Measuring the impact of sustainable procurement

Does your organisation measure the value of the goods or services purchased that deliver social or environmental outcomes? What about the number of your suppliers that have a commitment to delivering sustainability outcomes?

I imagine that most organisations would answer yes to either or both of these questions. And it is important to measure and understand expenditure and your supplier base, but this is really the starting point for measurement rather than the end point.

What if you could go beyond these numbers, and tell the story of the value that is created for the environment, the community or your own organisation as a result of its expenditure?

What if you could make the following statements, and have the evidence to support them:

37% of employees of small to medium enterprises that our organisation purchases from have experienced an increase in self esteem as a result of having sustainable employment.

Staff engagement has increased by 10% as a result of the pride our staff members feel because of our ethical procurement practices.

There is certainly a lot of discussion about the true value of and business case for sustainable procurement, but much of this is anecdotal or based on ‘gut instinct’. What is lacking is the evidence base. And if the purpose of sustainable procurement is to achieve positive outcomes, it makes sense to track how well it does so.

Our traditional approaches to measuring return on investment or value for money have been very narrowly focused on unit cost. That’s a very simple calculation of how much money is being spent divided by how many widgets we get for that money.

But a calculation of this nature provides an incomplete picture. All it does is measure economic outcomes. It doesn’t help you to truly value the things that matter to individuals and our society, like self esteem and community resilience. It doesn’t help you to understand whether your sustainable procurement policies and practices are successful and how you can maximise value. And it doesn’t help you to tell the story to your internal decision makers and your external stakeholders about the impact of your procurement spend.

We need to move away from these narrow and incomplete measures, and calculate a more holistic return on investment. We need to calculate social and environmental value just like we calculate economic value.

Triple bottom line measurement approaches and holistic cost-benefit analysis can provide this complete picture.

Rebecca Cain, accredited SROI practitioner, will present a webinar for ECO-Buy Members on 18 July to discuss how to measure the environmental and social outcomes of your procurement. See the event invitation here.

Net Balance has significant experience helping clients identify the social, environmental and economic outcomes and measure these reliably, including social return on investment (SROI) and environmental metric reporting for a number of clients.