Sustainable Procurement in India - Time to move from “Show & Tell” to “Do & Deliver”

When I meet people these days, I am often confronted by THE question - what is happening in India? I go through the ritual of narrating some of the real changes happening in India both in terms of awareness and acceptability of sustainability as a concept. I tell them about ongoing discourse in public on sustainability while simultaneously refraining from painting a rosy picture. Indeed it is not very uncommon today to hear our ministers speaking on sustainability. There are at least two common themes that I find in their discourses. Firstly, they all mention India has a long tradition of worshiping nature. Secondly, no one forgets to quote our Father of the Nation, Mahatma Gandhi - “There is enough for everyone's need but not for everyone's greed”. No doubt, these thoughts underpin our sustainable living philosophy. If someone evaluates how much of it is lip service and how much is actually practiced in India, it would throw up some interesting results. My understanding is that this philosophy is still in the hearts and deeds of people living in ‘Bharat’ but certainly not found in people living in India.

Coming back to sustainable purchasing, when I mentioned real changes above, I actually meant it. It all started with introduction of Public Procurement Bill in the last Parliament in 2013. The Bill indeed had provision, though weak, on using environmental criteria as one of the evaluation criteria. The Bill lapsed but hope didn’t. Next came, 12^th Five Years Plan (2012-17) document that talked about promoting green public procurement through price incentives on Government tenders, development of a framework and guidelines for promoting green products, identification of top 100 green products (based on assessment of maximum environmental impact) and setting of standards for the same etc. When I read it for first time, I could not believe my eyes! What more can one ask for? Then came report of the Expert Group on Low Carbon Strategies for Inclusive Growth in India in early 2014. It recommended that government and public sector procurement officers should be empowered to buy on life-cycle cost basis. Can you imagine the power of this narrative? If implemented, it can invigorate green products market in India and bring about changes we can’t even envision now. 

Well here I am not talking about Prime Minister’s tagline of ‘Zero Defect - Zero Effect’ for ‘Make in India’ campaign, because that would be repetition. I am only talking here of government policy documents available in public domain. These documents definitely throw light on what is cooking in the minds of policy makers. These are good ways to “Show & Tell” stakeholders of government’s intent. Looking at these documents, no one would have any doubt about inevitability of arrival of this concept in India, with a bang. I salute those guys, who could visualize potential of sustainable/green procurement in propelling industry on sustainability path, and put their thoughts in black and white. This is especially credible when you see the round-eyed blank look of large numbers of procurement professionals when they are asked about sustainable purchasing. I am sure these recommendations would certainly be taken as inputs when new Public Procurement Bill is tabled in the Parliament (if ever).  This brings us back to THE question I mentioned in the beginning; and which essentially means – when are we actually going to “Do & Deliver” on the intent that is evident?

Here comes the reality check! When I talk to people in ministries responsible for taking this concept forward, I get the impression that they are applying department centric approach to find a solution. This is never going to work, as sustainable procurement is multidisciplinary subject and requires leveraging knowledge across departments. The Ministry of Environment, Forest and Climate Change (MoEFCC) did attempt to call a meeting of stakeholders in September 2014 under UNEP’s funded SPP-EL project and formed a Project Steering Committee for implementation.  But no one heard anything after that, as no one was willing to speak. The mystery got unraveled when I recently met UNEP official in Paris a month back. He shared that MoEFCC is no longer interested in SPP part of the project. This was shocking to say the least!

Sustainable purchasing and Eco-labeling are both complementary to each other and that is why the programme is named SPP-EL. Therefore, the decision of MoEFFCC appears bizarre as how could eco-labeling scheme become successful in absence of effort to create demand for such products?  This decision is a big setback and has pushed India two years back on SPP journey. Then I realize that there is a pattern to it. It happened in 2012, when Planning Commission led Expert Committee had recommended legislation on green purchasing but the report is gathering dust. Now it is happening again. What are we afraid of and who is sabotaging government’s initiative on sustainable purchasing? This flip – flop approach on sustainable purchasing has been giving inconsistent signal to industry, who would have liked to invest money in research and design for manufacturing sustainable products and become robust partner in government’s “Make in India” campaign.

