An Introduction to Green Purchasing

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An Introduction to Green Procurement

It's Easy Being Green


Green Purchasing, also known as Environmentally Preferable Purchasing (EPP) is important, and not just because we'd need the resources of five (5) earths to sustain us if everyone in the world consumed like the developed world did (and the US, Australia, and Canada in particular). It's important because purchasers, be they government, corporate, or institutional, yield a great influence over the future of the planet with every buying decision they make - and because every purchase has a hidden cost on the environment.

Public sector and private sector institutional buying combined accounts for the vast majority of spending in most developed countries. It's true that we as consumers in developed countries buy a lot, but when you consider that we're (almost) always buying from a private sector company that is in turn spending 60% to 80% of its revenues buying raw materials, products, and services from other businesses, and that, in some countries, public sector buying alone accounts for as much as 25% of GDP, it's easy to see that, combined, purchasers ultimately control 70%++ of GDP in much of the developed world. Thus, if we were to refuse to buy products that were not green, we would effectively force our suppliers to provide us with green products, as the alternatives would be for those suppliers to go out of business.

So what is green purchasing? Simply put it's one of the three cornerstones of sustainable purchasing, where the other two cornerstones are sound social policy and economic soundness. However, whereas economic soundness insures that the overall decision is sound from a life-cycle cost and corporate sustainability perspective, and whereas social policy addresses your need to be a responsible corporate citizen when it comes to human rights and welfare, green purchasing addresses the environmental impact of your buying decision.

One might think that buying green is the easiest criterion of the spend triumvirate to meet now that we have "organic" and "local" food and "eco-friendly" labeling and "energy-star" standards, but it is, in fact, the most challenging criterion! A food product does not necessarily have a low carbon footprint just because it is "organic" or "local"; just because a product is "eco-friendly" when used, does not mean that it's production process was "eco-friendly"; and just because a product is "energy-star" compliant does not mean that it will have the best overall energy utilization.

Buying local produce makes sense during the fall harvest season, because you're eliminating the carbon footprint that accompanies transportation, but it does not make sense in the spring when all the product is coming from greenhouses. Why? The energy footprint associated with a greenhouse often has a much higher carbon footprint than transporting products by land from the opposite hemisphere. Eco-friendly detergent is much better than hazardous bleach, but if it's been produced in a factory that (still) uses a process that generates toxic chemicals as byproducts, it's not very eco-friendly at all. And your average energy-star desktop workstation still consumes 80+ watts of power, which really adds up if your employees never turn them off. If all your employees are doing is word-processing and internet purchasing, they could be using a thin-client that only consumes 4W of power when in use, and a fraction of a watt in standby mode, hosted on a multi-core modern server that supports automatic power-down of processors, drives, and power supplies when utilization drops beyond a certain threshold.

The hope is that this wiki-paper will help you understand the different aspects of green purchasing and how you can go about being green.

Benefits of Green Procurement

Before an organization can go green, it has to want to go green. Why should an organization want to be green?

Brand Image
An organization that has gone green is seen as a good corporate citizen. This increases its image in the eyes of the public.

Customer Satisfaction
An organization that goes green in response to customer concerns increases its levels of customer satisfaction, a key point in customer retention.

Reduced Risk
Not only is any company that does not go green risking a run in with the law by failing to comply with green regulations, which are multiplying at the rate of Fibonacci's rabbits around the world, but it is also maintaining more liability than it needs to. Hazardous chemicals are just accidents, and lawsuits, waiting to happen. With green purchasing, you can offset financial and environmental risk, rather than just inheriting it from your suppliers.

Cost Reduction
Going green doesn't cost more. Most of the time it actually saves money, especially when the new products use less energy, generate less waste, and last longer. Plus, sometimes green products work better than their toxic counterparts!

Going green can reduce the following costs, among others:

  • hazardous material management costs
  • operational costs
  • repair and replacement costs
  • disposal costs
  • health & safety costs (which often come in the form of liability insurance and expensive settlements)

Increased Shareholder Value
A better brand with happy customers who keep coming back and drive up sales while costs keep falling results in significant ROI and EPS, and this makes investors as giddy as school-girls - which is every company's #1 goal, whether they admit to it or not.

