Time to put sustainability at the heart of procurement

The United Nations COP26 conference in Glasgow has amply highlighted the need to continue to work, with urgency, to tackle climate change.

We know the buildings and construction industry is responsible for more than a third of energy consumption and nearly 40 per cent of direct and indirect carbon emissions globally.

We also know that the construction industry has significant potential to deliver sustainable benefits to our cities and communities, natural environment and local and national economies. But turning words into action to mitigate environmental harms and enable a more sustainable future is a significant undertaking and requires an evolution of the business as usual outlook.

Forward-looking policies from legislators, environmental and social governance (ESG) principles in business, and green financial instruments, are working to drive action to reduce carbon emissions and foster greater sustainable value and social justice.

Now is the time for the construction industry to take action to deliver; ensuring programmes and projects set, and meet, sustainable objectives to address the climate and biodiversity crises.

The power to do this lies in the earliest stages of the construction process, specifically in the design and procurement stages, with raw material supply constituting to fifty percent of the embodied CO2e for the entire lifecycle.

Traditional cultures, behaviours and practices have presented barriers to change in the industry, with procurement being dominated by the priorities of cost and programme. But with environmental, social and economic sustainability now rising up the agenda, a shift in focus is emerging and, in many regions, it is now becoming mandatory for procurements using public funds.

Leading the change

The construction industry has repeatedly demonstrated its capability to bring about dramatic change. Many governments have challenged the industry to improve health and safety on construction sites and setting the target of reducing deaths and serious injuries.

The industry met the target, overcoming the barriers, because government legislation and the senior leadership in client organisations and the construction industry drove the necessary change across the EU and North America in the last decade.

Today, sustainability is on a similar path, and we must act now. Industry leaders, particularly in client organisations, have a vital part to play in putting economic, environmental and social sustainability at the forefront of decision-making opportunities, to make it a major part of procurement with immediate effect and empowering their teams and the supply chain to follow suit.

This empowerment enables procurement teams to weave sustainable objectives and requirements throughout the tender, contract documentation and contracts awarded to the most appropriate supplier, thereby utilising the procurement process to also deliver on the sustainability objectives of the planned investment.

Embedding sustainability into tenders

Tender and contract documentation provides the opportunity to set out sustainable objectives and key performance indicators (KPIs) for programme and project delivery. Some examples include carbon setting and calculation, environmental product declarations (EPDs), evaluation of construction methods (e.g. logistics planning, energy and waste minimisation), as well as KPIs for community engagement and job opportunities. This can be supported by developing value profiles and balanced scorecards to prioritise sustainability objectives and determine measurable KPIs for inclusion in procurements.  

With immediate effect, sustainability ought to be a major part of selection criteria and sufficient weighting needs to be attributed to it in award criteria to reward tenderers who are adapting to meet the challenges.

Sustainability requirements and criteria must be realistic about the capabilities and experience of tenderers, but also challenge the market to make the necessary step change and advancements if the construction industry is to meaningfully participate in addressing rising global temperatures and biodiversity loss.

Maturing the supply chain

Domestic and international supply chains contain highly variable levels of maturity with respect to sustainability integration in their service offering. For some, the transition to more sustainable processes and practices can present significant cost barriers. An example would be small and medium enterprises who may not be able to progress as rapidly as major contractors.

Early market engagement will enable client organisations to determine the supply chain capacity and capabilities to meet their sustainability objectives, to understand where they are on their sustainability journey and to enable the supply chain to adapt to meet the client’s ambitions.

By setting out sustainability expectations and key performance indicators in contracts, the supply chain will need to integrate sustainability into their service offering to remain relevant and not lose out. 

Getting real about risk

New technologies are being explored to help the construction industry achieve sustainability objectives, but the adoption of these innovative technologies and approaches can present risks for all involved in their development and application.

There is a need to adopt a mature and balanced risk-sharing approach to encourage the market to invest and innovate in this area.  

In addition, new products, systems and approaches need to be backed by certification – which is relatively new and, in some case, not yet developed - to grant assurance that they are providing anticipated environmental impacts, carbon emissions or other benefits.

Understanding upskilling

The construction industry needs to keep pace with the legislative environment, client sustainability objectives and the continuing evolution of sustainable technologies and practices – in everything from retrofitting of buildings and homes to low-carbon concrete. This sustainable transition requires us all to develop new knowledge, skills and experience; we are all on the same journey.

Major organisations have the resources and capability to keep up to date, upskill their people and adapt the way they work. Small and medium sized organisations in the supply chain, are unlikely to have such resources, however, it is important to understand their challenges and the support they may need. We all have a responsibility to take the industry with us.

Share the learning

We all face challenges in adapting to a more sustainable future. As we adopt more sustainable ways of working and given that time is against us, the sharing of experience, learning and ideas is critical.

We need to work together to embed sustainability in procurement if the construction industry is to make its fair contribution to resolving the climate and biodiversity crises.

We can drive change, by:

1. At an organisational level, setting meaningful and ambitious sustainability objectives and targets
2. Empowering procurement teams to turn objectives into reality
3. Engaging with the supply chain – and seeing how you can support each other
4. Incorporating performance regimes to motivate the supply chain.