Glossary of Terms
Welcome to SPLC’s Glossary of Terms in sustainable purchasing!
As with all of our resources, we welcome your feedback! If you see a term that is missing, please email us at firstname.lastname@example.org.
- 1 Anti-competitive practices
- 2 Assessment
- 3 Beneficial owners
- 4 Competitive dialogues or consultations
- 5 Chemical products
- 6 Disclosure
- 7 Direct purchasing
- 8 Eligible procurements
- 9 Enterprise-wide sustainability
- 10 External stakeholders
- 11 Forward commitments
- 12 Full-cost accounting (FCA)
- 13 Hybrid life cycle assessment
- 14 Impacts
- 15 Indirect purchasing
- 16 Life Cycle Assessment
- 17 Market analysis
- 18 Market transformation
- 19 Materiality Assessment
- 20 Multi-Stakeholder Efforts
- 21 Non-financial award criteria
- 22 Performance-based specifications
- 23 Preliminary market consultations
- 24 Priority Spend
- 25 Procuring innovation
- 26 Small and medium enterprise (SME)
- 27 Small and medium enterprise-friendly
- 28 Supplier diversity
- 29 Supplier innovation
- 30 Supply chains with a high risk of hidden impacts
- 31 Sustainability criteria
- 32 Sustainability performance
- 33 Sustainability spend analysis
- 34 Sustainable purchasing
- 35 Sustainable purchasing program
- 36 Total cost of ownership (TCO)
- 37 Transparency
Anti-competitive practices are business, government or religious practices that prevent or reduce competition in a market.
Assessment here is defined as the process of identifying and ranking priority environmental, social and economic/governance issues, based on criteria specific and material to an organization and/or its stakeholders.
Beneficial owner is a legal term for the individuals who ultimately control and profit from a corporation. Public interest organizations, such as Global Witness, the B Team, and Transparency International, have documented how anonymous, opaque companies enable corruption, fraud, organized crime, tax evasion, and impunity for abusers of human rights and the environment. Recognizing that knowing the true identity of ones suppliers is a prerequisite for effective due diligence, procurement organizations are increasingly requesting beneficial ownership transparency from their suppliers. In 2017, Open Ownership, a global registry of beneficial ownership information launched to support the tracking of beneficial ownership information.
Competitive dialogues or consultations
Competitive dialogue is a public-sector tendering option that allows for bidders to develop alternative proposals in response to a client’s outline requirements. Only when their proposals are developed to sufficient detail are tenderers invited to submit competitive bids.
Chemical products refer to products purchased for application in liquid, gel, or powder form, such as: cleaning and sanitizing products; building maintenance products; and landscaping maintenance products, whether these products are purchased directly or through a service agreement, such as a cleaning or landscaping contract.
For purchasers to be able to understand and take responsibility for the environmental, social, and economic impacts associated with the full life-cycle of the goods and services they buy, they must be able to gain access to material information about those impacts. Disclosure of material information by suppliers to purchasers (and other stakeholders) can be done confidentially or publicly.
An organization’s total direct purchasing refers to all purchases of goods and services that are directly incorporated into a product being manufactured or bought for resale. In contrast, indirect purchasing refers to purchases of goods and services that are not directly incorporated into a product being manufactured or resold.
Refers to the total value of procurements to which a strategy or process could reasonably be applied.The respondent may determine the portion of their organization’s purchasing that would be eligible for a specific action.
The extent to which a company has integrated sustainability across its total enterprise.
External stakeholders to an organization’s sustainable purchasing program can include customers, investors, public interest organizations, taxpayers, and community members, to name a few. Suppliers are also external stakeholders, however, SPLCBenchmark asks questions about them separately because they are an important group of external stakeholders that have a consistent relationship to sustainable purchasing programs in all types of organizations, whereas some organizations have investors and others don’t, etc.
An agreement to purchase a product or service that currently does not exist, at a specified future date, providing it can be delivered to agreed performance levels and costs
Full-cost accounting (FCA)
Full cost accounting (FCA) is a method of cost accounting that traces direct costs and allocates indirect costs by collecting and presenting information about the possible environmental, social and economic costs and benefits or advantages for each proposed alternative.
Hybrid life cycle assessment
Hybrid life cycle assessment (LCA) is a method for combining detailed data about specific facilities with average data about an entire industry sectors to provide an approximate understanding of the sustainability performance an industry supply chain that includes those facilities and sectors. More on Hybrid LCA.
Impacts of a purchased good or service include all of the direct or indirect consequences of production, distribution, use, and disposal of that good or service. Impacts may be positive or negative, and improving impacts includes both enhancing positive impacts and reducing negative impacts.