Furthermore, when you consider that a study from the Center for Advanced Purchasing Studies by Craig R. Carter and Marianne M. Jennings found that increased corporate social responsibility is generally correlated with higher revenues, healthier and safer work environments, and improved relationships with customers and suppliers, how can you go wrong?

How to Make an Impact

The reason that green procurement is so complex is that there's no single rule-of-thumb that you can apply in every situation. Therefore, this section will offer advice on how to go green on a category-by-category basis before offering some general tips.

IT

Buy computers, peripherals, copiers, and related electronics that are

  • energy efficient
    as it often costs more to power a computer over its useful life-cycle than it costs to buy it
  • free of hazardous materials
    because, even today, too many pieces of electronic equipment that contain hazardous materials end up in landfills and taint local water supplies
  • repairable
    and made of modular components that can easily be swapped out when they fail so you don't have to replace whole systems until they reach the end of their useful life
  • highly recyclable
    and designed to be easily disassembled and recycled
  • returnable to the manufacturer under an end-of-life program
    who will then see that the component is refurbished or recycled

Office Supplies

Buy paper and cardboard that is

  • high in recycled content
    as this saves trees, and makes the tree-huggers very happy
  • recyclable
    as this saves more trees, and makes the tree-huggers even happier

Buy office supplies that are

  • free of hazardous materials
    because your stapler doesn't need to contain toxic chemicals!
  • high quality and have a long life span
    because it's not a cheap hole-punch if you have to buy a new one every month
  • made primarily of recyclable materials
    as everything we make wears out eventually

Buy office furniture that is

  • free of hazardous materials
  • animal-friendly
    like pleather which is just as good, and a better choice when the alternative is a furniture manufacturer that buys leather from a supplier that kills the cow just for its skin (and leaves the corpse to rot)
  • made from lumber harnessed at a sustainable rate

Buildings and Maintenance

Buy cleaning supplies that are

  • non-toxic
  • bio-based
  • available in concentrate form
    as this reduces packaging requirements and the transportation-component of the carbon footprint

When it comes to lighting

  • take advantage of natural lighting
    since almost everyone likes a sunroof
  • use fluorescent lights
    as they're energy efficient and last longer
  • install motion sensors and timers
    to insure lighting, heating, and cooling levels are reduced, and, when possible, eliminated when the room / building is devoid of humans

When it comes to heating and cooling

  • take advantage of geothermal
  • install a green roof
    as this can drastically reduce your cooling bill in the summer
  • redistribute generated-heat in the winter
    because, if you have a data center, the heat produced by your server farm might be enough to heat your whole building (and definitely enough to heat your water year round)
  • implement a Cool Biz policy
    and install programmable thermostats that only turn on the heat when the temperature drops below 17C (63F) in the winter and only turn on the cool when the temperature rises above 25C (77F) in the summer
  • use easily repaired systems
    as these have longer life spans
  • factor noise pollution into your decision

In general

  • go for energy efficiency
  • be hazardous material free
  • employ water conservation technology
  • use energy efficient cement
  • select individual durable natural-fibre carpet tiles
  • look for refurbished equipment
  • use software systems like BEES to help you make the best decisions
    BEES (Building for Environmental and Economic Sustainability) software uses life-cycle data to help buyers compare and rate the environmental and economic performance of building materials based on their relative impacts with respect to considerations that include global warming, indoor air quality, resource depletion, & solid waste.

Transportation

When it comes to transportation, do as much as you can. Although the impact on a company's total carbon footprint varies from company to company, transportation can account for to 75% of a company's carbon footprint in extreme cases.

