a risk based approach to sustainable procurement eauc – eaf programme
TRANSCRIPT
![Page 1: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/1.jpg)
A risk based approach to sustainable procurement
EAUC – EAF Programme
![Page 2: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/2.jpg)
A risk based approach
Background Three year project Reducing negative environmental and social impacts
through purchasing Steering group, partners from Further Education and
Higher Education Training
Train the trainer Policy and strategy development Risk based approach to procurement Supplier engagement Social issues in procurement
![Page 3: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/3.jpg)
A risk based approach
Objectives Develop a shared understanding of what a risk based
approach to sustainable procurement looks like Review good practice of risk based approaches Practice the implementation of a risk based approach Be introduced to the latest guidance available Develop an action plan to take back to your institution
![Page 4: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/4.jpg)
A risk based approach
Agenda
12.00 Lunch
12.30 Introductions and objectives
12.45 What is a risk based approach?
13.15 Why take a risk based approach?
14.00 Break
14.15 Implementing a risk based approach
15.45 Case Study Review
16.15 Action Planning
16.30 Close
![Page 5: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/5.jpg)
A risk based approach
Format and style of workshops Interactive Informal Varied Proactive
![Page 6: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/6.jpg)
What is a risk based approach?
![Page 7: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/7.jpg)
Basic risk management
Identification Analysis Evaluation Control/management
![Page 8: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/8.jpg)
Risk identification and analysis
Identify potential threats that could stop you achieving your business objectives by completing the following sentence: there is a risk of ….. which would result in ……
Impact (low, medium, high) cost time quality
Likelihood (low, medium, high)
![Page 9: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/9.jpg)
Risk evaluation
L/H = M M/H = H H/H = H
L/M = L M/M = M H/M = H
L/L = L M/L = L H/L = MImpact
Likelihood
Low
High
HighLow
Impact
![Page 10: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/10.jpg)
Risk evaluation
Manage Stop Stop
Ignore Manage Stop
Ignore Ignore Manage
Impact
Likelihood
Low
High
HighLow
Impact
![Page 11: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/11.jpg)
Risk to the environment from the organisation (and its supply-chain)
- Pollution Potential- Climate Change - Resource Depletion- Emissions- Waste
Why is the environment a risk? (1)
Reputation
Fines/ prosecutions
Rising costs
![Page 12: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/12.jpg)
Risk to the organisation from the environment
- Reputation - Legal compliance- Supplier failure- Supply failure –
resources!- Environmental taxation- Heath impacts, e.g. air
quality and respiratory disorders
- Quality of working environment
Impacts on cost, time and quality
Business risks
Why is the environment a risk? (2)
![Page 13: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/13.jpg)
Sources of environmental purchasing risks
Risks can arise from three different areas of supplier performance:
1. Supplier performance in their own sites/operations
2. Supplier performance while on your site
3. Supplier-provided components/products/services which flow through into your operations products/services
Slide courtesy of Environment Agency (adapted)
![Page 14: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/14.jpg)
Why take a risk based approach to sustainable procurement?
![Page 15: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/15.jpg)
Why take a risk based approach?
![Page 16: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/16.jpg)
Why take a risk based approach? Every product or service we buy has an
environmental and social impact You buy thousands of products You have limited resources You have limited time You are being asked to demonstrate how the
work you do supports your institution
![Page 17: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/17.jpg)
Why take a risk based approach? We need a way to prioritise our activity Risk as a concept resonates with institutions
and senior management Ensures we are not wasting our efforts – we
are looking to implement sustainable development which is about reducing impact
Tried and tested approach
![Page 18: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/18.jpg)
Why take a risk based approach? Helps focus activity on main impacts Involves stakeholders internal customers –
helps get buy in for implementation Demonstrates that high risks do not only
come from high value purchases
![Page 19: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/19.jpg)
What guidance exists?
![Page 20: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/20.jpg)
What guidance exists?
The approach we are going to use is adapted from Sustainability and Local Government
Procurement – IDeA (November 2003) An approach used by Belfast City Council The Environment Agency
![Page 21: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/21.jpg)
Implementing a risk based approach to sustainable procurement
Exercise
![Page 22: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/22.jpg)
Implementing a risk based approach In groups identify what environmental issues
are of particular concern – try to choose 3.