An organization’s total indirect purchasing refers to all purchases of goods and services that are not directly incorporated into a product being manufactured or bought for resale. In contrast, direct purchasing refers to purchases of goods and services that are directly incorporated into a product being manufactured or resold.
Life Cycle Assessment
Life cycle assessment (LCA) is a method for assessing environmental (or other) impacts associated with all the stages of a product’s life, from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling. More on LCA.
A market analysis is a quantitative and qualitative assessment of a market. It looks into the size of the market both in volume and in value, the various customer segments and buying patterns, the competition, and the economic environment in terms of barriers to entry and regulation.
Market transformation is the strategic process of intervening in a market to create lasting change in market behavior.
Materiality assessment is the process of identifying and ranking priority environmental, social and governance issues, based on criteria specific to an organization and/or its stakeholders. More on materiality assessment.
Collaborative projects or programs that leverage the collective knowledge and influence of marketplace actors (e.g., buyers, suppliers, regulators, public interest organizations).
Non-financial award criteria
Bid evaluation criteria that factors in performance on criteria other than cost, such as giving weight to factors such as energy efficiency or actual CO2 emissions.
Appreciative gestures, recognition and incentives that are not monetary based. Incentives which cannot be offered in terms of money are known as non-monetary / non-financial incentives.
A performance specification for materials establishes performance indicators measured by standard test methods with defined acceptance criteria stated in contract documents and with no accompanying restrictions on proportions.
A performance specification specifies the operational requirements of a component or installation. Simply put, a performance specification tells the contractor what the final installed product must be capable of doing.
Preliminary market consultations
The market consultation aims to actively approach the market to find out about the state of the art and current development in the related sector, and gather valuable feedback.
Priority spend categories are those categories of spend where an organization has an opportunity to significantly improve relevant category impacts, whether by virtue of volume of category spend, intensity of impact, or both.
When an organization acts as a launch customer for innovative goods or services. These are typically not yet available on a large-scale commercial basis. More information about procuring innovation.
Small and medium enterprise (SME)
Small and medium enterprises are businesses whose personnel numbers fall below certain limits (often <100 personnel for “small” and 100-500 personnel for “medium”). SMEs outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors.
Small and medium enterprise-friendly
There are various ways of making procurement processes more open to SMEs and encouraging first tier contractors to do the same. For example, ensuring that the minimum insurance requirements for suppliers are proportionate to the risk and value of the contract being tendered removes an undue burden on SMEs wishing to compete for low-risk business. Example SME-friendly procurement policy.
Supplier diversity refers to sourcing from businesses that are owned or operated by individuals who belong to groups) that have historically faced barriers to employment and/or economic opportunity. These may include, for example, businesses that are owned or operated by women, minorities, veterans,
A supplier diversity program encourages sourcing from businesses that are: owned and/or operated by historical minorities, women, veterans, or LGBT individuals; or have been historically disadvantaged in the marketplace for other reasons. Supplier diversity has many benefits, including customer satisfaction, cost savings, and investor relations.
A supplier’s initiative that offers its strategic customers a competitive edge or offers a service initiative that generates enhanced services.
The production and distribution of some products and services are known to have a greater risk of negative social, environmental, and economic impacts, such as human trafficking, labor abuses, corruption and bribery, natural resources theft, and more. Buyers of these products and services need to require greater transparency and conduct more thorough due diligence when buying from these supply chains to ensure their purchases are not sponsoring such harmful behavior. There are many tools and service providers available to help buyers evaluate which supply chains have a higher risk of hidden impacts. The SASB Materiality Map is a free resource that can serve as a starting point.
Requirements pertaining to the sustainable quality of a product and its sustainable production, which have to be fulfilled in order to acquire a sustainability status or certification
Sustainability performance refers to the extent to which a product, service, or supplier supports the natural, social, and economic systems on which we depend, now and in the future.
Sustainability spend analysis
Sustainability spend analysis is a process for identifying: 1) sustainability-related risks and opportunities across an organization’s overall portfolio of spending; an 2) priorities for action based on the relative significance of particular spend categories, suppliers, purchasers, regions of origin, or other factors. Reed a comparison of conventional and sustainability spend analysis.
Sustainable purchasing is the act of taking responsibility for the environmental, social, and/or economic consequences of purchased goods and services.
Sustainable purchasing program
A sustainable purchasing program is the set of activities undertaken by an organization to implement sustainable purchasing, whether unified as a centrally-managed program/policy or decentralized as a collection of potentially uncoordinated programs/policies.
Total cost of ownership (TCO)
Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. When incorporated in any financial benefit analysis, TCO provides a cost basis for determining the total economic value of an investment.
Transparency is a fundamental principle to build momentum for and create healthy market competition to improve relevant ESE impacts, fosters collaboration, and catalyzes innovation.