  • use ground transportation whenever possible
  • use hybrid or electric vehicles
  • use as little packaging as possible
    and insist that it be 100% recyclable
  • optimize total transportation distances
    and seriously consider using strategic sourcing or network design optimization technology
  • improve vehicle efficiency
    through hydrogen combustion and nitrogen-filled tires, for example
  • use RFID and GPS
    to speed up processing and optimize routes in real-time
  • look for innovative ways to reduce the environmental impact

Note that transportation is one example where "bio" isn't always good, because bio-fuel, and especially corn-based ethanol which requires over six barrels of oil to make eight barrels of ethanol, which burns less efficiently, is not the answer. Not only is it less efficient, but it also reduces the global food supply. Considering there are still people starving in the world, how can you feel good about that decision?

Food

When it comes to food

  • look for food that is chemical and pesticide free
  • buy local during harvest season
  • buy from countries on a neighboring continent at other times of the year
    for example, in spring, the United States should be buying from South America and in the fall, South America should be buying from the United States, and neither should be buying from Australia or Africa unless the food product can't be produced in sufficient quantities on the continent or neighboring continent
  • look carefully at the total carbon footprint from initial production through to final consumption
  • look for alternative sources of the nutritional components you need
    for example, North America consumes more than its fair share of meat when soy is a perfect substitute whose production is less harmful to the environment (as farm animals produce a lot of methane and require a lot of feed, which in turn requires a lot of chemical-based fertilizer, etc.)
  • consider concentrates when buying liquids
    as this reduces packaging requirements and minimizes the transportation component of the product's total carbon footprint
  • buy in usable or salable quantities (to reduce spoilage)
  • insist on minimal packaging
    that is 100% recyclable

Despite the proliferation of "organic" and "local" classifications, and the general acceptance of these as good things, "organic" and "local" and "fair trade" can sometimes be the worst choice you can make.

If something is classified "organic", this is usually taken to mean that a traditional crop is grown pesticide free using traditional methods. This often prevents cross-bred or genetically modified strains from being classified as organic. What's important is that the food is pesticide and chemical free, not how "pure" the seed is or even what production methods are used (as long as they are socially responsible). The only important concern is if the food is safe for consumption or not. Modified and cross-bred strains are usually more drought resistant, and modern farming methods can produce more crops per acre. We shouldn't be preventing this, but encouraging it.

"Local" is great during harvest, but buying local during the spring in the Northern Hemisphere can often be the worst mistake you can make, because you're likely buying from a greenhouse with a high life-cycle carbon footprint relative to the carbon footprint of trucking a crop up from Brazil to Chicago. Do your research before implementing a stupid across-the-board "local produce only" policy.

"Fair trade" is important, but how "fair trade" is the product you're buying? To get that label, an organization usually has to join an organization or pay for a third party certification and inflate its expenses or follow an arbitrary set of rules, which may be in conflict with local practice. Also, many retailers of "fair trade" products often apply a mark-up, that they keep, to "fair trade" products that are higher than the mark-up they apply to products without that label - products that could be grown by companies that pay or treat their workers even better than those that meet the minimum "fair trade" requirements. So, all things considered, just how fair is "fair trade"? If you have good ethics, do your research, and make decisions that you can sleep with, I'm sure you can be just as "fair".

Energy

When it comes to energy

  • Use renewable sources as your primary power source
  • Seriously look at battery back-up technology
    to reduce dependence on diesel, natural gas, and other environmentally harmful methods of back-up power generation
  • Use clean coal or natural gas as back-up power sources if you must, never oil
    as we need to conserve liquid fuel for transportation needs!
  • Always choose the most energy efficient technology out of your economical set of options
  • Minimize noise pollution (from generation and distribution)
  • Make sure everything is properly insulated and shielded (to avoid electromagnetic pollution)

The developed world consumes energy at an alarming rate. In 2004, Canada consumed an average of 18,408 kWh per person, the US an Average of 14,240 kWh per person, and Australia an average of 11,849. While this wasn't as bad as Iceland, who consumed an average of 29,430 kWh per person, or Norway, who consumed an average of 26,657, per capita, these countries still consumed 4 to 6 times the world average of 2,701 kWh per person, and 10 to 30 times the average consumption in under developed countries like Senegal and Nigeria (at 206 kWh and 157 kWh per capita, respectively) and moderately developed countries like China and India (at 1,684 kWh and 618 kWh per capita, respectively). (Souce: UNDP Human Development Report 2007/2008)

