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Greening Institutional Procurement
“Through the things they buy, institutions wield great influence over the future of our planet.”
Nearly every purchase an organization makes, whether it is a ream of copier paper or a new office building, has hidden costs for the natural environment and the world’s people. Many products require huge inputs of water, wood, energy, metals, and other resources that are not always renewable. And they often contain toxic chemicals that, when released into the environment, endanger the health of humans and the ecological systems we depend on. These impacts can occur at any stage of a product’s lifecycle: obtaining the raw materials, manufacturing, packaging, transport, use, and even after disposal.
Because of the sheer scale of their purchasing, however, large institutions can also be a powerful force for change. In the European Union alone, government purchasing totaled more than $1 trillion in 2001, or roughly 14 percent of GDP. Corporations, universities, religious bodies, and other large institutions like the United Nations and the World Bank also have significant purchasing power. In the United States, roughly 3,700 colleges and universities collectively bought some $250 billion in goods and services in 1999—equivalent to nearly 3 percent of the nation’s GDP.
For many common institutional purchases, alternatives now exist that are less resource-intensive, less polluting, and less harmful to human and environmental health than their conventional counterparts. These include hybrid cars, recycled paper, and non-toxic cleaning products. By boosting demand for such items, institutions can play a key role in building larger markets for green goods and services.
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Greening Purchasing Contracts “Greening” procurement means that in addition to specifying basic requirements for quantity, price, function, or safety, institutional buyers make environmental demands on their suppliers as well. In contracts with suppliers, purchasers can ask that:
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Pioneers in Green Purchasing
“Around the world, growing numbers of universities, corporations, government agencies, and other institutions are reviewing their purchasing habits and incorporating environmental concerns into all stages of their procurements.”
At the corporate level, green purchasing pioneers include companies in virtually all sectors of the economy, including banks, hotels, automakers, clothing retailers, and supermarkets. Many of these businesses are motivated by enlightened self-interest: they are finding that by embracing energy efficiency measures and other relatively small-scale changes in their internal operations, they can reduce their environmental impacts as well as improve their profitability. Many companies also realize that they may lose competitiveness by pursuing resource-intensive or environmentally destructive methods. But balancing green purchasing with the corporate profit motive can be a delicate process; in some cases, it can still be a competitive disadvantage to “do the right thing.”
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Examples of Green Purchasing in Selected Companies Canon Federal Express IKEA Migros Toyota |
Over the past decade or so, calls for greener government procurement have escalated as well. Many governments increasingly recognize the value of greening operations as a way to streamline costs and achieve wider environmental policy goals, such as reducing waste and meeting targets for energy efficiency. Several countries—including Austria, Canada, Denmark, Germany, Japan, and the United States—now have strict national laws or policies requiring government agencies to buy green (though this does not mean they always do so). There has also been a flurry of green purchasing by city, state, and regional governments.
As both the government and industry levels, most green purchasing activity has focused on buying recycled or energy-efficient products, although interest in renewable energy and other green purchases is also rising.
Pressures and Drivers
“Institutions of all kinds increasingly face a wide range of regulatory and consumer pressures to buy green.”
Many governments now offer rebates, tax breaks, and other economic incentives to encourage businesses, schools, individuals, and other consumers to invest in everything from energy-efficient appliances to alternatively fueled vehicles. Governments are also using their regulatory authority to essentially force institutions to make greener purchases. New laws or regulations that require manufacturers to meet certain standards for energy efficiency or recyclability influence the way many companies now design and make their products.
Governments are not the only ones pushing institutions to buy green. Around the world, individual consumers are beginning to translate personal concerns about their health, the environment, and social justice into greener buying at the household level. These consumers increasingly expect better environmental performance from the institutions that guide them, the businesses they support, and the products they buy. Growing numbers of concerned consumers, shareholders, and nongovernmental organizations (NGOs) are also participating in boycotts and other direct actions to pressure companies into shifting their buying practices. In other cases, NGOs are actively partnering with leading corporations to help them redirect their significant purchasing power toward environmental ends.
Overcoming Obstacles
“At a practical level, the success of green purchasing often comes down to the role of the professional purchaser.”
An institution’s procurement department wields considerable power. When purchasing is highly centralized, a single decision made by just one or a handful of buyers can have a tremendous ripple effect, influencing the products used by hundreds or even thousands of individuals. As a result, the buying activities of institutional purchasers often have far greater consequences for the planet than the daily choices of most household consumers.
Unfortunately, many purchasers are not yet harnessing their tremendous power to leverage change. In some cases, they simply are not aware of the influence they could have. But they also face serious legal, political, and institutional obstacles at all stages of their work—from establishing a green purchasing program to selecting green products. Unless these barriers are addressed and the gap between good intentions and practical results is narrowed, today’s pioneering green purchasing initiatives could be swallowed up in the rising swell of consumption.
Identifying Green Products
“The absence of sound environmental information has left manufacturers, environmentalists, and others confused about what exactly constitutes a ‘green’ product or service.”
One significant challenge in buying “green” is knowing exactly what to look for. Relatively little is known about the environmental characteristics of most products and services on the market today, making it tough for buyers to compare products effectively. Tracing a product’s origins up the chain of production can be particularly difficult. Without the time or scientific background to extensively research green product offerings, many purchasers simply prefer to be told what to buy.
Fortunately, sophisticated tools are being developed to help both manufacturers and purchasers evaluate the environmental performance of products. One particularly promising technique, lifecycle assessment (LCA), offers a methodology for identifying and quantifying the inputs, outputs, and potential environmental impacts of a given product or service throughout its life. Agreement is also emerging, at least among some stakeholders, on how to define certain green goods, such as paper and cleaning products. Many purchasers (and other consumers) also seek guidance from national, regional, and global ecolabeling initiatives. And many organizations publish green purchasing guidelines or product lists for their purchasers to reference or provide detailed training manuals to lead buyers through the process.
Spreading the Movement
“Green purchasing is not the only way to minimize the problems associated with excessive consumption. But it is an important step along the way to achieving a more sustainable world. As individuals, we will need to push the organizations we work for and rely on to join us in building such a world.”
Today, initiatives at the international, regional, and local levels seek both to address the obstacles to green purchasing and to accelerate its adoption. For instance, a number of organizations and networks, mainly in Europe, North America, and Japan, now publish green purchasing information, collect success stories, and publicize trends.
Fledgling efforts are also underway to spread green purchasing in the developing world, though considerable work remains to be done. One way institutions can help spread green purchasing to the developing world is by using their own procurements to strengthen local green markets. For instance, the United Nations, World Bank, donor agencies, and multinational corporations that operate in these countries can seek to buy a greater portion of their goods and services from local green suppliers, helping to build capacity for sustainable production.
Clearly, the world’s institutions have significant power to bring about environmental and social change through their purchases. But no matter how environmentally sound this purchasing is, it still uses resources and generates wastes. To truly mitigate the impacts of their consumption, institutions will need to find ways to meet their needs without buying new products—for instance, by eliminating unnecessary purchases and extending the lives of existing products.
Worldwatch Web Resources:
