Sustainable procurement: a case study on Standard Bank Limited, Bangladesh
AuthorAbedin, Md. Jaynul
MetadataShow full item record
Till today there are no separate rules or regulations for private sector procurement including banking sector. As such the Public Procurement Act, 2006 is the only established law for procurement in any sector in Bangladesh. In the Public Procurement Act, 2006 (PPA 2006), the term ‘procurement’ has been defined as ‘the purchasing or hiring of goods, or acquisition of goods through purchasing and hiring, and the execution of works and performance of services by any contractual means’. In line with that banking procurement can broadly be defined as the purchasing, hiring or obtaining of goods, works or services by the banking sector by any contractual means. Banking procurement is alternatively described as the acquisition of goods, works or services if such acquisition is effected with resources from bank’s funds. The items involved in banking procurement range from simple goods or services such as clips or cleaning services to large commercial projects, such as the development of infrastructure, data centre, banking software etc. Procurement in the banking sector hardly differs from that in the private sector. The purpose of procurement in the private sector is basically straightforward whereas that in the public sector complex as considers the economic development and welfare of the country rather than the commercial profits. Furthermore, unlike other private procurement, banking procurement needs to address the considerations of integrity, accountability, national interest and effectiveness since banks deal with common people’s money. Sustainable Procurement (SP) is procurement that is consistent with the principles of sustainable development, such as ensuring a strong, healthy and livable society for all, living within environmental limits, and promoting good governance. Sustainable procurement is an approach that takes economic, environmental and social sustainability into account when making any purchasing decisions. An analysis through the review of Banking Sector procurement considering Standard Bank Limited as a subject of case study to find out the possible scope of sustainable procurement in present Banking Sector procurement framework reveals that although there are some provisions in the PPR, 2008 and STDs which relate to the sustainability issues, these are not sufficient in introducing sustainability in the Banking Sector procurement. What to talk about a Private Bank like Standard Bank Limited the Procurement Policy of Bangladesh Bank itself does not have clear guideline on Sustainable Procurement related performance measures and way to achieve the Key Performance Indicators of Sustainable Procurement. The current scenario of sustainable procurement practice in the banking sector has been studied through analyzing the Annual Report, interviews with key procurement professionals and survey with procurement officers of Standard Bank Limited addressing three aspects namely economic, environmental and social aspect of sustainable procurement. The analyses indicate that although there are a few cases where some sustainability issues are in practice, these are not very common as a whole in the banking sector of Bangladesh. Existing tendering system in Bangladesh is still based on the lowest price approach and whole life costing approach is rarely considered in banking sector organizations. Majority of the banks do not have any provision as such an environmental management system with the exception of a few. The study indicates that at present there is virtually no mechanism in our banking sector procurement system to check the environmental performance of contractors/ suppliers. Sustainability criteria should be embedded in the tendering system of any organization. Knowledge and awareness at the individual procurement professional level seem important in order to make active sustainable procurement choices. A clear commitment is necessary from the very top of the management which has to be transferred to everyone involves in procurement or consumption. For any bank it is necessary to formulate a sustainable procurement policy and to align the procurement framework with the policy. The Board of Directors of the Banks needs to come forward to remove the barriers to sustainable procurement whether actual or perceived. Awareness campaign should be arranged focusing on how to take account of non-monetary benefits of sustainable procurement. Finally, there is a huge scope to further study about the sustainability issue. Advanced research needs to be conducted in order to get a deeper insight into the sustainability issue in relation to the banking sector procurement in Bangladesh.