Manufacturing

In manufacturing,

  • don't use toxic chemicals or hazardous materials
  • install water conservation technology
  • design for re-use
  • design for recycle
  • design for minimal packaging requirements
  • control and contain odors
  • design for scrap and waste minimization
  • don't over produce

Manufacturing can be very wasteful. For example, it takes, on average, the excavation of three (3) tons of waste rock and ore to produce the 1/10th of an ounce of pure gold required for one 14-carrat wedding wing. (So, unless absolutely necessary, avoid products that unnecessarily contain gold!)

Generic

  • buy less
  • reuse
  • recycle
  • minimize waste
  • go lean
  • ... and that includes inventory
    as excess inventory requires storage, which has an environmental impact, and can spoil or become obsolete, which results in waste

The mantra of conservation is reduce, reuse, recycle. Believe it or not, there is a lot you can do with respect to reduction if you try. The developed world consumes 2/3rds to 4/5ths of the world's paper. Considering the developed world is also saturated with computers, with many countries now having as many computers as people, is this really necessary? Especially considering that, on average 65% of print-outs and photo-copies, many of which could be read on-screen, land in the bin before day's end? WWF Then there's all the junk mail, catalogues, newsletters, and free magazines clogging our mailboxes that we don't want which could be made available in electronic form. If you were to institute a no print-out policy where anyone printing out anything but a final copy of a document that required a signature was fined (and repeat occurrences resulted in departmental budget cuts), you could drastically reduce your paper consumption. (Now, I'm sure you're coming up with objections to this suggestion like "everyone needs a copy of this report for the meeting", but they're irrelevant as they are all easily solved. Install in-table thin-clients in your meeting room or LCD table-tops which can be partitioned into multiple screens, and everyone can have their own electronic copy of the documents for the meeting. Problem solved.)

Before replacing a piece of equipment, see if you have a piece of equipment somewhere else that would work. Or if multiple pieces of equipment are required at the same time, see if there's a way to buy less and redistribute what you already have to meet your organization's need. IT is a prime example. Let's say your software developer needs a new machine and your administrative assistant needs a new machine. Let's also say that your developer's machine is only two years old, and was top of the line two years ago, and that your administrative assistant only runs office applications. You only need to buy your developer a new machine, as the developer's old machine still has at least two years left of life in it for office applications and will do just fine for the administrative assistant.

Make sure everything you buy is recyclable, and recycle everything you can. Be sure to take advantage of dealers and programs that will pay you money for scrap.

Ten Steps to Green Procurement

This section outlines a ten-step process that an organization can use to go green.

Commit to Being Green

Make Green a corporate mandate and create a green policy. This should come from the top. Specify that green is a top priority, and that all procurements for products and services must have minimum green requirements, as well as written authorizations to choose a product that is not among the greenest possible choices. Make it everyone's responsibility and make it a key component of compensation reviews and allocations.

Identify and Categorize Your Needs

Ask yourself: what are we buying, what do you need to buy, what environmental impacts do each of these products or services have, and do they have any similarities? Once you answer these questions, you can see where you can make a big impact. Then you can do something about it.

Develop Green Specifications and Standards

The first step is to develop green specifications and standards for every product you buy. If you buy a lot of office paper (and you probably do), you can insist on a minimum amount of recycled content and unbleached / non-chlorinated paper that is easily recyclable.

If you buy a lot of IT hardware, you can save the environment in a major way by insuring that your IT organization moves away from always-on-at-full-capacity mainframes to modern rack-based server clusters with dynamic resource allocation and virtualization and rack-based cooling that not only cut operating power requirements drastically (often in half), but also cuts power requirements for cooling (by 20% or more). You can replace all your energy-hog desktops with Sun and IBM thin-client technology that is anyway from 5 times more efficient to 20 times more efficient than your average desktop (depending on computing needs). You can replace your power-hungry CRT monitors with power-light LCD monitors. You can make sure that all of your equipment has automatic power-save standby modes that consume 1W of power or less if it is left on.

