Drivers and barriers for sustainable procurement

their selection process for contractors and suppliers. The collaboration also created information and education material for contractors and suppliers in the sectors’ supply chains. Being aware that the much smaller contractors and suppliers cannot produce in-house capabilities, the larger companies realized there was a need and responsibility to educate the supply chain instead of ‘pushing the problem down the chain’ if they wanted to achieve real improvement beyond mere legal compliance box-ticking.

Generally, the drivers and barriers for sustainable procurement can be divided into two groups: external drivers and internal drivers. Next to the above-mentioned pressure from customers, external drivers are also under pressure from the general public, governmental regulation and legislation, investors, and the desire for a competitive advantage by gaining a positive and sustainable image (Walker et al, 2008).

The main internal drivers are personal commitment of managers and investors, and the wish to reduce costs by a reduction of waste, pollution, brand damage or litigation costs. The drivers are somehow interlinked; for example, an internalization of costs for emissions through governmental regulation backs the internal driver to save costs through sustainable practices. Sustainability violations in the supply chain in essence became a commercial risk to business organizations and with procurement departments often being involved or in charge of selecting suppliers, sustainable procurement was driven by risk considerations.

The adoption of sustainable procurement practices is going hand in hand with an ever-increasing need to improve the visibility and transparency of supply chains. The need for transparency is not only required to monitor sustainability but also other risks and potential disruptions in the supply chain. Visibility is also required for formally conducted supply chain audits (Awaysheh and Klassen, 2010) and for operational improvements such as keeping inventory levels down.

Although sustainable procurement is considered a strategic decision needing top management support, at a purchasing level, sustainability is actually more connected with the personal and ethical values of a company founder filtering

into the wider organization and related to middle-management support. The increase in sustainability requirements on the supply chain has certainly given the supplier selection process – and therefore procurement departments – more strategic and operational importance in business organizations.

The internal adaptation of sustainable practices in organizations can be categorized into four groups: resistant, reactive, receptive, and constructive adaptation (Walton et al, 1998).

Resistant adaptation of sustainable practices means that organizations only adapt such practices if there is no way around it. The attitude here is that sustainability issues are per se ‘anti-business’. There is no intrinsic motivation to improve sustainability in the organization and sustainabilityrelated laws are followed only by the letter but they do not feed into policies or strategy of the organization.

Reactive adaptation derives from the mere ambition to comply with environmental and social responsibility law and to avoid penalties. Solutions often focus on reducing the harm from emitted pollutants – for example by collecting and disposing of waste – and not on reducing emission levels in the first place. Environmental and social issues are appreciated but with no change of current processes and solutions are usually happening at the end of the supply chain with only incremental solutions.

Receptive adaptation starts considering possible competitive advantages coming from sustainability improvements, but the translation into operational processes and procedures is still minimal.

Constructive adaptation embraces the value of integrating product and process design into the sustainability planning. These companies also maximize the benefits from environmental initiatives as well as from the productivity of resources.

These four levels of internal adaptation of environmental and socially responsible practices, however, do not go beyond the organization’s boundaries. To achieve truly environmentally and socially responsible practices, the involvement of more supply chain members is crucial. Achieving sustainable procurement may often start at an operational level, but needs to develop into an integration of sustainability considerations in the strategy. From its focus on the operational side of the supplier–customer relationship, it therefore started to include more and more supply chain stakeholders, developing the discussion further into the downstream and upstream supply chain and into making the entire supply chain management more sustainable.

Whilst the wish for cost reduction is a major internal driver for sustainable procurement, cost concerns are also a major barrier. Customers may aim for the lowest possible price and are not willing to pay a premium

for more sustainable products. Costs associated with the implementation of sustainable practices are even more significant for small and medium-sized companies with fewer resources at their hands for investment. A managerial attitude of seeing ecology and social responsibility in a trade-off with economy increases the cost barrier even further.

Not knowing how to make procurement more sustainable can be an internal barrier too. Incorporating sustainability issues at a concrete, practical level appears to be difficult for many managers, even if they accept the necessity for more sustainability in their procurement. Managers are used to addressing issues of efficiency or governance in their interaction with suppliers and are often simply ‘illiterate’ in how to address sustainability. In such situations, the development of suppliers can be a way to improve the sustainability performance and development targets can be included in supply contracts.

A lack of legitimacy is another barrier. Paying only lip service to sustainability and working on sustainability purely from an advertisement perspective for ‘greenwashing’ purposes prevents individuals from buying into the agenda and committing to sustainability improvements.

We already mentioned the importance of including other supply chain actors in sustainability improvements in the supply chain. Before we look further into this, we discuss what external drivers and barriers determine whether organizations embark on the implementation of sustainable supply chain practices or not.

Regulation can be considered a major driver for organizations’ environmental and social compliance efforts. Although compliance is not a guarantee of improved environmental and social performance, it is related to involvement in sustainable practices in purchasing. Improvement in sustainability performance is more likely to be seen in those companies who adapt and integrate sustainability into their supply chain rather than using a reactive adaptation strategy. Nevertheless, regulation is a motivator for new solutions for reducing environmental and social impact at a low cost. Regulation can be the initial trigger to start thinking about new ways of doing this and for reducing wasteful activities, therefore leading to improved production yields.

Customers are drivers for sustainability considerations in supply chains and procurement in many ways. This pressure can stem from the final consumer, and is then carried up the supply chain. Consumer-facing companies are particularly exposed to pressure groups and environmental campaigners. Large, high-profile corporations with much buying power are also often seen as being in the driving seat of demanding sustainability improvements in the

upstream supply chain and therefore face most attention from campaigns and media and the most potential threat of negative publicity.

In a business environment, competitors also act as drivers for better supply chain practices. Competitors may become technology leaders or guide the industry to norms and legal frameworks, thereby driving other companies down the same route. Solution and innovation leadership amongst competitors can mean a competitive advantage since the pioneers often set the industry standards for future developments. When competitors gain a competitive advantage because of their supply chains’ sustainability, companies have to respond to this challenge by implementing sustainability improvements themselves.

Increasing public awareness and the influence of non-governmental campaigning groups are among the societal drivers for sustainable supply chain practices. Pressure groups and campaigners often have the potential to publicly embarrass companies and thereby influence customers and lawmakers.

Suppliers as a possible driver for sustainable supply chains have received little attention in academic research. Some argue that suppliers are generally not the driving force behind sustainable supply chain practices but can support their implementation and provide valuable knowledge (Carter and Dresner, 2001). In addition, the ability for supply chain integration and collaboration with customers is an essential contributor to sustainability improvements. New products and services developed with other customers can also make the supplier the more knowledgeable partner for sustainability improvements.

Many of the external drivers can also act as external barriers. Regulation can reduce innovation or lead to changes that want to satisfy the law rather than achieving objective sustainability improvements. These can also be industry-specific. Regulatory priorities (for example to ensure a free market) might prevent organizations from sourcing the most environmentally friendly and socially responsible option.

Suppliers may not be willing to share more information in the supplier–customer relationship, preventing further integration necessary to make the supply chain more sustainable. Depending on the power balance in the relationship, customers may not be able to convince their suppliers about suggested changes and suppliers therefore become a barrier for improvements.

Drivers, barriers and practices vary across different industries. Sectors are adapting to sustainable supply chain practices at different speeds. Market structures, ownership, governance, industry-specific regulation, and the contextual situation put organizations into more or less individual situations.