Sustainable Procurement: Making sure you get what you want
David Baggs, CEO &
Technical Director, ecospecifier global
Summary:
Sustainable Procurement is gaining broad support globally as the
need for increased sustainability outcome become not just more
obvious, but urgent. To achieve sustainability in purchasing once
must know not just about what constitutes sustainability from a
theoretical point of view, or just from a broad practical
standpoint, but to ensure we get what we want from any given
purchase, we need know deeply from a whole-of-life-cycle impact
perspective with economic and social inputs. Only then is one
ensured that the correct decision has been made. The question is,
'how can we achieve this simply within pragmatic organisational
constraints?'
This Technical Note looks at this question from an
organisational standpoint and looks at the implications of engaging
organisation-wide processes in sustainability to deliver overall
increases in productivity called 'Green Productivity' benefits, how
to engage these processes and deliver simple easier procurement
outcomes. The role of third party certification in reducing
research time and effort and providing simpler solutions in
sustainable procurement is also presented.
Introduction:
According to Batsholom and Reid1 Effective use of
tools requires a good process, which depends, in turn, on
supportive mental models. To deliver sustainable procurement
outcomes that actually deliver real environmental, social and
economic improvement in real terms, we must first share mental
models of what is sought to be achieved. Then we need to have
some 'sustainability compass' as a guidance tool and to employ
detailed analysis processes such as life-cycle analysis to make
sure we are getting as robust and holistic answer as we can get and
decide what the important issues are and how important they are
relatively. Then and only then, can we get down to the individual
product comparison assessment level.
Green Procurement can however mean more than just modifying the
specifications of the purchasing department, it can mean embedding
the necessary mental models (understanding) and processes
throughout the entire organisation then using measurement and
benchmarking analysis (such key performance indicators in
organisational and staff performance and at a product specification
level, life cycle assessment- LCA and life cycle impact analysis -
LCIA) and overall, this often requires engaging the whole
organisation from the top down and generally overcoming obstacles
and resistance along the way. At his level it is described as Green
Productivity.
Indeed organisations like Interface the global carpet
manufacturer that started their sustainability journey in
eco-efficiency have, according to its Asia Pacific CEO Robert
Coombs at a recent Green Building Council of Australia 'Green
Leaders' presentation2, realized their maximum benefits
are gained when the whole organisation is engaged in green
procurement, across all sectors. This is how and where 'Green
Productivity' is found.
Green Productivity is derived from finding and driving the
creation of synergy between sustainability initiatives engaged
during green procurement processes. Whether it is using integrated
design processes to design buildings or integrated policies and
processes across major organisations to increase outputs, reduce
costs and increase productivity, synergy delivers multiple benefits
across multiple systems and allows the overall organisation,
process, or system to be optimised - leading to larger overall
savings by enabling and delivering different outcomes. Generating
Synergy and hence Green Productivity involves a variety of
processes that will now be considered.
Discussion:
Sustainability Compass: What is
Sustainability?
The Natural Step Foundation originally from Sweden, have developed
four system conditions for sustainability which when used to
develop appropriate strategic questions can often be used
spontaneously to provide general guidance on whether an
organisational initiative, process or product purchase is heading
towards sustainability or away.
- Substances from within the earth must not systematically
increase in the environment;
- Substances produced by society must not systematically increase
in the environment;
- The physical basis for the productivity and diversity of nature
must not be systematically deteriorated; and
- Fair and efficient use or resources with respect to meeting
human needs.[3]
What is a Sustainable Product?
We must also realize that the characteristics that make a product
sustainable do not just relate to the materials that they are
manufactured from but involve all aspects from a products' design
and raw materials sourcing to the way it is used, deconstructed and
re-used or disposed. It is also an emergent quality of one or more
systems:
- 'supply' systems;
- 'construction' & 'manufacturing' systems;
- 'procurement' systems;
- 'demand' processes;
- 'disposal' systems;
such that the overall life-cycle impact is minimised over more
than one life-cycle or
as the US Architect William McDonough and German Chemist Michael
Braungart
have coined in their book by the same name, the
'Cradle-to-Cradle'4 cycle.
