29. August 2010 by Steven.

At the time of the writing of the blog edition, Green Procurement and Purchasing is still in its infancy. Whereas large private companies are often held out as the most proactive organizations, that has not, yet, proven true for Green Procurement and Purchasing. Instead, public organizations around the world have taken the lead on this topic. Largely, this may be due to political necessity. Regardless of the cause, an assessment of the various approaches is interesting and helps to explain how some approaches are robust and others are weak. In developing your organization’s response to its green initiatives, please consider the current state of affairs from around the world.

A simple Internet query will yield one many aspects and insights to various programs. However, for the purposes of this blog, the top trading countries will be assessed. The G-8 countries of: the USA, Canada, Japan, France, Germany, Italy, Russia and the United Kingdom, provide a ready-made list to compare [note: government green procurement practices are the sole topic of the next blog edition].

Canada. Canada’s national government has started its green journey. It has formed the Office of Greening Government Operations [OGGO] that has begun to implement standards and training for Green Procurement. The office also works within the Canadian federal system to promote sustainable office buildings, ‘environmental citizenship’ [what each federal employee can do to help reduce waste], proper e-waste disposal as well as other initiatives. OGGO also works with provincial entities to improve overall greening of operations.

With regard to Green Procurement, OGGO has developed online training, decision tools, written guidance, made purchasing department heads responsible for achieving goals, has goals, has a written policy and other guidance for types of purchases. An example of improvement metrics is found in the Sustainable Development in Government Operations organization that tracks the percent of procurement budgeted funds spent on green purchases to the whole. This same organization has proposed additional metrics that are worth mentioning. They are:

• Environmental Load. Are measures for actions taken and results of those activities such as water consumed, waste to landfills, total ozone depleting substances used, etc.;
• Cost Load. Are measures of the cost for environmentally related actions, or results, such as the cost per gallon of water, the liability of contaminated, sties, etc.;
• Efficiency Measure. A measure derived from either Environmental Load or Cost Load and normalized to a denominator to obtain a measure of load per person or per other unit of measure;
• Activity. A measure of the organization’s workforce that are involved in green activities and training;
• Proportion. A measure of infrastructure within the organization on the count of alternative fueled vehicles, facilities with water conservation programs, etc.

Japan. On April 1, 2001, a law came into effect in Japan called the ‘Green Purchasing Law.’ The law’s main focus was to provide the tools and methods by which Japan could become a ‘recycling-based society’ by supporting the goal of promoting Goods and Services that reduce Environmental Loads by:

• Promoting greener purchases by public organizations [i.e., Government];
• Provide information on environmentally friendly Goods and Services.

The methods by which the country of Japan hoped to achieve these goals are to have governmental agencies and ministries act to purchase greener by implementing policies and promoting the eco-labeling programs of finished products.

In the act of purchasing, the law creates the expectation that fact-based data shall be used as a ‘factor for determination’ in selecting one product, or service, over another based on a designated list of items from 17 different categories [such as Paper, Office Furniture, Lighting, etc.].

Since the implementation of the law, the Japanese government has measured progress on the percent of green products/services purchased. For example, over 90% of Paper products purchased are considered green. The national government has also continued to monitor progress of its overall implementation plan by noting the adoption of green purchasing practices by prefectures, districts, cities and towns or villages – all at the governmental level. As one might believe, this studied indicated that the green initiative was implemented more readily in larger cities than in smaller towns. Also, the survey results indicate that the main detriment to opting for greener products, or services, was the premium paid for those products.

The Ministry of Environment [MOE] is responsible for implementing of the above law. Prior to this law coming into being in 2001, the MOE took actions in 1996 to establish the Green Purchasing Network [GPN]. The GPS in still active today with over 2,000 industry and governmental members. The organization helps to establish criteria for those member organization to make purchase decision on products that are green decisions.

France. In 2007-2009 the French government adopted action plan for green procurement. In France’s overall framework, it has national laws for environmental purchasing that are deployed by multiple agencies and for various levels of government from national to the local level. France has also established goals for improved action but does not have an overall method of tracking the goals. Nonetheless, some of the French government’s goals include action on recyclables, lighting, buildings, low emission autos and wood products.

French officials are able to ‘go green’ by using ecolabels, ISO 14000 standards and the EMAS [Eco-Management and Audit Scheme] as tools. These standards are developed primarily by the Agency for Energy and Environment Management. Despite such actions, it appears that the public sector of procurement in France lags behind the private sector in energy purchases with many private sector firms adopting the ‘kWh Equilibre’ option to obtain 100% renewable energy.

