The following study is aimed at examining the issue of relevance of the green procurement in the context of the UK supply management, focusing on small and medium-sized enterprises. With the help of empirical and theoretical approaches to research, the study was carried out on the basis of secondary study and overall result processing by means of the grounded theory. It was established in the course of investigation that the major constituents of the green procurement were the aspects of ecology, society, and economy. In the case with British small and medium-sized enterprises, many business units severely undermine the competitive advantage that can be achieved through environmental awareness of the enterprise. Hence, since obtaining relative autonomy from the EU requirements, it is now essential to establish green procurement principles for the UK in order for it to remain relevant.
Background of the topic
Today, consumers, society and governments of different countries show an unprecedented interest in companies that take care of the environment and care about the health and safety of people. Environmental protection has become a global social phenomenon of the modern world. Information on this topic can be found in all major media outlets, as well as on the Internet. The current generation, influenced by “green” ideas, has every chance to improve the environment in the next 50 years, consciously choosing environmentally friendly goods and services; companies also pay a lot of attention to this issue.
Consumers who consider themselves “green” want to deal with ethical, environmentally friendly businesses (Rahman and Reynolds, 2019). Moreover, an enterprise that wants to consider itself “green” must deal with ethical, environmentally conscious suppliers. The environmental principle means that green companies ensure that their activities are environmentally friendly and that they actively support the introduction and use of environmentally friendly technologies (Appolloni et al., 2014). It is important not only that the headquarters follows these principles; all their subcontractors and partners must also follow them so that the main company fulfils its goal of becoming a successful green enterprise.
The procurement strategy is a crucial step in the supply chain of any enterprise. The term “green procurement” means that the organization pays special attention to the search, identification, selection and procurement of goods and services that have minimal environmental impact (Bohari, Skitmore, Xia, and Teo, 2017). Previously, the main requirement for suppliers was strict adherence to the principle of QCD (Quality, Cost, Delivery). The letter “E” (Environment) has now been added to this abbreviation (Mangla et al., 2019). Environmental criteria should be present in procurement contracts at all stages of the process, starting from the earliest one – in the definition of the subject of the contract and in the technical characteristics of the purchased goods. A clear definition of environmental requirements in the subject of the contract clarifies the requirements for the stakeholders from the very beginning. For example, for the supply of recycled paper, paper produced without chlorine, the supply of electricity from renewable sources, fabrics without chemical fibers, or products without GMOs could be considered.
In addition, if earlier regulatory bodies forced enterprises to be engaged in environmentally responsible behaviour, now the market requires it (Papadas, Avlonitis, and Carrigan, 2017). Increased energy and commodity costs are pushing companies to look for alternatives and ways to reduce costs. The “green procurement” policy ensures the emergence of many products and solutions that reduce waste, energy and water consumption and achieve multiple increases in efficiency. Suppliers of companies that have implemented the principles of green procurement in their activities should study and adopt the provisions of the green procurement policy, as well as comply with the guidelines for green procurement. At the same time, the introduction of “green procurement principles” in the supply chain makes it possible to increase profits and improve the organization’s environmental performance (Mangla et al., 2019).
Thanks to green procurement, it is possible achieve excellent financial results by fulfilling goals to reduce costs and increase revenue (Sroufe and Melnik, 2013). Moreover, this will positively affect public opinion and the company’s reputation in the eyes of stakeholders (Song, Yu, and Zhang, 2017). Experience has shown that “green procurement” does not require a major restructuring of the procurement business process – procurement procedures remain unchanged, but a wider range of options is being considered (Blome, Hollos and Paulraj, 2013).The demand to reconsider approaches to the implementation of procurement functions under the pressure of the environmental protection and increase the social responsibility of business figures determines the relevance of studying the directions of supply chains and procurement process development.
Nowadays, when evaluating a material, product, or service, not only their operational characteristics, quality and price are taken into account, but also the impact that they have on the environment. Enterprises who do not pay enough attention to the environmental issues tend to lose their positions in the market, so an environmentally oriented approach is aimed at protecting not only the environment, but also the company itself. In addition, it enhances the company’ brand awareness in the final market. Using this approach allows improving living conditions, reducing the total cost of maintenance, saving money and maintaining company’s reputation as an environmentalist.
The analysis of scientific points of view and the systematization of scientific approaches to understanding the category of “green procurement” from the perspective of fragmented and integrated approaches to its development will benefit to the vision of its substantive aspects. Moreover, such an analysis could help identify the main factors that contribute to and simultaneously influence the development of green procurement in small and medium-sized businesses in the Great Britain. In this regard, in order to investigate the vision and prospects of green procurement in Great Britain SMEs of FMCG sector, its influence on the companies, FMCG sector, economy and society as a whole, it seems rational to analyze current state in this field on the base of secondary study and address to the experts’ opinion in frames of the empirical study.
The ability to achieve quantitative and qualitative goals of green (sustainable) procurement activities is provided through the synthesis of economic, social, and environmental components that form the contour of green supply chains and logistics. Consolidating unity in the interaction of these components is ensured by resource-saving technologies (Walker and Jones, 2012). Based on the analysis, it would be easier to define and create structural and functional features of green procurement, including objects, subjects, and managerial processes, the area of application, applied technologies, directions of environmental impact and the results of its application.
Objectives of the Research
The aim of the study is to identify a green vector in procurements in SMEs functioning in Great Britain FMCG, in terms of its direction and components, based on the principles of green economy and in frames of the overall concept of social responsibility and sustainable development. The implementation of this goal predetermined the objectives:
- To investigate and analyse the practices of green procurement management applied in British SMEs functioning in FMCG market;
- To identify the institutional prerequisites for the development of FMCG SMEs’ green procurement in Great Britain;
- To identify principles, best practices and failures in the design and operation of green supply chains, applied in SMEs functioning in Great Britain FMCG;
- To conduct a study of the quality of business processes in the green procurement systems observed in SMEs in Great Britain FMCG and the influence of green procurement on the design and essence of supply chain, based on the principles of system analysis;
- To formulate characteristics of the integrative management of green procurement in Great Britain SMEs functioning in FMCG sector;
- To specify further prospects for the development of the green procurement in Great Britain.
The instrumental and methodical apparatus of the study is formed in clear relation with the evidence base founded on the application of the theoretical and methodological scientific foundation of business and economic research: expert assessments, graphical interpretation of conclusions and suggestions, monitoring of information data from system-analytical studies, case study and situational analysis, statistical generalizations of findings. The research implies the implementation of an interdisciplinary approach, elements of system theory, analysis of official data of state statistics service bodies, national and foreign analytical, statistical, and rating expert agencies, as well as works of leading scientists on the subject under study, and legislative base. Although the research will apply some quantitative methods of data representation, it has qualitative nature as its core.
In addition to the secondary study, an empirical study will be carried out using the method of expert survey and the subsequent processing of its results based on the principles and methods of grounded theory as one of well-established qualitative methods of building a theory based on data analysis. When selecting experts, it was important to consider the following: professional competence, the expert’s interest in the survey, analyticity and breadth of thinking, constructive thinking, the ability to obtain reliable information from this category of respondents (Ikart, 2019; Johnson et al., 2018). The reliability of expert assessments is determined by such factors as qualification, working conditions, participation in decision-making processes, objectivity, independence of experts from each other. The number and representativeness of the group of experts is estimated not much by statistical but rather by qualitative indicators. However, an increase in the number of experts in the group leads to a monotonous increase in the reliability of the expertise (Ikart, 2019). In our study, 20 experts are expected to participate.
The principles of green economy have been present in the market for almost half a century due to the global concern on what complications may Earth face in case of the enterprises’ incompetence. In order to understand the roots from which green procurement stems from, it should be dwelled upon the four basic principles of ecology created in 1971 by American scientist B. Commoner (Ivlev and Ivleva, 2018):
- ‘Everything is connected to everything else’, referring to the phenomena of every environmental constituent being correlated;
- ‘Everything must go somewhere’, emphasizing the idea of human need to ponder upon the ways their waste can be eliminated from the surface in the least harmful way;
- ‘Nature knows best’, implying that business no longer has the right to exploit natural resources without considering the ways of damage control;
- ‘There is no such thing as a free lunch’, dwelling upon the notion of reimbursement when it comes to everything humans tend to utilize for their personal needs.