In general terms it relates to products that not only:
- are not harmful ecologically (cradle to grave);
- require minimal maintenance in use;
- don't cause human illness;
- minimise resource demand because they are:
- salvaged, or contain recycled materials;
- reusable or recyclable with minimal additional energy or
processing
- Designed for Disassembly (DfD);
but are also:
- durable & low maintenance;
- minimise resource demand e.g. energy ,water, rare &
non-renewable resources;
- use renewable resources;
and come with manufacturer:
- extended responsibility commitments; and
- corporate social responsibility reporting.
However, if we considered all these reductive aspects of
sustainability to be the full extent of a sustainable product
description, we will be missing any chance of real or actual
sustainability. While we have only vague ideas of what will
constitute a truly sustainable city of the future, we cannot even
get there by only reducing the impacts of growing demands when the
natural systems are in such decline as a result of human
actions.
Biodiversity has plummeted by almost a third in the 35 years
to 2005… land species have declined by 25 per cent, marine
life by 28 per cent, and freshwater species by 29 per cent… the
current extinction rate is now up to 10,000 times faster than what
has historically been recorded as normal.
The Convention on Biological Diversity in Bonn, pledged a
"significant" reduction in biodiversity loss by 2010…global
inaction has already made such a goal totally
unattainable.5
Key examples of the failure to control biodiversity loss is
presented in a 2005 Australian Government report6 that
showed up to 80% of timber imported into Australia from some
countries is illegally harvested and a 2004 American Forest
Products and Plywood Association report7 that found
worldwide illegal timber trade to be worth US$22.5 billion with a
16 country survey finding 20-80% of exports from every country in
the study were illegal.
To ensure sustainability, the natural systems that have been so
significantly degraded will need proactive support. This support
has been broadly characterized by this author as 'Restorative
Sustainability'8 and products and processes that support
restorative sustainability can be identified by one or more of the
following features or abilities:
- promote ecological restoration by:
- reducing past concentrations substances from within the
earth;
- reducing past concentrations substances produced by society in
the ecosphere;
- repairing and restoring ecosystems and increasing the
diversity of nature;
- are perpetual or self perpetuating;
- create net positive influences;
- provide multiple ecological benefits; and
- long lasting effects.
So to move towards a truly sustainable future all social and
business organisations and individuals will of necessity or intent
move toward organisational and behavioural patterns that support
the whole gamut of sustainability characteristics and will need
strong change management support as they confront the inevitable
skeptic/s within and the various influences within organisations
and individuals that relate to any change.
Barriers to Green Purchasing:
There are a wide variety of potential barriers that are likely to
be experienced by individuals within organisations trying to create
change towards sustainability. Some of these are as follows:
Organisational: Lack of /or poor:
- policy direction;
- commitment at senior levels;
- internal sustainability champion/s;
- understanding of issues;
- appropriate organisational structure; plus
- intrinsic conservatism;
- automatic assumption of increased costs;
- identified sources of funding (if necessary);
- perception that green 'is not a business concern'.
Individual:
- 'butt protecting" - fear of failure ;
- culture of conservatism;
- lack of time (or will) to research alternatives;
- bias in specifications towards 'tried & true';
- over-focus on first cost not whole-cost;
- specifications preclude innovative solutions
- perception that 'second hand is second class'
- unwillingness to take responsibility for change;
- lack of information on alternatives;
- lack of creditable eco-assessment of products.
While these are all real concerns many are a result of a lack of
understanding of the reality of the benefits of an integrated
approach to sustainability resulting from the view that
'sustainability' is something that is added to the status quo
rather than integrated into new processes from the beginning.
The Way Forward - Green Productivity
Green Purchasing is a purchasing strategy. Green Productivity (GP)
is an organisation level strategy for enhancing productivity and
environmental performance (including purchasing) simultaneously and
integrates the adoption of innovative practices, processes,
technologies and products as a key tool. Innovation is a primary
driver of economic growth. Green Productivity greens the process of
innovation to deliver not just cost effectiveness but savings.