![Page 23: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/23.jpg)
Implementing a risk based approach In groups identify 20 products / services you
routinely buy as an organisation
![Page 24: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/24.jpg)
Implementing a risk based approach In groups identify 20 products / services you
routinely buy as an organisation Consider the environmental impacts / risks
associated with the products or service
![Page 25: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/25.jpg)
Implementing a risk based approach In groups identify 20 products / services you
routinely buy as an organisation Consider the environmental impacts / risks
associated with the products or service Using the matrix provided identify whether
you perceive the product to be a high, medium or low environmental risk and high, medium or low profile risk
![Page 26: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/26.jpg)
Implementing a risk based approach
Environmental
Risk
Profile
Risk
Procurement High Med Low High Med Low
Item 1 * *Item 2 * *Item 3 * *
![Page 27: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/27.jpg)
Implementing a risk based approach
Low
Low
High
High
En
viro
nm
enta
l R
isk
Profile Risk
![Page 28: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/28.jpg)
Implementing a risk based approach
Priority 2 Priority 1
Priority 4 Priority 3
Low
Low
High
High
En
viro
nm
enta
l R
isk
Profile Risk
![Page 29: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/29.jpg)
Control and management
Priority 4 Reduce consumption Increase awareness and encourage via questionnaire
and referral to policy
![Page 30: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/30.jpg)
Control and management
Priority 3 Reduce consumption Green specifications only on the basis of cost benefit Increase awareness and encourage via questionnaire
and referral to policy Minimal green supplier appraisal
![Page 31: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/31.jpg)
Control and management
Priority 2 Reduce consumption Green options sought Cost / benefit evaluated Green supplier selection Green design Green specifications Whole Life Costing Ensure issues included in consultancy design briefs
![Page 32: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/32.jpg)
Control and management
Priority 1 Reduce consumption Green options sought Cost / benefit evaluated Green supplier selection Green design Green specifications Whole Life Costing Ensure issues included in consultancy design briefs Gain commitment to future action
![Page 33: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/33.jpg)
Summary of the process
Review / Identify environmental and social priorities for your institution
Identify a group of individuals within your institution from different backgrounds and experiences
Compile a list of all the products and services you purchase (as comprehensive as possible)
Spend as long as it takes prioritising using the matrix (1 – 2 days)
![Page 34: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/34.jpg)
Summary of the process
This means you have undertaken an environmental risk analysis of all the products and services you purchase!!
Identify the suppliers related to those products or services
Prioritise management response Communicate it to staff and suppliers
![Page 35: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/35.jpg)
Case study review
The Environment Agency
![Page 36: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/36.jpg)
Identification of Business Need and Assess against Waste Hierarchy
Identification of Business Need and Assess against Waste Hierarchy
Business RiskAssessment
Business RiskAssessment
Sustainability RiskAssessment
Sustainability RiskAssessment
Influence with Supplier
Influence with Supplier
LOW RISKIdentify main issues and
integrate into the contract
LOW RISKIdentify main issues and
integrate into the contract
Summarise risks, Supplier Influence& Map using Boston Matrix
Summarise risks, Supplier Influence& Map using Boston Matrix
HIGH RISKMore detailed risk
assessment, rank, allocate and manage
HIGH RISKMore detailed risk
assessment, rank, allocate and manage
The Environment Agency
![Page 37: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/37.jpg)
The Environment Agency
High level environmental risk assessment Does the purchase or service provider have the
potential for high energy consumption? Is the product made of – or does the service
provider use – unsustainable materials Could the item or service provider cause a
pollution incident in the performance of Agency work?
![Page 38: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/38.jpg)
The Environment Agency
High level environmental risk assessment Are excessive emissions (to land, air or water)
caused during the manufacture of goods used directly or by the service providers?
Is there an environmental public relations risk to the Agency in purchasing the product or service?
![Page 39: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/39.jpg)
The Environment Agency
Agency’s influence with the supply base The agency then looks at the potential influence it
will have with high risk product or service provider Is the Agency a key client? Does the Agency represent more than 0.5% of turnover? Is the Agency an easy customer to work with? Does the Agency pay on time? Is the Agency efficient in its business dealings with us?
![Page 40: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/40.jpg)
The Environment Agency
Detailed risk assessment (answers yes to three questions or more
Management action Determine the method of risk management Allocate responsibility Agree a date for resolution Address though supplier selection, specification,
evaluation, and negotiation Can’t manage it because of lack of influence
![Page 41: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/41.jpg)
Case study review
United Utilities
![Page 42: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/42.jpg)
United Utilities
CSR Policy Environmental Policy Sustainable Procurement policy BITC Index
![Page 43: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/43.jpg)
United Utilities
2003 saw a review of the supplier prioritisation approach, which prioritised commodity groups rather than individual suppliers
Each commodity group was assigned a potential environmental impact ranking, based on an impacts matrix approach developed internally
![Page 44: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/44.jpg)
United Utilities
The resulting commodity prioritised list formed the basis of our engagement programme with our suppliers
The engagement workshop programme also included specific workshops for United Utilities' procurement buyers and internal customers - United Utilities' employees who set contracts and/or procure goods and services as part of their job
![Page 45: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/45.jpg)
United Utilities
While the focus so far has been very much on environmental areas, there have been elements of social sustainability that have started to become incorporated
![Page 46: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/46.jpg)
United Utilities
Examined all of the products they purchased and looked at high spend areas
Produced a prioritised list of suppliers of high risk commodities
Undertook as series of supplier engagement workshops
![Page 47: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/47.jpg)
United Utilities
Reducing energy consumption Reduce the release of greenhouse gases Reduce the use of non-renewable materials Reduce the risk of pollution Reduce waste production Comply with environmental regulations Reduce the impact of transport
![Page 48: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/48.jpg)
Summary
It is a fairly simple approach but will help focus your effort
Risk based approach may appeal to senior managers
Gets buy in and is inclusive
![Page 49: A risk based approach to sustainable procurement EAUC – EAF Programme](https://reader030.vdocuments.us/reader030/viewer/2022033100/56649d945503460f94a7c19d/html5/thumbnails/49.jpg)
A risk based approach
Objectives Develop a shared understanding of what a risk based
approach to sustainable procurement looks like Review good practice of risk based approaches Practice the implementation of a risk based approach Be introduced to the latest guidance available Develop an action plan to take back to your institution