A Playpiece for Embedding Sustainability into Sourcing Contracts

By now, you have sat through enough strategy meetings to know the pattern.

The sustainability team presents ambitious goals for ethical sourcing, carbon reduction, and community impact. The procurement team nods politely. And then, quietly, the contracts go out exactly as they always have, price, delivery date, payment terms. The disconnect is not a matter of malice. It is a matter of systems. Procurement professionals are measured on cost savings, supplier reliability, and contract compliance. Sustainability metrics have not, historically, appeared on their scorecards. The result is a gap between intention and execution that swallows countless well-meaning corporate pledges. But here is the truth that changes everything: procurement is the most powerful lever for sustainability that any organisation possesses. Every naira spent with a supplier is a vote for a certain kind of business practice. Every contract renewed is an opportunity to raise the bar. The procurement department is not your obstacle; it is your most underutilised ally. The task is to give them the tools to become champions of your sustainability agenda, and that begins with embedding the right language, the right metrics, and the right incentives into the contracts they sign every day.

The foundation of any sustainable procurement framework is a robust Supplier Code of Conduct that is not merely a signed document filed away and forgotten, but a living, enforceable part of the contractual relationship. Kela, the Finnish social insurance institution, provides a compelling model. With annual procurement expenditure reaching €1.5 billion, they have updated their Code of Conduct to establish minimum sustainability standards that all suppliers and their subcontractors must meet, now covering themes like sustainable water use, responsible raw material sourcing, biodiversity protection, and animal welfare . The code is incorporated into every call for tenders and procurement contract, and it applies not only to the direct supplier but extends throughout the supply chain . This is the critical shift: sustainability requirements cannot stop at your immediate vendor; they must flow downstream to the factories, farms, and facilities where the real environmental and social footprint resides. The code must also reference specific international standards, such as the International Labour Organisation (ILO) conventions, creating a clear, enforceable benchmark for labour practices, child labour prohibition, and working conditions .

Beyond the high-level code, you need specific, measurable contract clauses that translate aspirations into obligations. Law Insider provides sample language that can be adapted for any jurisdiction: “The Service Provider shall perform its obligations under this Contract in a manner so as to conserve energy, water, wood, paper and other resources, reduce waste and phase out the use of ozone depleting substances and minimise the release of greenhouse gases, volatile organic compounds and other substances damaging to health and the environment” . The clause should also mandate that suppliers maintain their own environmental and ethical sourcing policies, and require them to provide copies upon request . The University of Newcastle’s procurement policy goes further, explicitly extending its sustainability expectations to outsourced suppliers of equipment, stationery, and building contractors through non-cost evaluation criteria that assess energy minimisation, adverse environmental impact, and end-of-life product stewardship programs . This means that when a tender is evaluated, sustainability performance is weighted alongside price and quality, creating a commercial incentive for suppliers to invest in better practices.

The most sophisticated organisations are moving beyond simple compliance to performance-based contracting that ties commercial terms to sustainability outcomes. Lenzing, a global fibre producer, has embedded sustainability clauses into supply agreements with its top chemical suppliers and actively monitors compliance through third-party assessments like EcoVadis and the Together for Sustainability audit programme . They track the percentage of procurement spend covered by these assessments, currently around 60 percent of global procurement spend, excluding wood and pulp and have set a target to assess 95 percent of top suppliers representing 80 percent of spend by 2025 . This is the gold standard: moving from “trust me” to “show me,” with verifiable data driving continuous improvement.

But how do you measure what matters? This is where Key Performance Indicators become indispensable. The Environmental Paper Assessment Tool (EPAT) offers a useful template, with its latest version tracking over 30 KPIs across categories including deforestation compliance, business ethics, and labour rights aligned with ILO Core Conventions and ISO 26000 . Your own KPIs should be tailored to your industry and material issues. For a food and beverage company, this might include: percentage of agricultural raw materials sourced from Rainforest Alliance or Fair Trade certified farms; average distance from farm to factory (food miles); percentage of packaging that is recyclable or compostable; and number of smallholder farmers trained in regenerative agriculture practices. For a manufacturer, relevant KPIs could include: percentage of suppliers that have publicly disclosed emissions reduction targets aligned with a 1.5°C pathway; number of suppliers audited for forced labour risks annually; and percentage of high-risk suppliers with corrective action plans in place.

The European Commission’s “Buying Green!” handbook emphasises that effective green public procurement requires integrating environmental considerations at every stage, from needs assessment through contract performance, and using selection criteria and contract performance clauses to promote environmental responsibility . This means that sustainability should not be an afterthought added at the end of the procurement process. It must be considered from the moment a need is identified, shaping the specifications, the supplier selection criteria, and the ongoing contract management. The World Bank’s sustainable procurement guidance reinforces this, noting that within its Environmental and Social Framework, there are over fifty sustainability-related topics where contractors, suppliers, or consultants are essential for implementation—child labour, forced labour, safety, pollution prevention, worker rights, among others . Procurement is the essential mechanism for passing these requirements on to those who will manage them, creating contractual obligations that hold them accountable .

Perhaps the most powerful shift is to frame sustainability not as a burden on suppliers, but as a source of competitive advantage. Sievo’s research on sustainable procurement highlights that companies with strong ESG credentials can drive down costs by 5 to 10 percent and achieve higher growth and valuation margins of 10 to 20 percent . When you communicate this to your procurement team, you reposition sustainability as a strategic enabler rather than a compliance headache. You also need to equip them with training. A1 Group’s “Responsible Buyers Training” programme is an excellent model, with three focused sessions covering ESG and corporate goals, the direct role of purchasing in influencing outcomes, and practical guidance on embedding ESG into tenders and utilising KPIs . This kind of investment signals that sustainability is not a one-off initiative but a permanent competence embedded in the organisation’s DNA.

The journey from a procurement department that tolerates sustainability to one that champions it requires patience, collaboration, and a willingness to redesign processes that have been in place for decades. But the payoff is immense. When your procurement team becomes fluent in the language of ESG, when they see supplier relationships as opportunities for impact rather than merely transactions, your sustainability goals cease to be aspirational documents and become operational realities. The contracts they sign become the architecture of a better supply chain, one that respects workers, protects the environment, and builds the resilient, ethical business that your stakeholders demand and your future depends on. Start with one pilot category, one set of contract clauses, one training session.

Build from there.

The procurement department is waiting for you to ask. They are ready to become your new best friend.