The use of the term 'sustainable procurement' may be increasing in the context of environmentally friendly transitions and resource economy (e.g. the energy sector), but what does the term actually mean?
Sustainable procurement refers to procurement that takes into account fundamental economic criteria (price, quality, timeframe, etc.) as well as the concepts of sustainable procurement and social responsibility. This article highlights what sustainable procurement is, its impact on supplier relationships, and its benefits.
What is Sustainable Procurement?
Procurement is always required to meet fundamental criteria such as price, quality, delivery period and service level. Apart from that, sustainable procurement is also required to meet criteria rooted in sustainable development as well as social responsibility in accordance with the entire life cycle and economic prospects.
From the buyer's perspective, sustainable procurement essentially consists of balancing three important concepts:
Environmental: eco-friendly issues, energy performance, waste reduction, product lifespan, resource protection and more.
Ethics and society: respect for human rights, working conditions, inclusivity, diversity and more.
Economics: costs, product quality, delivery timeframes, and more.
How Important is Sustainable Procurement for Companies?
This is a frequently asked question by business owners, managers and procurement practitioners. Sustainable procurement is a process of procuring goods and services that considers the social, environmental and economic impacts of procurement decisions. The aim is to create added value for the company and other stakeholders, while reducing risk and improving performance.
Benefits of Sustainable Procurement for Companies
Sustainable procurement has many benefits for companies, including:
1.Improve brand reputation and image
Companies that carry out sustainable procurement can demonstrate their commitment to social and environmental responsibility, as well as meet the expectations of customers, investors and society. This can increase customer trust and loyalty, as well as open up new market opportunities.
2. Save costs and increase efficiency
Sustainable procurement can help companies reduce operational and maintenance costs, as well as optimize resource use. For example, by choosing goods and services that are energy efficient, environmentally friendly, and long-lasting, companies can reduce energy consumption, greenhouse gas emissions, and waste. Apart from that, sustainable procurement can also increase employee productivity and work quality by improving their health, safety, and welfare.
3. Reduce risk and increase resilience
Sustainable procurement helps companies identify and manage risks associated with their supply chains, such as price uncertainty, supply disruptions, human rights violations, corruption, and negative environmental impacts. In this way, companies can increase their resilience to changes in markets, regulations and socio-environmental conditions.
4. Encourage innovation and growth
Sustainable procurement can encourage companies to innovate and create new, more sustainable solutions to meet the needs of customers and other stakeholders. This can increase the company's competitiveness and growth in the long term.
How to Implement Sustainable Purchasing in the Hotel Industry
Sustainable Hotel Management
The most direct way for hotels to implement sustainable practices, reduce their carbon footprint and waste, and achieve ESG levels is at the operational level. However, individual consumption patterns differ greatly from one guest to another. So, although guests may be offered more environmentally friendly options, no one can control how many showers they take, how they use the room's climate control system, or how much room service they order.
However, by addressing sustainability at an operational level, hotels can limit the environmental impact of even their most extravagant guests. More importantly, many of these sustainable operational practices also offer cost savings that not only finance the initial implementation, but also increase the hotel's overall profitability. In other words, there is a very strong business case for implementing sustainable hotel management practices.
Energy management
As Forbes reports, “60-70% of [a hotel's] utility costs are billed for electricity alone.” So, energy consumption is not only a significant cost center for hotels, it also represents the largest part of a hotel's carbon footprint.
Thus by implementing a smart energy management system, a hotel can not only reach new levels of sustainability, but can also reduce operational costs and even increase the property's resale value – while offering a better guest experience.
HVAC Energy Management Systems
Temperature control is important for every hotel property. Whether it's heating or air conditioning, every hotel property requires some kind of HVAC system. So, to reduce their carbon footprint, many hotels are implementing IoT-enabled energy management systems that monitor and adjust energy consumption in real-time, improving HVAC system performance and significantly reducing energy consumption.
Specifically, while occupancy sensors and smart thermostats monitor and respond to room occupancy fluctuations, intelligent energy management systems like Verdant EI use advanced machine learning algorithms to continuously analyze local weather patterns, thermodynamic history, and peak demand loads to optimize energy consumption in real time. time, all year round.
Smart Lighting
IoT energy management systems also help hotels reduce lighting energy consumption. Just as HVAC systems use occupancy sensors and machine learning algorithms to optimize HVAC energy consumption, smart lighting systems also enable hotels to track occupancy patterns, set desired lighting times, and improve overall lighting energy consumption.
While some companies have reduced lighting energy consumption by up to 75% simply by switching to smart LED lighting systems, the hospitality industry has seen even greater results. For example, when the Chatwal Hotel in New York City retrofitted approximately 1,300 lamps with smart lighting, it saved more than 410,000 kilowatt-hours per year, which equates to a 90% reduction in lighting energy consumption. It's true that Chatwal Hotel saved approximately $124,255 in the first year alone, which shows that continuing hotel operations makes good business sense.
Sustainable Facilities
Of course, energy consumption does not only include the implementation of intelligent energy management systems. This also includes eliminating redundant and energy-consuming amenities, such as replacing “minifridges and coffee machines in each room with common amenity areas in open living areas.”
Water Management
Whether for food/beverage service, guest room amenities, swimming pools, landscaping, laundry, or sanitation, water is a critical resource for every hotel operation. And hospitality uses up a lot of water. Indeed, according to the EPA, hotel water use accounts for approximately 15% of all commercial and institutional water use in the US.
So, it is not surprising that as with energy management, many hotels have used IoT-based technology to save water. In fact, McGraw-Hill Construction estimates that implementing a smart water management system can reduce water consumption by 15%, energy use by 10%, and overall operational costs by 11%. In other words, by conserving water, hotels also reduce their carbon footprint because they use less energy to manage water, resulting in additional operational cost savings.
Therefore, some properties have taken smart water management a step further by installing shower systems that filter their own water. The result is that hotels engage guests in reducing their water consumption, thereby creating a more sustainable and rewarding guest experience overall.
Bathing Facilities
Hotels are also reviewing the environmental impact of the complementary toiletries they offer to guests. Specifically, they choose to offer products that are more sustainably sourced and do not contain chemicals or additives considered harmful to the environment or guests' health.
Many hotels are making a statement by offering specially formulated amenities to their guests. Resort companies like RockResorts have taken it one step further with specially formulated natural products based on essential oils made without preservatives and artificial ingredients packaged in recyclable containers. Other mid-range hotel brands are experimenting with mass dispenser presentations.
There has also been an increase in the number of hotel developers revitalizing and repurposing old buildings such as “urban factories, warehouses, hospitals, office buildings, and schools.” This not only avoids higher new construction costs, but also reduces the environmental impact of development because fewer construction materials are required, and less habitat is disturbed.
Spa Services
As with toiletries, many hotels are also finding more environmentally friendly ways to offer their spa services. By using products that use local and indigenous ingredients, as well as natural and organic ingredients, hotels can offer treatments that have little impact on the environment, but also provide guests with a connection to the destination they are visiting.
The Future of Sustainable Hotel Management
Every industry experience changes and faces new challenges. However, climate change and the environment are a series of challenges facing all of humanity. And the only way we can be successful is if we start rethinking the way we live our lives and the way we do business.
The hospitality industry has been very proactive in achieving this goal. From operations to the guest experience to how properties are designed and built, hotels are implementing more sustainable practices across the board. Moreover, many of these steps result in cost savings that not only cover implementation costs, but also reduce overall overhead costs and increase profitability. In other words, there is a very strong business case for hotels to embrace sustainability and invest now for a cleaner environmental future.