IEMA CIPS and NHS Environmental Purchasing in Practice

Environmental Purchasing
in Practice
guidance for organisations
September 2002
iema
The Institute of Environmental Management and Assessment
St Nicholas House
70 Newport
Lincoln
LN1 3DP
www.iema.net
The Chartered Institute of Purchasing and Supply

Easton House
Easton on the Hill
Stamford
Lincolnshire
PE9 3NZ
www.cips.org
The National Health Service - Purchasing and Supply Agency

Premier House
60 Caversham House
Reading
RG1 7EB
www.pasa.doh.gov.uk
Editorial Panel
John Brady - IEMA
Carl Kockelbergh - CIPS
Andy Davey - NHS PASA
Authors
Barbara Morton - Manchester School of Management with
contributions from Malcolm McInnes of the Environmental
Supply Chain Forum and Chris Foster of EuGeos Limited
Design and Production

Dan Brady
David Mallon
Seraph Print Management
Newcastle upon Tyne
Tel/Fax: +44 (0) 191 263 4332
Introduction
The practice of environmental purchasing has been a much-neglected

subject, but in the last few years significant progress has been made in
developing tools and techniques to aid purchasing. The subject is acquiring its
own intellectual credibility, although it remains a backwater for many
environmental professionals. In this publication we bring together many
examples of good practice in this field, and by doing so we hope to give this
subject greater presence.
Materials and energy flow into organisations through their purchasing
activities. The upstream impacts of these flows are diverse and, in many cases,
environmentally significant. Energy purchases can directly effect the build-up
of carbon-dioxide in the atmosphere, forest products can have a major impact
on the worlds biodiversity. Toxic materials can spread through the biosphere
riding on the back of the supply chain. Beyond environmental sustainability
lie the social concerns of poverty and child labour. Again, the supply chain is
the point at which these concerns can be either reinforced or ameliorated.
This publication contains a number of important contributions to the
subject. First, the publication explains in detail how the environment can be
considered at each of the key stages in the purchasing process. This is an
important contribution, there are many different tools and techniques that can
be used, and to see them in relation to purchasing in this way should bring a
new level of clarity to the subject.
Second, it makes the connection between supply chain management and
environmental management systems (EMS). An EMS requires an assessment
of significant environmental aspects, and in many cases some of these aspects
will lie in the supply chain. Where this is the case, the IEMA draft code offers
practical guidance on how they could be handled.
Third, we have included a number of good practice examples and case
studies - references and web site addresses are also provided. To know that
other organisations have done something that you might wish to understand
and emulate can be helpful and inspiring.
Finally, we would like to pay tribute to all those organisations whose
experiences have been mentioned in this publication. There can be no better
acknowledgement than to be studied and regarded by your peers. The
organisations providing good practice examples have values that require that
they do something to move the supply chain towards environmental
sustainability. These values are to be cherished and celebrated.
Russell Foster, Chief Executive, IEMA

Ken James, Chief Executive, CIPS
Duncan Eaton, Chief Executive, NHS PASA
Acknowledgements
I am grateful to Barbara Morton of the Manchester School of Management

at UMIST for writing the journal. Barbara was ably supported in this
endeavour by two colleagues, Malcolm McInnes and Chris Foster. The
practice of environmental supply chain management is a diverse and multi-
faceted topic and they are to be congratulated for bringing the various strands
together into such a coherent whole.
I would also like to thank Andy Davey and the NHS Purchasing and
Supply Agency for editorial and financial support. It is reassuring to know that
a major UK purchaser such as NHS PASA gives such enthusiastic support to
this work.
My appreciation is extended to the following people for giving their time
to discuss and shape the contents of this publication: Martin Baxter, IEMA;
Christopher Browne, Environment Agency; Mike Davis, Office of
Government Commerce; Jayn Harding, Sainsburys Supermarkets Ltd; Martin
Houldin, EMAG; Gordon Murray, Improvement & Development Agency;
Bob Ryder, DEFRA; Alistair Wright, Barclays Plc and members of NHS
PASAs environmental working groups.
John Brady
Editor
Apart from the purpose of private study, research or review under the Copyright, Design and
Patents Act 1988, no part of this journal may be reproduced, stored in a retrieval system or
transmitted in any form by any means without the prior permission of the copyright owners.
Whilst every effort has been made to ensure that this publication is factually correct at the time of
going to press, the data, discussion and conclusions are not intended for use without substantiating
investigations by the users. Readers are referred to the list of references and useful web sites at the
back of the journal. No responsibility for loss suffered by any person acting or refraining from
acting, as a result of the material contained in this publication, will be accepted by the Institute of
Environmental Management and Assessment, the Chartered Institute of Purchasing and Supply,
the NHS Purchasing and Supply Agency, or by any associated organisations.
ISSN 1473-849X
Printed on Green Coat velvet Plus
World copyright by the Institute of Environmental Management and Assessment, the Chartered
Institute of Purchasing and Supply, and Crown Copyright 2002. The diagrams and associated text
in sections 5 to 10 inclusive are the property of Barbara Morton.
Foreword
I am sitting in the BA lounge at Brussels airport. Today I met some MEPs

to talk about corporate social responsibility. I could have talked to them about
sustainable development or even integrated product policy. All these trends
will have the same end result, forcing everyone, individuals as well as small and
large organisations to look at the products they buy and where they buy them
from.
We will need to ask far more questions about the entire life story of
products, and take actions to make sure that their stories do not disclose tales
of environmental harm, unnecessary pollution or social injustice. No
individual or organisation can claim to have embraced sustainable
development, corporate social responsibility or even environment initiatives if
they are not looking at issues associated with the products they buy.
In the BA lounge there is a workman drilling into the wall. I am thinking
- what would a power drill look like in a more sustainable society? How would
a company making power drills behave in a world where all power drill
manufacturers excelled in corporate social responsibility? How will integrated
product policy affect the design and marketing of the drill? When it is worn
out, will the workman throw the drill in the dustbin or will he have access to
recycling facilities?
I can safely assume that the workman does not ask these questions. This
is a shame because if he did, and power drill customers did also - we would
now have power drills with rechargeable batteries which did not use toxic
chemicals in the solder, we would have highly energy-efficient drills that were
designed for recycling with recycling facilities readily available. The product
might not be truly green - but it would be much greener.
This workman is installing some wooden shelves. How embarrassing, I
am thinking, it would be for Brussels Airport to learn that the wood has come
from forests being clear felled, where indigenous people were being exploited
and the rare primates that lived in the rainforest were ending up as the loggers
evening meal. Tools exist to make it easier for the airport to specify sustainable
wood. If more companies specify it, sustainable wood will become available
and more of the worlds forests will be protected.
At face value, green purchasing is scary, it means making difficult
judgements, it means asking awkward questions and taking risks. So is there a
business benefit? Yes, yes and yes. My tens years of leading the green
purchasing initiative at B&Q and now the parent company Kingfisher has
demonstrated that there are significant commercial benefits. Done well,
greener purchasing means being a better informed buyer by knowing more
about where your products are made and how. It means having more creative
and influential relationships with your suppliers. It results in driving more
product innovation and even cost reductions. Ultimately it means handling
products that make you and your colleagues proud.
Foreword
I welcome this Practitioner Guide and the initiatives it describes. It

attempts to make the concept of green purchasing accessible to all.
Good luck and enjoy the journey!
Dr Alan Knight OBE

Head of Social Responsibility - Kingfisher,
Chair of the UK Governments Advisory Panel on Consumer Products and the
Environment
Member of the Sustainable Development Commission.
Contents
1 Introduction
Purpose of the Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 The Environmental Context . . . . . . . . . . . . . . . . . . . . . . . . 4

Sustainable development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Pressures for environmental improvement . . . . . . . . . . . . . . . . . . . . . 4
Environmental management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Public policy development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 The Case for Environmental Purchasing . . . . . . . . . . 9

To reduce waste and improve resource efficiency . . . . . . . . . . . . . . . 10
To secure the supply of goods and services . . . . . . . . . . . . . . . . . . . . 11
To minimise business risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
To provide cost savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
To provide added value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
To enhance corporate image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
To create markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
In the public sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4 Taking the First Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Developing an environmental policy . . . . . . . . . . . . . . . . . . . . . . . . 16
Environmental purchasing and EMS . . . . . . . . . . . . . . . . . . . . . . . 18
Engaging with stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Prioritising and managing the task . . . . . . . . . . . . . . . . . . . . . . . . . 22
Case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(The Environment Agency, Barclays Plc,
Belfast City Council and B&Q)
5 In Practice: Identifying Need . . . . . . . . . . . . . . . . . . . . . 24

The purchasing needs of an organisation . . . . . . . . . . . . . . . . . . . . . 24
Building environmental factors into need . . . . . . . . . . . . . . . . . . . . 26
6 In Practice: The Specification . . . . . . . . . . . . . . . . . . . . 28

Performance specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Product labels, claims and declarations . . . . . . . . . . . . . . . . . . . . . . 30
Product information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
The public sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Others ways of specifying for less environmental harm . . . . . . . . . . . 34
Best practice in procurement areas . . . . . . . . . . . . . . . . . . . . . . . . . 35
Whole life costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
The role of design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Case study - Varian Medical Systems . . . . . . . . . . . . . . . . . . . . . . . . 40
Contents
7 In Practice: Supplier Qualification and

Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Pre-qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Supplier appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
The value of questionnaires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Suppliers concerns about questionnaires . . . . . . . . . . . . . . . . . . . . . 46
Environmental management systems . . . . . . . . . . . . . . . . . . . . . . . . 47
EU procurement rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Supplier vetting and auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8 In Practice: Tendering and Tender Evaluation . . . 50

What can companies do? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
What can public sector organisations do? . . . . . . . . . . . . . . . . . . . . 51
9 In Practice: Contract Management and
Contract Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Environment as part of the review process . . . . . . . . . . . . . . . . . . . . 54
Working with suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Continuous improvement in the supply chain . . . . . . . . . . . . . . . . . 56
10 In Practice: Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . 58
How can accounting regimes foster environmental purchasing? . . . . 58
What information is required and how should it be used? . . . . . . . . 59
11 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Sustainable development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Stakeholder and legislative pressure . . . . . . . . . . . . . . . . . . . . . . . . . 61
The benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Good and effective practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Getting started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Environmental purchasing in practice . . . . . . . . . . . . . . . . . . . . . . . 62
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Appendices
1 Environment Agency Procurement Strategy . . . . . . . . . . . . . . . . . . . 64
2 Barclays Environmental Supply Chain Management . . . . . . . . . . . . 68
3 Belfast City Councils Environmental Supply Chain Management . . 71
4 Environmentally Preferred Actions . . . . . . . . . . . . . . . . . . . . . . . . . 74
5 Environmental Labelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6 Examples of Products Covered by Greener Public Purchasing
Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Contents
7 Environment Agencys Supplier Evaluation Model . . . . . . . . . . . . . . 81

8 Nortel Networks - Environmental Procurement . . . . . . . . . . . . . . . 86
9 Stora Enso Environmental Management . . . . . . . . . . . . . . . . . . . . . 87
10 Sainsburys Raising the Standard . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11 The B&Q QUEST for Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Useful web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
References and relevant publications . . . . . . . . . . . . . . . . 94

Section 1
Introduction
Ten years ago the environmental impacts of products and services flowing
into organisations were neglected aspects of environmental performance.
Purchasing was the poor relation of environmental activity. This situation is
now being rectified. Purchasing and environmental professionals have begun
to recognise the importance of the supply chain in the transition, over the long
term, to a more sustainable world.
Environmental purchasing also has a valuable role to play in the short
term by: reducing corporate exposure to environmental risk, improving the
security of key supplies, and driving environmental improvements along the
supply chain. Whilst the benefits of environmental purchasing have to be
weighed against costs and other commercial pressures, the environment cannot
be ignored in modern day purchasing practice.
This Guide presents an account of good environmental purchasing
practice, and it should be of value to environmental practitioners, purchasers
and supply chain professionals in organisations.
Purpose of the Guide