Hence, these principles have now been integrated into the fundamentals of the green economy, which stands for resolving the issues associated with the interaction of the environment and economy.
The paradigm of the following research is considered as constructivist. The research paradigm of constructivism is based on a critical attitude to realistic ontology and the thesis of the social construction of reality; the scientific method in the framework of this paradigm is conceptualized as a process of interpretative construction of knowledge by a researcher in the context of his dialogical interaction with research participants, as well as in the context of wider social practices in which the researcher is inevitably engaged. Knowledge in the paradigm of constructivism is always local in nature: it is knowledge obtained under certain conditions, knowledge in the prospect, determined by the angle of view and the position of the researcher (Mohapatra, Mahapatra and Parida, 2015). The process of cognition must necessarily include not only an analysis of the object itself, but also a reflection of the conditions and perspectives in which this “object of reality” was formed (constructed) as a “research object.”
Sustainable procurement concept
It should be noted that the concept of sustainable procurement is aimed at finding the relationship (positive and negative) between environmental protection, social and economic aspects in the implementation of such procurement. Sustainable procurement is one way to compete transparently in the global market (Kalubanga, 2012). When planning sustainable procurement, the interaction of the environmental, social and economic aspects is assessed: the use of natural resources, energy, water in the production and use of goods and services; the presence of pollution in the production or use of goods; loss of flora and fauna when using natural resources, etc. (Cheng at al., 2017). In addition, with sustainable procurement, the main social factors that are taken into account include the working conditions of employees in production, as well as when distributing goods or providing services. In recent years, the UK has taken significant steps in promoting sustainable procurement practices, in large part due to EU legislative initiatives in this area (Sjafjell and Wiesbrock, 2015). However, given the events of Brexit, the question of the further development and distribution of sustainable procurement in the UK remains highly controversial.
The term “sustainable procurement” was first used at the Rio Sustainable Development Conference in 1992. Today, there are various definitions of sustainable procurement. For example, Shakya (2019) defines sustainable procurement as “the meeting of business needs for materials, goods, utilities and services in an environmentally-friendly, responsible and ethical way.” Robert Menard (2011) believes that sustainable procurement represents “organisations’ use their procurement function to foster sustainable development and reviews strengths, weaknesses and success factors embedded in this practice (p. 115). Mangla et al., (2019), making more emphasis on the consumers’ perception of sustainable procurement, define it as follows: “sustainable procurement means making sure that the products and services we buy are as sustainable as possible, with the lowest environmental impact and most positive social results” (p. 23). Dubey et al., on the contrary, focusing on the business’ side of the concept, considers sustainable (green) procurement as a key to superior performance m writing that “the adoption and integration of Corporate Social Responsibility principles into procurement processes and decisions while also ensuring, they meet the requirements of the company and its stakeholders” (Dubey et al., 2019, p. 70). Another definition specifies sustainable procurement as management system, the purpose of which is to harmonize or search for parity between market participants, producers and minimize environmental impact (Appolloni et al., 2014).
Making small and medium-sized enterprises (SMEs) to do less harm to the environment represents a primary success factor in the process of the environmental shift of the economy. Improving environmental performance also contributes to the development of new business areas for SMEs in the first place, as crucial suppliers of goods and services (Melon, 2020). This improvement can be achieved through green procurement ‑ the purchase of environmentally friendly products, the selection of a supplier and the establishment of environmental requirements in the contract. Sustainable procurement is associated with a broader aspect of cooperation and interaction between all the supply chain constituents (Vluggen et al., 2019). Many enterprises have, thus, enhanced their perception of sustainable procurement and have designed tools and techniques to potentially benefit from this collaboration. Examples of green purchases range from purchasing energy-saving light bulbs to commissioning a new establishment from renewable wood sources.
After analysing the literary sources, one can conclude that the direction of “green procurement” appeared in the late 80s – early 90s of the last century (Grant, Wong and Trautrims, 2017). This concept arose on the basis of a new “environmentally sound design” approach, which has appeared over the past two decades. It, in turn, refers to the concept of sustainable development, which has become widespread in the world.
In general, the literature identifies three key aspects that affect the ecological orientation of customers: policies and principles for protecting the environment; its assessment and the “green” product or process (Theron and Dowden, 2014). An important tool for ensuring green procurement is the interests (environmental values) of stakeholders ‑ customers, suppliers, and end users. From here, three objective signs of green procurement follow: social character, financial support, environmental sustainability (Mangla et al., 2019). When purchasing, it is important to take into account social and environmental aspects, safety and traceability of raw materials, sustainable methods of trade and partnership.
According to the Business Charter for the Sustainable Development of the International Chamber of Commerce, one of the key environmental requirements for goods or services is to develop and supply services that do not have potential environmental impact and are not harmful when used for their intended purpose and economical in terms of energy consumption and natural resources that can be recycled, reused, and safely disposed of (Shakya, 2019).
Based on the definition of environmental competitiveness in the broad and narrow sense, one can draw the following conclusions about the necessary environmental parameters of goods, components, etc. for green procurement (Burns and Carter, 2018):
- The product is completely environmentally competitive, if its environmental characteristics are most preferable in comparison with other indicators of the product in a specific regional market;
- A product is completely competitive if in it, along with functional, technical and economic characteristics, environmental and economic-ecological indicators of the product are taken into account and compared in the conditions of a specific regional market;
- Environmentally competitive one is the product that, according to the ingredients and volumes of pollutants entering natural objects during the environmental life cycle of the product, meets state standards and is not inferior to the corresponding indicators of the sold product in a specific regional market.
- The basis for assessing the ecological competitiveness of the goods is the industry and regional standards for the emergence of pollutants into natural objects in the process of production, promotion (trade), consumption and disposal of used goods, a comprehensive study of the environmental, economic, ecological, functional, technical, economic parameters of a similar product;
- The environmental component in the price of consumption of the goods consists of the price of the goods, taking into account the environmental costs of producing the goods and the costs of operating the goods, taking into account the environmental component.
Goods should be considered ecologically competitive, it its production, consumption and disposal, after the end of their service life, provide for the supply of pollutants to natural objects at or below the standard values. Pollutants entering natural objects during the implementation of the environmental life cycle of a product have a certain ingredient composition. In turn, each ingredient has its own level of aggressiveness, on which the economic and environmental damage to natural objects depends. Thus, when comparing the volumes of pollutants entering natural objects, it is necessary to determine the environmental competitiveness of the product in terms of volume and aggressiveness of air emissions, discharges into water bodies, landfills in land and water bodies throughout the entire ecological life cycle of the product (Blome, Hollos and Paulraj, 2013).
There is a widespread misconception that environmental protection entails great technical difficulties, problems and costs (Straub, 2018). Although it is now estimated that improving environmental performance benefits a firm’s competitiveness, a lack of relevant knowledge and skills deteriorates the effect of environmentally-friendly options. At the same time, the limited internal resources of SMEs contribute to the choice of a development strategy with minimal risks, with less willingness to invest in new technologies, partly due to the uncertainty in the payback period of invested funds (Macrory, 2019).
A survey conducted by UK-based organization UK Carbon Trust found that more than 60% of consumers are willing to buy products from environmentally conscious companies. Meanwhile, more than half of SMEs perceive ‘greening’ of the economy as a threat; approximately half of small enterprises think that a green economy requires a high investment rate to make a profit, and only 22% of companies believe that investment in environmentally-friendly goods and services will increase profits (Straub, 2018).