Just yesterday on the birth anniversary of Mahatma Gandhi, India committed to reduce emissions intensity of its GDP by 33 to 35 per cent by 2030 from 2005 level. Sustainable purchasing could be one of the strategies to decouple emission intensity from GDP growth. But it finds no mention in strategies to honor her commitment to the world community. Sometimes I wonder whether we have the necessary bandwidth to harmonize our efforts internally and come out with actionable policy on this subject? While I am yet to come up with a firm answer to this, what I am certain of is that I have witnessed marked improvement in the frequency and quality of conversation around this topic. Today, unlike a few years back, my colleagues are willing to spend a few minutes to know what is sustainable procurement. They pose question like what can we do? Some of them even come up with solutions. TERI University is developing a course on Sustainable Consumption, and Production and Sustainable Purchasing would be a part of that curriculum. GAIL India is asking its vendor to submit data on environmental measures taken by them. Many public sector undertaking units are compulsorily using take back clause in procurement for end-of-life management of lead acid battery. While many bottom-up approaches are taking roots, it is time now for the country’s leadership to give thumbs up to this concept and move it from the “Show & Tell” basket to the “Do & Deliver” basket.

Ignore Sustainability in Supply Chain at Your Own Peril – The Case of Nestle

I can’t recall anybody saying NO to “Maggi”, a ready-to-eat noodles brand in India. I remember eating “2- Minutes Maggi”, when our hostel mess used to be closed on account of summer vacation and now I see my children savoring its taste with pleasure. Its recent advertisement campaign ‘Meri Maggi – 2 minutes mein Khushiyan’ celebrated the everyday spontaneous happy moments that Maggi has been creating for consumers - wherever, whenever, whoever! Its popularity cuts across sections, region or age divide. If you have travelled to India, I am sure you would be able to recall its bright yellow packets found on the shelves of mom-and-pop shops across the country. To say the least, it was one of India’s most iconic brands till yesterday. But not any longer!

Last fortnight has been abuzz with “Maggi”, though for wrong reason, in Indian media be it print or visual. Reportedly, “Maggi” brand of ready-to-eat noodles, manufactured and sold by Nestle, has been found to contain dangerously high levels of lead in some samples. Its sale has been banned across several states by respective states governments. Nestle share price has witnessed severe beating at Mumbai Stock Exchange. Its brand value has been so diluted that its tag line “Good Food - Good Life” no longer emanates the same confidence. Nestlé has been forced to recall all of its wildly popular instant noodles in India after this unsavory revelation. According to the Wall Street Journal, this exercise would entail recall of 400 Million packets of Maggi, weighing 27000 Tons, would need 2500 trucks for transporting these packets from warehouse to cement plants for pulverization and incineration and would take 40 days to accomplish. This would also mean loss of 98.47 billion calories, when several million people are struggling to meet two squares of meals. Such a colossal waste of resources!!!

This is not the first instance of supply chain risks arising out of sustainability concerns that has been reported in world media. This is also not the last incident rocking the business world. The debate would go on for sometimes whether Nestle was at fault for sourcing raw materials from vendors because such dangerous levels of lead cannot come in “Maggi” during manufacturing process but from raw materials. But are not you responsible for your supply chain? To put simply, Nestle failed to identity ‘hot spot’ in its supply chain arising out of sustainability concerns and take adequate measures to address those concerns. No organization can afford to overlook risks in its supply chain that have negative impacts on environment, human health and society. The only way to insulate itself from such risks is to identify those risks and work together with vendors to mitigate those risks. Otherwise, chances are Nestle saga will repeat again.

It makes immense business sense for industry to proactively focus on sustainability concerns in their supply chain in view of heightened consumer’s awareness and regulatory challenges. However, actually doing this is not without challenges, especially when business has increasing gone for global sourcing in its quest to reduce cost. This has resulted in many global supply chains leading to SMEs in Asia. But the SMEs in this region have largely remained indifferent to sustainability concerns. In such situation, business is in serious peril of inheriting environmental risks from less environment-conscious suppliers. On the other hand, when buyers undertake sustainability reporting initiatives to improve suppliers’ sustainability quotient, the suppliers may get suspicious of such a move unless, the buyers integrate them suitably into their sourcing strategy. Thus, to avoid turbulence in the supply chain, the cost advantage of sourcing from this region needs to be balanced against the associated risk from losing the market in view of increased sustainability concerns of consumers and environmental regulations.

Business needs to revisit and reconfigure its sourcing strategy to improve supplier’s sustainability performance and simultaneously make its supply chain more efficient and cost effective. I know it is easier said than done. I recall, Jason Pearson, Executive Director of Sustainable Purchasing Leadership Council (SPLC) making a suggestion to businesses to resolve this issue while delivering keynote speech during SPLC Summit 2015 in Seattle this year.  He said the issue is complex and no solution is possible when purchasers and vendors try to find out solutions while working in silos. A solution can emerge only when they join hands and start a dialogue to find out a win-win solution. Therefore, let us start conversation with our vendors to avoid a repeat of the Nestle fiasco!!!