Sunday, April 27, 2014

London to Rio – Olympics Leads the Way on Sustainable Procurement

Ever since its modern avatar at Athens, Greece in the summer of 1896, Olympic Games have been a fascinating movement attracting interest of professionals from all walks of life. Countless articles have been written on lessons one can draw from Olympics movement.  And why not; it represents the best! Take first, its motto - Citius, Altius, Fortius — Faster, Higher and Stronger. This could be the motto for every organisations, be it public, private or non-profit! In fact, the Olympics have motivated organising countries to showcase new technologies and industrial progresses, bringing the latest innovations into the global spotlight. Examples of innovations galore, from the groundbreaking worldwide radio broadcasts of Paris Olympics in 1924, to the 1964 Tokyo Olympics which were the first Games broadcast by satellite to television screens around the globe. In more recent times, London Olympics held in 2012, has left a lasting learning legacy on how to deliver a sustainable development project.

In this blog, my intention is to focus specifically on valuable insights that sustainable procurement professionals can draw from the sustainability efforts that recent Olympic Games have made in implementing sustainable practices in procurement of goods, works and services. In my opinion, International Olympics Committee (IOC) made their commitment for environment and sustainable development known for the first time by amending the Olympic Charter in 1994 and subsequently publishing Olympic Movement’s Agenda 21 in 1999. However, sustainable actions in games, specially sustainable procurement, picked up only in Vancouver 2010 and London 2012, which pioneered the first sustainable supply chain programmes. Rio 2016 has committed to continue these excellent initiatives, analysing lessons learnt in each occasion and applying the best practices.

London 2012 sustainability effort began much before its bidding process. The London bid team created an aspirational vision called “Towards a One Planet Olympics” to deliver a sustainable legacy. It addressed environment with objectives on GHG emission, water and waste; social issues like noise, communities, transport and mobility; and economic factors like employment and business. Since the very beginning, Olympics Development Authority (ODA) sent a clear message to industries about delivering sustainability through procurement. The ODA’s Procurement Policy stated that “the ODA would seek to use its purchasing power to support sustainable development in London and the UK and ………., and would aim to ensure that sustainability is integrated into business cases, procurement plans and related contracts”.

The ODA set specific, clear, and challenging sustainability targets from the outset to ensure early consideration of sustainability issues. The design team was tasked to meet core sustainability criteria along with other performance criteria while specifying requirement for products and works. Sustainability criteria formed part of the award criteria and all tenders were evaluated based on the most economically advantageous tender (MEAT). In order that SMEs don’t get discouraged from bidding process, they were supported to make them business ready. The technical evaluation included environmental sustainability assessment too. The technical evaluation criteria scores were weighted as much as 70 per cent with respect to the commercial scores. It was made mandatory to report on sustainability Key Performance Indicators (KPIs). Through all systems in place, sustainability was impregnated into DNA of London 2012, leaving nothing to chance. Thanks to this commitment, the London Games raised the bar and set new standards for sustainability in many areas by saving 400,000 tonnes CO2 equivalent, achieving ‘zero waste’ to landfill target, using 100% sustainability sourced timber etc. and most of all inspiring sustainable living in many Londoners. 

Building on the successes of London Olympics, Rio 2016 is hoping to replicate and surpass London 2012’s stunning sustainability feat. Its intentions are very clear on its website i.e., to adopt new practices of production and use, which are less environmentally aggressive. With a project budget of R$ 3 billion, Sustainable Supply Chain Guide, issued by Rio 2016, aims to convert procurement of goods and services into a tool to promote and encourage the use of sustainable technologies, supplies, processes and services. The document encourages suppliers to adopt sustainability management system, such as ISO 14001, OHSAS 18001, SA 8000 etc., which will be used as competitive differentials in evaluation processes. As per this guide, Rio 2016 aims to minimize and offset emissions of carbon dioxide and other greenhouse gases (GHG). Therefore, efficient emission management by suppliers during production and distribution will be deemed as an important technical and commercial competitive advantage, as emission offsetting costs will be integrated into the total cost of ownership analysis. In nutshell, a simple glance through the guide provides enough hints on what to expect during Olympics on sustainability front.  But, what overwhelmed me most is Rio 2016’s plan to establish and communicate requirements i.e., outlining the sustainability assessment criteria and minimum requirements, well in advance to suppliers. This would provide abundant time and opportunity to vendors to take measures to enhance and make their management systems worthy of the huge business generated by Rio 2016.

Looking beyond just a sporting event, can we draw something from Olympics? The London Olympics provides a proven template on how to approach sustainability in procurement. It has demonstrated that with innovation in design and materials specification, environmental benefits go hand in hand with economic savings. Both London and Rio convey importance of early engagement with vendors while implementing sustainability strategy.

People often confront me – do you have vendors for supplying greener products and services? I see this situation merely as a communication problem. It typically exemplifies chicken and egg situation. Unless you communicate with vendors and sound your intent to purchase greener products and services, they would think – Oh! Where is demand for greener products?  Who is going to buy if I invest in developing sustainable products that save resources and energy at the same time? The only way to get rid of this situation is to proactively communicate your requirements with vendors. The vendors are not dumb and they can read the writing on the wall provided we engage and communicate with them. When Olympics can source products with sustainability criteria, there is no reason why others can’t.

Here is an interesting encounter I had last year with one of our vendors. My organization purchases lots of Carbon copy paper, that use carbon sheet in between papers, for preparing passenger charts, giving details of name, age, sex, berth number etc. While discussing sustainable procurement, one of the vendors asked me – why don’t you use Carbonless copy paper (CCP) or NCR paper for your charting paper requirements? He also explained that the thin carbon sheet used in Carbon copy paper takes many years to biologically decompose. When I asked for the cost comparison between these two types of papers, he gave me a thought provoking reply. He said that though the cost of Carbonless copy paper is currently more than that of Carbon copy paper, the purchase order may be placed on him only when his product is competitive and meets organisation's quality and other requirements, but he should not be denied the opportunity to participate in tender process by limiting the properties or requirements for Carbon copy paper.

This incident made me think how, by just communicating your requirements, public authorities can drive market for innovative sustainable products. Most definitely, Olympics learnt and internilised importance of communication much earlier! I am sure, with the kind of commitment and management support for sustainability, innovation in sustainability will continue to be showcased in Olympic Games. We, purchasing professionals, can expect more revelations and interesting surprises – no matter where in the world the events are held. Let us hope that as the Olympics torch spreads the message of the Games throughout the world, so may the light of knowledge of SPP implementation spread to organizations. Long live the Olympics spirit!