Profits can be generated via savings generated by:
- delivering greater raw and recovered materials resource
efficiency;
- improved productivity in processes and people;
- increased quality in products and services;
- higher sales, as a result of changed market profile due to
benefit derived from above initiatives etc
Beneficial, green competitive advantage translates into
profitability because competitiveness in pricing, quality and, the
integration of environmental and productivity improvements creates
new business opportunities. Up until now, "Quality" has been the
focus. Extending this concept to include environmental quality is
not difficult, it is logical…and the market is demanding it.
However, this represents still the first steps toward increased
productivity. Companies that focus only on quality derive only a
fraction of the benefits that can flow from taking several more key
steps. Indeed many organisations have already extended their
quality systems to consider environmental quality with an
'Environmental Management System' (EMS) but the majority of these
tend still to be outward focused often purely on environmental harm
reduction of manufacturing processes in the external environment.
These companies typically will see further benefits but still not
all the benefits that can be encompassed with overall
organisational strategies that consider all aspects of
sustainability within a company. Not just environmental and
resource impacts locally, but globally, taking responsibility for
the resource recovery of products used or produced, considering
social and health impacts on staff (e.g indoor environment quality)
and third parties particularly in relation to equity between
developed and developing nations, transparency and openness of
information in reporting of Corporate Social Responsibility
initiatives, in short, Green Productivity.
A growing number of companies globally have engaged Green
Productivity processes to find it has had major bottom line
benefits and transformed the company. Companies such as Bovis Lend
Lease, Electrolux, Ikea, etc have derived massive commercial
benefits from the Sustainability work they have done that has
engaged the whole organisation in the process and focused on
internal stakeholders and well as environmental consequences.
However the first step Green Purchasing program and learn from
there. There are now several major international and
nationally-based programs underway with this focus to assist
various sectors move in the direction of greening products and
purchasing.
International Processes
International Task Force for Sustainable Products: The
United Nations Environment Program (UNEP) Sustainable Consumption
and Production branch within its Division of Technology Industry
and Economics is hosting the International Task Force for
Sustainable Products' that has resulted in a Marrakesh Task Force
lead by the UK with 13 country members working in various sectors:
lighting; home entertainment products including
televisions, simple set-top boxes and multi-function set-top boxes;
electric motors and compliance monitoring, as well
as:
- raising awareness of product policy as a means of achieving
international development and environmental objectives
- encouraging more innovation on product eco-design
- establishing and participating processes for improving product
performance.9
Equator principles: More than eighty financial
organisations around the world have adopted a set of principles
called the Equator Principles that is already having major impacts
at project levels around the world.
'The Equator Principles Financial Institutions (EPFIs) have
adopted these Principles in order to ensure that the projects we
finance are developed in a manner that is socially responsible and
reflect sound environmental management practices…
We will not provide loans to projects where the borrower
will not or is unable to comply with our respective social and
environmental policies and procedures that implement the Equator
Principles.10
There are 10 principles that among other things requires a
project to:
...maintain or establish a Social and Environmental
Management System that addresses the management of these impacts,
risks, and corrective actions required to comply with applicable
host country social and environmental laws and regulations,
and requirements of the applicable Performance Standards and EHS
Guidelines. 10
Also requiring transparency of information, full consultation
with stakeholders and Independent Monitoring and Reporting.
The principles apply to all new project financings globally with
total project capital costs of US$10 million or more, and across
all industry sectors:
They are based on International Finance Corporation (IFC-World
Bank Group) Performance Standards and Environmental Health and
Safety Policies as well as IFC Procurement Policy. IFC
Procurement Policy calls up green building rating tools e.g. LEED®
(and consequently systems such as Green Star™ would also apply) for
its own Buildings as 'practice what you preach' demonstration so
there is a potential direct link between green building rating
scheme success and successful project funding. This is powerful
leverage in the marketplace.
National Processes
The Australian Procurement and Construction Council
(APCC) has introduced the world's first government
procurement framework to incorporate all three elements of
sustainability into one document. The framework is a set of
national and trans-Tasman principles to guide Australian State,
Territory and Federal governments and the New Zealand Government in
implementing sustainable procurement.
