As the need to tackle climate-related issues arises, so does the responsibility to hold yourself accountable in your procurement decisions. Since this can be a bit of a challenge, you should make it your goal to search for certain eco-certification or eco-label (Sustainability Badge) to save time. Be aware that third-party certifications provide a greater level of impartiality than a company’s own certifications.

But what exactly is an eco-label?

There are three types of ISO-standards when reffering to eco-labels. (International Organization for Standardization). Type 1, Type 2 and Type 3. 

Type 1 / ISO 14024

Type 1 consists of symbols, such as The Nordic Swan Ecolabel or Fair Trade that are awarded to those whose products or services fulfill a set of criteria, determined by an expert group. This type of labelling furthers the chance of conscious procurement, without the need for prior environmental expertise or knowledge.

Type 2 / ISO 14021

Type 2 consists of self-declared environmental claims and advertising. This requires the manufacturers, importers, retailers, and distributors to be transparent to disclose relevant data and demonstrate their own reliability. However, that data will not be independently certified, which can raise questions about the validity of the claims while also placing demands on the customer’s own environmental expertise.

Type 3 / ISO 14025

Type 3 provides declarations of the sustainability of a product or service but does not show whether it has been approved or not. The analysis focuses on the overall environmental performance and impact and how that data was developed. This type of label can but is not required to be third-party certified. As a result, the customers required to have significant environmental knowledge. 

What is the EU Eco-label?

The EU Eco-label is the official Sustainability Badge of the European Union, established by the European Commission in 1992. The label certifies that a product has been manufactured with the environment in mind from extraction, production, and distribution to disposal, while also encouraging companies to move from a linear scheme and develop products that can be reused and recyclable.

To be awarded the EU Eco-label, the product or service must follow a strict line of criteria created by independent experts in consultation with key stakeholders. The criteria are tailored depending on which product is being reviewed, and are revised periodically to accurately reflect the latest innovations and changes in for example, EU policies. This ensures that the products and services awarded the EU Eco-label only include criteria that are in line with the current environmental standards. 

Current product groups include, but are not limited to: electronic equipment, paint, furniture, holiday accommodation and textiles.

When do buyers apply the eco-label?

In step 4 of the sourcing process buyers ask for information about the market (RFI). As part of that process step buyers can pre-select suppliers with capability to provide products with a Sustainability Badge.

In step 5, when deciding specification, more specific selection criteria are defined and decided including choice of label.

Learn more in Dr Aurora Dawn Benton’s course about Sustainable Procurement

Listen to Real Life Buyer podcast about Sustainability and Fairtrade

More about the Sourcing process.

In the book “Profit from Procurement – Add 30% to your Bottom line by Breaking down silos”, written by there founders of Efficio, the leading Procurement Management consultancy firm in the world, sourcing execution is the engine of a procurement department. Knowing how to successfully manage a sourcing event, including managing stakeholders is a key capability of a professional buyer.

The Sourcing Process part 1 – basic course (first of three courses) is the first step to becoming a sourcing specialist. What differentiate a good buyer from an excellent buyer is the understanding of (and capability to drive) the basic sourcing process. The learning objectives of this course is to create an understanding of a modern sourcing process and provide insight in the basic steps needed to conduct a successful sourcing event.

Procuring Sustainability Badge products from suppliers

…can create significant end-customer value in several ways:

• Enhanced Brand Image: Customers increasingly prefer environmentally responsible products. By offering eco-labeled items, a company can strengthen its brand image as an eco-conscious and responsible business.
• Market Differentiation: Eco-labeled products can differentiate a company in a crowded market, appealing to a growing segment of environmentally aware consumers.
• Customer Loyalty: Eco-friendly practices often result in higher customer loyalty as consumers prefer to associate with brands that demonstrate environmental responsibility.
• Regulatory Compliance: Sustainability Badge products often meet or exceed regulatory standards, reducing the risk of non-compliance and associated costs.
• Cost Savings: In the long run, eco-friendly products can be more cost-effective due to factors like energy efficiency and lower waste disposal costs.
• Health and Safety Benefits: Sustainability Badge products often have health and safety benefits, which can be a strong selling point for health-conscious consumers.

In summary, procuring eco-labeled products aligns with the growing global trend towards sustainability, offering competitive advantages while contributing positively to environmental conservation.

Including Sustainability Badge in RFQ – case

In a notable case, a buyer from a leading electronics company decided to include eco-label requirements in their Request for Quotation (RFQ) for manufacturing components. This strategic move was part of the company’s broader initiative to enhance its sustainability practices and appeal to eco-conscious consumers.

Upon issuing the RFQ, the buyer specified that all components must meet certain eco-label standards, such as reduced carbon footprint, energy efficiency, and minimal use of hazardous materials. The suppliers were also encouraged to demonstrate their commitment to sustainable practices.

The results were remarkably positive:

• Improved Supplier Engagement: Suppliers who already had eco-labeled products were eager to participate, while others began reevaluating their processes to meet the requirements. This led to an increase in eco-friendly innovations within the supplier community.
• Enhanced Product Quality: The eco-labeled components were of higher quality and had longer lifespans, reducing long-term costs and enhancing product reliability.
• Positive Customer Response: The end products, now boasting eco-friendly components, received a favorable response from the market. Customers appreciated the commitment to sustainability, leading to an increase in sales and brand loyalty.
• Environmental Impact: The initiative significantly reduced the environmental impact of both the buyer’s products and the suppliers’ manufacturing processes.

This case illustrates how incorporating eco-labels in procurement processes can drive positive outcomes, from enhancing product quality and brand reputation to fostering environmental responsibility in the supply chain.

Pre-approval of suppliers using Ecovadis

Buyers can use EcoVadis, a renowned provider of business sustainability ratings, to assess and approve suppliers based on their environmental and social practices. By leveraging EcoVadis, buyers can:

• Evaluate Suppliers’ Sustainability Performance: EcoVadis assesses suppliers across various sustainability criteria, providing a comprehensive rating that buyers can use to evaluate suppliers’ environmental and social practices.
• Make Informed Decisions: The ratings and detailed reports from EcoVadis enable buyers to make informed decisions about which suppliers align with their corporate sustainability goals.
• Encourage Improvement: By preferring suppliers with higher EcoVadis ratings, buyers can motivate their supply chain partners to improve their sustainability practices.
• Monitor Continuous Performance: EcoVadis provides tools for continuous monitoring of suppliers’ sustainability performance, helping buyers ensure ongoing compliance and improvement.

In summary, using EcoVadis, buyers can effectively integrate sustainability into their supplier selection and management processes, thereby aligning their supply chains with broader environmental and social objectives.

Note: Illustration to blogpost is created by Chat-GPT on April 19, 2024