Purchasing with the environment in mind or environmental purchasing
as it is referred to in this Guide is now on the agenda for a wide range of
companies: from multi-national corporations to small and medium-sized
enterprises, including manufacturers, wholesalers and retailers, and service
providers. In the public sector, government departments, agencies and local
authorities are involved. All these organisations have an interest in the issue,
but they operate in different circumstances and face different challenges and
opportunities.
The information in this Guide will be of value to those who wish to
understand the case for environmental purchasing, either to gain senior level
commitment or to deliver improvements in the supply chain. It will also assist
environmental professionals who wish to acquire a better understanding of
how purchasing decisions are made, and how their organisations
environmental performance relates to the supply chain.
This Guide has been written for those with responsibilities for purchasing
and the supply chain and for environmental management professionals and
consultants. It should also be of interest to budget holders and technical staff
who are involved in purchasing decisions or are equipment users, and those
who develop and implement policy relating to purchasing, environmental
management, supply chain management and risk management. Its contents
are not aimed explicitly at individual consumers.
This Guide should help those who are engaged in supply chain activities
1
Introduction
to take the appropriate action. In particular, it should allow you to:
understand the business reasons for implementing environmental

purchasing, and communicate these to senior managers, colleagues and
companies in the supply chain;
understand how environmental purchasing relates to environmental
management systems - particularly ISO 14001 and the Eco-Management
and Audit Scheme;
appreciate the possibilities for environmental purchasing within the public
and private sectors, including how it can be done within EU procurement
rules, and learn how some organisations have capitalised on these
opportunities; and
understand that environmental purchasing is part of a process of
continuous improvement.
The Guide should help you to find information on environmentally

preferred products and services, and evaluate the environmental performance
of suppliers. It should also provide some insights into the process of how to
buy from environmentally responsible suppliers.
There is no single way to implement environmental purchasing that is
right for all organisations. This Guide does not offer one prescription to fit
all circumstances. However, the most effective approaches to environmental
purchasing do have some common features. Good and effective practices tend
to be:
integrated with an organisations overall business objectives and its

environmental and procurement strategies, and supported by clear
objectives and targets;
backed by senior level commitment and the allocation of responsibilities,
and owned by those responsible for delivery; and
well communicated throughout the organisation.
Contents
Sections 2, 3 and 4 address briefly the context and development of
environmental purchasing, and how it can contribute to the achievement of an
organisations environmental objectives. These sections cover: the relationship
between the supply chain and the concept of sustainable development, the
pressures on organisations to take action, and the business case for
environmental purchasing.
Sections 5 and beyond deal with the practice of environmental
purchasing. Separate sections address: identifying need, specifications,
2
Introduction
supplier qualification and appraisal, tendering and tender evaluation, contract

management and review, and whole-life costing.
The Guide makes extensive use of case studies to illustrate good practice
at various stages of the purchasing process. References and web sites to useful
sources of information, much of which is available on the Internet, are
provided at the end of the Guide.
The Guide pays particular attention to two key challenges. The first is
how to incorporate environmental purchasing into an organisations
environmental management system. A draft IEMA code of practice is
suggested. The code needs to be given further consideration but we believe it
is an important first step in the link between the formal requirements of an
environmental management system and the stages in the environmental
procurement process. The second challenge is to integrate environmental
considerations into financial systems and procurement strategies. The Guide
offers a number of supporting mechanisms.
3
Section 2
The Environmental Context

Sustainable development
Organisations in the public and private sectors are showing an increasing

interest in environmental issues, often as part of an engagement with the wider
issue of sustainable development. The UK governments sustainable
development strategy - see http://www.sustainable-development.gov.uk/
sdig/promoting/increase/index.htm - describes the issue in terms of addressing
the following four broad objectives at the same time:
social progress which recognises the needs of everyone;

effective protection of the environment;
prudent use of natural resources; and
maintenance of high and stable levels of economic growth and
employment.
All four objectives, to a greater or lesser extent, have a connection with

purchasing. Purchasing activities influence the quantities and types of
resources consumed, and have a direct bearing on economic growth and
employment. Also, the considerations taken into account in the sourcing of
products and in the choice of suppliers affects the potential for abating
environmental damage and making social progress in the supply chain.
Some examples of corporate responses to the sustainable development
challenge can be found in the work of Project SIGMA - see
http://www.projectsigma.com. But while interest in sustainable development
is growing, environmental management has been the focus of most activity in
organisations so far.
Pressures for environmental improvement
Many organisations have accepted the need to develop their

environmental management capabilities. This has helped them to address a
wide range of environmental issues in a formal and structured manner. The
major external pressures for the adoption of environmental management
practices are listed below. All these pressures have implications for an
organisations financial position and are therefore major influences on the
adoption of environmental purchasing:
Fiscal policy: the climate change levy, the landfill tax, and fuel taxation
policy are all examples from the UK of fiscal measures driving
environmental improvement.
4
Environmental regulation and legislation: much environmental

legislation imposes limits or administrative controls on emissions from
operational sites, such as air emissions, effluent discharges, noise and solid
waste. In the last ten years, legislators have moved away from this
command and control approach towards the use of laws that give
individual organisations more flexibility in the way they respond. Some
of this recent legislation is having a direct effect on supply chains - for
example:
the Producer Responsibility Obligations (Packaging Waste)

Regulations;
the proposed Waste Electrical and Electronic Equipment Directive; and
the proposed End-of-life Vehicles Directive.
By directly affecting the market for products, legislation changes the

context in which purchasing is carried out in public and private sector
organisations. As the demands of environmental legislation increase,
forward-looking organisations are taking action now to secure their futures.
In addition, public sector purchasers in the European Union must operate
within EU procurement rules. The European Commission has made it
clear that there are numerous possibilities for integrating environmental
considerations into public procurement - see http://europa.eu.int
/comm/environment/gpp. Potential actions by public sector purchasers are
discussed later.
Customer and competitor pressure: many corporate customers are
looking for good environmental performance from suppliers and the
goods or services they provide. Like all other forms of customer
preference, this presents threats and opportunities, according to your
response and that of your competitors.
External benchmarks: organisations are faced with a number of external

benchmarks, for example:
Business in the Environments Index of Corporate Environmental

Engagement
FTSE4Good
Dow Jones Sustainability Index
For many large companies, including, for example, those in the UKs
FTSE350, these external benchmarks have become major incentives for
adopting environmental management policies and practices.
Investor interest: investors are beginning to take account of the
5
environmental performance of companies, with the prospect that good

performance will attract investor loyalty over the long term. Companies
with good environmental records are often seen as being better managed,
with better control of the whole range of risks facing them.
Insurers: in some cases, notably in the USA, companies with good
environmental performance and an accompanying reputation find
insurance more readily available and at lower premiums. Insurers in other
areas are beginning to seek evidence that companies manage the
environmental impacts of their operations.
Community and other stakeholders concern: the general public is
increasingly concerned about the impact of corporate activity on the local
and global environments. Large corporations can no longer take for
granted their licence to operate from local communities, and many - for
example utilities owning large tracts of land in National Parks - are now
regarded as custodians of the environment. Also, many non-governmental
organisations have grown in stature and reach to become more than just a
threat to corporate image. Many, such as the Forest Stewardship Council
and the Marine Stewardship Council, now present a range of
opportunities through partnerships.
Environmental management
These pressures and the growth of environmental legislation have
prompted many organisations to employ environmental specialists and to
adopt formal environmental management systems. The latter may, like quality
management systems, be certified by third parties - most commonly under
ISO14001 or the European Unions Eco-Management and Audit Scheme
(EMAS). As well as providing a structured approach to environmental control,
they can also place additional demands on purchasing professionals since,
according to ISO14001, certified organisations must address all significant
environmental aspects which the organisation can control or over which it can
have influence. Purchasing is one of the main activities through which
organisations can manage their environmental impacts.
Also, corporate customers are placing demands on their suppliers that
relate to the suppliers environmental performance. The electronics and
automotive sectors have been particularly demanding. For example, suppliers
to General Motors have been advised of the requirement to achieve ISO 14001
and have been set deadlines for meeting that requirement.
Purchasing and supply chain managers can expect to be more involved
than ever before in helping their organisations to manage the environmental
effects of bought-in goods and services. They are also likely to become
increasingly involved in ensuring continuous environmental improvement
amongst companies in the supply base, in areas such as risk assessment, pre-
qualification and supplier development.
6
Public policy development

Public sector purchasers have a particular role to play in delivering
environmental improvements because of the context in which they operate.
The European Commissions proposal for a Sixth Environmental Action
Programme, for the period 2001-2010, has identified public procurement as
an area which has considerable potential for greening the market.
Markets and consumer demand can be guided towards products and

services that are environmentally superior to competing products by means
of information, education and by ensuring that products, as far as possible,
incorporate true environmental costs. This will encourage business to
respond with innovations and management initiatives that spur growth,
profitability, competitiveness and job creation. It will also allow consumers
to adopt greener lifestyles as informed choices.
Source: Sixth Environmental Action Programme

http://europa.eu.int/comm/environment/newprg/index.htm
The international dimension

There is also a need to comply with international obligations. The EU
Treaty, for example, commits member governments to integrate environmental
protection into their policies. The Rio Declaration calls for the reduction and
elimination of unsustainable patterns of production and consumption. At
Kyoto, the UK Government agreed to reduce greenhouse gas emissions by
12.5% on average for the period 2008-2012 - see http://www.defra.gov.uk
/environment/climatechange/.
The linked concepts of Integrated Product Policy and Market
Transformation are likely to have increasing prominence as policy-makers try
to address environmental impacts such as depletion of natural resources,
diffuse emissions of hazardous chemicals and increasing quantities of waste. In
the UK, the Governments Advisory Committee on Consumer Products and
the Environment is taking a lead in this area - see the reference at the end of
this Guide to their second report entitled Action for Green products: A tool-
box for change (2002).
An example of a market transformation measure is the UK governments
recently launched, Waste and Resources Action Programme (WRAP). The
programmes aim is to create markets for recycled materials. Further
information on the WRAP initiative can be found at http://www.wrap.org.uk.
Another example of stimulating a market for recycled materials is the UK
governments recently negotiated contract for recycled paper. Closing the loop,
7
Integrated Product Policy is an EU term. It is an approach to reducing the

environmental impacts of products by looking for cost-effective measures
that can be taken at all stages in a products life cycle. The life cycle extends
from raw material extraction, through all stages of production and
distribution to use and ultimately disposal or recovery.
Market Transformation is a UK government term. It means encouraging
producers to place more environmentally-sound products on the market -
for instance by raising minimum product performance standards, and
encouraging customers to buy products with class-leading environmental
performance - for example, by providing better information about lifetime
energy consumption and costs on product labels.
Source: http://www.defra.gov.uk/environment/mtp/index.htm
as this is often called, involves not only recycling materials, but also buying the
products that contain recycled materials. From a business perspective,
purchasers and environmental professionals need to work together to address
the challenges and opportunities these initiatives bring.
8
Section 3
The Case for Environmental