Sustainable procurement means organisations will consider:
- strategies to avoid unnecessary consumption and manage
demand;
- minimising environmental impacts of the goods and services over
the whole of life
- suppliers' socially responsible practices relating to
employees;
- •and value for money over the whole-of-life of the goods and
services, rather than just initial cost.11
The Market Leading the Way
There is ample evidence in the market that green and ethical
investments are driving company share values and business
offerings. The financial organisations behind the Equator
Principles have done this for a reason. They know the ethical
investment sector is one of if not the strongest growing financial
sector. Table 1 below shows an example of a recent Cleantech Funds
performance against the ASX demonstrating clearly that the market
is supporting the capital value of the Cleantech stocks in this
fund well in advance of the generic ASX pool of stocks and this is
not an isolated example.

Table 1: ACT Cleantech Fund vs ASX &
others12
Further example of the growth in this sector is the massive 550%
anualised growth in projects registered under the Green Building
Council of Australia's Green Star™ green building rating
scheme.13
Effective Organisations
It is importantto have effective plans and strategies in
place at an organisational level to ensure Green Productivity
delivers all the potential benefits it can. Some key actions
towards green procurement are:
- ensure Senior Management 'buy-in'
- identify internal champions - appoint Sustainability Director
or Officer
- develop, adopt & promote Corporate Sustainability Policy to
drive Green Productivity based on a 'continuous
improvement model' e.g. ISO 9001, or 14001.
- consider all aspects of organisational activity
- governance
- operations
- social responsibility
Within the Corporate Sustainability Plan:
- develop a Green Purchasing Plan with category specific green
tender specifications and assessment processes;
- that uses metrics the market will understand e.g. based
existing: Minimum Energy Performance Standards (MEPS), Green Star,
Life-cycle Assessment etc.
- Plan for & assess Green Purchasing outcomes across
whole-of-organisation:
- integrate Green Procurement KPIs into relevant staff
performance criteria and reviews;
- collect & publish Statistics - internally and
externally;
- use corporate influence in market as a consumer to drive market
change;
- analyse procurement processes and modify - products &
materials, buildings, services (particularly specifications &
contracts);
- use weighted assessment processes based on key environmental
priorities - not just cost & fit-for-purpose issues, to choose
between dislike products;
- use Life-cycle Assessment as an information source;
Innovate: A key pathway to achieving real
synergy and savings in sustainability is innovation. This is can be
a foreign concept for some builders and developers. However the
importance of innovation is underscored by the following quote from
Björn Stigson, President of the World Business Council for
Sustainable Development in Geneva, Nov 200414
Technology is a key part of the solutions for sustainable
development… Innovation and technology are tools for achieving
higher resource efficiency in society.
Manage risk: There is an only sometimes correct
perception that innovation increases risk. Most organisations are
quite risk averse, however some key questions that might assist in
determining how real the risk is and whether it is worthwhile
is:
- Is the risk real or perceived?
- In who's opinion?
- Are they expert in the appropriate field, if not who is?
- Is the risk worth the returns?
- How can any identified risk be externalised?
Use smart tools & collaborate: Learning
from other peoples' experience and mistakes
reduces time and costs. Use online facilitation resources
such as:
- Viridus: an forum for green business
professionals that allows online sharing through forums, polls,
blogs and facilitates direct connection through profiles,
one-on-one and group collaboration.
- The Greenleap Network: An extensive email
forum among green practitioners in Australia run by Philip Sutton
of Green Innovations Inc. Membership to the Greenleap forum is free
for first 12 months, then generally after that, a small fee is
charged:
- see also www.green-innovations.asn.au for information on
Green Innovations & resources on creation of an ecologically
sustainable economy & sustainability-promoting firms:
Use third party verified information: Using or
specifying products or criteria based on third party verified or
certified information is a powerful, strategic tool to reduce
overall research time in:
- understanding the issues and priorities;
- creating specifications; and
- weighting and tender assessment systems;
- ensuring the products you purchase will deliver the benefits
you need to drive productivity;
- finding leading edge, innovative products;
- reducing risk in the purchasing process.
