‘Sustainable procurement.’ Two very dull words that just might make you money. The people controlling multimillion-dollar budgets are demanding to see your eco-credentials before they buy.finds how to get your piece of the pie—and become more efficient at the same time
The modern equivalent of a travelling salesman rocks up at North Shore City Council, a folder full of carpets under his arm. He presses the flesh with Michael Field, sustainability manager, manager of corporate sustainability, procurement, energy and fleet—aka, the Man with the Large Chequebook.
It’s all going well. Field is a former sustainability manager for Interface, the global carpet company that ‘radical industrialist’ Ray C Anderson transformed into a world leader in green supply. So he knows his flatweave from his needlefelt. He asks the salesman whether his company has a product stewardship system to take back the carpet after use and divert it from landfill. Indeed they do, says the salesman.
Most people would leave it there. Field doesn’t. He spends the next 15 minutes asking the salesman exactly what happens to the carpet once it is taken back. Finally, the salesman gives in. “We burn it,” he says.
Scenes like this are happening all over the business landscape. Today the boundaries between global ‘green’ markets and the rest have become so blurred it’s less about how much you could gain by taking part and more about much you will lose if you don’t. From the well-meaning and misguided to the barefaced bullshitters, everybody wants a slice of the sustainable pie and is willing to jump through hoops to get it. But the hoops are getting tighter.
Talking to Field, who also used to write spec sheets for Environmental Choice New Zealand, he is absolutely crystal clear on how much of the council’s $350 million-plus budget we are talking about. We are talking about all of it.
From the well-meaning and misguided to the barefaced bullshitters, everybody wants a slice of the sustainable pie and is willing to jump through hoops to get it. But the hoops are getting tighter
“Sustainable procurement is procurement,” he says. “You don’t say, ‘We’ll do those ones sustainably and we’ll burn and pillage on all the rest’.”
He’s not alone. Field has just developed a Sustainable Procurement Toolkit. This, or something like it, is on its way to a Town Hall near you. It may already be there. It is also being used to determine who gets a slice of the business action at the 2011 Rugby World Cup.
It consists of a document asking suppliers to respond to questions or requirements on different aspects of the goods and services they offer. These are organised chronologically and in order of difficulty around specific issues, such as environmental management, water use or climate change.
Each question has a number of points available for its successful completion, and a one-paragraph explanation of why the issue is important. There are also templates and examples to show how the various documents need to look. When filling it in, you have to provide proof of what you say: if you say you have an environmental policy, they want to see a copy of it, signed by a senior company officer.
Field says: “There’s no point in asking the questions if you don’t ask for proof. We completely understand that a company can have an environmental policy and do nothing about it. If the senior officer has to sign it, at least we know it has been waved in front of him, and they know that someone is asking about it.”
To get your snout in this trough, it’s not sufficient to have a few products on a ‘green shelf’ to pump out to those who ask. These days, procurement professionals want to know all about your whole business: where you get your materials, how you heat your buildings, what you do with your waste, and more. And if someone else supplies you with more than half of what you are trying to sell on, they want your supplier to fill in the paperwork too.
The main form of proof asked for is some form of external certification: those ticks, stamps and endorsements that have spread like a pox over products and services in recent years. There’s Forest Stewardship Council (FSC) for sustainable wood and paper, Energy Star for appliances, and Green Star for buildings, certificates for how products may help to ease asthma and prevent heart disease, stamps for what things do have in them and for what they don’t. You name it, there’s probably a stamp or logo about it.
Which probably leaves you wondering, which ones should I get?
Consultant Alex Reiche of Envirospec is living proof that this isn’t always an easy question to answer. He earns his living doing things like checking product credentials for architects at $300 a pop. He reckons you can do it yourself, but you will need thousands of dollars worth of manuals and someone who can interpret them.
“The fact of the matter is these policies are currently voluntary, but one day they will become law,” he says. “You can take simple steps that are important, which will cost money. Or you can do nothing now, which means you will probably then have to do it all in one go.
“What you do now depends on who is dictating the policy. If you are supplying someone like BNZ and they say they want to match the Green Star Five standard on their building, and you don’t have the correct certification, you won’t have a chance to sell your products into that building.”