Purchasing
Today, most large organisations have adopted some aspects of good
environmental practices. In the UK, Business in the Environments 2000
index of corporate environmental engagement shows 184 of the UKs top 350
companies (representing 78% by value) responding to its survey. However, the
results show that addressing environmental impacts in the supply chain
presents a real challenge for many companies. This important aspect of
sustainable development attracts the lowest management score, with 17 out of
38 sectors scoring below 50% (Business in the Environment, 2002).
According to Business in the Environment, No company can solve its own,

let alone the worlds environmental problems in isolation. Once a companys
internal policies and systems are in place, there is usually a need to involve a
growing range of suppliers, contractors, and partners in minimising overall
life-cycle impacts.
Source: BiE 1996, p.28
Early proponents of environmental supply chain management included

companies such as BT for whom bought-in goods and services account for a
very large proportion of total expenditure. Many companies accept the need
to measure and manage the environmental effects they are buying in, by
examining the products themselves and the suppliers who are providing them.
The following examples from Nortel Networks and Carillion plc demonstrate
the importance they place on environmental procurement:
Nortel Networks
Nortel Networks is currently implementing its corporate policy and
procedures on environmental procurement which will provide operational
control of environmental considerations relative to the purchase of goods and
services from suppliers. We are establishing a global process for defining,
communicating and maintaining core supplier environmental requirements.
Source: http://www.nortelnetworks.com/corporate/community/environment/
supplies_mgmt/sup_mgmt.html
If environmental purchasing is new to an organisation, purchasing and

supply chain professionals and others need to understand the potential
benefits, particularly where they are required to make a case to senior
9
The Case for Environmental Purchasing
Carillion plc
Identifying and managing the environmental impacts associated with our
sub-contractors and bought-in products is fundamental to the success of
our environmental programme. As a result of an environmental supply
chain programme, we have been able to identify high-risk suppliers and
products and identify alternatives with lower environmental risk.
Source: http://www.carillionplc.com/about/e_speech.htm
management. The business case for the environment becoming a mainstream

issue in purchasing has been described by the Environmental Supply Chain
Forum - see http://www.greensupply.org.uk. In summary it is to:
reduce waste and improve resource efficiency;

secure the supply of goods and services;
minimise business risks;
provide cost savings;
provide added value;
enhance corporate image; and
create markets for new products and services.
To reduce waste and improve resource efficiency

Effective purchasing processes can make a significant contribution to
reducing waste in an organisation - this is part of what the UK government
calls modernising procurement. This means that organisations should first
ensure that they have the right purchasing structures and processes in place
before tackling environmental purchasing. The role of the purchasing
professional is to deliver value for money and ensure that money is not wasted.
Where the amount of waste generated is large and waste management costs in
an organisation are high, there is likely to be substantial scope to improve
purchasing practice, thereby improving environmental performance. See, for
example, the NHS controls assurance standard on the management of
purchasing and supply at http://tap.ukwebhost.eds.com/doh/rm5.nsf.
The aim of improving the efficiency of an organisations procurement and
use of materials, energy and other inputs is central to modern purchasing
management. This resource efficiency, or doing more with less, is also a key
component of environmental management practice. Building collaborative
relationships inside and outside an organisation to drive resource efficiency
forward is a key requirement which, when recognised, opens up opportunities
for joint purchasing-environmental improvements.
10
For example, a vehicle manufacturers collaborative work with a

supplier of sub-assemblies led to reductions in the weight, complexity
and material content of that sub-assembly. Development prompted by
the search for cost-reduction led to: energy savings for the supplier and
the vehicle user; reduced demand for materials; and a sub-assembly
design that facilitates refurbishment. These are all environmental
benefits.
When suppliers, contractors and other partners are involved,
purchasing and supply chain managers have a critical part to play in
driving environmental improvements forwards.
To secure the supply of goods and services

Environmental regulations, such as the banning of certain
dangerous substances, can have an impact on the security of supply of
vital goods and services - see, for example, the UK Governments
chemicals strategy at: http://www.defra.gov.uk/environment/
chemistrat/strategy/02.htm#2.
Purchasers need to be aware of potential implications for supply in
time to source alternative materials or to ensure that existing suppliers
can continue to meet their needs.
Suppliers may also come under pressure from customers to improve
their environmental performance. Failure to make the necessary
improvements may result in the loss of a particular supply contract or, at
worst, the failure of the business. Business failure has ramifications for
all of that businesss customers. Thus environmental pressure in one part
of the supply chain can affect suppliers and customers elsewhere.
Products with reduced environmental impacts can, however, present
their own problems in terms of security of supply. For example, markets
for products containing recycled material are still developing. Prices can
fluctuate and availability might not be guaranteed at all times. These
uncertainties should decrease as markets for environmentally-preferred
products mature.
To minimise business risk

Some organisations have decided to view environmental supply
chain management as a business risk. This is because the potential
threats to security of supply posed by environmental issues justifies such
an approach.
A company can be exposed to business risks through the operations
of its suppliers and contractors - for example, where contractors are in
breach of environmental Regulations. An additional risk to major
corporations or high profile companies is that poor performance on the
11
part of suppliers can result in unwelcome media coverage. The

increasingly global nature of business compounds the problem and adds
further pressures on companies to address environmental performance in
their supply chains.
Organisations need to understand the nature of the services
provided to them and their associated environmental risks in order to be
able to write a contract that deals effectively with them. Organisations
cannot outsource their environmental responsibilities.
To provide cost savings

Cost savings remains high on the list of priorities for many
purchasing and supply chain professionals. Their incentives and rewards
are often linked to savings achieved. The inferior quality of some early
examples of so-called greener products led many to believe that value
for money was not achieved through greener purchasing. But as quality
has improved, organisations have been able to source products with
better environmental characteristics using a whole-life costing approach,
and have demonstrated that cost savings can be achieved - examples are
to be found in the BiE/CIPS publication Buying into a Green Future
(1997).
Meanwhile, there is a growing body of evidence to suggest that an
active environmental management process can bring about savings in
operating costs most notably through reducing waste. It could be
argued therefore that suppliers with good environmental management
could expect to be lower cost suppliers in the long run. Savings can be
made by small and medium-sized companies as well as by larger
enterprises. Some useful examples of cost savings by industry can be
found at http://www.envirowise.gov.uk.
A notable example of where environmentally beneficial initiatives
have made a significant contribution is Baxter Healthcare who produced
US$75 million of additional income, from savings and cost avoidance
between 1995 and 2002 - see: http://www.baxter.com/investors/
citizenship/environmental/index.html.
To provide added value

Purchasing has a role to play in delivering an organisations
environmental and sustainable development objectives. It can add value
by helping to stimulate markets for environmentally preferred goods and
services, particularly through joint working and by encouraging suppliers
to aim for continuous improvement across a range of issues, including
the environment. The result is better quality products from better
performing suppliers.
12
To enhance corporate image

Purchasers and supply chain managers can justifiably argue that corporate
image is enhanced through environmental purchasing practice since it
demonstrates to a wide audience that the organisation is engaged with the
consequences of its operations and activities. It is saying that an organisation
is looking beyond the factory gate to the impacts of its products and services
on the wider community. It is also saying that an organisation is interested in
these impacts over time, ultimately from cradle to grave, rather than only
during their immediate use.
To create markets
Purchasers with significant buying power in particular markets can
encourage suppliers to invest in new technologies, and develop new products
with higher environmental specifications. They can also stimulate markets for:
recycled products or those with a high recycled material content; and

new services delivering an equivalent function to the products they replace
but at lower environmental cost.
The creation of markets should be seen in the context of the shift from
products to services. Companies are increasingly offering a service based on
the function provided by products - such as chemicals (see ENDS Report,
2001a and below) - rather than the product itself. This can help to reduce
In 1999, the giant US electronics and aviation business Raytheon entered

into a far-reaching contract with engineering consultancy Radian
International. Under the five-year, US$200 million deal, Radian is providing
life-cycle chemical management services to more than fifty Raytheon
facilities - purchasing, managing and disposing of all the chemicals and gases
they use. This may seem no more than a routine, if large, example of
outsourcing, taking a complex activity out of Raytheon's hands and helping
it to concentrate on its core businesses. But the contract included one crucial
additional feature: a series of "shared savings" incentives for Radian to cut its
client's chemical consumption, improve its process efficiency and reduce the
unit price of chemicals.
The key goal of chemical management services contracts is to ensure that
both customer and provider win from reducing the costs of chemicals. A
common starting point in bidding for contracts is to propose a cap on the
cost of the customer's annual chemical purchases and then guarantee a
reduction over the span of the contract - typically 3-5 percent per year over
3-5 years.
Source: ENDS Report 313, Feb.2001
13
environmental impact and create scope for new purchasing arrangements such
as flat fees. This in turn stimulates innovation amongst suppliers, since they
are rewarded for developing services that result in less environmental harm.
Purchasers need to reflect this focus on function in their contracts and
negotiations with suppliers.
In the public sector

Government agencies in many parts of the world now address the
environmental impacts of their purchasing activities. Advice and case studies
from around Europe are described in the International Council for Local
Environmental Initiatives Green Purchasing Good Practice Guide (ICLEI,
2001a).
Public procurement represents 14% of GDP for the EU as a whole over

1,000 billion Euro. Publicly purchased items come from every sector of the
economy from pencils to power stations and public procurement can
thus have a considerable impact on the marketplace and on sustainable
consumption. It is therefore very important that public authorities set an
example in this field and seek to procure goods, services and works that do
not harm the environment.
Source: Margot Wallstrom, Commissioner for the Environment, ICLEI, 2001a
A recent OECD document on Greener Public Purchasing and the ICLEI

publication The World Buys Green (ICLEI, 2001b) both highlight green
purchasing initiatives currently underway internationally. Examples are given
in the table overleaf:
In the UK, Local Agenda 21 has helped to drive environmental purchasing
initiatives in many local authorities, see http://www.defra.gov.uk
/environment/sustainable/la21/policy.
Environmental purchasing also plays a role in delivering economic
development strategies. In particular, local government is required to
undertake its activities, including purchasing, according to the principles of
best value, see http://www.local-regions.dtlr.gov.uk/bestvalue/proc/
bvpindex.htm, and Murray 2000.
14
Examples of public sector initiatives around the world
Austria Procurement Service Austria is an organisation operating a

hot-line and providing information and legal expertise.
Canada Greening of Government Operations initiative.
Denmark Action Plan for Sustainable Public Procurement and the work
of the Danish Environmental Protection Agency - see
http://www.mst.dk.
Europe-wide European Eco-Procurement initiative, including the Buy It
Green network (BIG-Net) of the International Council for
Local Environmental Initiatives (ICLEI) - see
http://www.iclei.org/europe/ecoprocura/network/
France Greening of Government through an inter-ministerial
commission.
Germany Instruments to support local initiatives include a handbook
providing information on product use and specifications.
Japan Action Plan for Greening of Government Operations -
adopted in June 1995.
Switzerland Greener public purchasing is a grass-roots phenomenon
involving officials and purchasers from the federal, canton and
municipal administrations.
USA The Environmental Protection Agency has put in place an
Environmentally Preferable Purchasing Program.
Environmentally Preferable Purchasing (EPP) is a federal-wide
program that encourages and assists Executive agencies in the
purchasing of environmentally preferable products and services
- see http://www.epa.gov/oppintr/epp/.
UK The Department for Environment, Food and Rural Affairs
takes a lead in providing policy advice on environmental
procurement for central government departments and agencies
and other public sector bodies. As part of its guidance,
DEFRA lists 'Five good reasons for buying green' at:
h t t p : / / w w w. s u s t a i n a b l e - d e v e l o p m e n t . g ov. u k / s d i g /
improving/partf/greenbuy/02.htm
15
Section 4
Taking the First Steps

Typically, one of the first actions by an organisation committed to
environmental improvement is the appointment of an environmental manager
to be responsible for day-to-day operational issues such as waste, noise and
emissions to air. Often these activities will be managed within the framework
of an environmental management system.
Traditionally, environmental managers focus on the environmental
impacts arising from the goods and services provided by their organisation.
But an organisation should also take account of the impacts of goods and
services it buys, including those of contractors working on its premises.
Purchasing has a key role to play in delivering environmental objectives in both
of these respects because:
those responsible for purchasing are at an interface with suppliers and

contractors; and
they are well placed to gather data from suppliers and others on the
environmental characteristics of products and services.
Developing an environmental policy