Examples of third party schemes include:
- Minimum Energy Performance Standards (MEPS):
is a Federal Government star based mandatory differential rating
system for:
- Energy Star Australia: Energy Star is an
international standard for energy efficient electronic equipment
including computers, printers and photocopiers, and home
electronics such as TVs, audio products and DVD players. It was
created by the US Environmental Protection Agency in 1992 and has
now been adopted by several countries around the world, including
Australia. The Australian ENERGY STAR program is a joint initiative
of the Australian Government, and State and Territory Governments
overseen by the Australian Government Department of Sustainability,
Environment, Water, Population and Communities. See http://www.energystar.gov.au
- Window Energy Rating Scheme (WERS): run by the
Australian Window Association, is a 10 Star based voluntary
differential rating system for analysis of heating and cooling
benefits of windows and glazing, skylights and films for
residential and commercial buildings.
- Renewable Energy Certificates (RECS): a
numerically based mandatory differential rating system that
assesses the efficiency of energy generating systems relevant to
locality/conditions undertaken by the Federal Government's Office
of the Renewable Energy Regulator. Products registered for RECS
include:
- solar hot water heaters
- small generation systems e.g. photovoltaic, wind, hydro
- see www.orer.gov.au
- "National Carbon Offset Standard: run by the
Federal Government's Department of Climate Change ánd replacing the
'Greenhouse Friendly' scheme this Standard sets the requirements
for verification of the embodied carbon offsets for products and
companies to ensure that carbon neutrality claims made via offsets
or abatement are genuine.
- Water Efficiency Labelling Scheme (WELS): like
MEPS is a Federal Government star based mandatory differential
rating system for some categories of water consuming fixtures and
fittings such as:
- Forest Stewardship Council (FSC): A
global sustainable timber certification scheme with full chain of
custody certification to ensure the timber being purchased with the
logo is actually sourced from controlled sustainable forestry
operations. Scheme certifies:
- FSC 100% Certified sources;
- FSC Mixed Sources (% mix nominated)
- FSC Recycled sources
- see www.fsc.org
- Australian Forestry Standard (AFS): An
Australian Timber Industry initiated standard that is a member of
the Global PEFC system also with full chain of custody
certification. AFS (and other PEFC based timber certification
schemes from overseas) are a way to ensure the timber is not
illegally sourced, however certain aspects of their system are
likely to lead to lower environmental outcomes than FSC.
However to deliver sustainability outside these quite narrow
bands of products other third party systems that consider products
more holistically using international Standards based around LCA
are needed to reflect within scientific limitations the whole of
life (WOL) impacts of products and buildings. Some systems that
provide ratings based on these WOL impacts are:
- Cradle to Cradle: is a multi-attribute
eco-label that assesses a product's safety to humans and the
environment and design for future life cycles. The program provides
guidelines to help businesses implement the Cradle to Cradle
framework, which focuses on using safe materials that can be
disassembled and recycled as technical nutrients or composted as
biological nutrients. Unlike single-attribute eco-labels, MBDC's
certification program takes a comprehensive approach to
evaluating the sustainability of a product and the practices
employed in manufacturing the product. The materials and
manufacturing practices of each product are assessed in five
categories: Material Health, Material Reutilization, Renewable
Energy Use, Water Stewardship, and Social
Responsibility14.
- BRE Green Guide: Products are assessed using
LCA methodology to generate Environmental Profiles for each product
as well as various construction elements, e.g. a roof or an
external wall. This allows specifiers to compare one type of
element with another. Each construction element is then reported as
an Ecopoint score over a 60-year period. These are the standard
metrics as used to provide ratings in the Green Guide. Ecopoint
scores are then used to generate A+, A, B+,
B, C+ and C ratings.
