Can UK construction embrace sustainable procurement?
Pressure is building on UK businesses to tackle embodied carbon - the emissions tied to the materials, products and services used across the construction supply chain. With growing legislation on these scope 3 emissions, increased investor scrutiny and forward-thinking clients, sustainable procurement is quickly becoming a top priority.
While the UK Government is considering a mandated reporting of scope 3 emissions, there are already public and private-sector companies leading the way. These companies are targeting net-zero and sustainability goals and driving an innovative approach to procurement.
The Chartered Institute of Purchasing and Supply’s (CIPS) latest look at trends finds buyers and suppliers are increasingly embedding environmental and social governance (ESG) into their procurement. They’re achieving this by engaging with suppliers to drive sustainable objectives and adopting sustainability monitoring tools.
For forward-thinking organisations, sustainable procurement isn’t just a cost. It’s a pathway to unlocking value and standing out in a competitive market.
Yet, despite growing recognition of sustainable procurement as a strategic priority, many organisations struggle to turn high-level ambitions into practical actions.
Challenges around governance, supply chain engagement and data have been highlighted by researchers at Centre for Digital Built Britain (CDBB), but valuable lessons are emerging from organisations already rethinking procurement practices and processes. By considering these learnings from early adopters and broader industry experience and research, organisations can better understand challenges and learn how to navigate them.
What does leading by example look like?
The construction supply chain is known to be highly complex, with its multiple tiers and huge numbers of suppliers, which is creating significant barriers to sustainable procurement. Data published from ResearchGate earlier this year identified more than 40 factors that limit action across public and private sectors, from gaps in knowledge to financial constraints
Among early adopters, senior leaders are providing solid foundations for change, giving the backing and support to help integrate new procurement practices and processes. Biopharmaceuticals business AstraZeneca has embedded its sustainable procurement strategy successfully across its global operations. A company representative said: “Sustainability is one of the top three priorities for us as a corporation. So it’s sponsored by the CEO at the highest level.”
As Europe’s busiest airport, Heathrow also demonstrates how effective leadership empowers organisations to put in place the essential building blocks of good governance.
Heathrow’s sustainable procurement strategy has strong executive sponsorship and governance mechanisms that review the emissions and social value associated with any project. The company adds: “Procurement approval now has a dedicated sustainability presence.”
The benefits of supply chain collaboration
Engaging with the supply chain is essential to implementing change, but CIPS’ survey and industry studies have found that this is often inconsistent, with limited ability to track and monitor suppliers’ products and materials.
National Highways, the UK Government’s road operator, has a proactive and multi-tiered approach to supply-chain engagement, including setting more rigorous requirements for tier 1 and tier 2 suppliers. The organisation explains: “We have also established formal routes for communication, including an engagement council with our supply chain every six months.”
Embedding sustainability into contracts is another effective strategy, as supplier commitments become mandatory.
By segmenting suppliers by risk, based on their decarbonisation challenges, the right emissions clauses can be included in contracts.
Heathrow Airport drives engagement with key suppliers using a ‘balanced scorecard’ approach, using the tool feedback from the supply chain to identify potential areas for improvement. This dialogue has encouraged suppliers to invest in their sustainability capabilities. The organisation says: “Having that conversation was the big door opener.”
The purchasing power of a major client can also be a powerful tool. AstraZeneca comments: “The incentive [for suppliers] is you keep working with AstraZeneca… it’s as simple as that.”
Getting digital tools right
While the UK construction industry has embraced digital innovation in the form of building information modelling (BIM), carbon data and other sustainability information are often remains fragmented across the supply chain.
Heathrow Airport says: “There is an absolute flood of information, but understanding how it’s packaged… is where we’re still maturing.”
Those leading by example recognise the importance of digital tools and dashboards for integrating data, tracking carbon emissions at scale, sourcing insights and converting these into actions.
AstraZeneca works closely with Ecovadis, Carbon Disclosure Project (CDP), the Science Based Targets Initiative (SBTi), the Worldfavor supply chain reporting platform, and Microsoft’s Power BI data visualisation and reporting platform. Meanwhile Heathrow Airport is building integrated dashboards using data extracted from its own enterprise management system.
Whatever the approach, among early adopters we’re seeing procurement teams taking on the role of data integrator to ensure information is robust, manageable and can be converted to actionable insights. Procurement teams will need to be given the training and skills to embed sustainability into core decision-making and to develop a mindset that drives what we describe as ‘sustainability by default’.
Creating an action plan for success
We’ve identified the key actions to drive successful sustainable procurement strategies. These are:
- Internal support: Ensure the sustainability action plan has board-level support and is aligned with broader procurement key performance indicators. Maintain momentum by setting medium-term goals, reviewing, refining and sharing learnings.
- Engage with suppliers: Focus first on those suppliers that have the greatest impact on your emissions. Ensure expectations are realistic. Build supplier capacity, especially for small-medium enterprises, using training, shared tools, mentoring and cost-sharing mechanisms.
- Adopt digital tools: Dashboards, integrated supplier portals and automated capture of carbon data are vital to informing and monitoring progress.
Embracing change to unlock opportunity
By learning from those who are implementing sustainable procurement strategies to pave the way, organisations have the potential to tap into opportunities. This includes leveraging innovation such as low carbon-materials or collaborative contracting models. Collaboration with the supply chain enables companies to build capacity and shared tools, enhancing business effectiveness and sustainable progress.
For organisations and teams at the start of their sustainable procurement journey, moving from ambition to action may seem challenging. But the lesson emerging from industry experience is that procurement teams who embrace change can reduce carbon emissions in the supply chain while unlocking organisational resilience, enhanced reputation and long-term value.