It is sensible therefore to establish an environmental purchasing policy that
provides a broad indication of how purchasing will do this. This is often
developed as part of an overall environmental policy.
An environmental policy should address the organisations key impacts
and be endorsed by senior management. Many business support organisations
can provide assistance to companies, particularly small and medium-sized
enterprises, wishing to develop a policy. In this way a policy can be established
even by organisations with no environmental manager.
The environmental policy should reflect the nature of the business. For
example, for a chemical company it should address the issues associated with
producing chemicals, rather than focusing on the use of recycled paper or lease
cars. A good example of a policy that addresses environmental impacts in the
supply chain is that of Carillion plc - further details can be found at
http://www.carillionplc.com.
An environmental purchasing policy can take account of the results of any
environmental reviews undertaken as part of policy development or carried out
within an environmental management system. This can help to assess the
significance of the indirect impacts of purchased goods and services.
Environmental purchasing can also be treated as an integral part of the
corporate approach to purchasing and supply chain management, for example
16
see http://www.society.barclays.co.uk/environment-content.htm
An explicit environmental purchasing policy should convey a strong, clear
message to suppliers and contractors about what the organisation seeks and
expects from them.
Purchasing and supply chain management professionals who are members
of the Chartered Institute of Purchasing and Supply were recently provided
with an environmental policy document which encourages them to take a lead
role in the process of implementing environmental purchasing - see
www.cips.org. The key text is reproduced below:
'The CIPS policy document states that purchasing and supply chain
management professionals should:
have a significant specialist influence and role in improving the
environmental performance of their organisations and that of their
suppliers and contractors;
seek to reduce the environmental impact of their own day-to-day
activities;
seek to develop the environmental purchasing policy and practices of
their employers and carry out their professional duties in an
environmentally responsible manner, compliant with all relevant
legislation and cognisant of the objectives of their organisation;
aim to reduce the adverse impact on the environment of their own
activities and that of their suppliers; and
work with colleagues and suppliers, as appropriate, to ensure that goods
and services purchased can be manufactured, delivered, used and
disposed of in a safe, and socially- and environmentally-responsible
manner'.
Source: CIPS, 2000
The policy itself should reflect the organisations overall environmental

strategy and objectives. These objectives will vary according to the nature of
the business, its supply chain relationships and the environmental pressures
and opportunities affecting it. Those developing the policy need to bear in
mind factors such as:
organisational arrangements for purchasing, e.g. centralised or devolved;
the size and buying power of the organisation;
the extent of influence of the organisation in its major markets; and
public sector constraints on purchasing - where these are relevant.
17
The most effective approaches to environmental purchasing tend to be:

integrated with an organisation-wide environmental strategy;
backed by senior level commitment and the allocation of responsibilities;
well communicated throughout the organisation;
supported by clear objectives and targets; and
owned by those responsible for delivering them.
In addition, in the more successful cases the roles of internal customers as

well as purchasers are defined and understood; results are included in
published reports; and savings are used to stimulate further actions.
Common failings of environmental purchasing initiatives include the
following:
the initiative has been led by environment managers and not integrated
with the purchasing process and wider corporate objectives and targets;
inconsistent messages have been sent to suppliers by different parts of the
customers organisation;
budget holders are able to ignore or reject environmentally-preferred
alternatives; and
internal customers have not appreciated their role in delivering
environmental improvement.
The table overleaf shows an example of an environmental purchasing

policy based on some work by the Institute of Public Finance. It may be
applicable to organisations in the public sector.
Environmental purchasing and EMS
For environmental purchasing to be fully effective, the link needs to be

made with environmental management systems. This can be done most
effectively in the assessment of significant environmental aspects. The
assessment of bought-in goods and services should consider the potential
environmental impacts of suppliers and service providers actions and
processes, and it should also consider the environmental impacts associated
with products themselves and their constituent materials.
Compliance with environmental legislation and standards affecting
products and product life cycle issues should be identified by the organisations
management system procedures. Where compliance with legislation or
standards requires some form of supply chain management, the EMS
programme should include such activity.
18
An illustrative environmental purchasing policy

- for a buying organisation
In pursuit of the organisations objectives relating to sustainability, we
recognise the critical need to act as a role model, by carrying out purchasing
activities in an environmentally responsible manner. We will therefore:
comply with all relevant environmental legislation;

encourage and persuade suppliers to investigate and introduce
environmentally friendly processes and products;
educate our suppliers concerning the organisations sustainable
development strategy;
ensure that suppliers environmental credentials are considered in the
supplier appraisal process;
ensure that, where appropriate, environmental criteria are used in the
award of contracts;
specify, wherever possible and reasonably practicable, the use of
environmentally friendly materials and products;
ensure that consideration is given to inclusion, within all specifications,
of a facility for potential suppliers to submit prices for environmentally
friendly alternatives; and
ensure that appropriate consideration is given to the costs and benefits
of environmentally friendly alternatives.
Signed: . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chief Executive

Date ............................
Source: Adapted from the Institute of Public Finance Guidance 2001
A draft IEMA code of practice for incorporating environmental issues into

supply chain management is shown in the table opposite. The draft code
describes the actions that might be required where procured good and services
embody some of an organisations significant environmental aspects. The draft
code needs to be given further consideration but we believe it is an important
first step in link between the formal requirements of an environmental
management system and the stages in the environmental procurement process.
19
IEMA Draft Code of Practice
on Incorporating Environmental Issues
into Supply Chain Management
In cases where procured goods and services contain the significant
environmental aspects in an organisations environmental management
programme, there should be:
a commitment to environmental supply chain management or
environmental purchasing in the organisations environmental policy and
procurement strategy;
a programme of environmental supply chain management action
containing objectives and targets against which progress can be
measured;
a clear link between these objectives and targets and the general
environmental goals of the organisation as a whole;
evidence that this programme also takes account of the organisations
commercial position vis--vis environmentally-significant purchases;
evidence that responsibilities for the delivery of this commitment are
assigned within those parts of the organisation responsible for the
acquisition of goods and services and for environmental management;
evidence that sufficient resources are available within relevant parts of
the organisation to fulfil the policy commitment and achieve the related
evidence that appropriate training is provided to enable purchasing staff
to discharge their responsibilities within the environmental supply chain
management programme;
evidence of an understanding by purchasing staff of the contribution
their function can make to environmental performance improvement in
the organisation;
evidence of joint working between environmental and purchasing staff
in the implementation of the environmental supply chain management
programme;
a mechanism for two-way communication with suppliers about the
operation of the environmental supply chain management programme;
progress monitoring and performance measurement, with reporting
mechanisms to purchasing and environmental management; and
audit of the environmental supply-chain management process within the
normal environmental management audit cycle; and
The review of any environmental management system that includes a
significant environmental supply chain management element should be
carried out by a group that includes purchasing and supply chain managers.
20
Engaging with stakeholders
Communication and dialogue with stakeholders in purchasing activities is

an important part of implementing policy on the ground. Methods of
communicating information on environmental purchasing within an
organisation can include:
induction training for budget holders and internal customers;
training and workshops on environmental purchasing;
purchasing guides - these often provide information on green products
and services; and
newsletters - in electronic format and hard copy on new products, services
and suppliers.
Barclays, for example, use a number of intranet sites for this purpose and
they have proved to be a cost effective and user-friendly approach. During
2000, Barclays launched three sites, see http://www.society.barclays.
co.uk/environment-content.htm, to supplement existing forms of internal
communication, as follows:
corporate responsibility - containing up-to-date information on
environmental, social and community issues;
aspects and impacts register - providing information about environmental
impacts and their significance, as well as targets and progress made; and
environmental, social and ethical supply chain management - providing a
user-friendly method for considering these issues during the tendering
process.
Those directly responsible for negotiating contracts and placing orders are
not the only people who need to be involved in communicating environmental
purchasing messages to suppliers and contractors. Managers, budget-holders
and internal customers on whose behalf the purchases are made also have a role
to play, and they need to be drawn in to the process.
Organisations use a variety of methods to convey messages to the supply
chain about environmental priorities. Methods are usually designed for each
of the following stages in the purchasing process: specifications, invitations to
tender, questionnaires, workshops, audits and visits, and contract review
meetings.
Therefore, all those who are involved in purchasing decisions and who
have contacts with suppliers need to be aware of, and to some degree involved
in, environmental purchasing. In the course of routine dealings with suppliers,
purchasers have opportunities to influence the process in a number of
particularly important ways, such as:
21
through the development of specifications and the environmental

characteristics of the goods and services to be purchased;
by choosing services in place of products and creating an opportunity for
suppliers to offer more environmentally preferable options; and
by encouraging suppliers to invest in research and development or new
production facilities in response to new environmental demands.
Prioritising and managing the task

When introducing environmental purchasing, most organisations are
immediately confronted with the environmental effects of a wide range of
goods and services they currently buy as well as the suppliers and contractors
supplying them. It can be difficult to know where to start. Those organisations
with most experience in this area have found that trying to tackle every product
and service and every supplier at the same time is a hugely resource-intensive
task. Indeed, it is simply not an option for most organisations. A much more
effective approach is to find a means of prioritising actions. This usually means
making a decision on two issues, namely:
which products and suppliers will be subject to most intense scrutiny, e.g
products with high environmental risk, and
which products and suppliers will be examined first, e.g. business-critical
products and suppliers.
For organisations starting out on this process, it is not enough to look only
at high-spend products and services. Major environmental impacts can occur
where expenditure is quite low. Similarly, companies cannot afford to
concentrate solely on their largest suppliers, as small suppliers can have high
environmental impacts. Purchasers and others involved in this process need to
find an approach to prioritising that is appropriate to their circumstances. The
types of products and services purchased and the manner in which purchasing
is carried out vary widely between organisations. So too does the level of
expertise within organisations. These factors are relevant to the choice of
approach and include:
the nature of the products and services purchased, such as products
supplied to your own specification, finished products for office-based
activities, and the services of sub-contractors;
the organisation of purchasing and whether it is centralised or devolved;
and
the level of environmental expertise available in your organisation.
There are a number of prioritising approaches in environmental
purchasing. Some bundle like-products together into ranges and categories
and address common issues. One common feature amongst practising
22
companies is to identify the products and suppliers associated with the highest
risk. This is defined by many organisations as a combination of the following
factors:
environmental risk, this might focus on the most energy-consuming
equipment, and products containing hazardous materials;
risk to the companys reputation or profile, this might focus on a waste
management contractor who dumps the companys waste illegally; and
risk to security of supply, this might focus on strategically important
suppliers with poor environmental performance.
Environmental purchasing can be seen as part of the process of managing

business risk. In introducing environmental criteria to the process of acquiring
goods and services, most organisations try to integrate the environment as
closely as possible into routine business practice. It makes sense for the
environment to be seen as another aspect of commercial relationships with
suppliers and contractors. Environmental factors can then be fully integrated
into day-to-day purchasing operations.
Case studies
The Environment Agency, Barclays plc, Belfast City Council and B&Q
Purchasers need straightforward approaches in order to know where to direct
their limited resources. In the UK, the Environment Agency uses a set of
five questions to decide where to focus its attention - the Agencys approach
to environmental procurement is described in Appendix 1. As part of this
process, the Environment Agency also assesses its own influence with
suppliers so that procurement can work in a way that reflects the Agencys
relationships with the market. Potential influence on the market is
important for many organisations - they can expect to be able to do more if
their spending power is significant in a particular market or if one or more
of their suppliers are producing to their specifications.
The Barclays case study in Appendix 2 and the Belfast City Council case
study in Appendix 3 illustrate alternative approaches. In the case of Barclays,
the services of external consultants are used to carry out a risk ranking and
to devise environmental questionnaires for use by buying teams. The scoring
mechanism means that purchasing professionals can integrate environmental
criteria into purchasing decision-making, without the need for extensive
environmental knowledge.
Some organisations are able to apply environmental performance measures
to their whole supply chain. They benchmark performance amongst
suppliers and within purchasing teams to help drive improvement - see the
example of B&Q at:
http://www.diy.com/bq/templates/contentlookup.jhtml?content=%2Faboutbandq
23
Section 5
In Practice: Identifying a Need

