Outdated procurement practices are a significant barrier to achieving ambitious sustainability objectives, and rethinking these practices is crucial. In a recent study by Accenture, it found that 93% of companies will not meet their carbon reduction goals if they do not double the pace of emission reduction activities by 2030. (Report)

In today's fast-paced world, where environmental concerns are at the forefront, setting sustainability goals are just the first step. The challenge lies in turning these aspirations into tangible actions.

 

The Challenge of Traditional Procurement Practices

To understand why many organisations, struggle to realise their sustainability targets, we must look beyond motivation and dedication and consider the role that procurement practices play in shaping the outcomes. This article explores the hidden challenges within traditional procurement processes and presents a compelling case for their re-evaluation in the context of large-scale carbon reduction and sustainability initiatives.

Traditional procurement process and the tools and methods they deploy may not be suitable for the scale and complexity of modern sustainability initiatives. Often the incentives for the procurement team typically measure and reward based on outdated goals. Current best practices are based around more collaborative contracting models and performance-based contracts. This means setting the carbon target goals (outcomes not inputs), measurement, recording requirements and speed of execution are included in the specification criteria to ensure that reduction targets are achieved and able to be communicated to all stakeholders.

 

Case Study: Telstra's Lighting Upgrading Project

To illustrate the impact of outdated procurement practices and the how it can hinder the potential for change, let’s examine the case of Telstra. In 2020, the Telstra Board set several targets to achieve their overarching ESG objectives, including a 50% reduction in CO₂ emissions by 2030 and a waste recycling rate of 85% by 2025. One of their projects aimed at achieving these targets involved upgrading the lighting systems in hundreds of Telstra Exchanges, some over a century old. Whilst the function of the Exchanges has changed over time, their importance has not diminished, and they now play a key role in hosting equipment for critical service providers. Telstra’s goals for this project were carbon reduction and not specifically the replacing of lights; it needed an integrated approach in obtaining the services.

 

Innovative Procurement Solutions

Prior to enLighten delivering the lighting upgrade, the traditional procurement method of seeking multiple quotes from lighting suppliers for each site proved to be costly and time-consuming. It was clear that achieving the ambitious goals set by Telstra within budget and on time was not possible. A new initiative was needed to align the suppliers with the carbon reduction and sustainability goals, rather than specifying inputs. Over the course of 12 months, Telstra collaborated with enLighten to develop an alternative procurement method that significantly reduced costs and delivery times.

This resulted in the supplier designing their solution on lighting outcomes (not a one for one replacement), reducing the number of luminaires installed by approximately 50%.

 

Results and Impact

This innovative approach also resulted in a complete redesign of the project delivery method, cutting the inefficiencies associated with individual site quotes. It also established controls around cost and performance. The result of this approach was the approval and successful rollout of Australia’s largest lighting upgrade project. To date, 425 sites across five states have been upgraded, with the installation of 62,414 enlighten fittings, achieving the following results:

• Energy savings of 23,366 MWh
• CO₂ reductions of 15,971 metric tons
• $5.1m in energy saving rebates, paid to Telstra
• 365456 kilograms of recycled metal.
• 26,098 kilograms of fluorescent tubes
• 1,593 kilograms of batteries were safely disposed of and recycled.
• 7,609 kilograms of plastic were repurposed through recycling.

The experience of Telstra’s LED lighting upgrade project underscores the need for a revaluation of how technical services are procured, especially for large-scale equipment upgrades. By establishing strategic partnerships with suppliers and aligning the objectives of the organisations through rethinking procurement practices and incentives, organisations can successfully achieve ambitious sustainability objectives while also saving cost and time. This case study serves as a powerful example of how shifting procurement practices can enable corporate Australia to thrive in a more sustainable future. Read the full case study here.