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

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

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

What is the ISO 20400 standard?

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

ISO 20400 defines sustainable procurement as “procurement that has the most positive environmental, social, and economic impacts possible over the entire life cycle”. In practical terms, implementing a sustainable procurement strategy therefore aims to integrate environmental and social criteria, in addition to economic ones, into purchasing decisions in order to prioritize products and services with the lowest possible societal impact. 

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

Furthermore, it must establish a sustainable supply chain by involving its suppliers in its ESG strategy.

Focus on the “RFAR” label

Unlike other international standards, ISO 20400 is a voluntary standard and is therefore not subject to certification. Its primary purpose is to provide recommendations and best practices for companies interested in pursuing ethical procurement.

However, since 2012, there has been a recognition mechanism for this approach known as the “Supplier Relations and Responsible Purchasing” (RFAR) label. This label is open to all companies and allows those who wish to gain recognition for their commitment to a sustainable purchasing policy. The assessment is conducted based on the criteria established by the ISO 20400 standard. The label is awarded for a period of 3 years and is subject to an annual audit by an accredited body and the National Purchasing Council (CNA).

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 ℹ Note : To date, 119 organizations have been awarded the label, representing approximately 176 billion in annual purchasing volume. To learn more about the certification process, please consult this dedicated fact sheet prepared by the Ministry of the Economy.

Responsible purchasing: what are the stakes?

Accounting for an average of 50% of a company's revenue, procurement has a significant impact on a business's economic performance. As a result, it also serves as a powerful lever for companies looking to implement an effective CSR strategy. Indeed, purchasing decisions do not only affect the organization itself but can also have major repercussions on the environment and society as a whole. 

The procurement function is also a key factor that significantly affects a company's carbon emissions. Emissions generated by procurement alone account for an average of 20% of a company's carbon footprint. However, this figure can be much higher for certain activities, particularly in the agriculture (63%), chemical (44%), and food, beverage, and tobacco (67%) sectors. Therefore, implementing a sustainable procurement approach is essential for the decarbonization of the value chain.

Beyond these various challenges, implementing a sustainable procurement approach as recommended by the ISO 20400 standard can provide numerous benefits to organizations : 

• meeting the expectations of their stakeholders (clients, consumers, investors);
• increasing organizational resilience by reducing risks related to the supply chain;
• reducing costs by limiting the "hidden costs" of purchased products and services (delivery delays, supply chain disruptions, waste management, etc.) and their negative externalities (emissions of greenhouse gases);
• ensuring the company's compliance with existing and pending regulations It is worth noting that since January 2023, including procurement in carbon footprint assessments has become mandatory. Furthermore, the new Corporate Sustainability Due Diligence Directive (CS3D / CSDDD) requires companies to also prevent ESG risks associated with their value chain operations.  
• enhance the organization's brand image and thereby enable it to stand out from the competition and access new markets.

Learn more about sustainable procurement

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

What are the core principles of ISO 20400?

Guiding principles

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

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

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These core principles should guide companies in implementing their approach, particularly when defining the CSR criteria to be applied during supplier selection.

Content

Looking more closely at the content of the ISO 20400 standard, it consists of 7 main articles: 

• the first three articles define the purpose of the standard, normative references, and a glossary of specific terms used;
• article 4 describes the fundamental concepts of sustainable procurement. It places particular emphasis on the importance for each management team to clearly define the reasons why they wish to implement such an approach.
• article 5 focuses more specifically on designing a sustainable procurement strategy. It highlights the importance of aligning this strategy with the company's overall CSR strategy and encourages the company to map out the CSR issues related to sustainable procurement (risks and opportunities).
• Article 6 focuses on the organizational conditions and management techniques required for the success and continuous improvement of a sustainable procurement strategy. It specifically recommends integrating CSR into the existing procurement department's governance, rather than creating a new, parallel structure.
• Finally, Article 7 covers the operational integration of CSR into existing procurement processes. 

How do you implement the ISO 20400 standard?

Implementing a sustainable procurement strategy in accordance with ISO 20400 first requires defining a corporate social and environmental responsibility (CSR) strategy at the company level. It is important to remember that for CSR to be fully effective, it must permeate all company processes, rather than being limited solely to procurement.

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The following main steps can then be identified: 

1. Assess the current procurement policy : the nature of products or services purchased, an analysis of their environmental impact, existing best practices, the level of stakeholder (supplier) engagement, etc.;
2. Map the risks and opportunities related to sustainable procurement : ideally, this should be applied to all purchases, or at the very least to those with the highest annual volume or spend;
3. Identify all stakeholders to ensure they are considered throughout the process : suppliers, clients, and partners, as well as the individuals responsible for procurement within the company;
4. Define the sustainable procurement strategy, aligned with the company's overall CSR strategy, while establishing ESG (environmental, social, and governance) criteria to be taken into account;

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5. Developing an action plan : defining the various actions to be implemented and assigning responsibilities;
6. Training procurement teams on sustainable procurement and the CSR criteria to be applied throughout the purchasing process;

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7. Defining key performance indicators (KPIs) to evaluate and track the organization's performance in this initiative over time;
8. Communication / Reporting results : this involves communicating in a detailed and transparent manner about the actions and results of the sustainable procurement policy. The company may also choose to pursue RFAR certification if it wishes. 

ISO 20400 vs. ISO 26000: what are the differences and how do they complement each other?

Historically, the ISO 26000 standard was the first to address sustainable procurement within the framework of corporate social responsibility. It encourages organizations to evaluate their suppliers using CSR criteria, work with them to improve their practices, and seek out sustainable products and services that have minimal impact throughout their life cycle. 

The ISO 20400 standard, on the other hand, focuses specifically on the procurement aspect and therefore goes further than ISO 26000 by detailing the precise methodology for deploying a sustainable procurement strategy. 

The two standards should therefore be approached as complementary. 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 to prepare for the implementation of ISO 20400. This allows the company to become familiar with CSR-related concepts so that it can then effectively integrate them into the procurement process.

Conclusion

Integrating ESG criteria into the procurement process is a key driver for corporate decarbonization. It also allows them to access new markets by improving their brand image among their stakeholders. 

The latest barometer conducted by ObsAR shows that this momentum is now underway in a majority of organizations and that the ISO 20400 standard is increasingly known and used. However, to make the approach fully effective, it is essential that organizations have the resources to back their actions, driven by strong momentum from executive leadership.