In this and subsequent sections we describe the actions that can be taken
by purchasers and supply chain managers at the key stages in the purchasing
process. The figure below illustrates the stages in the process of acquiring
goods and services at which environmental issues can be addressed.
Addressing environment at key stages of the purchasing process
Identification of Supplier qualification

Specification
need and appraisal
Financial
Accounting: evaluation
whole life costing
Financial
review
Contract management Tendering and

and review tender evaluation
The purchasing needs of an organisation

Most purchases originate with the identification of need being undertaken
well away from the purchasing department. This part of the purchasing
process usually involves, for example, technical staff and other internal
customers, many of whom will be budget holders.
Where purchasing and supply chain managers are involved in the very
earliest stages of identifying what an organisation needs to buy, they have the
greatest opportunity to manage out environmental impacts. At this early
stage, purchasers and internal customers working together can re-examine the
need for a purchase. They can ask themselves questions such as:
do we need this product? and
do we need it to this specification?
24
In many ways, purchasers need to ask themselves, and their internal

customers, the same questions as designers of products and services now
routinely ask themselves.
Quite often it turns out that there is more than one way of satisfying an
identified need of a user group and more than just one product with which
to achieve this, and that alternative options can be significantly different
from the current solution. Before starting to make plans it is advisable to
define what is termed the 'service unit' of the intended product or service.
This means thinking in terms of solutions to problems (making tasty coffee),
not to products (make a coffee machine).
Source: Charter and Tischner, 2001 pp.265-266
Some examples of choices are given below which illustrate this wider
thinking. The purpose is to find environmentally preferable solutions to
problems rather than selecting from a range of products which imply that the
solution has already been determined:
Purchasing a coffee machine or arranging for the provision of a hot drinks
service.
Purchasing quantities of new carpet or the function delivered by floor
covering. This approach has been adopted by Interface Carpets who
provide a service involving the leasing, not purchasing, of floor covering.
Arranging a business travel contract or installing video-conferencing
facilities at major company sites to cut down on business travel by air and
car. This can reduce environmental impact as well as cost.
Purchasing new fax machines or providing users with the IT facilities to
fax from their computers.
Purchasing new printers for every desk or negotiating a contract for
centralised printing facilities including the most up-to-date energy- and
paper-saving features.
Negotiating waste management contracts for packaging waste or working
with suppliers to introduce returnable packaging for delivery of the
products supplied.
Many purchases are made on the basis of what has been purchased in the
past. Effective environmental purchasing requires that repeat purchases
should be challenged and questioned. The more ambitious the environmental
objectives to be achieved, the more this fundamental re-examination becomes
a necessity. This approach is not radically new since good purchasing practice
requires that fundamental questions are routinely asked about the value being
delivered.
25
Building environmental factors into need

Purchasers can usefully apply the principles of the familiar waste hierarchy,
namely: eliminate, reduce, reuse, recycle, and dispose (or end-of-life
management). In the case of questioning the need to be served, a useful
starting point for this hierarchy is to re-think the purchase.
Waste (Purchasing) Hierarchy
Re-think - service instead of product?

Eliminate e.g. hazardous material content
Reduce e.g. distance travelled
Reuse e.g. packaging
Recycle e.g. paper, glass, metals
Dispose / end-of-life management
- minimise quantities and therefore cost
Purchasers and technical specifiers need to appreciate the environmental

characteristics of the products and services they buy. This knowledge can be
built up from a number of sources including:
environmental expertise within the organisation;
information provided by suppliers; and
external sources of environmental information such as trade associations
and government bodies - see the websites listed at the end of this Guide.
By increasing the understanding of the environmental impacts of products

and services currently purchased, purchasers and specifiers will be in a better
position to assess the alternatives. This in turn helps in the development of
new specifications.
Those who might be involved in identifying need include:
users - who can have significant knowledge of requirements, new and
potential uses of products and services, and the market;
environmental managers - who have knowledge of potential
environmental impacts of products, services and alternatives, existing and
forthcoming regulations and legislation;
procurement managers - who have knowledge of products, services and
26
the supply market, and can influence the development of new products
and processes by suppliers; and
first and second tier suppliers - who can provide information on
alternative products and services, and alternative means of delivering
functionality.
27
Section 6
In Practice: The Specification

One of the most effective ways of reducing environmental impacts
through purchasing is to focus on the specification of environmentally
preferred goods and services. For example, by changing specifications
organisations can:
manage out wastes such as packaging;
reduce the amount of hazardous material in products; and
increase recycled material content of products.
Purchasers and those specifying goods and services can use national and
international standards as an aid to environmental purchasing.

Specification
need and appraisal
Financial
whole life costing
Financial
review

Performance specifications
The process of introducing environmental criteria into purchasing usually
involves moving away from writing technical specifications towards the
development of performance or functional specifications.
This means that required outcomes or functionality become the focus of
the specification. This allows suppliers the freedom to offer innovative ways of
delivering functionality, without being tied to a technical specification.
28
Some companies have found that they can create benefits for the
environment and for the bottom line by allowing the supplier to offer an
alternative solution. For example, when a firm buys treatment chemicals for
boiler feed water, what the business really wants is clean water for the boiler,
not the chemicals themselves.
Buying the water-purifying service at a contract price to meet a water-
quality specification may provide the supplier with an incentive to minimise
material inputs and thus reduce environmental impacts. At the same time it
saves the customer from investing resources in chemicals management (see
ENDS Report 2001a). However, this approach doesnt work in all cases, and
organisations need to tailor these ideas to fit their own circumstances.
A useful introduction to environmental specifications is to be found in the
International Council for Local Environmental Initiatives Green Purchasing
Good Practice Guide (ICLEI, 2001a) which discusses the use of Life Cycle
Assessment to identify environmentally preferable products.
Life Cycle Assessment (LCA) considers, as the scientifically most reliable

method, the environmental impacts of a product from its design to its
disposal, taking into account all the steps in between including: raw material
extraction, manufacturing, packaging, transport, storage and utilisation. In
the context of LCA, an environmentally preferable product is a product
that has the minimum environmental impacts throughout its lifespan,
compared with other products or services serving the same purpose and
having the same functional qualities.
This method of identifying green products is quite sophisticated and,
hence, has its drawbacks. Information is not available for many product
groups and for the situations in which they are manufactured and used. In
addition, because they go into so much detail, LCAs can be seen as an
inflexible and expensive tool, therefore it is likely to be inappropriate for
most purchasing decisions.
Source: ICLEI, 2001a
The reservations about LCA apply in particular to full LCAs, these are
studies which seek to quantify all the environmental impacts arising at each
stage of the product life-cycle. There is however, a range of less rigorous, but
still valuable, techniques that can be used to bring life cycle thinking to bear
on purchasing decisions.
The ICLEI 2001a publication provides an illustration of one qualitative
technique - see Appendix 4. This draws out some general themes, but a similar
process can be used to examine the issues arising around the life cycle of any
particular purchase. The work of Lamming et al 2000 also deals with the
management of environmental impacts, costs and risks. In the UK, the
29
Environment Agency uses a life cycle approach based on impacts under the key
headings, raw materials, manufacture, use and disposal, see
http://www.environment-agency.gov.uk.
Product labels, claims and declarations

LCA results are also used by a number of eco-labelling schemes to identify
the award criteria for individual product categories. Thus, by choosing to
specify eco-labelled goods the purchaser can cut through the LCA maze. LCA-
based eco-labels are only one of several-types and Appendix 5 gives further
details of these potential aids to environmental purchasing.
Eco-labels appear to offer a quick fix for the purchaser looking to specify
environmentally preferred goods, but their use can turn out to be more
problematic than at first appears. For instance, at least 35 third-party eco-
labelling schemes now operate around the world, with each scheme having its
own particular set of selection criteria. The criteria for eco-label awards can be
found at the internet sites listed in ICLEIs Green Purchasing Good Practice
Guide, pp.9-10. If used with care, eco-labels can provide useful information
at the specification stage of the purchasing process.
The growing interest in the environmental performance of products has
led, not surprisingly, to many green claims being made by producers and
suppliers of goods, in pursuit of market advantage. Some confusion has arisen
over the meaning of the terms used, particularly less specific ones such as
environmentally-friendly. Indeed, some manufacturers can be criticised for
attempting to climb onto the green bandwagon by overstating the performance
of their products.
The misuse of terms such as environmentally friendly and recyclable has
led to a degree of cynicism by purchasers, and also to some attempts to address
the issue. In the USA, the Federal Trade Commission has produced guides for
the use of environmental marketing claims, see http://www.ftc.gov/
bcp/grnrule/guides980427.htm. The UK Government has produced a useful
Green Claims Code. It gives guidance on the use of Type II claims (see
definitions below). The guide sets out how products should not be described,
see http://www.defra.gov.uk/environment/gcc/index.htm. The International
Standards Organisation (ISO) has developed standards to bring some clarity to
the meaning of the different terms. It has described three types of
environmental product claims, termed ISO Type I, Type II and Type III (see
overleaf ), and has laid down some norms to try to regulate their use and the
basis on which they are made.
Product declarations are similar to other technical information produced
by suppliers. One difference between Type II and Type III declarations is that
the former are rather more selective, focussing perhaps on a single issue such as
energy consumption in use, or an issue believed to be of particular interest to
customers such as recycled material content. Hewlett Packards product
30
Environmental claims the ISO classification

Type I (ISO 14024) claims are based on criteria set by a third party and
are multi-issue, being based on the products life cycle impacts. The
awarding body may be either a governmental organisation or a private
non-commercial entity. Examples include the EU Eco-label, the Nordic
Swan and the German Blue Angel.
Type II (ISO 14021) claims are based on self-declaration by
manufacturers or suppliers, e.g. made from x% of recycled material.
Type III (ISO 14025) claims provide quantified product information
derived from full life cycle analysis, e.g. Volvos product profile for its
S80 motor car.
http://vcc.volvocars.se/pp/news80/environment/pop_recycling.asp.
declarations are a good example of Type II - see http://www.hp.com/

hpinfo/community/environment/scanners.htm.
There are fewer examples of Type III declarations in the marketplace, they
tend to be more comprehensive and are supported by more rigorous analysis
based on a full LCA. However the customer has to put rather more effort in
to obtain information about an individual issue - see the example of Volvo S80
referred to above.
Product information
Product information can be obtained from a variety of written materials -
some new sources are being developed on Internet sites. In the UK, the
Governments Department for the Environment, Food and Rural Affairs is
developing a website on Sustainable Products and useful information is also
to be found at the Envirowise website, http://www.envirowise.gov.uk. A series
of buyers guides for energy-consuming products such as PCs, laptops,
televisions and VCRs are being developed as part of its market transformation
programme - see http://www.defra.gov.uk/environment/mtp/index.htm.
Another body that is active in this field is the UK Environmental Product
Information Consortium (www.ukepic.com). UKEPIC aims to:
encourage the increased availability, reliability and accessibility of
environmental information to consumers;
provide UK consumers, intermediaries and government with reliable
information on the environmental performance and other related
characteristics of domestic and non-domestic products, systems and
services;
characterise and identify products, systems and services that represent best
31
practice and minimum standards;

provide current information as a basic searchable information data-base
that is accessible directly via the Internet, and in machine-readable formats
suitable for third-party applications;
encourage compatibility and convergence of information standards,
presentational formats in support of existing and planned UK, EU and
International consumer information systems where these will benefit UK
consumers; and
aid UK government market transformation policy.
Some useful web sites on green purchasing are listed at the end of this
Guide. The ICLEIs Green Purchasing Good Practice Guide (ICLEI, 2001a)
contains further listings. The Danish EPA website also contains useful product
information - see http://www.mst.dk.
The public sector

