Sustainable Purchasing Leadership Council: Your FAQs answered

Sustainable Purchasing Leadership Council: Your FAQs answered

In July, GreenBiz Group helped launch the Sustainable Purchasing Leadership Council (SPLC), through a video webcast hosted by executive editor Joel Makower.

During that 90-minute event (archived webcast available here), attendees posed more than 100 questions but only a small number were addressed. We've provided detailed answers to many questions below.

Is this a duplication of what private industry is already offering? What is SPLC doing that the private industry is already doing, such as Trucost on impact spend and UL Environment on green products?

Far from being a duplication of what the private sector already offers, our work will expand the market and accelerate adoption of the most credible and useful private sector offerings in this area. Our consensus-based program of guidance, measurement and recognition for leadership in sustainable purchasing will refer users to many resources and services provided by private sector enterprises, such as Trucost or UL Environment, and public sector initiatives, includinig those produced by the U.S. Environmental Protection Agency. Many purchasing organizations say they need assistance in understanding which resources and services are relevant to them, and which ones have a leadership orientation that makes them worthy of investment. By providing that assistance, we expect to increase demand for the services of high quality service providers.

Is there an organization that certifies businesses as sustainable across industries?

By our count, more than a dozen organizations offer purchasers scorecards, ratings or certifications for evaluating the enterprise-level sustainability of suppliers. Some use proprietary data and methods for rating businesses, while others certify suppliers against a standard or apply an algorithm to publicly reported data. Some look holistically at social, environmental and economic aspects of sustainability while others go deep on a specific aspect, such as greenhouse gas (GHG) emissions. At this time, it can be difficult for purchasers to know which supplier sustainability assessment tools are directionally accurate, cost effective and credible. One of the first work streams of SPLC will be the production of a buyer guide for use by purchasing organizations seeking tools for evaluating the impacts of their spending and the sustainability of suppliers.

It is worth noting that more than 50 environment, social and governance (ESG) ratings, rankings and indexes have been developed for use by the investor community, according to SustainAbility’s 2010 "Rate the Raters" report. The investor community has responded to the proliferation of so many tools by creating the Global Initiative for Sustainability Ratings (GISR) to develop a common standard for evaluating ESG performance, in the hope that raters, rankers and certifiers will use that common methodology. If successful, GISR’s standard will reduce survey fatigue and improve the transparency and comparability of the assessment tools.

While GISR is focused on developing a standard evaluation methodology that meets the needs of the investor community, it is likely that purchasers and suppliers alike would benefit from an analogous project aimed at developing a standard assessment methodology that meets the needs of the purchasing community. Council members can help determine if such a project should be undertaken, presumably with close coordination with GISR to ensure consistency for companies where data needs overlap.

What work will the council do to develop consistent and functional metrics for use across different sectors?

This is the core purpose of the Council. We seek to create a consistent, practical program for guidance, measurement, and recognition of leadership in sustainable purchasing across multiple types of organizations. The guidance may vary by institution type, because the definition of leadership in sustainable purchasing might vary from university to hospital to corporation, but the overall principles and measurement approach of the program will remain consistent. In all council guidance, for example, spending on product categories with greater impact intensity than others will receive proportionally more weight when evaluating the sustainability of the organization’s total spending on all products.

What is the measurement focus? Is there the ability for organizations to monitor green spending?

Our primary focus is to measure, understand and mitigate social and environmental supply chain impacts and risks. We are interested in helping organizations measure whether their implementation of sustainable purchasing actually results in meaningful improvements for society, the planet and the purchaser. Many purchasers recognize that a simple “% green spend” metric has limited ability to demonstrate such improvements. Many more sophisticated analytical approaches have been and are being developed. The council seeks to help purchasers identify which approaches are most practical and cost effective to implement, and to work with suppliers and procurement tool providers, such as ERP, eProcurement and analytics software vendors, to support them.

Is this a ratings-based program similar to LEED? Is it confined to only the building industry?

SPLC’s leadership recognition program will rate how effectively an organization has assessed and mitigated the impacts associated with their spending on goods and services. Like LEED, the program will include credits for a variety of actions, weighted according to the relative social, environmental and economic benefit(s) associated with each action. Unlike LEED, the program is not limited to the buildings or the building industry. Any institutional purchaser will be able to use the program to evaluate its sustainable purchasing efforts. The first pilot version of the rating system will be created over the next 12 to 18 months. We invite you to join the council and participate in its development.

