Category Archives: Going Green

Green Purchasing Reports

In advance of the upcoming Green Purchasing Summit in November in Miami, Florida, EyeForProcurement has released their Green Purchasing Report that summarizes the results of the Green Purchasing Survey they conducted in June – July 2007.

The survey, which polled 188 procurement professionals primarily across North America, Europe, and Asia across the automative, electronics, chemicals, apparel, and transportation sectors among others, found that while eco-friendly purchasing is a growing trend, few companies are realizing any spin-off benefits in terms of reduced costs. Furthermore, the cost of implementing environmentally friendly purchasing is seen as one of the primary barriers to adoption.

The report found that only 31% of respondents have policies and are actively practicing. An additional 21% have written policies on green purchasing but are not actively practicing green purchasing but an astounding 48% still do not even have green purchasing policies in place. For those that are actively practicing, or at least have established policies, 46% noted that the key driver was a larger corporate responsibility program. Other drivers were customer satisfaction and following the industry trend, at 13% each.

The key benefits that were cited were support of corporate environmental sustainability, strategy, and vision at 67%, responding to customer interest in eco-friendly products and practices at 49%, and reduced accident risk, liability, and health and safety costs at 19%. In contrast the major obstacles to implementation are costs for 43% of respondents, suppliers’ lack of environmental awareness for 42% of respondents, and insufficient green purchasing knowledge for 37% of respondents. The good news is that 98% of respondents believe that the practice of green purchasing will continue to expand. This indicates that the obstacles will eventually be overcome.

For those of you thinking of attending the EyeForProcurement Green Purchasing Summit in November in Miami, Florida, please note that EyeForProcurement is offering a 20% discount for all delegates who register and quote “Sourcing Innovation“.

In addition, in advance of the upcoming Green Transportation and Logistics Summit in San Francisco, California, EyeForTransport has released their Green Transportation and Logistics Report that summarizes the results of the Green Transportation and Logistics Survey they conducted in June-July 2007.

The survey, which polled 271 transportation and logistics professionals found that while some still view supply chain greening as a necessary evil, the most innovative and successful companies have discovered the business case for going green. It also found that 79% of companies believe supply chain greening is at least fairly important and that 69% believe that green issues will become more important over the next three years. Unfortunately, for the majority of respondents (66%), green initiatives are not yet seeing improved supply chain efficiency, but since a reasonable minority (27%) are experiencing more efficiency, this should improve as time goes on. Furthermore, 36% of respondents expect to see a financial ROI within the next three years while 74% expect to see a public relations payback.

The survey also reviewed some of the general transport and logistics initiatives being undertaken by respondents to green their supply chain. These initiatives include emissions measuring and/or reductions, energy efficiency improvements, switching to alternative fuels, reducing air transport, strategic warehouse and DC placement, vendor re-routing to reduce miles travelled, and the use of more environmentally friendly logistics provider. Some of the more specific initiatives being reported by respondents include product design and packing improvements, recycling programs, sustainable buildings, waste reduction & asset recovery, and reductions in toxins and hazardous chemicals.

The Green Purchasing Summit

Green Purchasing or Environmentally Preferable Purchasing (EPP) refers to the procurement of products and services that have a lesser or reduced effect on human health and the environment when compared with competing products or services that serve the same purpose.

Global warming is an (essentially) indisputable fact*. Although one can dispute how bad it really is, how fast it really is occurring, and how much of it is our fault (since science has demonstrated that carbon content in the atmosphere has risen and fallen over the earth’s history and that solar cycles do contribute to the earth’s temperature), it cannot be disputed that we pump carbon into the atmosphere (which serves to raise the global temperature) and, especially in countries where strict pollution control is not (yet) the norm, we still pump other dangerous compounds into the atmosphere that lead to (further) ozone depletion and acid rain. Furthermore, with the recent Live Earth campaign, it, along with corporate social responsibility, is on the tongue of just about every consumer these days. Thus, it’s important to consider the impact of your purchases on the environment when sourcing, or it might come back to haunt you when you become the subject of the next media circus, which could quickly be followed by the next boycott of your goods and / or services.

