Dale Burgess   |   21 May 2023   |   4 min read

ESG Procurement - The overlooked prescription to a healthier society

ESG Blog

A recent study found that during the pandemic, global plastic contributed an estimated 1.6 million tons of waste per day from 3.4 billion discarded single-use face masks alone. This has led to an unprecedented level of contamination in waterways, rivers, and oceans from the microplastic and metals leached into the ecosystem. Such contaminants have been directly linked to causing a variety of illnesses and disease, including some contaminants which are known carcinogens. It seems there’s a poetic irony in the notion that the item which was protecting us from one disease could contribute to causing others.

It begs the question, now that there are repercussions to so many billions of face masks with microplastics and metal ending up as pollution, could there have been a more sustainable way to solve this problem and reduce the long-term health risks?

Professionals working in healthcare procurement can make a significant impact on the sustainability of their supply chains through a deliberate effort to minimise waste and find alternative solutions to meet the healthcare demands of their own organisations and improve the health of society as a whole.

This article will explore six ESG (Environmental, Social, and Governance) factors that should be considered when deciding on how to execute a procurement event and how it can directly, or indirectly, impact the strain and demand on the healthcare system.

1. Carbon Impact Suppliers

According to the World Health Organisation, climate change is the single biggest health risk this century, and air pollution is responsible for approximately seven million deaths each year. By selecting suppliers with an environmental management plan or those who are carbon neutral, Buyers can collectively make a tangible impact in emissions reduction, and therefore air pollution. By supporting suppliers who have gone above and beyond to reduce their carbon footprint, procurement professionals are also supporting renewable energy sources, and conservation efforts.

2. Social Enterprise Suppliers

Awarding work to social enterprises with benevolent organisational goals can have a huge impact on the social determinants of health, such as income, education and access to health and community services. Not-for- profit and charity organisations also have a high job density, meaning for every $1million in turnover, nine jobs are created. Comparatively, despite employing a similar number of people, the mining and construction industries only create one job for each $1million in turnover.

There have also been a growing number of state government social procurement frameworks introduced. Now more than ever, social enterprises are positioned to develop their businesses and deliver a wider range of goods and services in every category.

3. Sustainable Supply Chains

Modern Slavery in Australia is real. Over 1,900 people in Australia are victims of modern slavery, yet only one in five cases of modern slavery are detected. Despite the urgent need for medical grade PPE during the pandemic, healthcare procurement staff in Australia and USA were unknowingly contributing to alleged modern slavery practices at rubber glove manufacturing facilities in Malaysia, according to an article by ABC news.

Now that the pressure has eased, supply chain managers should be extra diligent about the impacts of their sourcing decisions and making suppliers accountable for providing transparency over their labour practices. As per the Modern Slavery Act 2018, businesses with annual turnover of $100million or more must submit a modern slavery statement, however there are many smaller suppliers who voluntarily submit them too.

4. Local suppliers

Procurement professionals can promote local sourcing of goods and services to support local economic development and reduce the carbon footprint of transportation. This can help ensure that products meet local regulatory and quality standards, which can improve safety and minimise risks for both patients and healthcare staff. By sourcing from local suppliers, Buyers are also creating community connections and accessibility to healthcare services through positive relationships with their community and raising awareness of their services.

5. Long-term cost savings

Implementing ESG procurement practices not only benefits society but also makes good business sense. While it may require some upfront investments or changes in processes, adopting sustainable procurement strategies can lead to long-term cost savings. For example, choosing energy-efficient equipment or materials may reduce energy consumption and operating costs over time. Similarly, investing in durable and reusable products can decrease the frequency of replacements, resulting in cost savings for healthcare organisations in the long run.

6. Reliable access to resources

Procurement staff can ensure that healthcare workers have access to the resources they need to provide high-quality care. This can include creating a reliable and resilient supply chain to ensure availability of appropriate equipment and supplies, and technology that supports efficient and effective care delivery. In a time when Australia’s healthcare staff shortage is predicted to be short by over 200,000 staff by 2050, retention and recruitment will be a major priority for hospitals and care facilities, so procurement teams can play their part both directly, and indirectly, through their processes.

ESG procurement practices have the potential to bring about significant positive change in the healthcare sector. By considering factors such as carbon impact suppliers, social enterprise suppliers, sustainable supply chains, and local suppliers, healthcare procurement professionals can contribute to a healthier society and a more sustainable future.

Moreover, prioritising ethical practices, focusing on long-term cost savings and creating resilient supply chains can further enhance the impact of procurement efforts. By harnessing the power of procurement, healthcare organisations can become agents of change and pave the way towards a more sustainable and equitable healthcare system for all.

How VendorPanel can help

VendorPanel have partnered with givvable, a multi-award-winning platform that uses powerful AI & data models to automate supplier sustainability diligence. VendorPanel’s Go to Market module with givvable intelligence provides users with the data they need to evaluate supplier performance beyond traditional metrics and identify opportunities to improve their social and environmental impacts. Contact us today to learn more

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