In July 2001, the European Commission issued an Interpretative
Communication on the Community Law applicable to public procurement
and the possibilities of integrating environmental considerations into public
procurement. This document advises public sector purchasers on what they
can and cannot do under EU Procurement Rules. The document can be
downloaded from http://europa.eu.int/comm/internal_market/en/publproc/
general/environment.htm.
The Communication makes it clear that there are numerous possibilities
for the greening of public procurement under the Directives. Issues relating to
specification are addressed in a section entitled, Frequently Asked Questions
which can be downloaded from http://europa.eu.int/comm/internal
_market/en/publproc/general/environmentfaq.htm. Generally speaking, the
earlier in the purchasing process you place environmental considerations, the
greater the opportunity for intervention. The box below gives some helpful
questions and answers from the Communication.
Q) Is it possible to ask for process and production methods under the Directives?
A) In the technical specifications of the tender, process and production
methods can be requested where these help to specify the performance
characteristics of the product or service. This includes both process and
production methods that physically affect the end product (e.g. absence of
chemicals) and those that do not but nevertheless affect the nature of the end
product for example organic food, or furniture produced from sustainable
timber. It is not possible to require that the factory producing the goods use
recycled paper in its office, as this does not relate to the production of the
goods.
32
Q) Can I ask for specific materials for example, that windows be made of wood
in the technical specifications?
A) It is possible both to ask for specific materials to be used in an object
supplied or in a works contract, and also to ask for a type of material to not
be used. So, for example, you could ask for your windows to be made of
wood, or not to be made of a specific product.
Q) How can I use eco-labels in my procurement?
A) You can use eco-label criteria to help determine your environmental
technical specifications. You can also accept an eco-label certificate as proof
of compliance with those criteria, although you must accept other means of
proof - you cannot say that you only accept products with an eco-label
certificate.
Q) What happens where I want to ask for better performance than a European
standard in the environmental field?
A) The purchaser is obliged to refer to the European standard, but may
request better environmental performance than the standard in the technical
specifications.
Q) Can I request that products or services be supplied using specific methods of
transport?
A) Yes, in the contract clauses for the execution of the contract, the means
of delivery of the goods can be specified, as long as this does not lead to
discrimination. Other possible ways of reducing the environmental impact
of transport activities linked to the provision of goods or services, could
include requesting that deliveries of goods be made in bulk, or that cleaning
products are transported in concentrated form, and diluted at the place of
use.]
Source: The European Commission 'Interpretative Communication on the Community Law,

July 2001
Public sector purchasers must exercise caution in their use of eco-labelling

schemes in the tendering process. The ICLEI guide recommends that
purchasers always add the words or similar requirements and attach the
criteria of the eco-label asked for in the invitation to tender. As indicated
earlier, purchasers can also refer to standards when drawing up specifications.
Here again, purchasers subject to EU procurement rules have to exercise
caution.
Article 8 of European Directive 93/36 states that, The Directives define
that for the description of products or services bought, [purchasing] entities
33
must refer to technical specifications which are defined by reference to national

standards implementing European standards, or by reference to European
technical approvals or by reference to common technical specifications.
Consider the example of electrical emissions from computer screens.
There is a mandatory European Union-wide standard on the maximum
electrical emissions permitted from a computer screen. This fixes minimum
levels of environmental protection. The question is whether a purchasing
entity could go beyond these standards by requesting lower emissions.
The purchasing entity has to accept for its bidding process every screen
that respects the existing standard, but it could still make the electrical
emissions an award criterion. It could do this by stating in the specification
that every screen needs to respect the standard as a minimum requirement and
that, in the tender evaluation process, the actual emissions would be one of the
award criteria.
Article 8, of the European Directive 93/36 also states that, In cases where
no mandatory European standards exist, the [purchasing] entity should use
existing voluntary European standards or national standards or technical
specifications to describe the object of the contract. [In annex II the terms
standard and technical specification are described.] In this case, the
[purchasing] entity can set a specification which satisfies its own
environmental requirements but it has to define the technical terms of the
product in a way which does not lead to a certain product or supplier. If it
decides that, in the absence of any existing standard or technical specification,
it needs to refer to a specification or a name of a certain product, it needs to
make absolutely clear that it would also accept products which fulfil the same
performance criteria, for example by adding or equivalent to the description
in order to make clear that it will not give a de facto preference to a certain
supplier.
In the USA, the Environmental Protection Agency has introduced an
Environmentally Preferable Purchasing Program. Environmentally Preferable
Purchasing is a federal-wide program that encourages and assists agencies in
the purchasing of products and services. Information about the programme
can be obtained from http://www.epa.gov/oppintr/epp/. Environmentally
preferable is defined as: products or 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.
Examples of products covered by Greener Public Purchasing Initiatives are
shown in Appendix 6.
Other ways of specifying for less environmental harm

Eco-labelling schemes and environmental declarations are, to a large
extent, supplier- or producer-led initiatives, in that they involve the provision
34
of information by suppliers in anticipation of customers needs. While this

does not detract from their value to many purchasers in establishing
specifications for greener products, some purchasing organisations wish to
make their own assessment of environmental purchasing priorities and ask
their suppliers to provide products to meet these criteria.
Where organisations buy common products, such as paper, this approach
clearly overlaps with the use of product declarations. If one wants to buy paper
made from 100% post-consumer recycled fibre, one can seek out a producer
who makes a declaration on that feature about a product in its range.
Where major corporate customers have a strong role in product design
and specification, they can and do impose strict controls on the substances to
be used in the manufacture of materials supplied to them. This is particularly
the case in the electronics and automotive sectors. Here the requirements of
EU Producer Responsibility Regulations are of greatest relevance. Purchasers
can benefit from understanding the requirements of, for example: the proposed
Waste Electrical and Electronic Equipment Directive, and the proposed End-
of-Life Vehicles Directive.
Hazardous waste reduction is encouraged by legislation which has the
long-term aim of eliminating such substances from products on the market.
The European Unions current initiatives in Integrated Product Policy will
reinforce this trend. Electronic products manufacturers such as Canon and
Sony have lists of materials that are either banned from use in the companies
products, or are being eliminated from use - see, for example, Canons Green
Procurement Standards Guidebook at http://www.canon.com/ procurement/
green-e.html. Volvos lists of prescribed substances can be found at
http://vcc.volvocars.se/index.asp.
Best practice in procurement areas

The UK Governments Department for Environment, Food and Rural
Affairs provides guidance on best practice - see http://www.sustainable-
development.gov.uk/sdig/improving/contextf.htm in the following areas:
asbestos ozone-depleting substances

batteries paper
biodegradable substances pesticides and artificial fertilisers
climate change solvents
construction stationery
energy efficiency transport - green guide
hazardous substances waste and litter
horticulture waste guide
IT - a green guide water
noise wood
office equipment
35
Specification guides for particular sectors are also being made available -
see, for example, the Green Guide to Specification produced in the UK by the
Building Research Establishment (BRE 2002) for use in the construction
industry, http://www.bre.co.uk/.
Whole life costing

Purchasers need to take a range of factors into account when deciding on
which products to purchase with environmental impact being just one of
them. Cost is normally top of the list but good purchasing practice requires
that all of the costs associated with the purchase should be taken into account
not just the purchase price.
Examples of the application of whole life costing can be found in the CIPS
document How to buy energy efficient goods and services (CIPS, 1999). The
CIPS definition of whole life costing is given below.
"In whole life costing, all costs over the life of goods and services are taken
into account. This enables savings in running costs to offset any increase in
capital costs. The savings are calculated for each year of the equipment or
service contract life. It shows either a simple payback time or the payback
during the life of the equipment or service contract. It can be applied to
most situations to justify extra expenditure."
Source: CIPS, 1999
The UK Governments web site http://www.sustainable-development.

gov.uk/sdig/improving/partf/greenbuy/02.htm provides guidance on this
subject. It makes reference to the need to think about whole life costs early on
in the purchasing process, and certainly before the invitation to tender stage.
This allows all those involved in a purchasing decision an opportunity to
consider what costs, apart from the initial purchase price, are associated with
the proposed acquisition. For example:
will there be running costs?
does the product require special storage or handling facilities to avoid
pollution?
will the item require material inputs, such as coolants, that might need
such facilities?
what waste management costs might be incurred from using and disposing
of the item?
The technique of whole life costing is familiar to many purchasers,

particularly those responsible for purchasing items such as motors for major
pieces of equipment or vehicles.
36
Where organisations use a risk assessment approach as part of their

purchasing strategy, they will have defined weightings for key criteria that will
be reflected in the whole life costing process. In some cases, this will include
pass/fail criteria, reflecting those features that the organisation has decided
must be present for a purchase to proceed. Where they are used, these criteria
reflect the minimum standards of the organisation and are linked to the risks
identified.
There is a requirement on UK Government departments and agencies to
award their contracts on the basis of whole life costs and quality. The UK
Treasurys TTF Note 7 states that the public sector must not confuse lowest
price for lowest cost. Government policy is that value for money is not the
lowest price. Instead, the optimum combination of whole life costs and
quality to meet users requirements is required. The following extract from
DEFRA guidance indicates the types of costs to be taken into account.
" Whole Life Costing provides the means of determining if it is cost effective
to invest in a more expensive product initially to reduce costs in the long
run. The important elements for buyers are:
Direct running costs - resources used over the life-time of the product or
service
Indirect costs - loading on cooling plant arising from energy inefficient
equipment
Administration costs - COSHH overheads from buying hazardous
products requiring additional controls and special handling and disposal
Spending to save - investing in higher levels of insulation to save heating
and reduce bills
Recyclability - creating markets for our own waste by buying recycled
products
Cost of disposal - paying a premium at the outset to reduce waste, i.e. by
choosing a product which is more durable, re-usable, recyclable, includes
disposal costs or is free of hazardous materials requiring its disposal in a
special way."
Source: http://www.sustainable-development.gov.uk/sdig/improving/partf/greenbuy/09.htm
The example opposite illustrates the points that have been made about
whole life costing. It is a comparison of the costs of packs of alkaline, zinc-
chloride and nickel-cadmium batteries for 1000 hours of use.
37
Battery type Alkaline Zinc-chloride Nickel-cadmium

costs per pack of 4 3.00 1.50 6.00
Battery Life (average) 15 hours 6hours 7 hours
No. Packs req'd 67 167 1
Total Cost 167.50 250.50 6.00
Price of Recharging - - 10.00
Unit
Energy to Recharge - - 1.43
Staff time to collect - - c.23 Hours (139
batteries and recharge charges - 5 mins
to collect and 5
mins to replace)
Disposal 268 batteries to 668 batteries 4 batteries to
dispose of to dispose of dispose of (can
be recycled)
Total Cost 167.50 + 250.50 + 17.43 + staff
disposal costs disposal costs time and disposal
costs
Source: NatWest 'The Better Business Pack'
The results of whole life costing exercises should be fed back into the
purchasing decision-making process. The results will help to determine which
products and services are purchased. Whole life costing may form part of a
tender evaluation exercise. When awarding a contract, UK public purchasers
are advised to seek the most economically advantageous offer. This
encompasses the whole life costs of a product or service, together with any
quality or deliverability, including environmental requirements, aspects built
into the assessment - see http://www.sustainable-development. gov.uk/
sdig/improving/partf/greenbuy/09.htm
The same Government guidance states, Subject to EU rules etc, should a
purchaser determine that the tenderer needs to meet a certain standard, the
cost to the purchaser of verifying that the tenderer meets the standard can be
brought into the evaluation. Hence, if the tenderer is independently certified,
the cost of verification to the purchaser would be zero and this can be brought
into the evaluation of whole-life cost.
The role of design