So how do you learn more about Green Purchasing? The way I see it, you have two options. Hire an expensive consultant or go to a conference since there are not a lot of options from an educational perspective (yet). Although you probably should pursue the first option and bring in an expert in your sourcing project the first time you tackle a green initiative, you probably don’t want to pay one to educate you on the basics since this will put your consulting budget through the roof. To this end, I recommend going to conferences and learning the basics from your peers. Then you will be able to identify what projects can benefit the most from green purchasing initiatives.

Unfortunately, these conferences are still few and far between. Over the next six months, I’m only aware of two “green” conferences targeted at Procurement EyeForTransport’s “Supply Chain Directions: Green Transportation & Logistics Summit” in San Francisco (California) on the 25th and 26th of September and EyeForProcurement’s “Green Purchasing Summit” in Miami (Florida) on the 29th and 30th of November.

Even though it’s the first time EyeForProcurement is putting the event on, I believe the “Green Purchasing Summit” should be one event that you should consider. Since EyeForProcurement’s events focus on industry speakers, you’ll have the chance to learn from your peers. Furthermore, the round-tables represent a great chance to talk with your peers on issues relevant to you. So what will you learn?

According to the site, they are focussed on bringing in speakers with the knowledge and experience to help you:

  • find out what benefits Green Purchasing has to offer
  • learn how to apply environmentally preferable criteria early in your procurement process
  • identify which ‘green’ products work well, or better, than traditional products

Unfortunately the agenda has not been finalized yet, but considering how overwhelming the conference season can get these days, I thought it was important to point out this event before it gets lost in the shuffle.

For those of you thinking of attending the EyeForProcurement Green Purchasing Summit in November in Miami, Florida, please note that EyeForProcurement is offering a 20% discount for all delegates who register and quote “Sourcing Innovation“.

 

* There are those that will dispute it, and those that will aggressively point out the flaws in those arguments, and those that will aggressively point out the flaws in the counter arguments, and so on, but since this is a blog about Sourcing Innovation and not about Global Warming, I have disabled comments for this post since I do not want a global warming debate. If you disagree with me, that’s fine. Everyone is entitled to their opinions. If you do disagree, I hope you can at least respect the fact that I pointed out there are two sides to the argument, and that if you delve into the scientific facts, because of the complex interrelationships between all of the factors that influence climate, it is hard to precisely quantify.

Invest in Sustainability

In McKinsey’s May 2007 Web Exclusive “Investing in Sustainability: An interview with Al Gore and David Blood” (of Generation Investment Management), we are introduced to an extended investment model that fully integrates sustainability into its core. But more than that, we are reminded of some basic truths by Blood & Gore that we should not forget.

Blood:

  • It is best practice to take a long-term approach to investing.
  • The leading CEOs are the ones who explicitly recognize that sustainability factors drive business strategy.
  • There are material sustainability challenges in all industries.
  • You need to tackle the three or four long-term issues that will really affect corporate profitability.

Gore:

  • Focusing only on the quarter can blind you to the most important factors of all.
  • I think that the board of directors has a growing responsibility to address these very topics.
  • In addition to helping us assess the quality of a business model, a company’s response to the climate challenge can tell us an enormous amount about a management team.
  • Your employees, your colleagues,your board, your investors, your customers are all soon going to place a much higher value-and the markets will soon place a much higher value-on an assessment of how much you are a part of the solution to these issues.

And even though these bullet points don’t do justice to the in-depth discussion that was recorded in this four-plus page article, which pointed out that good sustainability practices and investments are the result of tackling the three or four long-term issues that will really affect corporate profitability, and not the 50 different tick-box sustainability criteria that might appear on someone’s list, they do serve to point out that sustainability is all about basics because sustainability is basic Fundamentally, businesses exist to make profit – but the only way to do that is to insure you stay in business. To do this, you will continue to need increasing raw-material supplies, manpower and brainpower, and customers to buy your product. Without the adoption of sustainability practices across the board, a corporation will not be able to insure that everything it needs tomorrow to sustain profitability will be available. Thus, sustainability should be a corporation’s first thought when developing its business plan, not its last.

Earth Day

Today is Earth Day and you can find out what’s going on in your area by starting with the Earth Day Network. In the spirit of Earth Day, here’s the next post in my ongoing Green series.

