The Importance of Sustainable Procurement
Sustainability in the supply chain can be recognised at almost every stage of the process. From prioritising ethical suppliers to minimising overproduction and waste by efficient supply and demand management. However, more specifically, sustainable procurement is the process of finding, sourcing and acquiring goods and services while considering environmental and social factors.
- More efficient and effective use of natural resources.
- Reduction of harmful impact of pollution and waste.
- Encouraging innovation.
- Businesses to be transparent and express commitment to eco-friendly development.
L’Occitane, the french cosmetics company, became the most recent to join the . It has joined other beauty powerhouses such as Clarins, L’Oréal and Louis Vuitton to pledge importance to sustainable supply chains and procurement processes.
Founded in 2017, the Responsible Beauty Initiative intends to reduce environmental impact and for beauty companies to begin more sustainable business practices. This can be achieved through sharing common processes and tools to create efficiency.
The company utilizes EcoVadis, a sustainability rating tool, to allow businesses to acknowledge and accept corporate social responsibility. EcoVadis is the World’s most trusted sustainability rating tool, spread over 200 industries in 160 countries. EcoVadis helps 650,000 companies to manage networks by monitoring the performance of companies' own upstream value chain.
(SPP) assists sectors worldwide in achieving sustainable practises that have an impact on the environment, economy and society. Their mission is to ‘Address’ issues such as greenhouse gas emissions, local air and water quality, the use of hazardous substances and the management of natural resources. They then ‘Encourage’ a diverse supplier base, promote fair employment and ethical sourcing practices. Finally, they ‘Create’ new jobs, new markets and opportunities for SME’s (small-medium sized enterprises).
They have worked with businesses, governments and Cities to set initiatives in place to reduce the environmental impact of procurement processes. For example, working with the City of Helsinki to renew the IT equipment with low-carbon solutions. This particular case study achieved remarkable results in energy efficiency and saving. Calculations show that total lifetime savings for electricity are estimated to be 288,000€ and 27,4% CO2 emissions saved.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”