Aspects of greening of activities for SMEs in FMCG sector
For SMEs, greening of activities is for the most part a voluntary step, depending on the goals and beliefs of one or more individuals. Many SMEs are nor against investing in more energy-efficient and environmentally safe processes, but they need reliable stakeholders and an appropriate framework to investments. However, they often face difficulties in gaining access to financing ‑ banks are reluctant to finance such investments and do not have specialists who can evaluate SME projects (Macrory, 2019). In these conditions, the practice of green procurement may be the first step towards greening British small and medium-sized businesses.
As a study in the United Kingdom (Defra, 2011) shows, microbusiness spends more time on activities aimed at demonstrating compliance with environmental requirements (preparing for inspections, paperwork, record keeping) than on actual compliance activities. Nevertheless, working on the principles of a “green office,” the company contributes to the formation of its image; this is part of its corporate social responsibility. This provides many advantages, in particular (Macrory, 2019):
- Attracting the attention of customers and the media.
- New features in PR, advertising.
- Investment attractiveness.
- An opportunity to confirm the environmental and social responsibility of the business.
Guidelines for green procurement are designed to bring each category of procurement into line with certain requirements that ensure compliance with accepted principles of environmental management. In many OECD countries, private sector executives have the right to a partial tax exemption ‑ a reduction for a fixed period of time of the company’ taxable income by the quantity of certain types of environmental investments (exceeding environmental requirements) (Kahanaali, Khaksar and Abbaslu). Such an incentive is usually part of an economic policy to promote innovation and R&D. The state can also provide tax incentives ‑ such as accelerated depreciation, reduction of property tax rates and corporate taxes ‑ when purchasing new environmental technologies and making other environmental investments. Preferential tax rates and tax incentives can also be differentiated depending on the real environmental effect of these investments. For instance, in the Netherlands, there function two preferential tax systems to stimulate the procurement of new environmental technologies: arbitrary depreciation of environmental investments (VAMIL) makes it possible to accelerate the depreciation of new environmental technologies included in the list approved by the local authorities, and the Tax rebate on environmental investments (MIA) allows deducing partially investment in environmental technology for tax (Kahanaali, Khaksar and Abbaslu, 2015).
The French government, through accelerated depreciation and preferential property tax rates and ocuppational taxes, stimulates the purchase of renewable energy and energy-efficient equipment. The Japanese government provides tax incentives (for example, a preferential rate of local corporate tax) to industry when introducing environmentally and climate-friendly technologies (OECD, 2009). However, bigger companies frequently get an advantage of environmental tax incentive programmes, as they are better educated on the subject of existence of such tools (Defra, 2011).
In the UK, a standard BS 8903:2010 “Principles and framework for procuring sustainably. Guide” was developed. Moreover, in the UK, the Energy Saving Trust (a nationwide non-profit organization) provides interest-free small business loans of up to £ 100,000 for the introduction of renewable energy technologies and measures to reduce energy consumption (Hasanbeigi, Becque and Springer, 2019). Some companies in the UK take environmental indicators into account (KPIs are used to measure them) when calculating suppliers’ ratings, which should also serve as an incentive for continuous improvement in this area. In their policy on green procurement, they emphasize the following: any activity must be carried out on the basis of rational environmental management and sustainable development (Mangla and Luthra, 2019). They ask suppliers to comply with certain environmental requirements in order to provide customers with high-quality, modern and environmentally friendly premium products with excellent performance. The most responsible companies strive to encourage suppliers to control and improve environmental performance by the maximum number of indicators. It should be noted that contrary to the generally accepted opinion, products with the least environmental impact in most cases are at the same time the most profitable in terms of costs (Mangla and Luthra, 2019). For example, a car that produces less air emissions is more likely to consume less fuel than other brands of the same class.
Requiring suppliers to provide goods of a certain quality by meeting environmental requirements and performance parameters, companies not only provide themselves with high-quality goods and predictable costs for purchased goods, but also indirectly force suppliers and manufacturers of various groups of goods to develop their product lines in a more energy-efficient and environmentally friendly direction. Thus, sustainable procurement can be seen as expanded CSR, and, in case of including it in the integrated reporting, it can become a tangible source of competitive advantage.
It is also necessary to consider the current environment and the state of sustainable development, since according to McKinsey & Company experts, more than 90% of the harmful environmental and social impacts of economic units working in the sector are attributable to the supply chain (Gajendrum, 2017). Such a statement may have a corrective effect on the approach to non-financial reporting, since the economic entity alone cannot bear a significant part of the risks reflected. SMEs of the FMCG sector can participate in the implementation of the SDGs through key business operations, partnership projects, development of inclusive business models, etc. (Gajendrum, 2017).
The authors point to the need to create a more inclusive and socially fair version of the capitalist system that would satisfy the basic needs of people who are “at the base of the economic pyramid,” which is the prerogative of the FMCG sector. Considering these types of business strategies, S. Hart and M. Milstein urge businesses to create so-called inclusive business models, anticipating the emergence of the very concept of inclusive business, formulated later in 2008 (Hart and Milstein, 2003). Hart and Milstein believe that all the “drivers” of sustainable development and related business strategies provide for the implementation of certain “dimensions” of “shareholder value,” opening up opportunities for the corporate sector to achieve higher financial performance. If the organization’s management is able to assess all the challenges of globalization and the business benefits associated with solving these challenges, the company creates “sustainable value,” that is, it achieves shareholder profit growth, adhering to the principles and values of sustainable development (London and Hart, 2010).
The dynamic development of the business and the genesis of logistics activities in retail and in the whole FMCG sector make it a priority to apply the logistics concept of shared responsibility, which implies achieving the maximum balance between the company’s benefits and the costs of organizing logistics by taking into account not only the characteristics of the economic environment, but also other components of the activity, including environmental (Ogunlela, 2018). In contrast to the general theory of enterprises, the concept of shared responsibility also considers the social component of logistics activities, which means the possibility of participation of small and medium-sized retail businesses in solving social problems, in particular, increased consumption, a low level of environmental culture of personnel, ensuring the necessary level of safety and comfort of work, ecological problems (Sroufe and Melnik, 2013). The following factors served to develop the concept of shared responsibility in FMCG (Ogunlela, 2018):
- The formation of new behavioural trends, the main one of which is orientation towards a healthy lifestyle, which transforms consumer’s behaviour and determines his choice in favour of acquiring goods and services that meet environmental safety requirements;
- Enhancing the significance of the environmental effect on the living standards of consumers and the sustainability of entities in the implementation of activities (Theron and Dowden, 2017);
- Openness of markets and a high degree of penetration of economic structures, basing their activities on uniform rules, standards and norms of business communication, enshrined in international codes (Mangla et al., 2019);
- An increase in the number of environmentally friendly enterprises and the emergence of an organized movement for the protection of the environment, for which the environmental aspects of the activities of business entities become priority (Mangla et al., 2019);
- The formation of the ethical foundations of doing business;
- The emergence of crisis phenomena in the energy and raw materials industries, which requires increased energy efficiency and the use of lean manufacturing technologies and systems (Ogunlela, 2018).
Lean manufacturing is one of the most common methods of work of small and medium-sized companies in the FMCG sector in the direction of greening logistics processes and procurement in particular (Ogunlela, 2018). Moreover, in some especially responsible companies, energy efficiency is becoming one of the determining criteria for the selection of suppliers. Some go even further, requiring suppliers to have LEED or BREEAM certificates (Melon, 2020). However, such practices, unfortunately, are still in their infancy at FMCG, including the British one. Meanwhile, conceptually, experts define five best practices for green procurement in the FMCG sector: aligning the procurement functions; allying with key suppliers; creating collaborative strategic sourcing; establishing control levels and minimizing risk; selecting the right technology (Sarkis, 2019).
It goes without saying that green procurement in FMCG SMEs requires collaboration with various suppliers, manufacturers, and producers in terms of agreement on the idea and observing of the environmental initiative in the supply chain network, with green procurement becoming the first step (Mahendra and Williamson, 2012). Furthermore, the procurement team should educate its suppliers on the subject of proper and efficient materials essential usage for pollution prevention (Stuart and Barry, 2008).