A number of interesting news items have hit the wires since my last green post. The University of Edinburgh has built what it claims to be the first green supercomputer. Fortune published its list of ten green giants, including Honda (the most fuel-efficient auto company in the U.S.), Continental Airlines (for collaborating with Boeing to engineer more fuel-efficient aircraft), Suncor (for measuring the environmental impact of each project), Tesco (for promoting green thinking to its customer and calculating “carbon costs” for each item), Alcan (for investing in clean manufacturing), PG&E (for investing in renewable energy), S.C. Johnson (for continued elimination of pollutants from its products), Goldman Sachs (for its bold climate-change policy in investing), Swiss Re (for developing financial tools to deal with climate change risks), and

Hewlett-Packard (for its eco-sensitivity). And the Gaia Napa Valley Hotel and Spa Resort has gone green.

The green movement is still going strong. The Supreme Court has ruled hat the EPA can regulate greenhouse gasses, Ontario is considering joining he U.S. greenhouse gas initiative, and Schwarzenegger is pumping up the green movement in. It’s also going strong in the real estate market – but in a more literal way. According to a recent CNNMoney.com article, the number of buildings with green roofs grew 25% last year.

EcotalityOn the technology side, a start-up by the name of plans to produce a prototype of an apparatus called the Hydratus that produces hydrogen fuel, as it’s needed by a car’s fuel cell, from a reaction between magnesium and water.

Finally, congratulations to Oakland, the cleanest city in the US according to SustainLane’s government site. After all, It’s Not Easy Going Green which, in the case of Las Vegas, means not going green at all!

Green Still Going Strong

Fuel-efficiency is still the craze. Consider the new design by the Massachusetts Institute of Technology, the University of Cambridge, Boeing, and Rolls Royce for a new mid-range aircraft that travels at 0.8 mach, runs considerably quieter than current generation jets, and uses 25% less fuel, as described in this Economist article. GE has a new efficient incandescent bulb that will eventually deliver the same environmental benefits as compact fluorescent lamps.

Carbon discussions are heating up, including discussions on an American carbon-trading system. (Good thing we now have CarbonTracker to help us measure how much carbon dioxide is in the atmosphere and where it is being released.) Furthermore, we might still be able to use carbon-based fuels, like coal, if we turn the waste product into a liquid or solid and store it underground. Alternatively, if sandstone and saltwater are available, we might be able to inject the gas directly into the ground, according researchers at MIT. IBM is creating carbon dashboards to help corporations understand and lower their supply chain’s carbon emissions and even a supermarket chain (Tesco) is introducing carbon labelling for its products in an attempt to send shockwaves through the supply chain.

Alternative fuels are popping up all over the place. BiOil5-megawatt power plant wants to turn animal fat and waste vegetable oil into domestically produced, cleaner-burning biodiesel. (After all, BioFuels power just opened a in Oak Ridge North, Texas.) Dyanmotive wants to use plant material to produce bio-oil. Ryan Katofsky and Microgy want to use biomass to produce additional megawatts. (In other words, besides producing milk, Bessie will now be powering your appliances.)

It’s not just about ethanol anymore, even though DuPont is attacking ethanol energy efficiency.

This is good since the amount of money spent on clean energy is expected to quadruple in the next decade, according to Clean Edge. And Europe will be leading the way. (Although an honorable mention must go to Nevada where the Solar One is almost complete.)

Even conventional fuels are becoming cleaner. Ultra-Low Sulphur diesel is now available across America.

And green companies are the new IT when it comes to funding. Think Nordic, which is about to produce a line of all-electric sedans, just received 25M in funding. (GM is also planning an all electric car, but it will not hit the market until 2010, whereas Think Nordic expects to be in full production by 2008.) Imperium Renewables just roped in a 214M Series B found of funding for its biodiesel efforts. CoalTek just nabbed 33M for its clean coal endeavors. LS9 just scored 5M for its search to derive alternates to fossil fuels through plants and microbes.

This is all good news, since precipitation changes are already occurring, and will continue to occur, thanks to Global Warming. This could make faucets run dry. Furthermore, climate change is likely to result in higher food prices thanks to diversion of basic food stuffs to meet growing energy demands.

It’s a good thing that at least the EU is taking action to reduce greenhouse gas emissions. According to the agreement reached on March 9th, 2007, governments are supposed to lower emissions to 20% below those of 1990, boost the percentage of energy consumption that comes from renewable sources to 20%, and ensure that biofuels make up at least 10% of fuels used for transport by 2020.

Now, if only all mansions could be green.