Environmental challenges aren’t going away. Businesses seeking to promote sustainability may want to broaden their approach to include one often overlooked area — the contracting process. By integrating sustainability into decision-making processes, from contract creation to final execution, businesses can drive positive change that benefits both the planet and society.
In this article, we’ll explore why sustainability matters, how it fits into the contracting process, and how businesses can embrace sustainable practices to make a real difference.
Why is Sustainability So Important?
Sustainability isn’t just about recycling or reducing emissions; it’s about creating a world where today’s actions don’t prevent future generations from meeting their needs. The National Environmental Policy Act (NEPA), passed in 1969, set the stage in the U.S. by declaring sustainability as a national priority. The goal? To foster “productive harmony” between humans and nature. To this end, the Act helped ensure that environmental, social, and economic needs would be balanced for both present and future generations.
From the current standpoint, sustainability involves three interconnected pillars:
- Protecting the environment through waste reduction, resource conservation, and minimizing environmental harm.
- Promoting fairness, equality, and well-being across communities to build social equity.
- Encouraging responsible economic growth that doesn’t deplete resources or harm people or communities.
Sustainability in contracts may address these same pillars in unique ways. By examining the contracting process more closely, businesses have the opportunity to drive sustainability across industries, from procurement to implementation and beyond.
Infusing Sustainability into the Contracting Process
Whether you’re tendering for new contracts or monitoring performance post-award, each stage of the contracting process presents an opportunity to address sustainability concerns. Consider the following stages:
- Tendering: When issuing a tender, the terms and conditions set the tone for the entire process. Instead of focusing solely on cost or delivery time, why not also consider sustainability criteria? For example, require contractors to use sustainable materials or give preferences to suppliers that have a proven track record of environmental stewardship. The tender stage is the ideal opportunity to establish sustainability expectations.
- Negotiations: As proposals roll in, this is your chance to dig deeper into how sustainability will be upheld throughout the project. During negotiations, discuss sustainability clauses that address reducing carbon footprints, utilizing renewable energy sources, and promoting fair labor practices. Negotiating these aspects early ensures that both parties are aligning their expectations for social and environmental outcomes.
- Review & Redlining: Solidifying sustainability commitments in the review and redlining stage is where the contract is scrutinized, and any necessary adjustments are made. For instance, ensure areas like waste-reduction strategies, emissions targets, and ethical sourcing policies are explicitly written into the contract. This is also a great time to make sure both parties are on board with clear, measurable goals that track environmental impact and social responsibility.
- Approval & Signature: Once the final approval happens, review the sustainability clauses thoroughly before signing.
- Post-Award Monitoring: Once the contract is in action, monitoring the progress of sustainability commitments is vital. Measure whether sustainable provisions are occurring as promised. Are eco-friendly materials being used? Are fair labor standards being enforced?
- Amendments & Renewals: Contracts often evolve over time, whether through amendments or renewals. This is also an opportunity to reassess and refresh sustainability objectives. As new environmental standards emerge or business priorities shift, revisiting sustainability goals helps ensure that they remain relevant and impactful throughout the contract’s life.
How Sustainability Fits with Global Goals
When businesses prioritize sustainability in their contracting practices, they aren’t only benefiting themselves; they’re also contributing to larger global efforts. The United Nations Sustainable Development Goals (SDGs) provide a roadmap for creating a more just, equitable, and environmentally sound world.
In the contracting process, these goals can be directly reflected:
- Gender Equality: Contracts can be an excellent opportunity to promote gender equality, from ensuring women are represented in hiring processes to fostering fair working conditions for all employees.
- Responsible Consumption and Production: By sourcing sustainable materials and opting for energy-efficient solutions, businesses can contribute to more sustainable consumption and production patterns throughout their supply chains.
- Climate Action: A contract is a tangible way to act on climate change. By selecting energy-efficient technologies or committing to carbon-reduction targets, companies can help reduce their environmental impact and support global climate goals.
Supply Chain Sustainability: The Ripple Effect
Sustainability isn’t just about what’s directly in front of us; it’s about considering the broader impact. Supply chain sustainability encompasses the environmental, social, and economic factors integral to the lifecycle of a product or service, as well as the pillars previously discussed. To create a ripple effect that leads to broader positive change, implement sustainability across the entire supply chain.
For instance, a company could:
- Choose suppliers who prioritize renewable energy and waste reduction.
- Champion fair wages and safe working conditions across its supply chain.
- Prioritize transparency. Ask the hard questions that help uncover sustainability issues and challenges.
It may not be achievable to align every link in the chain with sustainable values. Where feasible, start by reducing risks and improving contract resilience. It will help strengthen the deal and corporate reputation.
The Bottom Line: Sustainability is a Win-Win
Sustainability in contracting is about doing good and achieving long-term success. Whether through reducing environmental impact, supporting social equity, or driving economic efficiency, sustainable contracting practices contribute to a better future for everyone. This commitment not only contributes to global sustainability but also builds trust, drives efficiency, and enhances the overall project value.
As businesses and governments increasingly recognize the value of sustainability, integrating it into the contracting process will become the standard, not the exception. And by acting now, we can help create a world that’s not only more sustainable but also more prosperous and fairer for all. The future is in our hands; let’s make it a responsible one. Connect with us today for a complimentary consultation and start reaping the benefits of effective supply chain stability.
Author: Preshitha Parihar, Contract Lead, ABiz Corporation, Contract Management Innovators