Purchasing for Our Future: Sustainable Procurement for a Greener Tomorrow

The World Meteorological Organization declared 2023 the warmest year on record. For most Canadians, this climate catastrophe became front and centre with wildfires (over 11 million hectares burned), floods, heatwaves, and more, making the realities of our impact on the planet increasingly clear.

Now, this is not a new challenge, and governments across the world have expressed their collective intention to address climate change and reduce carbon emissions. 175 parties have signed the Paris Agreement designed to hold the increase in the global average temperatures below 2 degrees Celsius above pre-industrial levels. However, a recent report by IPCC indicates despite these commitments, we are not on track to reduce emissions. Simply put, our actions don’t match our intentions. 

“Collectively, we’re moving, but we’re not moving fast enough. Climate change isn’t linear, it’s exponential: The worse it gets, the faster it goes. Corporate commitments are growing but are often far from what is needed, and the “say-do” gap from both politicians and business leaders is still too wide. Courage is missing among leaders who too often prefer to kick the can down the road by setting, for example, 2050 targets, when the real window for curbing global emissions is the next eight years.” – Paul Polman, business leader and climate and equalities campaigner in 2022.

Canada’s Progress With Climate Action

There are many reasons for this gap, one of which is a lack of carbon literacy in the Canadian population, which is holding us back from taking urgent action now. A recent survey from Learning for a Sustainable Future showed that almost one-quarter of educators, parents, and students indicate that their worries about climate change are affecting their daily lives. Students are more likely than any other respondent group to report feeling anxious (41%) and frightened (32%). The lack of formal sustainability education is hampering the efforts of young people to address critical sustainability challenges, highlighting the urgent need to equip future generations with the knowledge and skills needed to build a more sustainable future.

One solution that we have yet to embrace is the circular economy, which I define as a system that is trying to fix a design problem—the design of how we run the economy and the design of the things (services and goods) in it. The Canadian Council of Academies Expert Panel defines the circular economy as “an aspirational direction in which to move, and ultimately involves transformative, system-wide change.” In a 2021 report about opportunities for the Circular Economy in Canada, the panel’s top recommended action for Governments was to practice circular procurement to advance the circular economy. There is a reason that the panel focused on procurement—it is likely the only rapid-change tool at our disposal, yet it’s strangely neglected and often not even considered a solution.

Why this conundrum? With so little education on sustainability, most organizations are yet to align their procurement practices to their stated sustainability goals—including our Federal Government. A recent report by the Competent Boards program and the Copenhagen Business School highlighted that “a shocking majority of top companies are lagging in sustainability expertise. This is a wake-up call for corporate boards and investors.” Currently, only about 113 Canadian companies have set science-based emission reduction targets through the Science Based Targets Initiative (SBTi). Additionally, a recent report from Climate Engagement Canada found that only 44% of the top emitters on the Toronto Stock Exchange have established a qualitative net zero carbon reduction target.

The Challenges and Opportunities With Sustainable Procurement

In my work with procurement professionals, I have observed that even when individuals in procurement functions want to make these advances, they are often stymied by the systems inside their organizations. Instead of an effective “trickle-down” signal into our capitalist economy, we get a singular focus on the “tyranny of the lowest price,” resulting in irreparable, non-recyclable products from suppliers who lack transparency about their practices and environmental impact. 

One of the basic tenets of sustainability is transparency, and our global systems for measuring this are developing fast. A good example is the Canadian Forced Labour & Child Labour in Supply Chains Act that came into effect this year and requires reporting by May 31st. If we look at impacts on forests, one finding that shocked me is that that global deforestation is responsible for 11% of greenhouse gas emissions. Yet, the Forest 500 organization found that 40% of the 350 companies and 150 financial institutions with the most exposure to and influence on tropical deforestation still have not set a single policy on deforestation. 

Focusing on procurement and supply chain performance offers a powerful solution to tackling deforestation. By mandating that all suppliers report their forest impacts, ambition, and progress towards that ambition (as advocated by the CDP), suppliers can incentivize measurement, management, and action across the entire supply chain.

