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The Procurement Department is a good place to manage Carbon Trading

Jonathan Dutton is Managing Director of CIPS Australia, the peak body for the procurement profession.

The re-arrival of carbon on the federal government agenda, firstly as a tax and, secondly, in time, as an emissions trading scheme, has had all manner of organisations reaching for their files from two years ago and dusting them off. Despite the long legal road yet to travel through Parliament and the Senate, carbon tax/emissions trading increasingly have an air of inevitability about them.

But business is not yet ready. They were going to be ready of course, but the failure to get the legislation through the Senate the first time, the shambles of Copenhagen in December 2009, and the pre-election promises to do nothing, soon killed the momentum. But, coming again it surely is – sooner or later. In any case, it is not just a compliance issue, nor even a risk issue. Simply, consumers (and employees for that matter) are demanding sustainable solutions.

Former NZ PM Helen Clark said at the CIPSA event in Sydney in June 2007 that consumers would in the future punish organisations that did not offer a sustainable solution. She was right then, and will still be right in future. Sustainability is set to become part of our marketing process due to customer needs to buy green. As Hillary Clinton said during the GFC – “the world’s shoppers are still buying green.” Organisations will have little option but to embrace carbon management and sustainability in general in the long run. Indeed they may even need to broaden their contribution to meet the even wider context of social responsibility.

Currently, responsibility for carbon tax/emissions trading often sits in many CFO’s offices, in some ‘Strategy Departments’, or within CSR or ‘green’ departments in big organisations. But it is not yet in the business mainstream. Not yet on the line managers’ desk. When it arrives, they will need help managing it into their P&L and understanding a more confusing purchase decision process. For instance, do we buy the cheapest with more carbon, or the pricey option with less carbon? Clearly it is set to become part of the fabric of our business decision making. Managers will need help from internal teams deploying good process, commercial awareness, trading skills, a legal perspective and an ability to work to a brief. Like the professional procurement teams, perhaps?

If you think of ‘carbon credits’ as a new currency, like Euros say, then it is all too easy to think of procurement teams taking on the responsibility for carbon or emissions trading. Now think how readily you can transfer the professional procurement skill set to managing carbon trading. Then think, who else could do it better, or even as well as procurement people?

Twenty years or so ago, major organisations started to realise that the supply chain was a good place to manage risk and, more recently, a good place to make sustainable total cost reductions. Nowadays they commonly seek to drive a wide range of commercial benefits from procurement efforts; not least by using procurement as an instrument of policy – to align outcomes to corporate strategies or public policies.

Business could do far worse than turn to procurement to manage carbon trading.

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