In many businesses, purchasing needs are created by design exercises
carried out, or commissioned, by the business itself. Large manufacturers
38
outsourcing component making are an obvious example, but there are many
others. In these cases, progress with environmental purchasing in an
organisation becomes closely linked to the uptake of the concept of Design for
the Environment.
As the name suggests, Design for the Environment (DfE) involves
designing products to reduce the environmental impact associated with them.
This requires some consideration of all the stages of the products life cycle,
including raw material extraction, manufacture, distribution, use and disposal,
and designing products in ways that reduce or, preferably, avoid the
environmental impacts identified.
While DfE sometimes make use of an in-depth identification and
evaluation of environmental impacts across the product life-cycle, at a basic
level it involves the application of some general principles (see below).
Purchasers should be aware of these principles - encouraging their uptake by
suppliers as well as by the organisations own designers will bring benefits.
Seven 'Design for the Environment' principles
Reduce total materials use, make products lighter or smaller

Reduce component count, making products simpler can reduce impacts at
assembly and facilitate disassembly.
Minimise harmful materials, reduce or eliminate quantities of harmful
materials in the product or in manufacturing processes.
Extend product life, increased durability or improved serviceability can
keep products out of the waste stream for longer.
Extend materials life, facilitate the disassembly of products for reuse of
components or recycling of materials.
Design for energy efficiency, in use as well as in production.
Minimise pollution, avoid highly polluting manufacturing processes and
make downstream pollution prevention easy.
Clearly, the need to involve other groups within an organisation applies

equally to the implementation of Design for the Environment. In some cases,
the principles listed are in conflict. For example, making goods more durable
may mean increasing weight. So marketers, designers and manufacturing
engineers need to work with purchasing and environmental specialists to
investigate the options and their practical implications throughout the life-
cycle.
39
Future legislation is likely to increase the pressure on manufacturers to

take responsibility for their products at the end of their life and to adopt
Design for the Environment principles. Purchasers can benefit from
understanding these trends. One way of doing this is to take advantage of the
requirements on suppliers to take back products after use. This helps to reduce
whole life costs, including waste disposal costs. Another way is to work with
suppliers, encouraging them to adopt these techniques so as to minimise
packaging. Both cost and environmental impact in the supply chain can be
reduced in this way. Further information on Design for the Environment is
available at http://www.cfsd.org.uk.
Case Study Varian Medical Systems
Varian implemented cleaner design techniques to reduce the environmental

impact of its products at all stages of their life-cycle, ie design, development,
production, operation, disassembly, recycling and final disposal. Design for
value maximisation was applied first to the collimator unit of a radiotherapy
simulator.
Varian adopted cleaner design techniques for three main reasons:

to maintain a competitive advantage;
to avoid excessive costs arising from proposed European take-back
legislation; and
to satisfy corporate policies.
The benefits of cleaner design include:

lower production costs;
reduced environmental impact of products throughout their life-cycle;
a positive marketing feature;
improved product quality; and
easier disassembly and increased recyclability.
Implementation included: the appointment of a co-ordinator, training for

selected staff and the setting up of cross-functional work groups. These
groups assisted the project development team by examining specific issues
associated with finishing, fastening, connectors and labelling. Integration of
cleaner design into the organisational culture of the company proved crucial
to the success of the initiative.
40
Case Study Varian Medical Systems (cont.)
As a result of the initiative, the number of fasteners used in each collimator

has been reduced by 29% and the overall number of parts by 65%.
Annual savings of 162,000 in component costs for collimator assembly
have been realised. This represents a 14% reduction in the annual cost of
parts. Assembly time for each collimator has been reduced by eight hours.
Other benefits include a more modular design and greater use of recyclable
materials.
Following the success of the collimator demonstration project, Varian plans
to extend the cleaner design approach to all of its products.
Source: New Practice Report published by the Environment and Energy Helpline. Also the
'New Practice Case Study (NC201) Electronic Equipment Manufacturer Benefits from Cleaner
Design'. For a free copy contact the environment and energy helpline on freephone 0800
585794 or visit the web site www.envirowise.gov.uk.
41
Section 7
In Practice: Supplier Qualification

and Appraisal

Specification
need and appraisal
Financial
whole life costing
Financial
review

Pre-qualification
Most organisations use a set of criteria - often on a pass/fail basis, to ensure
that suppliers meet their standards. Pre-qualification involves a company
vetting potential suppliers of goods and services to identify those able to meet
the required standard. In the private sector this typically results in being placed
on a list of approved suppliers. Purchasers are then able to buy from
companies on the list.
Many organisations now include environmental factors in their pre-
qualification criteria. This is one simple approach to integrating
environmental considerations into purchasing.
AMEC provides an example of the efficacy of this approach. The
company has signed partnering agreements with 21 key suppliers and sub-
contractors following a rigorous pre-qualification process. The process
involves a series of key requirements including safety and environmental issues.
A full account of the AMEC approach is available at
http://www.amec.com/news/.
42
In Practice:
Supplier Qualification and Appraisal
Supplier appraisal
Many companies now recognise that their environmental performance
and public profile are heavily influenced by the environmental performance of
companies in their supply chain.
Supplier appraisal is a procedure routinely used by purchasing
professionals. It can be extended to appraise a suppliers impacts on the
environment, and the extent of a suppliers engagement with environmental
issues. The telecommunications company BT provides an early example of a
company taking account of the environmental impacts of its suppliers. A large
proportion of BTs environmental impacts are associated with bought-in goods
and services, and the company introduced an environmental impact standard
known as GS13 for its suppliers. The standard is explained at
http://www.groupbt.com/betterworld/environment/Procurement/
procurement.htm.
The BT document states that it was developed to help BTs suppliers to
deal with the relative environmental impacts of their products and services.
The document is intended to help suppliers focus on areas for improvement
and forms part of the adjudication and contract review process.
A hierarchy of questionnaires is used by many organisations in supplier
appraisal, reflecting the nature of the relationship between customer and
supplier. In general, the greater the strategic significance of the product or
service, the greater the need for appraisal.
The Body Shop has used a series of questionnaires with its suppliers, the
depth of questioning and dialogue being dependent on the nature of the
relationship and the strategic importance of the supplier. The Body Shop
backs up the questionnaire with guidance for suppliers where this is
considered necessary.
Source: http://www.the-body-shop.com
The questionnaire is one of the most widely employed techniques in

appraisal, although its use is not always problem-free. The example below
shows a typical range of questions contained in a supplier environmental
questionnaire:
43
In Practice:
Environmental Management Questionnaire
i Does your organisation have a named officer responsible for

Environmental Management? Yes/No
If yes, please state the name, position and qualifications of that person:
Name:
Position:
Qualifications:
ii Does your organisation have an Environmental Policy? Yes/No

If yes, please enclose a copy
iii Does your organisation have in place an Environmental Management

System? Yes/No
If yes, do you have any objection to this being inspected? Yes/No
iv Does your organisation hold either of the following accreditations?

EMAS Yes/No
ISO14001 Yes/No
v Has your organisation compiled a register of environmental regulations

and legislation relating to your business operations? Yes/No
vi Has your organisation compiled an environmental effects register?

Yes/No
vii Do you have an environmental action plan in place to reduce your

adverse impact on the environment? Yes/No
viii Outline on a separate sheet the specific environmental impacts

associated with providing the product/service and what steps are being
taken to minimise them.
Source: IPF, 2001
44
In Practice:
The value of questionnaires

Questionnaires are often used to gather information on supplier
environmental performance and the environmental effects of products and
services because they:
are a familiar technique to purchasing professionals;
can appear to offer a cost-effective means of gathering information,
particularly where one questionnaire is used for all circumstances; and
can produce substantial amounts of data on suppliers and products.
They can be used at the pre-contract stage to influence the tendering

process or post contract as part of contract management. To be an effective
purchasing tool, supplier questionnaires need to be carefully designed. Those
using them need to know exactly how the responses from suppliers fit into the
purchasing process as a whole, especially when the questionnaire asks about
environmental factors. Suppliers need to know this too.
While one all-encompassing questionnaire may have its appeal, it is not
always the most effective means of delivering a relevant message to suppliers or
of generating relevant data. For organisations with a diverse range of suppliers,
it may be more appropriate to dedicate resources to more focused
questionnaires.
Questionnaires can be used to ask for information on a number of issues,
including product or service data, process data and management systems data.
Quite often, questionnaires are used to obtain data on all three of these aspects.
In these cases the purpose of the questions needs to be made clear to the
supplier.
Guidance from Business in the Environment and the Chartered Institute
of Purchasing and Supply (BiE/CIPS 1996a) highlights the need for
organisations to: collect only the information needed; identify key questions
and define information needs; and select suitable collection methods.
In a similar vein, Electricity Association guidance emphasised the need for
data-gathering to be regarded as a positive aspect of supply chain relations.
The Association recommends that companies should, promote a partnership
approach with key suppliers to encourage good environmental standards
without cost penalty (Electricity Association, 1996).
Organisations should look for a means of:

integrating the supplier environmental questionnaire, or other means of
information-gathering, with existing supplier evaluation processes; and
encouraging suppliers to regard the questionnaire as part of a dialogue by
providing them with feedback on the results of the exercise as well as by
45
In Practice:
being willing to explain and discuss the questionnaire in particular and the
evaluation process in general.
An example of questionnaires being used to evaluate supplier performance
is provided by the Environment Agency in Appendix 7.
Suppliers concerns about questionnaires

Supplier appraisal is a powerful commercial process that can have
immediate and direct impacts on the viability of a business. The scrutiny of a
companys environmental performance by one or more of its customers is,
potentially, a serious business risk. The difficulties and risks faced by many
companies, particularly small and medium sized enterprises in this regard
include the following:
The company has limited resources and finds it difficult to respond to the
numbers of questions being asked of it by more and more of its customers.
In contrast with many of the customer companies who issue these
questionnaires, the supplier has no dedicated environmental specialist and
may fail to understand the questions asked or might have difficulty in
providing the information required.
The questionnaire requires information about products or raw materials
which is outside the direct control of the supplier, meaning that the
supplier has to obtain information from their own supplier base.
The supplier may fail to achieve the score necessary to achieve the status
of an approved supplier and hence will lose the customers business.
Some time ago, Electricity Association guidance (Electricity Association,

1996) recommended that when questionnaires are used:
suppliers should not be overwhelmed or alienated;
superfluous information should not be requested; and
levels of information which ones own company would find it difficult to
supply should not be requested.
Recently, there have been moves to devise generic standards for
questionnaires within some industrial sectors, such as electronic products and
within the NHS Mackenzie (1998), Morton (1998) - see also
http://www.greensupply.org.uk.
In supplier appraisal, many corporate customers are beginning to focus on
specific aspects of supplier performance - such as greenhouse gas emissions or
hazardous material content of products, for example see the Nortel Networks
case study in Appendix 8 or go to their web site: http://www.nortelnetworks
.com/corporate/community/environment/supplies_mgmt/sup_mgmt.html.
46
In Practice:
Environmental management systems