In the UK, environmental requirements are most often applied when purchasing catering and food services (Burns and Carter, 2018). This may be due to the availability of knowledge of environmental requirements and the skills to apply them in procuring organizations, as well as more stringent legal regulation of requirements for this group of products. At the same time, sustainable procurement in the UK, as well as worldwide and even at the level of UN, is investigated mainly for public sector. This fact determines urgent necessity to conduct deep research of the situation in commercial sector, in particular in comparative prospect and in terms of existing and potential impact of Brexit on green procurement in the UK.
Based on preliminary analysis of literature, in frames of the grounded theory, we developed a list of categories which then will constitute a basis for data collection, analysis, and discussion. The categories are presented in the Table 1 below.
Table 1. Categorization table obtained in the process of grounded theory application*
|Category||Excerpt from the text||Variants of the code|
|Green approach||In this era of global business competition in the Fast Moving Consumer Goods (FMCG) industry, the trend of the supply chain has created a business environment which is becoming increasingly larger and more complex to meet customer demands, and one of the main challenges that companies are facing is the phenomenon of “green initiatives” within their supply chain network (Mahendra and Williamson, 2012, p. 1)||Green initiatives |
Supply chain network
|Strategic models of sustainability||Significant number of respondents (32 of 41; 77.54 percent) agreed that the implementation and adoption of green SC initiatives would enhance organisational performance, and the proper integration of all processes used for GSCM, which practice can lead to enhanced competitive advantage. The results furthermore indicate that the success of GSCM in the FMCG manufacturing industry requires a collaborative approach which differs from those traditionally used for SCs (Ogunlela, 2018, p. 167).||Enhanced competitive advantage |
|Overcoming inertia||Taking a supply chain perspective, procurement also need to analyse how decisions impact on the TBL in respect of suppliers. The results of a survey of sustainable procurement practices in 44 English-based UK Housing Associations (HAs), who are responsible for the provision of social housing, confirms prior research of other sectors that suggests 1) a failure to overcome inertia in relation to sustainable procurement; and 2) in the few examples where practices have been established, only the environmental element of the TBL is considered. The organisations surveyed have sustainability-related issues in their missions and external and internal pressures to embed sustainability, yet this has not translated into widespread establishment of sustainable procurement. Recommendations to neutralise inertia are: firstly, take the experiences from other areas, e.g. innovation management, which stress the importance of inter-organisational relationships; secondly, develop a small number of sustainable development indicators for procurement and, to take advantage of the relatively more-advanced environmental practices to show how these elements have socio-economic impacts; and finally, rather than focus on just the pressures and drivers of sustainability (as suggested in strategic models of sustainability), emphasise the triggers that overcome inertia and lead to changes in behaviour amongst procurement staff i.e. the establishment of ethical pricing models (Meehan and Bryde, 2011, p. 94).||Ethical models |
Sustainable development indicators
|Green SCMs||For the FMCG manufacturing industry to achieve effective green SCs, improved environmental impact, reduced costs, and increased sustainability and competitive advantage, all staff and relevant stakeholders need to obtain a clear understanding of pertinent theories to assist them in solving critical problems encountered in their GSCM processes. New trajectories for green SCM strategies in FMCG manufacturing industries need to be proposed and implemented, and new concepts and theories regarding green SCMs should emphasise the important considerations of environmental impact and the green initiatives used to ameliorate this in their business practices (Mathu, 2019, p. 112).||Environmental impact |
* Drawn up by the author based on secondary sources analysis.
In order to collect and systemize data required for the research, a constructivist approach to the study analysis was introduced in the process. The secondary study, implying the analysis of already existing data to obtain an evident depiction of the issue discussed, was introduced in the first place. Later, the aspect of empirical study has created the opportunity to held a contrastive analysis to define the future implications for the issue of SMEs green procurement in the UK. Processing of the study results is carried out with the help of grounded theory, presupposing methodological data gathering. The main purpose of this chapter is to focus on the methodological approaches to the issue of green procurement development across the Great Britain’s enterprises. Thus, the research nature itself has appeared to become exploratory, aiming at describing and closely analysing both secondary and empirical data for the sake of future research on the matter.
Constructivist paradigm of the research
Currently, several different and to some extent opposing each other paradigms coexist in social and human sciences, on which one or another approach to research can be built. Moreover, the most open confrontation today occurs between supporters of the positivist and constructivist paradigms (Mohapatra, Mahapatra and Parida, 2015). Sometimes this confrontation is also called the confrontation of the “new” and “old” (or traditional) paradigms, since the orientation toward constructivism is younger and less established, in contrast to the positivist orientation, which appeared earlier and received the status of legitimate in the social sciences (Mohapatra, Mahapatra and Parida, 2015). Proponents of the positivistic paradigm proceed from the ideal of value-neutral, apolitical research, and see the main goals of scientific research in explaining, predicting and controlling the phenomena being studied. The constructivist paradigm considers various aspects of relativistic ontology (recognition of many local, socioculturally constructed realities as existing), subjective epistemology, and pursues the goals of social criticism, reflection and transformation of various social formations and society, which characterizes the phenomenon of green procurement that we are studying in the framework of the latest concepts of sustainable development at the macro and micro levels.
Constructionism shares the view of knowledge as an interpretation ‑ historically determined, not untimely, contextually verified, and not universally valid, linguistically generated and socially conventional, and not just cognitively produced (Grand, Von Arx and Rüegg-Stürm, 2015). In this regard, we consider it reasonable, taking into account all the differences, to combine social constructionism and constructivist theories within the framework of a common constructivist paradigm. As we noted above in the Introduction section, constructivism paradigm relies on a critical attitude to realistic ontology and the thesis of the social construction of reality. In frames of this paradigm, the scientific method is conceptualized as a process of interpretative construction of knowledge by a researcher in relation to his interaction with research participants in a dialogue, including the context of wider social practices in which the researcher is inevitably engaged.
The constructivist paradigm is crucial in terms of the following research, as the issue of green procurement is economy is closely connected to various externally developed factors. When taking into consideration the whole ecological paradigm at its current development stage, the issue of green procurement in SMEs can be analysed from all the possible perspectives. Thus, such an approach is closely related to one of the major research goals to critically analyse the current stage of green procurement analysis within the UK.
An empirical study will be based on using the method of expert survey and the subsequent processing of its results while performing a contrastive analysis of the experts’ opinion and the reality of green procurement development. When selecting experts, the following should be taken into account: professional competence, the expert’s interest in the survey, analyticity and breadth of thinking, constructive thinking, the ability to obtain reliable information from this category of respondents (Ikart, 2019; Johnson et al., 2018). As it was already noted in the Introduction section, the reliability of expert assessments is determined by such factors as length of service, working experience, qualification, working conditions, participation in decision-making processes, objectivity, independence of experts from each other. An increase in the number of experts in the group leads to a monotonous increase in the reliability of the expertise (Ikart, 2019).
The population for our study constitutes 20 experts. The half of the representatives constitute researchers in the field of green economy. The other half, for the sake of contrast, included entrepreneurs of the British small and medium-sized enterprises who consider or already apply the principles of green procurement. The population selected for the study was formed out of a number individuals who directly cooperate with British SMEs. In the process of estimating their opinion on the green procurement, the secondary data was compared in terms of grounded theory. For the sake of clarity, the interviewees were invited for a personal conversation. As a result, only 5 experts out of 20 were able to communicate on the subject in a face-to-face manner. Other 75% of the population were interviewed via Skype video-conferencing app. The interview schedule can be found in the Annex B. In order to select the focus group, a large number of potential experts were contacted via electronic mail or with the help of their assistants. The final expert list was formed out of individuals who expressed interest in the study’s goal. The major methods to collect the data were the techniques of observation and interview. The former technique concerns implicitly investigating the general attitude towards the ideas of environmentally oriented economy.