What is the timeline for the SPLC to release products for use by organizations?

The steering committee has developed a proposed work plan for 2013-2014 that includes releasing a number of work products within six to 12 months, with the pilot version of the rating system being released after 12 to 18 months. The work plan for 2013-2014 will be finalized at the Founding Summit this month with input from representatives of Founders Circle members and strategic partners.

How will NGOs, especially grassroots voices, be adequately represented in this process?

It is very important to us that NGOs, as stewards of the public interest, be well represented in the work and dialogue of the council. Accordingly, we have been recruiting a balanced and representative Founders Circle to include a number of social and environmental NGOs, and we are still seeking to fill several of these spots. In our plan for transitioning from the steering committee to board governance, we also have reserved at least one-third of the board spots for NGOs and public interest voices. Additionally, the program development process will be structured to ensure that NGO and public interest voices are included, and also that no single interest group is able to dominate the conversation or decision-making.

Do you have any resources for purchasing software that can track sustainable attributes? Or plug-ins for existing procurement software?

Some software solutions do exist, but many are incomplete because purchasers have not coordinated what data they want from suppliers in such a way that software providers can facilitate the delivery of that data. The SPLC hopes to provide some coordination and clarity around this issue. For example, we are in conversation with existing procurement software providers to develop an Application Program Interface (API) to allow existing procurement software to seamlessly integrate the council’s leadership guidance.

How will SPLC ensure that federal procurement laws and requirements are met? In other words, the SPLC may be limited in its ability to guide federal agency action because of federal procurement requirements. How will these be monitored and met?

We see institutional purchasing by government as one of the most significant and potentially influential leverage points in the economy. Accordingly, it is extremely important that our guidance integrate well with existing federal procurement laws and requirements, and we will ensure that all major guidance meets this standard. That said, in cases where federal laws and requirements fail to adequately recognize leadership, the higher tiers of our recognition program may go beyond the compliance requirements in existing government procurement documents.

Are you considering the GRI framework as part of the tools that will translate into best practices?

Yes. We expect that our guidance eventually will be cross-referenced with the GRI program, but the process of harmonization likely will not commence until after v1.0 of the rating system has been developed.

One of the main obstacles buyers mention in buying responsibly is the pressure and obligation to reduce costs, which means contracts often go to the lowest bidders. Will the SPLC provide solutions for cost savings and responsible procurement at the same time?

Absolutely. Our guidance only will be useful -- and used -- if it makes economic sense. We see economic viability as a precondition for any definition of leadership in sustainable purchasing, and we even expect that some users will adopt our guidance exclusively for its cost-saving benefits. Most negative social and environmental impacts are related to hidden costs and other risk factors that organizations can save money by avoiding. The council’s guidance will help organizations identify those opportunities and capitalize on them with proven strategies.

Many purchasers are finding clever ways to deliver high sustainability performance within incumbent business practices, and the council hopes to spread those techniques. However, the council also hopes to be a community from which stakeholders can push for changes in business-as-usual approaches, much in the way that USGBC enabled thousands of purpose-driven professionals to advocate for important changes to local building codes. Once considered a hurdle to sustainability by many, local building codes in some areas are now driving improvements in sustainability.

What makes the SPLC different from The Sustainability Consortium?

Most notably, The Sustainability Consortium (TSC) focuses on the sustainability performance of consumer products (goods with attributes), whereas we focus on the sustainability performance of an institution’s overall purchasing (spending decisions with consequent impacts). As such, the SPLC will provide organizations with guidance on a number of areas not covered by TSC, including spend analysis and prioritization, procurement of services and non-consumer products, and procurement processes and best practices. Additionally, the council will provide a rating system for recognizing institutions that achieve outstanding performance in sustainable purchasing, and a credentialing program for procurement and supplier professionals that demonstrate mastery of sustainable purchasing knowledge and skills.

Will you work with TSC?

We are actively seeking a collaborative relationship with TSC. We have had several conversations with TSC senior staff about opportunities for alignment, and we are optimistic that a constructive relationship can be forged. At a minimum, assuming that TSC-developed category guidance achieves credibility and acceptance in the marketplace, we would seek to integrate that guidance into our proposed leadership program.

