budget hotels in Europe, mini soaps and shampoos have been replaced by pumps, to eliminate plastic containers.

A necessity: Rethinking the idea of price

For the speakers, redefining what the price of the goods and services you buy and sell includes, and raising awareness among all stakeholders on this point, is essential. Pierre-Olivier Brial is convinced of this: "Price must not be a factor against sustainable procurement".

In the same way that the idea of overall cost, or total cost of ownership (TCO), includes not just the purchase price but also the cost of acquisition, maintenance, use, insufficient quality etc., this overall cost should include sustainable criteria (such as respect for the environment, waste management, inclusion etc.).

Pierre Pelouzet is enthusiastic about this: "So this way, we re-evaluate this overall cost, we're buying something that has a use value, an environmental value, a social and societal impact value, an employment value, and so on. [] No it's not more expensive, it's simply a different quality, a different impact, it has a value and that needs to be emphasised".  

From this standpoint, companies have a key role to play in raising awareness. It starts with offering high-quality product content, making end customers aware of all the facts so they are able to make enlightened choices when shopping. Pierre Pelouzet agrees: "There is a need for visibility, a need for clarity, a need for serious transparency. That's why labelling is so important".

Ultimately, the aim of companies is to increase their customers' awareness and knowledge to allow them to make informed purchases. After all, the real question is: "Will my product or service, as responsible and ethical as it may be, actually be bought by customers?"  

[1] Small and Medium-sized Businesses

[2] Very Small Businesses