In the course of the primary data collection each of the 20 experts were asked eight expanded questions concerning the influence and relevance of ‘green’ procurement in terms of SMEs supply chain development. Then, their answers were compared in the constructivist paradigm framework, i.e. drawing attention to the sociocultural and behavioural aspects. The list of the respondents with indication of their age and occupation kind can be examined in the table below. The respondents’ names were removed for the sake of anonymity, so each of the experts is marked by a particular number.
Table 2: The list of the respondents questioned throughout the primary data collection
| ||34||Business analytic|
| ||45||Professor of Economics|
| ||48||Medium-sized enterprise CEO|
| ||20||Business college undergraduate|
| ||52||Small-sized enterprise director|
| ||31||Ecology counsellor|
| ||40||Professor of Ecology|
| ||29||Business advisor|
| ||56||Former small-sized enterprise CEO|
| ||28||Small-sized enterprise’s PR assistant|
| ||37||Medium-sized enterprise deputy director|
| ||47||Professor of Ecology|
| ||27||Start-up counsellor|
| ||25||Environmental activist|
As it may be seen from the table above, the population of the study was equally divided into the two groups: the representatives of the business sector who deal with their enterprises development, and the individuals interested in purely social and environmental aspects of green procurement. In such a way, the aim to empirically study the relevance and influence of green procurement could be examined from both economic and sociocultural perspectives.
To achieve this, the aforementioned experts were asked the following questions:
- What, in your opinion, does the term ‘green procurement’ mean?
- Do you think that small and medium-sized enterprises are nowadays competent in the matter of green procurement?
- Did the overall environmental policy in the world affect the supply chain management in the UK? If yes, how?
- What part of the current Britain-based SMEs are, in your opinion, environmentally aware? Is this statistics acceptable?
- Do you believe green procurement to be cost-efficient? Why?
- Are you familiar with green procurement practices in other European countries?
- In case you are aware of the issue, do you consider these practices relevant? Could they potentially be applied to the UK market?
- How do you think the green procurement trend will develop over the next five years?
The corpus for the research was collected by holding an extensive study on the issue of diachronical development of the green procurement notion within both the EU and Brexit timeframes. Analysis of official data of state statistics service bodies, national and foreign analytical, statistical, and rating expert agencies, as well as works of leading scientists on the subject under study, and legislative base was carried out.
Moreover, the interdisciplinary approach will be applied. This is due to the fact that at present, an increasing number of scientists are gradually inclined to believe that theoretical economics is in crisis (Mankiw, 2011). The events of recent years clearly demonstrate this crisis. The development of theoretical economics is characterized by three features that are unusual for natural science, which namely determine the crisis (Jerven, 2015). First, too many of the most general results of the theory are in a certain sense negative and indicate that the initial models are incomplete. Accordingly, the methods of economic sociology will be applied. Being a part of economic theory, sociology presupposes forecasting of the social impact as an economic outcome. Thus, such an aspect is of significant importance in terms of environmentally oriented green procurement.
Given that “sociologists mainly rely on sample data obtained “from sources specially organized for the project,” and “economists often resort to ready-made aggregated indicators of national statistics” (Guillen et al., 2005, p. 42), the combination of these methods can increase validity of the data. In other words, while the pure economy paradigm is aimed at estimating the theoretical basis that could be generally applied to a variety of cases, sociology is rather focused on the unique matters. When examining the research’s major issue, it was important to focus on both the personal data presented by the experts and its correlation with the overall scholarly statements concerning green procurement.
It should be borne in mind that economic action is a form of social action. This means, firstly, that the matter of interest to economic sociology is both “observed behaviour” and the “subjective position of the economic agent,” including the concepts of control developed (conceptions of control), definitions of the situation, and individual motives (Jerven, 2015). Secondly, the motives of the individual are not limited to pursuing exclusively economic goals (Jerven, 2015). Indeed, today, the attractiveness of a company for shareholders, customers, and investors (especially, institutional investors) is increasingly determined by the level of its CSR. This interpretation involves the inclusion in the social contexts of an economic action and recognition of its embeddedness of economic action.
Quantitative ways of data collection, presupposing expert surveys, document reviews and observation, has become the central issue of the research methodology. The economic system, being one of the research pillars, is understood as a set of interrelated and in a certain way ordered elements of the economy. This is a complex system of interacting elements that make up a single whole ‑ in the case of the UK green procurement, business entities, regulators, stakeholders, institutional investors, etc. A systematic approach is a form of methodological knowledge related to the study and creation of objects as systems, and applies only to systems. In the context of the matter, systematic approach helped classify the collected information into the specific categories crucial for further research.
Elements of science and practice are closely intertwined in system analysis; therefore, the justification of decisions with the help of system analysis is not always associated with the use of strict formalized methods and procedures, and judgments based on personal experience and intuition are also allowed, which is important given that the main processing method for the data obtained in the secondary and primary (empirical) research is grounded theory. An important feature of system analysis is the unity of formalized and informalized research tools and methods used in it. Thus, the major idea of the secondary study concept is to provide a clear understanding of how the qualitative data collected during the research could be integrated into both the theoretical and empirical aspects of the research.
Overall processing of results
In order to present results in a reliable manner, it is crucial to define the corpus and compare it with the already existing, scholarly reviewed data. Thus, the first step towards data collection was to hold a survey among the representatives of small and medium-sized enterprises across the UK. Once the empirical aspect is over, the statistical data recorded earlier is analysed in order to estimate the future implications of the field.
Processing of the research results will be carried out using the method of grounded theory. This applies not only to empirical research data, but also to secondary research, since it is assumed to obtain mainly qualitative data, with only some support of them with quantitative statistical data. The choice of the method of processing the research results is justified by the fact that grounded theory is the only completely universal type of qualitative research, and namely its results best fit the goals of building an independent and relevant theoretical model based on the statistics (Birks, 2015). We will focus on system design because it contains the most stable and structured procedure implications for conducting research in terms of the grounded theory (Birks, 2015). According to Miller and Fredericks (1999), such rigor is ensured, first of all, due to the need to focus on a paradigmatic model.
One of the integral parts of qualitative analysis concerns constant comparative methodology, implying that a statement or theory can be developed through a thorough data investigation. In the broader context, such a method can be considered as a grounded theory constituent. Strauss defines grounded theory as “a theory that is inductively derived from the study of the phenomenon that it represents. That is, it is created, developed and verified under various conditions by systematically collecting and analysing data related to the phenomenon under study. Thus, data collection, analysis and theory are interconnected with each other. One cannot start with a theory, and then prove it. Rather, they begin with a field of study, and everything related to this field has a chance to emerge” (Strauss and Corbin, 1997, p. 21). Thus, the grounded theory is a qualitative research approach that utilizes a series of procedures to develop a derived grounded theory of the phenomenon of green procurement impact on the enterprise system.
Turning to the very process of constructing grounded theory, it should be noted that its feature is the “zigzag-like” nature of the implementation, which consists in alternating data collection and analysis (Egan, 2002, p. 280). In this case, the researcher can use various types of data (observation results, documentary information, transcripts of other people’s interviews, etc.). After the interviews completion and data systematization, the first phase of the analysis ‑ open coding – could be proceeded. With open coding, the categories presented in the data were identified. Each category has properties that can be considered as subcategories (Birks, 2015). Corresponding dimensions are assigned to properties in order to demonstrate the boundaries within which they can vary.
The next stage of the analysis is called axial coding. Various categories discovered at the previous stage and were selected in order to be at the centre of the interaction between people, as phenomena. These categories were then associated with other categories. The latter are elements of the above paradigm model: precedents (factors that lead to the occurrence of a phenomenon), strategies (actions required to response to causal conditions), intermediate circumstances (specific factors that affect strategies) and consequences (results, caused by the use of strategies).