- ecospecifier global GreenTag™: GreenTag™ is an
umbrella Certification with dual certification outcomes. GreenTag™
has been designed to be adopted by Government and Corporate Codes
and Green Purchasing Policy as well as Green Building Rating Tools
and retail groups:
- GreenTag™ LCARate Certification is a fully
detailed life cycle analysis based rating and system that is an ISO
14024 compliant Type 1 ecolabel based on a Standard that includes
full ISO 14040 compliant life cycle analysis (requiring peer review
of all LCI/LCA), and that produces ISO 14025 Type III Environmental
Product Declarations (EPD) as part of the reporting process. The
GreenTag™ standard covers all product sectors including
development, construction, infrastructure, interiors, building
maintenance and building operations products. The materials and
manufacturing practices of each product are assessed and scored in
six categories: Health & Ecotoxicity, Material/Building
Synergy, Greenhouse Impact, Life Cycle Impact, Biodiversity, and
Corporate Social Responsibility. A GreenTag™ Ecopoint is then used
to rate the product against the impacts of a worst case business as
usual product in common use in the same functional category.
- GreenTag™ GreenRate's Certification system
rates and certifies products against the Green Building Council of
Australia (GBCA) Green Star™ system materials calculator based
credits for:
- Flooring and underlays
- Furniture - chairs, tables, storage and workstations
- Joinery
- Walls, partitions and ceilings
Furthermore, the EPD reporting is expanded to include ecospecifier
Technical Opinion as to the products relevance to all the other
Green Star™ credits where third party certification is not
possible.
This green building rating tool (GBRT) pre-assessment service
assesses products against the Technical Manual standards of the
various Green Star™ rating tools as other building rating schemes
such as NABERS and BASIX in Australia and elsewhere, schemes such
as LEED®, BREEAM™ etc and then publishes the Certification
Report/EPD on the relevant ecospecifier website to the country or
region of the search.
Where a product has relevance to one or more GBRT they are then
connected to specific search functions for each individual Rating
Tool and Credit to make finding products relevant to specific
credits easy to find.
CONCLUSION
While green procurement is superficially about buying ecological,
health and socially beneficial products in an economically
efficient way, when organisations engage fully with green
procurement strategies across all aspects of the business, plan and
design systems in an integrated way and focus on ensuring quality
outcomes, the Green Productivity can provide substantial benefits
and often lead product development or businesses in quite
unexpected directions.
For professionals looking to implement Corporate Sustainability
plans research can be a significant and time consuming process.
Using the experience and expertise of others is a sure-fire way to
reduce research and implementation time and costs. Online forums,
networks and tools such as Greenleap and ecospecifier websites
together with third party verification systems such as MEPS, WELS,
FSC, GreenTag™, BRE Green Book and Cradle to Cradle™ are simple and
easy ways to shortcut green procurement and green productivity
timescales and workloads while ensuring that the information being
relied upon is accurate and genuine.
REFERENCES
- Batsholom and Reid, in Malin, N. (2005), accessed on
11/05/12 at http://www.buildinggreen.com/auth/article.cfm?fileName=141201a.xml
- Pers. Comm. (25th Aug. 2008)
- Accessed 11/05/12 at http://www.naturalstep.org/com/What_is_sustainability/
- McDonough, W.; Braungart, M. (2002), Cradle to Cradle: Remaking
the Way We Make Things. North Point Press, New York
- UNEP in assoc with WWF, Zoological Society of London and Global
Footprint Network, (2008), The Living Planet Index,
accessed 11/05/12 www.unep.org/GEO/geo3/english/221.htm
- Jaakko Poyry Consulting, (2005), Overview of Illegal Logging,
Australian Department of Agriculture Fisheries and Trade,
Canberra.
- Seneca Creek and Associates and Wood Resources International,
(2004) "Illegal" logging and global wood markets: The competitive
impacts on the U.S. wood products industry. Prepared for American
Forest and Paper Association
- Baggs, D. (2007) Sustainability in Context Seminar Series,
Ecospecifier, Brisbane.
- Accessed 11/05/12 at http://www.equator-principles.com/principles.shtml
- Australian Procurement and Construction Council, (2008),
Australian and New Zealand Government Framework for Sustainable
Procurement, APCC, Deakin, ACT.
- ACT Cleantech accessed 11/05/12 at http://www.auscleantech.com.au/Pages/cleantech.html
- Green Building Council of Australia, (2008,2009) e-letters
March 2008, August 2009.
- Accessed on 11/05/12 at http://www.wbcsd.org
- Accessed on 11/05/12 at http://www.mbdc.com/detail.aspx?linkid=2&sublink=8