Field agrees, and has chosen the schemes acceptable as proof in his system with care. “There are loads of ‘green labelling’ schemes in wood and paper, for example, but we only accept two, FSC or the Programme for the Endorsement of Forest Certification,” he says. “We are looking for something which shows an auditing process.”
So if you were thinking of posting a cheque and getting a wee sticker for the van, you need to think again. Your participation in properly audited certification schemes operates like a WOF for your business, and does the legwork for the procurement people. The certification scheme checks all the details so you don’t have to submit a libel trial’s worth of files every time you want to sell the council some paperclips.
Nobody’s turning the market into a hippie festival. This is about good business, not politics. And it’s not a complete shut-out for those firms that don’t have a fleet of hybrids or a sponsored rainforest
Reiche says: “It’s a bit of a fight-back from the early years, when about five or ten years ago fashion pushed things towards greenwash,” he says. “This is so people are not going to be able to lie through their teeth.”
On the other hand, nobody’s turning the market into a hippie festival. This is fundamentally about good business, not politics. And it’s not a complete shut-out for those firms that don’t have a fleet of hybrids, a sustainability department and their own sponsored rainforest. There’s no pass or fail, no minimum score, and Field knows of no business on Earth that can max out the test.
“Those that do very well at answering these questions tend to be bloody good businesses. They are leading their markets and they are good people to do business with. But it only becomes the deciding factor if other things are equal. You need to make sure they can do what you are paying them to do at the sort of price you would expect to pay. There’s no point being green if you can’t do a good job. We won’t use you.”
The key term these days is not ‘green’, but ‘sustainable’: this means that first and foremost the procurement folks are still looking for someone who can do the job, and keep doing it. Using Field’s toolkit you get points for holding an ISO 14024 certificate, but you can also get points for having low-flow taps. The intention is to avoid the system being skewed in favour of big international companies. Field reckons it’s actually easier for smaller companies as it’s easier to track and document things, and you can get these systems in place early on.
“People don’t really understand what ‘sustainable’ is,” he says. “It has been linked to ‘environmental’, but is not necessarily the same as that. We equally reward social, environmental and economic factors.
“If someone is far and away better than the others on the other things, my preference is to go for that option. But we might say in the debrief, ‘You did appallingly on this. When we put this out to tender again, we will expect you to do better.’ And they always step up.”
And there is no interest in boutique shopping on this scale, so don’t think you can charge a premium price for behaving yourself.
“Our council saved $1.3 million using these tools on ourselves,” says Field, “so I don’t see any reason why I should pay a premium on supplies from firms using them. If you think you can charge more because you have a lot of points, you won’t be able to. It’s about impact and supply chain management. Few suppliers ask their suppliers where they get their stuff from, and this, of course, comes with a risk.”
That risk may be the sort of human rights issue that laid Nike low in the 1990s, or an environmental faux pas of the type that led Nestle to hastily switch its Indonesian palm oil supplier recently. Ultimately, the assumption is that human rights and environmental abuses are unsustainable; if you use human and natural resources badly you will run out of them sooner or later. This makes unsustainable business inefficient in the long term. And the global protest and activism movement, combined with increasing international environmental regulation, makes it more costly in the short term.
The procurement professional is paid to make sure these very real costs and reputation risks are not passed on to the organisation they work for with the products and services you are selling. The end-game is to create collaborative relationships between buyer and supplier, rather than the traditional transactional relationships where each side beats the other over the head with the contractual details.
Systems like this are seeking to rewrite the rules of global trade. Now companies like Walmart are taking this seriously, it will pay the rest of us to take note. There are big piles of export dollars out there for companies that get to grips with this: this documentation is increasingly required as passport into some of the biggest markets in the world.
“Export opportunities are hugely increased for companies who have engaged with this process,” says Field. “These are the questions they will be asked when they export. This is what businesses need to be doing if they want to supply into Europe. Otherwise they haven’t got a show. A lot of countries are looking for reasons not to buy from here.”
Reiche adds: “It is just a bigger version of the same market. Europe and the UK have a high level of green procurement guidelines and you need to comply, otherwise you don’t get into the market.”