In the third phase, with selective coding, the researcher starts writing grounded theory about the relationship between the categories identified in the previous phase of analysis (Birks, 2015). The necessity of this phase is due to the fact that during axial coding, not one category and the corresponding paradigm model are distinguished, but several ones. This requires a choice of the main category around which the theory will unfold. The latter is also carried out using the paradigm model.
Data Analysis and Critical Discussion
An analysis of the monographic and periodical literature on the problems of the dissertation showed that, in general, publications on environmental and economic management are very diverse in approaches and topics and cover a fairly wide range of problems. However, at the same time, it should be noted that studies related to environmental and economic management and its features in relation to logistics and supply chain coordination are extremely limited and fragmented. Nevertheless, we managed to highlight some features.
In the course of the collecting primary data from environmentalists and entrepreneurs, it was established that the GMRP (Green Material Requirement Planning), LP (Learn Production), DfE (Design for Environment), and TQEM (Total Quality Environment Management) approaches are most fully responsible for ensuring environmentally friendly supply chain in production logistics. Sales logistics, engaged in the efficient distribution of finished products, also requires consideration of environmental factors in the performance of its processes and operations. As it was mentioned by one of the experts, “the very notion of green procurement implies that an employer is environmentally aware to such an extent that a customer can no longer feel hesitant about the materials quality.” This presupposes the application of direct delivery schemes, the goods movement over shorter distances, the number of rides reduction and loading operations, the most efficient use of the extra space in vehicles. Sales process interacts closely with environmental marketing and must take into account the environmental preferences of the customers. In fact, when pondering upon the last questionnaire point it was mostly pointed out that “over the next 5 years the accurate pattern of ecological dialogue should be established in the supplier-consumer paradigm.”
The ecological approach to warehouse logistics is based on the concept of building sustainable real estate. In warehouse complexes, it is necessary to use the land resources allocated for their construction, as well as electricity and water, as efficiently as possible. They should be convenient and comfortable for the work of warehouse personnel. Transportation in supply chains, as most experts admit, is a logistic activity that has the greatest negative impact on the environment both at the global and local levels. However, when speaking of the actual situation within the state, most of the experts agreed on the opinion that “despite the great load of environmental theoretical data, no more than one-third of the existing enterprises are actually willing to execute those green logistics patterns.”
Processing the results of the interview showed that experts describe green procurement as “actions that take into account environmental aspects and integrate them into the supply chain management process to change the environmental behaviour of suppliers and consumers.” Here, respondents do not distinguish “green” logistics as a separate type of activity, but attribute to it a number of actions, the result of which should be to increase the level of environmental responsibility of participants in supply chains.
During the survey stage, the overall attitude towards the green procurement techniques application in the supply chain management segment could be identified based on the respondents’ emotive approach to the issue. 12 of the respondents’ responses were absolutely positive in terms of the matters relevance. The overall visual representation of the feedback could be noticed on the diagram below:
Thus, the further research steps concern overall results processing and defining a new theoretical approach towards the issue of green procurement.
Other respondents, under the “green” supply chain regard the process of scientific and practical activities, involving the formation of an efficient tool for integrating environmental aspects throughout all the aspects of the supply chain to reduce any possibility of harm and contribute to the value of goods through the use of energy and resource sustainable technologies. Within the framework of this definition, the respondent discloses the relationship between environmental impact, economic impacts and social responsibility of procurement activities within supply chains.
This definition was reflected in the responses of other respondents. So, one of the experts considers green procurement as “a system of measures that provides for the use of energy and resource-saving logistics technologies and modern equipment in all parts of the supply chain of goods in order to minimize negative environmental impact and increase the total consumer value of products for consumers.” This definition is consonant with the definition proposed by the previous indicated respondent, but is more capacious.
In general, respondents note the choice of market partners sharing the priorities of “green logistics” and the joint implementation of relevant projects with them as priorities of green procurement; participation in governmental programs and support for public initiatives aimed at implementing the principles of sustainable development and others. In fact, 20 out of 20 experts agreed upon the statement that the global environmental policy had significantly affected the supply chain management across the UK. In words of the medium-sized enterprise CEO, being one of the expert, the major issue concerned “the increasing end users’ demand to know how the product they are using affects the environment as fragile as it is depicted in the media nowadays.”
Thus, clear relationship can be traced in understanding of green procurement by the representatives of the UK SMEs working in FMCG sector: sustainability (as the basic requirement) – green approach (core concept) – green practices (as the result for company) – consumer value (as the result for company’ attractiveness for consumers) – stakeholders (company’ attractiveness for stakeholders such as local communities and so on).
In a number of procurement procedures, product safety criteria are applied such as a prohibition or restriction on the content of anionic and / or nonionic surfactants in the composition, the classification of the product as class 4 (low hazard substances), and the requirement that there are no non-pathogenic microorganisms in the composition. Special attention in some purchases focus on the biodegradability of the ingredients.
In general, the use of grounded theory and content analysis in secondary and empirical research allows concluding that the integration of green technologies into all parts of the enterprise’s logistics chain is implemented through the following activities:
- When managing procurement, it is necessary to evaluate suppliers in terms of environmental friendliness of the production of goods. For example, one should analyse the following aspects of the activities of suppliers: the application of technologies in manufacturing or services that ensure “lean” production, emphasizing the application of the principles of energy saving in production, minimization of production waste, and a number of other indices. Much attention should be drawn to the recycling options (reuse in production).
- Within the framework of distribution logistics, the following areas of activity should be envisaged: the use of environmentally acceptable packaging materials, the implementation of the return of packaging materials, the disposal of packaging and goods unsuitable for their intended use (it is about physical utilization, moral obsolescence). An analysis should also be made of existing and promising distribution channels for their impact on the environment, including the aspect of organizing the movement of “reverse” material flow.
- In terms of the transport logistics, the main attention should be drawn to the analysis of the qualitative features of the vehicles utilized for environmental sufficiency and compliance with environmental law, and the assessment of the possibilities of using eco-fuel should be carried out.
- Within the framework of warehouse logistics, an environmentally grounded spatial distribution of the used warehouses, compliance of storage conditions with established standards should be developed.
To ensure a high degree of environmental protection, it is necessary to implement an integrated system of this protection at all stages of distribution. The listed areas of activity may vary depending on the direction of economic activity and the specifics of the organization. However, in general, the implementation of these areas of development will ensure the implementation of “green” management.
The results of the analysis demonstrate that there is a clear need to develop typical environmental requirements and criteria for different product groups in the UK. Often, purchasers present specific requirements formulated for a specific product group, or links to specific corporate standards and norms. In this case, the development of standard environmental requirements and their adoption as guidelines on the level of regulatory and consulting services for small businesses will help procuring entities to include these requirements in the procurement documentation.
When speaking of the socio-political aspect of green procurement in the UK, the major development obstacle should be indicated. Most of the procedures concerning the issue were initially focused on the standards approved in the European Union. However, the Brexit process required authorities to reconsider their development path and decide whether the supply chain development should still address to the EU regulation or there was a need to create an independent strategy for the state. For the sake of clarity and contrast in terms of data, the green procurement statistics across the EU countries should be examined.
In the procurement of nutritional services for children and adolescents, restrictions on the content of artificial additives and toxic substances in products are used more often than in other cases. In Europe as a whole, in 73% of analysed procedures for cleaning products and 95% of procedures for cleaning services, customers use ecological requirements and criteria (Mangla and Luthra, 2019). Environmental risks from the use of non-environmentally friendly cleaning products are very significant. The main active ingredient of synthetic detergents and cleaners are surface-active substances (surfactants), many of which, especially anionic ones, do not decompose in the aquatic environment. Phosphates, which are a common component of washing powders, entering water bodies, lead to eutrophication (“blooming”) of water bodies. This, in turn, leads to a change in the living conditions of aquatic organisms and deterioration in the quality of the aquatic environment. In addition, chlorine compounds that are highly toxic are often found in disinfectants. Other components of cleaning products, such as preservatives, perfumes and dyes, can cause negative effects on the condition of water bodies. In addition, they are often allergenic and irritating and can be harmful to employees of the manufacturer and end users.
