ISO 20400, a guide to responsible purchasing.

Note: this article was first published in Spanish and can be found here.

Last March, the new ISO 20400 was launched for the integration of sustainability in the purchasing processes, as we commented a few weeks ago in “Responsible buying: general state, trends, and implementation”.

The standard has been modeled during a process that began in September 2013, counting with the participation of nearly 40 countries around the world and has been based on the British Standard (BS) 8903 published in 2010.

The structure of the standard is similar to the BS8903 although the latter has three sections while the ISO has four. In addition, it also incorporates other developments in sustainability such as the UN Guiding Principles on Human Rights and Business.

Responsible purchasing management: essential at the present time.

Whether the reason for the implementation of the responsible purchasing is really by ethical determination of the company, for “less voluntary” reasons, or for any other reason, there are a number of benefits that just to enjoy them is well worth the effort to perform a responsible purchasing management, and the use of ISO 20400 is a very good way to achieve that management.

Technically it is a guideline, not a standard of requirements, so it is not certifiable, but it is always possible to carry out evaluations in those organizations that use the standard in order to check their conformity and make recommendations for improving the purchasing processes. Also, ISO 20400 will complement the ISO 26000 Social Responsibility which is also an uncertifiable guide.

Like many other ISO’s, the 20400 is a norm applicable to any type of organization, public and private, and of any size and geographic location having, in this case, the objective of being understood by any stakeholder involved or affected by the decisions of the purchasing processes.

Basics and vectors of the guide.

The general outline of the guide is quite similar to that of others in the ISO family.

It is composed of 4 main sections: understanding the fundamentals on which the standard is based, integrating sustainability into procurement policies and strategies, organizing the purchasing function towards a sustainable model, and integrating sustainability in the procurement process.

Within its foundations, ISO 20400 defines responsible purchasing as the one that has the most positive environmental, social and economic impacts, and bases the principles of such purchasing on accountability, transparency, ethical behavior, respect for the interests of the stakeholders, respect for Human Rights, innovative solutions, integration or continuous improvement, among others.

The reasons for implementing responsible purchasing may be different for different organizations, so it is necessary to define the objectives and goals of each organization in a way that is aligned with those motivations and policies.

As examples of vectors that can “push” a company to the implementation of responsible purchasing, ISO 20400 proposes some of them:

  • Responding to customer sustainability demands.
  • Improvement or creation of a competitive advantage.
  • Stimulation of innovation.
  • Responding to stakeholder demands.
  • Compliance with laws and regulations.
  • Business risk management.
  • Security in supply chains.
  • Increased investor confidence.
  • Increased employee productivity and motivation.
  • Improvement of relations with suppliers.
  • Creation of economic value.
  • Personal leadership of a manager of the organization.

Top management: key, as always.

The need for top management to be involved in the implementation of ISO 20400 is just as important as in any other management system that we want to carry out, and so the guide reminds us.

It also makes clear the differences between the three roles that can be given in terms of accountability in these processes, that is to say, one who can be asked for explanations for the development of a sustainable purchasing strategy, one that is responsible for executing that said process strategy, and one that acts only as support when carrying out what is programmed.

Risk analysis is here to stay.

As it happens with the new version of ISO 9001: 2015, the 20400 also takes into account the analysis of risks and opportunities (in this case concerning sustainability) and its treatment, when it comes to managing the processes of the organization.

In addition to the risk analysis supported by a multidisciplinary team, ISO 20400 proposes using other techniques such as:

  • Life cycle approach: consisting of analyzing the sustainability impacts associated with all stages of the life of a product “from the cradle to the grave”.
  • Life cycle costing: consisting of considering all the costs incurred during the life of a product or service, the amounts of which can be monetized in different ways.

Grievance mechanisms.

For stakeholders (especially the most vulnerable ones) to communicate their problems, complaints or suggestions to the organization, the standard proposes the creation of grievance mechanisms that, in order to be effective, should:

  • Be based on dialogue and mediation.
  • Be endowed with legitimacy.
  • Be accessible and easy to understand.
  • Protect those who complain about possible threats.
  • Follow clear and known procedures.
  • Be equitable giving equal information to the parties involved.
  • Be transparent.
  • Be a source of continuous learning.

Those mentioned so far are only a few of the highlights of the new ISO 20400, but there are many other interesting ones such as those related to the whole process of defining specifications, selecting suppliers, realizing and managing procurement contracts, etc..

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Albert Vilariño Alonso

Albert Vilariño Alonso

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Consultant in Corporate Social Responsibility, Sustainability, Reputation and Corporate Communication,and integration of people with disabilities.