The CDP’s (formerly the Carbon Disclosure Project) non-disclosure list underscores the importance of proactive transparency for organizations with environmental impacts. Their 2023 Non-Disclosure Campaign spurred an impressive response: 317 companies took the initiative to disclose information to CDP. This breakdown demonstrates a clear focus on key areas: 70% addressed climate change, 18% on forests, and 21% on water security.

HP Canada’s Experience With Sustainable Procurement

HP Canada recognized the issue of circular and sustainable procurement five years ago and began turning our resources and expertise towards trying to change the situation in Canada. As Canada’s most Sustainable Technology company, we recognize that putting this practice into high gear requires experts of widely differing skill sets to come together. Our investments include funding case studies, developing tools (also available to our channel business partners through our HP Amplify Impact program), and funding a second cohort of the Sustainable Procurement Fellowship with CBSR. Through this unique program, we teach sustainability professionals at some of Canada’s top companies how to guide and help their procurement teams in implementing circular or sustainable procurement. 

Technology purchasing is an ideal category to test run circular procurement on—it is a category that all organizations purchase and can easily be delivered as a service which significantly reduces its impact for the same product. McKinsey supports this in a 2022 paper citing simple procurement changes as “no regrets moves.” 

In our research, we have identified four elements that need to be present to enable the transition to sustainable or circular procurement:

1. Executive-level commitment to using procurement as a tool to meet organizational goals for sustainability.
2. Defining the right metrics for how procurement performs. If performance is only measured on saving dollars, there will never be a transition.
3. Investment in dedicated teams must be increased as stronger efforts need to be made to train, educate, and staff the procurement department. It needs to be seen as a key strategic enabler of the business. Our collective future is too precious for short-term decisions and part-time action. 
4. Accountability: if no one reads the procurement documents (outside of the buyer and seller) or vendor codes of conduct are not enforced, suppliers don’t really need to invest in sustainability. For instance, our federal government indicated in a throne speech nearly 30 years ago it was planning to implement green procurement. Yet, Environment and Climate Change Canada recently issued an RFP without the word plastic even being mentioned. Accountability for aligning our procurement actions against our goals is critical.

Sustainable and Circular Procurement

So, what are the solutions? Let’s start with the definition of sustainable and circular procurement. 

This type of procurement is about seeking the best value for money whilst purchasing, as defined by Dr. Bob Willard at Sustainability Advantage:

• The most sustainable service or good 
• From the most sustainable supplier
• In alignment with the organization’s stated purpose and goals

CDP estimates that supply chain emissions are, on average, 11.4 times higher than carbon emissions in the average organization. For most organizations, this means that even if they are a beginner on the journey up “Mount Sustainability,” procurement is the first place to start. After all, you are what you buy. 

Fortunately, we are starting to see pressure from global buyers on their Canadian suppliers to measure and disclose carbon emissions (hopefully, soon to be followed by biodiversity, water, forests and plastics disclosures, too). This means the system of trickle-down transparency and action is nascent but very effective. To drive widespread change in Canada, we need more robust sustainability requirements for suppliers. As global practices evolve, this will ensure that Canadian suppliers remain competitive. Ignoring these sustainability measures will ultimately hinder their competitiveness. Experts like Dr. Bob Willard recommend weighing sustainability performance at 30% or higher to incentivize suppliers to prioritize these crucial areas.

The Canadian federal government recently implemented a new standard requiring suppliers on all bids exceeding $25 million to measure, disclose, and set Paris agreement-aligned targets to reduce carbon emissions. This is a good move as it focuses on supplier performance, but I would argue it needs to apply to all suppliers to spur the level of activity needed in our economy and be expanded to many other areas of sustainability performance like plastics and biodiversity.

The time for action is now. Sustainable procurement is a cost-efficient way to drive economy-wide change at the speed required for business and our planet. What are YOU waiting for?