How sustainability can build value in construction
Reconciling best-value procurement and sustainability should not be a problem as the two represent a win-win
Procurement is all about value, so too is sustainability as long as that value is measured in more than just money.
In principle, the synergy is clear, says Duncan Brock, group director at the Chartered Institute of Procurement & Supply. “Sustainability runs through the heart of procurement,” he says. “It is not only in the best interests of customers and the environment, but typically makes processes more efficient and less costly.”
In practice is where the challenge starts. Procurement is critical to embedding sustainability into decision-making and the supply chain is the engine room, explains director of sustainability for Canon Europe, Stuart Poore. “Any business serious about changing its value chain needs to get practical in the way they manage suppliers,” he says. “Clear and precise expectations must be laid out in tendering and contracting, including targets for improvement. Without that, there’s a danger nothing substantive will be delivered.”
How to track sustainability in the supply chain
How best to target and track supply chain sustainability is open to debate, says Mr Brock. “There is a range of ways businesses are integrating sustainability into procurement. Heathrow Airport, for example, has embedded sustainability in supplier contracts for construction of the third runway, including key performance indicators and evaluation criteria,” he says.
Most sizeable organisations rely to some degree on supply chains to deliver set goals, but the construction industry is almost archetypal in its traditional contracting model.
Unfortunately, fallout from the disastrous failure of Carillion illustrates just how many supply chain businesses can take a hit in the wake of a major collapse. Its implosion looks set to break national insolvency records, with liabilities of almost £7 billion, leaving creditors among its 30,000 suppliers facing a payout of less than one penny in every pound.
Even in this industry, though, the procurement game is changing, and for the better, says Shaun McCarthy, director of Action Sustainability and chair of the Supply Chain Sustainability School. “In construction, around 80 per cent of main contractor revenue goes to the supply chain,” he says. “However, it is no longer just about ticking boxes; the new standard for sustainable procurement, ISO 20400, provides guidance on aligning sustainability goals.”
The writing is on the wall for bare-minimum compliance, according to Mr McCarthy, who led the UK delegation on the new standard. Furthermore, it seems entirely appropriate the world first for completing assessment against ISO 20400 should have been claimed by a leading UK-based international infrastructure and construction company, Balfour Beatty.
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