This dialogue is continued on the next blog edition. Part 2 of an ‘Overview of Governmental Programs for Green Purchasing’ will cover the remaining G-8 countries less the United States that will be subject of its own blog edition. Please continue reading the Green Purchasing Blog at www.recyclechain.com and thanks.

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7. August 2010 by Steven.

In the last blog we discussed how ‘greenwashing’ is a relative concept.  We continue with that concept by example and further develop the concept of ‘greenwashing’ and a potential strategy for your organization.  To demonstrate, let’s take for example, on one end of the spectrum, take a large organic farm.  Because it is organic one would immediately give it points for being green.  It does not use pesticides, etc. However, it is still a large farm and it will still use fossil fuels, etc.  If that organic farm is in California and only sells to New York, in which case there are a lot of fossil fuels involved for transportation, does that company rank as a greenwasher because it has a high carbon content relative to some other organic farms?  Does it fly under the radar of environmental organizations because it is a true organic farm? 

On the other hand, the polar end of the spectrum, take a small energy company using coal as a fuel.  Coal is assumed by most to be a ‘dirty’ technology and the concept of ‘clean coal’ a prime example of greenwashing.  However, the small coal company has taken out a loan and invested in some technologies to reduce carbon emissions by using algae to absorb the carbon dioxide.  Because this company uses coal it is much more likely to be targeted for greenwashing but the company is acting in an environmentally friendly way and the net environmental impact of both companies may be the same.

Working the procurement department as you do, you actually purchase from both organizations directly or indirectly.  How do you assess each company?  What are your criteria?  Are your criteria sufficient enough to match the environmental groups?  If you believe they are, are they enough to prevent your organization from being labeled as a greenwasher because you convinced your marketing organization to advertise about your green purchases?

To answer this question, you might employ a simple ratio.  Is the ratio of dollars spent by your organization to go green to the dollars spent to advertise going green greater than 1.0?  If the answer is, ‘Yes,’ then your organization is in a defensible position.  Your organization is attempting to do the right and good thing.  If your organization spends more money advertising its green activities than it spends in the implementation of green, then you are likely to be actively greenwashing.  In Procurement, as part of your Spend Analytics, you may be able to derive this ratio with the help of the marketing organization or your procurement colleagues that support the marketing organization.  This ratio, or one similar to it, is a first good step.

Behind this ratio still lies the requirement for your organization to be doing something and, further, that the ‘something’ needs to be increasing over time.  You can be rest assured that over a period of years, your marketing costs will increase.  Your green activities need to increase as well.  As always, being green, from a procurement perspective, is really two elements:  internal measures and measures with the supply base.  Those two measures are interlinked as your specifications can drive your purchasing behavior and your behavior can influence your internal actions.  The purchasing department can be the catalyst for change.  Recognize this fact as part of your greenwashing prevention campaign.  Let your entire organization know of your efforts.  Regardless of those efforts, your organization may still be accused of greenwashing.  The more green you do the better off your organization.  However, there is no certain standard.  You must be prepared to defend your organization’s claims of its environmental stewardship.

In closing this blog edition, we focus on the fact there is no standard.  If one references the seven deadly sins of greenwashing as currently listed on Wikipedia, one can derive a strategy for each.  Arguably, the procurement department can influence each of the seven.  However, of the seven, two stand out as being more directly influenced by the procurement team.  Those are the ‘Hidden Trade-Off’ and the sin of ‘No Proof.’  These two greenwashing sins account for most of the offences found in a study conducted by TerraChoice in 2007.  For both, the ‘sins’ has to do with sourcing of materials [e.g., is organic truly certified as organic].  In sum, your actions matter.  For the remainder of the greenwashing sins, the greenwashing trigger could be triggered by a relative measure.  Is your product relatively less green than another company’s but your claims are substantially the same as theirs?  As such, be aware the importance of what you do relative to other organizations within, or without, your industry.  To assist in determination of other’s actions, the topic of the next few blog editions will be common practices by government agencies throughout the world, in the US and then into large commercial enterprises.  The next few blog editions should help baseline your expectations of common activities within green procurement and purchasing.

Please continue reading the Green Purchasing Blog at www.recyclechain.com with the next edition about Government programs for green procurement.

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