Wherever possible, you should use existing environmental standards such as Energy Star, or standard environmental ratings, factors, and best practices, such as might be recommended by LEED, EMAS, or the ICLEI KES in defining your specifications.

Establish Green Selection Criteria and Their Impact on Award Decisions

Once you have identified the standards you are going to use for each category, you have to outline the selection criteria, weight and prioritize them, and figure out how much of an impact they are going to have on your decision. What percentage of the decision must be based on green considerations? 20%? 50%? 80%? In some categories, where the difference between "green" and "not green" is not that significant, or where your overall spend, and therefore your overall influence, is low, it's probably not useful to take a hard stance - unless there are considerable cost savings or brand enhancements to be made. The categories where your spend is high, and the effect of going green is substantial, are where you need to focus your efforts, as that's where you can do the most good.

Focus on Identifying Products and Services which are Green

Generally speaking, if a supplier isn't green, or making an effort to go green, that supplier should not even be invited to bid. Make it a policy that, unless you are not able to identify at least three green suppliers, that a non-green supplier should not even be allowed to enter a bid. Also consider defining automatic exclusion rules for suppliers that still employ manufacturing processes that produce banned CFCs or products that (unnecessarily) contain lead, mercury, cadmium, hexavalent chromium, polybrominated biphyenls, and polybrominated diphenyl ether (as restricted or banned under RoHS. Also, don't be afraid to show preferences to manufacturers and distributors who actively advance environmental conservation practices.

Always Use a Life-Cycle Costing Approach

Consider the total environmental impact of the product you are considering from the harvesting and processing of the raw materials through its final disposal before making a decision. Be sure to include efficiency, waste, recyclability, and material composition into your analysis. With regards to services, consider the total environmental impact of the equipment utilized in the performance of the services as well as any impact of the services themselves.

Include Green Performance Clauses in Every Contract

Be sure to incorporate clauses into every contract that allow you to enforce penalties or terminate the contract if the supplier does not meet the minimum green and sustainability requirements that they commit to. Also consider incorporating clauses that reward the supplier with more business or bonuses if they exceed green requirements. For example, if they managed to increase their recycled content factor from 40% to 50% without reducing quality, they should be rewarded with more business. If they manage to deliver equipment which is more energy efficient than promised, and you save bags of money, give them a bonus by reducing the base volume rebate you negotiated. In addition, the entire contract should be littered with green terminology.

Communicate and Inform

Once you have policies and practices, it's important that you communicate them, explain them, and offer your buyers training on the complex categories that they have to manage on a regular basis so that they can differentiate the products that are truly green from those that are coated in greenwashing.

Use Green Technology

Use e-procurement, e-sourcing, and other e-systems, run on energy-efficient technology, to buy online rather than using reams upon reams of paper that result in the unnecessary destruction of forests to research, contract, and buy products and services. Furthermore, maintain all of your manuals, and policies, in easy to access e-documents on your indexed, searchable, and easily accessible corporate intranet.

Make it Easy

Design every policy, process, and system developed and deployed in support of green to be easier to use than the alternatives. People like easy. If you make purchasing green easy, it will happen naturally (and, done right, save you a lot of gr$$n).

Author(s)

Michael Lamoureux, Ph.D., Sourcing Innovation

References

Benefits of Green Purchasing Decisions
Green Seal

Buying Green: A Handbook on Environmental Public Purchasing
The European Commission

Buying Green Online: Greening Government e-Procurement of Office Supplies
EPA

Green Procurement Standards: 3rd Edition
The Screen Group

Green Public Procurement in Europe 2005
European Commission

Green Purchasing: Helping Nature and the Bottom Line
Janet Wiens

Green Purchasing Report
EyeForProcurement

Green Transportation and Logistics Report 2007
EyeForTransport

Lean and Clean with Green Purchasing
Mickey North Rizza

Purchasing
Rutgers

Purchasing Power WorldWatch Paper #166
Lisa Mastny

Reasons for Change
Pollution Prevention Regional Information Center

Sustainable Procurement
Wikipedia

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