In the UK, in the procurement of cleaning agents and detergents in all technical specifications there is a requirement that the purchased product conforms to the standard for this type of product; however, these standards contain minimum requirements for the environmental safety of the product. Additional environmental requirements for product composition, such as a prohibition on the content of quaternary ammonium compounds, phenol and its compounds, chlorine, are found in single purchases (Mangla and Luthra, 2019). In a number of procurement procedures, product safety criteria are applied such as a prohibition or restriction on the content of anionic and / or nonionic surfactants in the composition, the classification of the product as class 4 (low hazard substances), and the requirement that there are no non-pathogenic microorganisms in the composition. Special purchases focus on the biodegradability of the ingredients.
In European practice, when determining the criteria for detergents, reference is made to eco-labelling standards of type I “European Flower,” which include a prohibition on the use of dangerous carcinogenic, mutagenic, toxic substances. Biodegradable components are preferred, and great attention is paid to packaging requirements, in particular, the use of recycled materials (Burns and Carter, 2018). However, after Brexit, European standards became invalid for British companies. Nevertheless, those buyers who want to better understand the aspects of eco-cleaning should also pay attention to the composition of the cleaning agents and cleaning products used by the cleaning company. In our opinion, the requirements for FMCG suppliers can be significantly expanded using European experience.
The table below shows the requirements identified as priority in the European national concepts of sustainable procurement in small and medium-sized businesses in the FMCG sector. Examples of sustainable procurement include refusal to purchase toxic and chemically hazardous substances, the purchase of certified wood products, the use of reusable containers, equipment energy efficiency requirements, gas emission restrictions, the creation of new jobs, the purchase of honest, non-smuggled products, and much more. Economic, environmental and social aspects of sustainable procurement, identified as priority in national practices of EU countries are shown in Table 2.
Table 2: Economic, environmental and social aspects of sustainable procurement, identified as priority in national practices of EU countries
|Economic aspects||Environmental aspects||Social aspects|
|– justification of the real need for products; |
– development of innovation;
– accounting for the cost of the product life cycle;
– increasing the efficiency of procurement (taking into account the ratio of resources spent on the acquisition of products – cash, time, labour – with the quality and production characteristics of the product)
|– requirements for the energy used (use of renewable energy, energy efficiency requirements, etc.); |
– limits on carbon dioxide and methane emissions;
– the requirement for processing and disposal of waste (organization of separate collection of garbage, requirements for sending waste for processing, etc.);
– requirements for the use of water (reduction of water consumption, the use of rainwater, the creation of closed-loop water circulation systems, etc.);
– requirements in relation to the use of dangerous substances (for example, refusal to use toxic and hazardous substances, refusal to use pesticides in food production);
– requirements for the materials used (the use of materials manufactured during recycling, application of non-toxic materials, materials that will be recycled during some period, and so on);
– ensuring environmental protection at the local level (i.e., the level of local community, that is, contributing to health and social security at the local level);
– conservation of biodiversity;
– restrictions on emissions into water;
– requirements for other emissions into the air
|– ensuring employment (creating new jobs, maintaining employment); |
– health care (ensuring access to quality products, creating conditions for maintaining health, etc.)
– support for local social communities
– support for national and racial minorities, support for women
It is obvious that the large-scale implementation and widespread use of green procurement in the small and medium-sized businesses in the field of FCMG, as the most numerous composition of economic players, will stimulate business and society to produce and consume environmentally friendly products, develop competition between manufacturers, and create environmentally friendly behaviour in society and as a whole will become one of the effective mechanisms for implementing state policy in the field of solving environmental issues.
In the Sustainable Development Strategy in 2005, the UK government announced the quite utopian goal of becoming a leading state in terms of sustainable procurement by 2009. Understanding that this goal cannot be achieved alone, the Department of Environment, Food and Agriculture, together with the Ministry of Finance, created a Sustainable Task Force procurement (The Sustainable Procurement Task Force (SPTF)), which has become a role model in sustainable procurement and a supporter of the private sector in terms of sustainable development. As a result, by 2006 the National Action Plan for Sustainable Procurement Development in the UK Procuring the Future, was developed in 2006. This plan reflects the principles outlined in the Sustainable Development Strategy and in existing European national legal acts regulating public procurement. This strategy defines how to take into account the principles and mechanisms of sustainable development in government-based procurement and investment agreements in all UK authorities.
The following rules are aimed at achieving the following objectives:
- reduce adverse environmental complications during the construction and maintenance of the facilities;
- to encourage more efficient use of public resources;
- to motivate the market for the investments in innovations and manufacturing of products with more cost-efficient principles for all buyers;
- to set an example for business and the public by showing that both government and public sectors contribute significantly to sustainable development.
At the same time, the Action Plan states the following need: to collaborate with primary organizations that are already actively working in the sphere of sustainable procurement; communicate with the Secretariat of the European Commission and the OECD in their planning for the revolutionizing of national sustainable green procurement plans; Engage with major public sector players, suppliers and businesses in the UK to provide broad support for the proposed action. In the Action Plan, ten priority areas were identified from the 174 existing areas of the UK procurement of products, the purchase of which requires the primary application of sustainability principles. Thus, in the UK, as well as in other European countries, the principles and rules of sustainable procurement are defined in various kinds of political acts and integrated into national legal acts on public procurement. These strategies, although they relate to public procurement, can be taken into account by British small and medium-sized businesses to build a strategic vision and tactical support for their green procurement initiatives. In addition, given the large impact of public procurement on market formation, green public procurement serves as a tool to stimulate the development of the market for environmentally friendly goods and services.
At the beginning of the 21st century, the problem of the unstable development of modern civilization acquired a new qualitative state and reached its extreme degree. It becomes obvious that an economy built on the principles of technocracy and non-equivalent social and natural exchange is not capable of ensuring the long-term sustainable development of either the state, society, or business. Mankind enters the Age of Environment when short-term economic goals prove to be untenable if they are not subordinated to the long-term environmental imperative. In this regard, there is a need for a radical restructuring of the existing foundations of entrepreneurship in order to create an economy whose sustainable development would not be in conflict with the interests of nature and future generations. Logistics, supply chains and the procurement system as their most important component as a field of practical activity make a negative contribution to the processes of environmental pollution and depletion of natural resources, and therefore logistics as a branch of knowledge should consider environmental issues in the context of its activities.
In the course of the following research, there was an attempt to investigate the patterns of development of logistics and ecology symbiosis, also known as “green procurement.” While trying to define the scope of green procurement’s influence and relevance in Great Britain’s small and medium-sized enterprises, a number of research objectives were outlined. In terms of the paper’s conclusion, these aims could be compared with the actual research outcomes.
The first aim was to investigate and analyse the practices of green procurement management applied in British SMEs functioning in FMCG market. In the course of the objective’s fulfilling, it was established that the principles of green procurement across the state mostly concerned the introduction of the new renewable energy sources for the logistics process. However, while such an innovation was encouraged by both private and governmental institutions, the tendency of creating an eco-friendly image of an enterprise is still more prevailing over actual attempts of ecological compliance.
Another objective was connected with establishing institutional prerequisites for the development of FMCG SMEs green procurement in Great Britain. As it was established, the UK government has already developed a legislative document denoting principles and work patterns for sustainable procurement. Furthermore, some non-profit institutions like the Energy Saving Trust encourage SMEs to introduce renewable procurement strategies funded by the organization itself. However, the open question concerns the extent to which entrepreneurs are willing to exploit these opportunities, as the empirical study has shown that most of the business sector representatives do not perceive green procurement as a secure area of growth.
Third aim concerned principles, best practices, and failures in the design and operation of green supply chains, applied in SMEs functioning in Great Britain’s FMCG. Thus, the major principles concerning the issue of green procurement in the UK were based on the patterns developed in other European countries. In such a way, they have inevitably become the best practices among the state considering the international experience. The negative aspects, however, were also present in the enterprises’ intention to create the image of environmentally-aware unit by paying attention to the public image instead.