Will the SPLC purchasing guidelines look beyond just product itself to the manufacturing processes used to determine the consequences?

Absolutely. We aspire to develop guidance that addresses the most significant life cycle consequences of goods and services purchasing. Depending upon the type of goods or services, this could include upstream impacts, such as manufacturing-related impacts, or downstream impacts, such as energy usage or disposal costs.

Will SPLC be U.S.- or North America-focused initially or start with a global perspective?

SPLC is launching with a global perspective from the start. We are represented on UNEP’s Sustainable Public Procurement Initiative (SPPI); ICLEI is a partner on the basis of its EU-based Procura+ program and the U.K.-based CIPS Sustainability Index is a member of our Founders Circle. Our guidance will benefit from international guidance and will address the global supply chains of purchasers. Several work streams we intend to kick off at the Founding Summit will produce guidance with international applicability, such as the development of principles for leadership in sustainable purchasing and guidance on spend-related impact assessment. When developing the first version of the rating system, it is likely that the council's limited resources will require a focus on the leadership standards available within a manageable scope. Given the origins of the council and the relative scale and homogeneity of the North American institutional purchasing marketplace, it is likely that leadership criteria available to purchasers in North America will be the scope for version 1.0 of the rating system. However, it will be designed for adaptation to other markets.

How is the SPLC looking to work with the National Minority Supplier Development Council and the Women's Business Enterprise National Council? They don't seem listed, yet there is a lot of discussion around diverse vendors.

We are committed to engaging these organizations and their members as stakeholders in our work. We recognize that the continuing underuse of minority- and women-owned businesses has profound impacts on the security, health and enfranchisement of households and whole communities. For us, any definition of leadership in sustainable purchasing must reward actions by institutional purchasers to support women- and minority-owned businesses. We recognize NMSDC and WBENC as leaders in the effort to define and accelerate leadership in diversity spending, and seek their guidance in how to best support and advance the supplier diversity movement. We have initiated conversations about strategic partnership with both organizations.

One way we believe the council can add value to the supplier diversity movement is by supporting efforts to prepare diverse suppliers to meet the sustainability needs of purchasers. As reflected in the webcast, a number of the council’s founding members recognize that providing technical assistance to diverse suppliers is essential to ensuring that those suppliers are prepared to compete and thrive when sustainable purchasing efforts are ramped up. Today, purchasing organizations wanting to provide such technical assistance to their diverse suppliers typically must develop their own training curricula and organize their own training events. Some purchasing organizations don’t have the capacity to create and run such programs themselves. The council hopes that the training curricula it will develop to support its guidance program can be tailored for use by organizations like NMSDC and WBENC in their regularly scheduled training events, to which purchasers can refer or sponsor their suppliers to attend. In addition to preparing diverse suppliers to meet the sustainability needs of purchasers, the council’s training curricula further could be used to support diverse suppliers in examining their own purchasing practices and performance. (The council’s curricula similarly could serve as a foundation for providing technical assistance to any small and medium enterprise supplier, as well as veteran-owned and disability-owned suppliers.)

How will SPLC address social side issues, both locally and internationally?

The SPLC places equal weight on social, environmental and economic aspects of leadership in sustainable purchasing. However, because the SPLC emerged from an earlier initiative, the Green Products Roundtable (GPR), which focused on green or environmentally preferable products, its initial stakeholders brought more expertise on environmental than social issues. For that reason, we are now actively recruiting stakeholders with expertise on social issues to provide a balanced complement of expertise and perspective. We expect that these new voices will help us to define leadership broadly, to include not only social responsibility to the immediate community, but also social responsibility to all people affected by the extended life cycles and supply chains of goods and services.

Will the concept of natural capital be integrated into the SPLC’s efforts?

The council will encourage the inclusion of all concepts that help us and our stakeholders understand and address the full life cycle consequences of goods and services purchasing. Such concepts may include, but are not limited to: natural capital, ecosystem services, externalized costs, total cost of ownership (TCO) and social return on investment.

Has the SPLC considered supporting development of an ISO standard on green purchasing or sustainability purchasing?

