August 14, 2012

Procurement Perspectives | Stephen Bauld

Green procurement an important element

Green procurement is becoming more prevalent in government RFP and tender documents as each year passes. With growing concerns about greenhouse gas and global warming, the proper management of liquid and solid waste and, before them, loss of ozone in the upper atmosphere and acid rain, many municipalities have tried to make “green procurement” an important element in the procurement process.

To facilitate this process, the standards industry has responded through the development of environmental certification such as LEED and the ISO 14000 family of environmental standards.

There is obvious merit in green concerns. Since supporting environmental responsibility seems like a good idea, many governments adopt “green” purchasing policies that give little thought to the choices that such policies will require them to make.

For instance, one Ontario municipality directs its staff: “To implement a system of ordering, purchasing and resource consumption which results in the least environmental impact, including the purchasing of recycled and recyclable products and the purchasing of products which are produced through the use of recycled renewable resources.”

Particular areas of green concern in relation to procurement include the extent of recycled content, energy conservation, recyclability and toxicity. The actual extent of the influence of green purchasing policies on day-to-day purchasing activity was indicated in a 2006 study carried out by TerraChoice, an Ottawa environmental marketing firm retained to manage Environment Canada’s Environmental Choice Program.

Under this program, products may carry an identifying label where extensive research reveals that they meet the program’s standards for impact on the environment. It was found that among Canadian federal procurement staff:

— 71 per cent reported that they were guided by an environmental policy;

— five per cent never buy green, 27 per cent sometimes do, 48 per cent often do, and 20 per cent always do;

— 31 per cent are permitted to pay a premium for green procurement of up to five per cent: and

— 17 per cent are permitted to pay an even higher premium.

These figures suggest that green policy initiatives have perhaps been one of the most successful non-financial criteria that have been incorporated into the public procurement process.

Despite the attraction of environmental concern, it is important to bear in mind that like every other guiding principal that is incorporated into the municipal procurement process, implementing “green” procurement policies infers balancing choices.

Generally, environmental protection is costly. If it was not, then everyone would embrace it. The fact that the need to balance competing goals is not understood is indicated by reference to the definition of “sustainable purchasing” promoted by organizations such as the Fraser Basin Council and the Sustainability Purchasing Network. They define “sustainable purchasing” as the process used by organizations to buy goods or services taking into account:

— Best value for money (price, quality, availability and functionality);

— Environmental aspects over the life cycle of products; and

— Social aspects (i.e. local jobs, community impact and working conditions).

Sounds good, but difficult to apply in practice. Far from being necessarily compatible, these choices are to a very great extent mutually contradictory. As I have noted, the best value for money criteria is itself a highly complex one, which frequently involves internal trade-offs. Complicating the decision-making process by bringing in yet a wider range of concerns (at least some of which are almost open-ended – for instance, what are the limits of community impact”?) merely complicates the decision-making process.

When presented with a difficult choice between environmental or social enhancements and best value for money, a purchasing department requires clear direction as to how to balance these competing goals.

Is it more important to recycle, or to reduce overall environmental impact? If it is the latter, who determines that impact? As procurement policies evolve many considerations need to be reviewed.

Stephen Bauld, Canada's leading expert on government procurement, is president and CEO of Purchasing Consultants International Inc. He is also the co-author of the Municipal Procurement Handbook, published by LexisNexis Canada. He can be reached at stephenbauld@bell.blackberry.net.Print | Comment