The next aim of the research was to conduct the study of the quality of business processes in the green procurement systems observed in SMEs in Great Britain FMCG and the influence of green procurement on the design and essence of supply chain. For this purpose, an expert survey was conducted, including the participants from both environmental and business segment to obtain a better scope of the matter. As a result, it was established that while all of the respondents realized the importance of the green procurement issue, the vast majority of entrepreneurs were only theoretically willing to secure sustainable procurement patterns within their enterprises. Hence, the quality of theoretical basis of the research could be considered more than efficient, while its practical realization has only been introduced to the market.
The concepts of environmental awareness and protection are topics that concern society, the economy and business. However, the existing practices of green purchasing, logistics chains exacerbate environmental problems, adversely affecting human health and nature, which is why global environmental changes are becoming a serious test for them. At the same time, focusing only on traditional economic indicators can have the most negative consequences. There is a need to take into account the impact of environmental consequences on the human environment from the functioning of supply chains. Such a task can be successfully solved only by relying on the sustainable development system, which accounts for not only economic and social factors in the indicating systems of nature users, but also environmental ones. In this regard, environmental adjustment of the indicators of the FMCG “industry’” as a whole and the transport and logistics chain in particular is required. At the same time, consideration of environmental peculiarities in the formation of the supply chain determines the “green” supply chains, which are little studied from a scientific point of view.
Compliance with the pillars of sustainable development is the key for success of modern business. An international and national institutional environment is being formed for introducing green technologies into production and logistics activities, the system of recording the harmful effects on the natural spheres and evaluating the effectiveness of companies’ efforts to protect the environment from pollution are being improved. Increasingly companies in the world realize the unique value of non-renewable resources and are looking for the optimal balance between the needs of the organization, society, and nature. A matrix approach to classifying “green” technologies according to the stages of the product life cycle and directions of reducing the harmful effects on nature would allow to most effectively build a policy for the sustainable development of SMEs’ business.
A positive effect of the environmentally oriented transformation of the procurement system is the reduction of environmental risk both for the enterprise itself and for individual citizens and society as a whole. The inclusion of the environmental factor in the traditional issues addressed by logistics allows creating an effective motivated approach to the management of procurement processes of various directions in order to reduce the costs of functioning of the entire logistics system and the environmental and economic damage to the environment.
Despite the fact of the individual environmental impact’s visible insignificance, they make up a large majority of business players, and their combined environmental impact is very significant. Thus, for example, while a growing number of enterprises are realizing the benefits of cleaner production in the form of reduced raw material and material costs, adhering to environmental standards and improving customer relationships, most British SMEs lack an understanding of the fact that positive environmental outcome can be an advantage in the market. Most importantly, the limited capabilities of SMEs to adequately interpret and respond to regulatory impacts and incentives should be noted. The task is to adapt the environmental management system, both in content and in form, to the specifics of SMEs. The key to success, small businesses in particular, is to focus on simple, affordable improvements to management methods, rather than implement a formal, sophisticated green management system. It should also be accented that sustainable procurement is quite coherent with the principles of sustainable development, such as providing a conscious society, environmental welfare, and contributing to good governing patterns (Grant, Wong and Trautrims, 2017). Sustainable procurement by the Marrakesh working group is understood as a process in which organizations satisfy their needs in a way that involves assessing benefits not only for the organization, but also for society and the economy while minimizing environmental damage, while paying close attention to the cost assessment of product life cycle cost (Grant, Wong and Trautrims, 2017). The life cycle cost includes not only the costs of acquisition, installation, maintenance, operating expenses, but also the costs associated with the dismantling and disposal of products (Perera, Morton and Perfrement, 2009). Namely the accounting of the life cycle cost that allows justifying during the procurement the need to purchase more environmentally and socially preferable products at the purchase stage, while it is demonstrated that higher purchase prices for such products are offset by lower operating costs and disposal costs. Thus, the main aspects of sustainable procurement are economic, social and environmental. For each of these areas, tasks that are solved during the procurement are determined, and procurement requirements are formulated.
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Summary table of key environmental performance indicators
Part 1. Materials, capital and operating costs (I)
|Area of assessment||Code of the criterion||Criterion||KPI||Materials||Capital expenditure||Operating expenditure (I)|
|Raw staff||Auxiliary materials||Equipment||Construction, |
|Realization of goods||Industrial services||Energy||MRO|
|Green procurement||1||Knowledge of green procurement guidelines||Knowledge and understanding of green procurement||E||E||E||E||E||E||E||E|
|2||Ecological policy of supplier||The presence of open |
|System of management||3||Certificates|| |
|Ecological assessment of the supplier||4||Participation in CDP||CDP Report||R**||R**||R**||R**||R**||R**||R**||R**|
|5||Assessment of the life cycle|| |
* E – expected; R – recommended; D – desirable
** These requirements should be considered mandatory unless appropriate instructions are received.
Summary table of key environmental performance indicators
Part 2. Operating Costs (II) and Logistics
|Area of assessment||Code of the criterion||Criterion||KPI||Operating costs||Operating expenditure (I)|
|Goods and services of general purpose||Marketing||Logistics services|
|Canteen||Express Courier Service||Other||General marketing activity||Measures|
|Green procurement||1||Knowledge of green procurement guidelines||Knowledge and understanding of green procurement||E||E||E||E||E||E|
|2||Ecological policy of supplier||The presence of open |
|System of management||3||Certificates|| ||R |
|Ecological assessment of the supplier||4||Participation in CDP||CDP Report||–||–||–||–||–||R|
|6||Assessment of the life cycle||(3) Environmental declaration of production||D||D||D||D||D||–|
|Environmental performance indicators||7||Greenhouse gas emissions||(3) Carbon footprint||D||D||D||D||D||D|
|12||Recycling and Reuse||(2) Waste recuperation||D||–||D||D||D||–|
|13||Food and beverages||(1) Plates and dishes |
(2) Saving food
(3) Large household
|14||Usual materials||(1) Carrier bags |
(2) Lighting fixtures
(3) Supple chain
(4) Carton boxes
|15||Choosing of location||Logistics optimization||–||–||–||–||D||–|
|Transport KPI||(1) Questionnaire |
Following Green Procurement Policy, any company should strive to encourage suppliers to control and improve environmental performance by the maximum number of indicators.
A number of KPIs are classified as desirable, as suppliers are not required to report them. However, it is recommended to track them, as they may become recommended or mandatory (expected) in the future.
The experts’ interview schedule
|No. of expert||Interview date (Held 10February, 2020 – 10 March, 2020)||Form of communication||Interview duration|
| ||February, 11th||Skype interview||˜30 min.|
| ||February, 11th||Personal meeting||˜30 min.|
| ||February, 13th||Skype interview||˜30 min.|
| ||February, 13th||Skype interview||˜30 min.|
| ||February, 13th||Personal meeting||˜30 min.|
| ||February, 16th||Skype interview||˜30 min.|
| ||February, 17th||Personal meeting||˜30 min.|
| ||February, 17th||Skype interview||˜30 min.|
| ||February, 17th||Skype interview||˜30 min.|
| ||February, 19th||Skype interview||˜30 min.|
| ||February, 19th||Skype interview||˜30 min.|
| ||February, 20th||Skype interview||˜30 min.|
| ||February, 20th||Skype interview||˜30 min.|
| ||February, 21st||Skype interview||˜30 min.|
| ||February, 23rd||Skype interview||˜30 min.|
| ||February, 25th||Skype interview||˜30 min.|
| ||February, 28th||Skype interview||˜30 min.|
| ||March, 1st||Personal meeting||˜30 min.|
| ||March, 3rd||Personal meeting||˜30 min.|
| ||March, 5th||Skype interview||˜30 min.|