Several initiatives are underway, domestically and internationally, to develop standards for green or sustainable purchasing. The council sees its work, including the guidance, measurement and recognition program, as a preliminary step toward such standard development. It is possible that our guidance ultimately could be translated into an ISO standard, and we will certainly seek to follow an ISO-compliant consensus process in order to facilitate such translation in the future.

Does "measurement + guidance + recognition" program equate to a rating system for sustainable products?

No. We will create a program to assess leadership in sustainable purchasing, but we will not create a rating system for products. We believe that excellent guidance already exists for many product categories, often in the form of standards, certifications and labels. We may recognize some of this guidance as leadership guidance, but we will not evaluate individual products.

This seems like it's oriented toward consumer products or institutional purchasing, such as office supplies. What about construction materials?

The guidance program that we will develop encourages purchasers to look at their entire spending portfolio, including construction materials, fuels, energy, food, waste services and many other goods and services. For purchasers whose purchases of construction materials represent a significant portion of their impacts, we do expect to provide guidance on construction materials. As stated elsewhere, however, this guidance likely will build upon the best available existing guidance for procurement of construction materials.

Will the program criteria that is established be published for review and comment before adoption?

Yes. Initial draft guidance on any topic will be developed by SPLC staff in consultation with a technical advisory group with expertise in the topic. The initial draft then will be published for public comment, and all substantive comments will be either integrated or explicitly addressed in the subsequent version. As appropriate, some guidance may be issued for public comment multiple times.

Will the SPLC launch something to help with green labels so purchasers have a clearer understanding of what items are environmentally preferable?

Yes. In fact, the predecessor to the SPLC, the Green Products Roundtable, was launched precisely to address confusion in the marketplace around green claims. The GPR developed guidance on identifying credible green claims (available on the council’s website) that was highly valued for its multi-stakeholder consensus origins by the Federal Trade Commission when it was revising the Green Guides, its rules for green marketing. The council will continue this work by creating a guidance program that looks comprehensively at an organization’s overall spending, but also clearly identifies the most credible and useful product certifications, standards and labels.

How will all the data that you will be collecting from the brain trust of participating stakeholders be synthesized and made useful for purchasers?

This is the core work of the council. Each of our technical advisory groups (TAG) will be led by subject matter experts who will pose to themselves and the TAGs a misleadingly simple question: “What does leadership look like for sustainable purchasing in this area or topic?” We believe that the community of experts will be able to come to consensus on a practical answer to this question, and we are committed to translating this answer into operationally useful guidance for purchasing professionals. This will not be an easy task, but we hope that you will join us in attempting it.

How can the SPLC make sure it is objective in choosing leaders in sustainable purchasing and not giving preference to one of the founders?

The SPLC is a nonprofit organization governed by a board of directors which has final control over all program decisions. The by-laws require that the board be balanced and representative, and that no single interest be allowed to unduly influence its decision-making. The same is true for any of the other program development groups and committees. The Founders Circle members receive public recognition for supporting the launch of the council, but founders have no special role or influence in the ongoing decision-making of the council.

How will "sustainable" be defined?

In general, we believe sustainable purchasing maximizes benefits for the purchasing organization, society and the planet. It is the work of the council to give this general definition operational meaning through the proposed program for guidance, measurement and recognition of leadership in sustainable purchasing.

How would a primary resource provider fit into the conversation?

We consider all members of the upstream supply chain of goods and services as suppliers, whether indirectly or directly, to institutional purchasers. Because some of the most significant social and environmental consequences of industrial production occur high up in the supply chain, the perspective and expertise of primary resource providers will be critical to the development of informed, practical purchasing guidance that addresses these upstream consequences.

Are any corporate consumers on the Founders Circle?

We have several spots in the Founders Circle reserved for corporations whose primary role in the institutional purchasing market place is as a purchaser, including in the hospitality, healthcare, financial services and media sectors. We expect to announce new members in those spots in the coming weeks.

Is there a participation fee?

Yes. We will announce the fee structure for general membership in late August.

What are the next steps? What is the desired course of action for the audience?

Please sign up for our SPLC update newsletter and share information about the council with your colleagues, customers and any other relevant parties. That way you will be prepared to get engaged when our general membership program launches in September and we begin populating our technical advisory groups and publishing guidance. For those organizations interested in joining the Founding Circle, please contact us now. Otherwise, stay tuned for the invitation to general membership in September.