ISO 20400: everything you need to know about the sustainable procurement standard

Faced with environmental and social challenges, more and more companies are adopting responsible purchasing practices. Since 2017, the ISO 20400 standard has provided them with a clear, recognized methodology for implementing the approach. 

In this article, discover the main advantages of using this standard to involve all your suppliers in the decarbonization of your company and its value chain.

What is ISO 20400?

ISO 20400 is a standard dedicated to sustainable procurement published in 2017 by the International Organization for Standardization (ISO) at the request of some 40 countries and international organizations (UN, OECD, European Commission). This standard was developed primarily to provide a clear, harmonized methodological framework for organizations wishing to deploy a sustainable purchasing policy.

ISO 20400 defines sustainable purchasing as "purchasing that has the greatest possible positive environmental, social and economic impacts over its entire life cycle". In concrete terms, the implementation of a sustainable purchasing strategy therefore aims to integrate environmental and social criteria into purchasing actions, in addition to economic criteria, in order to give preference to products and services whose societal impact is kept to a minimum.

🔎 Focus : These CSR criteria must be applied within the framework of two different but complementary approaches. On the one hand, the company must strive to select products that offer the best possible environmental performance (e.g. eco-designed products, recyclables, local products, etc.).

On the other hand, it must implement a sustainable supply chain by involving involving its suppliers in its ESG approach.

Focus on the "RFAR" label

Unlike other international standards, ISO 20400 is a voluntary standard and is not subject to certification. Its main aim is to provide recommendations and best practices for companies interested in ethical purchasing.

Since 2012, however, there has been a mechanism for recognizing this approach, the Responsible Purchasing and Supplier Relations" (RFAR) label. This label is accessible to all companies, and enables those who wish to do so to have their commitment to a sustainable purchasing policy recognized. The label is awarded for a period of 3 years, and is subject to annual verification by an accredited organization and the Conseil National des Achats (CNA).

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 ℹ Please note : To date, 119 organizations have obtained the label, representing some 176 billion annual purchases. To find out more about the labeling process, please consult this dedicated fact sheet prepared by the French Ministry of the Economy.

Responsible purchasing: what's at stake?

Representing on average 50% of a company's sales, purchasing has a considerable impact on its economic performance. As such, they also represent a powerful lever for companies wishing to implement an effective CSR strategy. Purchasing decisions not only affect the organization itself, but can also have a significant impact on the environment and society in general. 

The purchasing function is also one of the variables that significantly affect a company's carbon emissions. Emissions generated by purchasing alone account for an average of 20% of a company's carbon footprint. However, this figure can be much higher for certain activities, such as agriculture (63%), chemicals (44%) or food, beverages and tobacco (67%). Implementing a responsible purchasing approach is therefore essential for the decarbonizing the value chain.

Beyond these various challenges, implementing a sustainable purchasing approach as recommended by ISO 20400 can bring many benefits to organizations : 

• meet the expectations of their stakeholders (customers, consumers, investors);
• increase organizational resilience by reducing supply chain risks;
• reduce costs , notably by limiting the "hidden costs" of purchased products and services (late deliveries, supply chain disruptions, waste management, etc.) and their negative externalities ( greenhouse gas emissions);
• ensure the company's compliance with existing and pending regulations : in particular, since January 2023, it has been mandatory to include purchasing in the carbon footprint. In addition, the new Directive on the Duty of Vigilance (CS3D / CSDD) obliges companies to prevent ESG risks linked to operations in their value chain.  
• improve the organization's brand image , enabling it to stand out from the competition and gain access to new markets.

What are the main principles of ISO 20400?

Guiding principles

The ISO 20400 standard is based directly on the seven key areas defined by the ISO 26000 standard on corporate social responsibility (CSR). It focuses on : 

• organization of corporate governance;
• respect for human rights ;
• consideration of working conditions and relations (employee health and safety, quality of social dialogue, etc.);
• environmental impact (responsible use of natural resources, adaptation to climate change, protection of the environment and biodiversity);
• fair practices (absence of corruption and unfair competition, promotion of CSR in the value chain, etc.);
• consumer protection (fair marketing and information practices, health and safety protection, etc.);
• community involvement and local development (involvement with local communities, local job creation, etc.).

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These key principles should guide companies in the deployment of their approach, and in particular in defining the CSR criteria to be applied when selecting their suppliers.

Contents

A closer look at the content of ISO 20400 reveals 7 main sections: 

• The first three articles define the purpose of the standard, the normative references and a glossary of specific terms used;
• Article 4 describes the fundamental concepts of responsible purchasing. In particular, it stresses the importance of each department defining precisely the reasons why it wishes to implement such an approach.
• Article 5 deals more specifically with the design of a sustainable purchasing strategy. In particular, it reiterates the importance of aligning this strategy with the company's overall CSR strategy, and invites the company to draw up a map of CSR issues linked to sustainable purchasing (risks and opportunities).
• Article 6 focuses on the organizational conditions and management techniques needed to ensure the success and continuous improvement of the responsible purchasing strategy. In particular, it recommends integrating CSR into the existing governance of the Purchasing department, rather than creating a new parallel structure.
• Finally, Article 7 deals with the integration of CSR into existing purchasing processes from an operational point of view. 

How to implement ISO 20400?

Implementing a responsible purchasing strategy in line with standard 20400 requires a company-wide strategy for social and environmental responsibility (SER). To be fully effective, CSR must permeate all corporate processes, and not be limited solely to purchasing.

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 ⚠️ Caution : Management commitment plays a fundamental role. It will be responsible for giving impetus to the approach and guaranteeing the necessary resources (human, financial) for its deployment.

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The following main stages can then be distinguished: 

1. Draw up an inventory of existing purchasing policies: type of products or services purchased, analysis of their environmental impact, best purchasing practices already in place, level of commitment from stakeholders (suppliers), etc. ;
2. Draw up a map of the risks and opportunities associated with sustainable purchasing : ideally, this should be deployed for all purchases, and at least for the largest purchases in terms of volume or amount per year;
3. Identify all stakeholders to ensure they are taken into account throughout the process : suppliers, customers and partners, as well as those responsible for purchasing within the company;
4. Define the responsible purchasing strategy, aligned with the company's overall CSR strategy, with ESG (environmental, social and governance) criteria to be taken into account;

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🔎 Focus : Here are some examples of ESG criteria that can be integrated into the selection of products and/or services:

• environment: energy performance, carbon footprint, eco-design, impact on biodiversity, etc.
• social: working conditions of employees in production companies, respect for human rights, etc.

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5. Setting up an action plan: defining the various actions to be implemented and the people responsible;
6. Training purchasing teams in sustainable purchasing and the CSR criteria to be applied as part of the purchasing process;

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 ℹ Please note : Many organizations offer ISO 20400 training courses (AFNOR, Agence Lucie, etc.). These courses last an average of two days and cost an average of 1,000 euros. They can generally be delivered face-to-face or by videoconference.

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7. Definition of performance indicators (KPIs) to assess and monitor the organization's performance over time;
8. Communication / Reporting of results: this involves detailed and transparent communication on the actions and results of the responsible purchasing policy. The company can also apply for RFAR certification if it so wishes. 

ISO 20400 vs. ISO 26000: what are the differences and complementarities?

ISO 26000 is historically the first standard to address sustainable procurement as part of corporate social responsibility. In particular, it encourages organizations to assess their suppliers using CSR criteria, to work with them to improve their practices, and to seek out sustainable products and services with minimal impact throughout their life cycle. 

ISO 20400 focuses specifically on purchasing, and goes further than ISO 26000 in detailing the methodology for deploying a responsible purchasing strategy.

The two standards should therefore be approached in a complementary manner. Since ISO 20400 is based on the CSR principles of ISO 26000, implementing a CSR strategy in accordance with ISO 26000 is an excellent way of preparing for the implementation of ISO 20400, so that the company can familiarize itself with CSR concepts and then apply them effectively in the purchasing process.

Conclusion

Implementing ESG criteria as part of the purchasing process is a key factor in decarbonizing companies. It also enables them to access new markets by improving their brand image in the eyes of their stakeholders. 

The latest ObsAR barometer shows that the momentum is now underway in a majority of organizations, and that the ISO 20400 standard is increasingly well known and used. However, to make the approach fully effective, it is essential that organizations have the means to carry out their actions, thanks to a strong impetus provided by management bodies.

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Further information

Download the replay of our webinar dedicated to decarbonizing the value chain.