Many companies are now using the adoption of an environmental
management system as a criterion for supplier selection. This means that
suppliers who fail to implement environmental management systems may not
be invited to compete for future business. In the automotive sector, Ford and
General Motors have adopted this stance with their supply chains.
It is important to recognise that some organisations focus on specific
aspects of environmental performance amongst their suppliers, rather than the
fact that they may have achieved certification to ISO 14001 or EMAS. This
focus is normally addressed in the audit process where these aspects are
examined in detail. This illustrates that corporate customers may be interested
in questioning the relevance of issues addressed by a suppliers environmental
management system.
Recent changes to EMAS mean that companies implementing the scheme
are encouraged to demonstrate continuous improvement in environmental
performance. In the Stora Enso Case Study in Appendix 9, EMAS and ISO
14001 are considered to be the best tools to ensure continuous improvement
everywhere the company operates.
EU procurement rules
The EU rules are strict about what can be considered when selecting firms
to be invited to tender and the documentation (European Commission 2001)
contains an exhaustive list of permissible requests for information. Only
information that is to be used to influence the decision should be requested.
It should be noted that a contracting authority cannot consider the same
criteria twice, i.e. it can look at supplier policies as part of selection, but it
cannot look at them again at the contract award stage. The box opposite shows
two frequently asked questions and answers in the ECs Interpretative
Communication on public procurement.
Supplier vetting and auditing

Organisations may audit their suppliers and prospective suppliers at
different points in the purchasing process, using a variety of approaches.
Auditing can be carried out by environmental specialists, but most
organisations dont employ this type of specialist in-house. Frequently,
environmental auditing is combined with other forms of auditing, particularly
quality auditing. Environmental questions may be added to existing auditing
routines. Some corporate customers audit their suppliers performance even
when those suppliers have achieved certification to an environmental
management systems standard.
One major US-based healthcare products company has recently begun to
47
In Practice:
Q) How can I use company environmental management systems in my

procurement?
A) The references a contracting authority may require as proof of a
company's technical capacity are listed exhaustively in the public
procurement Directives. Environmental management systems can play a
role insofar as these fall within one of the categories or references listed in the
Directives. Thus, environmental management systems can be accepted as
proof of technical competence where the specific scheme applied has an
impact on the capacity of the company to execute a contract with
environmental requirements. Other means of proof of technical capacity
must also be accepted. It is also possible to require the putting into place of
specific environmental management systems for works contracts where there
are significant environmental issues to deal with..
Q) Do the rules still apply when a contract is below the EC threshold?

A) Treaty principles of non-discrimination, fairness and transparency apply
and although the detailed rules do not, domestic policy still applies. (In the
UK there is a requirement to deliver value for money. So care must be taken
that the contract is handled properly.)
Source: European Commission 2001

http://europa.eu.int/comm/internal_market/en/publproc/general/environmentfaq.htm
re-design its supplier appraisal system to bring together its health, safety and
environmental systems, and to give responsibility for assessing significant
aspects of environmental performance to in-house auditors. This has
considerable training implications for the company, but ensures that a much
fuller picture is available on which to evaluate suppliers, since the company
already operates a supplier assessment system which includes reference to
environmental performance.
The audit process can become part of the process of supplier
improvement. In the UK, for example, a Good Practice Guide entitled
Business and environmental improvement through supply chain partnership
produced by the Environmental Technology Best Practice Programme quotes
the example of a Nortel plant in South Wales working with its key suppliers to
reduce their collective environmental impacts. Here, the customer company
acts as a mentor providing guidance, advice and assistance to its suppliers,
stimulating improvements in environmental performance and a reduction in
costs. (Environmental Technology Best Practice Programme, 1997a & b).
Sainsburys has launched a programme, Raising the Standard to assess the
level of environmental management among its own brand suppliers and to
raise their environmental awareness - see Appendix 10 and ENDS Report,
2001b.
48
In Practice:
Another trend, illustrated in the case of IBM (Whitaker, 1998) involves

the transfer of good practice from customer to supplier as a means of driving
environmental improvement in the supply chain.
In B&Qs QUEST system, the merchandiser prompts the B&Q audit
team to carry out an audit of a prospective supplier, see the B&Q Case Study
in Appendix 11.
49
Section 8
In Practice:
Tendering and Tender Evaluation
Organisations can incorporate their own environmental priorities into
tenders for goods and services. This helps to make environmental purchasing
an integral part of business operations, particularly where environmental
criteria are used alongside traditional purchasing criteria such as quality,
delivery and fitness for purpose.
Tender evaluation criteria can be set by internal customers and purchasers
working together. Potential suppliers will appreciate the signal being sent by
key customers if environmental criteria are explicitly part of the routine of
purchasing practice.

Specification
need and appraisal
Financial
whole life costing
Financial
review

What can companies do?

Companies implementing environmental purchasing strategies need to set
out contract award criteria for the benefit of suppliers competing for their
business - they have greater scope to determine appropriate environmental
criteria on which to award contracts than those operating under EU public
procurement rules.
50
In Practice:
Many companies apply weightings to environmental and other criteria

used in evaluating competing bids and these are usually made clear to potential
suppliers. So, it is possible that environmental factors may be given a higher
weighting in purchasing arrangements for products and services where there is
a high degree of environmental risk.
What can public sector organisations do?

Whilst contracting authorities in the public sector must conform to strict
EU rules about selecting firms to be invited to tender, they must also be aware
of the rules surrounding contract award criteria.
In the UK, HM treasury and the DETR have provided guidance to
government departments in a joint note entitled, Environmental Issues in
Purchasing, see http://www.hm-treasury.gov.uk/about/about_envpurchase.
cfm. This and other relevant guidance is also available through the website of
the Office of Government Commerce - see http://www.ogc.gov.uk.
When tenders have been submitted, the contracting authority enters the
phase of the tender evaluation, leading to the award of the contract. The EC
Public Procurement Directives contain two options for the award of contracts:
either the lowest priced tender is accepted or the economically most
advantageous tender is accepted. The aim of this second option is to help the
contracting authorities get the best value for money. In the UK, government
policy is that the most economically advantageous offer is always preferred.
In order to determine which tender should be considered to be the most
economically advantageous, the contracting authority has to indicate
beforehand the criteria to be applied.
The most economically advantageous tender

Examples of the criteria that may be applied in order to determine the
economically most advantageous tender, are:
price aesthetic and functional characteristics
of the goods or services
delivery date
after-sales service
delivery period
technical assistance
period for completion
profitability
running costs
technical merit
cost-effectiveness
Other criteria are possible.
quality
Source: Public Procurement Directives
51
In Practice:
As a general rule, the EC Public Procurement Directives impose two

conditions with regard to the criteria that are applied for determining the most
economically advantageous tender. First, the principle of non-discrimination
has to be observed and second, the criteria applied shall generate an economic
advantage for the contracting authority. Economic considerations can include
aspects of environmental protection such as the energy consumption of a
product.
The common factors shared by all criteria used for the evaluation of
tenders is that they must relate to the nature of the work to be carried out and
the manner in which it is done. The criteria should give the contracting
authority discretion to compare the different tenders objectively and to accept
the most advantageous on the basis of objective criteria.
The purpose of the assessment is to establish which tender best fulfils the
needs of the contracting authority. Therefore, the function of the award
criteria is to assess the intrinsic quality of the tenders. This implies that the
award criteria have to be linked to the subject matter of the contract. A
frequently asked question and answer relating to award criteria, shown in the
box below, helps to clarify the position:
Q) What kind of environmental criteria can I use at the award stage?

A) Only those criteria that have a link to the subject matter of the contract
and give the contracting authority a direct economic benefit. This could
include giving a bonus to products that are more energy efficient, that will
last longer, or that will cost less to dispose of. In the case where the
environmental aspects do not bring an economic benefit to the contracting
authority, these aspects can only be taken into account at the beginning of
the tender procedure, where the contracting authority defines the technical
requirements of the contract.
The following advice has been provided to UK public purchasers by

DEFRA. On award criteria under the EU rules, contracting authorities are
free to choose the tender that is either the lowest price or the most
economically advantageous - to the contracting authority. For UK authorities,
the latter should almost always be chosen, as it equates to value for money. In
that case, qualitative issues and whole life costs should be included within the
evaluation formula. This is helpful when considering environmental issues.
52
Section 9
In Practice: Contract
Management and Contract Review
Organisations seeking to drive improvements in their supply chains need
to ensure that environmental considerations are integrated into the contract
management and review process. This involves setting targets for
environmental performance improvements by suppliers and contractors over
the course of a contract.
Where organisations engage in long-term commercial relationships with
suppliers, it is important to convey the message that environment is a priority
for the customer. This could encourage suppliers to bring forward innovative
solutions to environmental problems. Knowing that major corporate
customers will continue to treat environmental improvement as a serious issue
gives suppliers confidence to invest in process improvements, research and
development.

Specification
need and appraisal
Financial
whole life costing
Financial
review

53
In Practice: Contract Management
and Contract Review
Environment as part of the review process

Contract management and review, linked to the achievement of targets
puts the environment firmly on the commercial agenda and has the effect of
ratcheting-up environmental improvements along supply chains. Many
companies now use key performance indicators (KPIs) to measure their own
performance and that of their suppliers. Contract management using KPIs for
suppliers helps to maintain focus on targets for improvement.
Targets for environmental improvement in the supply chain can cover the
whole spectrum of environmental impacts from raw materials sourcing
through production, transportation and use, to options for end-of-life
management.
Working with suppliers

Customers can require performance improvements of their suppliers, but
they can also involve suppliers in reducing environmental impacts by joint
working. The improvements made by suppliers themselves frequently include
changes to processes and production methods that have the effect of reducing
emissions and waste. Depending upon the performance of suppliers at the
beginning of a long-term contract or commercial relationship with a customer,
these measures can help suppliers move from non-compliance (in extreme
cases) through compliance to leading-edge environmental performance.
Many initiatives involve a certain amount of joint working, where
suppliers can collaborate in meeting objectives defined by their major
customers. Joint improvement targets typically involve:
reducing packaging weights and volumes;

introducing reusable and returnable packaging;
reducing the hazardous material content of products;
examining purchasing order quantities and delivery frequency; and
improving delivery scheduling to reduce impacts from transportation.
Many companies with major influence over their suppliers, such as in the
automotive sector, set target dates for their suppliers to achieve environmental
management system certification. The commercial threat of losing significant
business drives suppliers to meet these environmental standards. The
automotive sector has encouraged improved environmental performance along
supply chains as indicated in the following statement from the glass maker
Pilkington (overpage).
For some companies, particularly the small and medium-sized enterprises,
achieving EMS certification can seem a daunting prospect. In recent years,
54
and Contract Review
corporate customers have directed their suppliers towards sources of support

for achieving ISO 14001 - see the Volvo example below.
An important market for Pilkington is the car industry, which is becoming

an even more demanding sector than the construction industry. Ford,
Toyota, BMW, Volvo, Renault, Fiat and others are studying the whole life
cycle of the car, from conception to exhumation. As a main supplier to all
the world's car makers, Pilkington can testify to the close interest being
taken - particularly by the European automobile manufacturers - in all envi-
ronmental aspects of their components. The company can clearly see sever-
al significant benefits in involving suppliers in discussions over environmen-
tal issues, including:
more robust life cycle control in answer to questions from customers,

particularly architects and specifiers, and the motor industry;
less risk of being associated with an environmental accident caused by a
small supplier; and
an improved image, through assisting small and medium sized enter-
prises to obtain advice and improve their environmental performance,
hence improving the regional environment.
Source: Buying into a Green Future, BiE/CIPS, 1997
Volvo Cars - Suppliers Crucial to Product Improvement

Since as much as 65-70% of the added value of a Volvo Car is contributed
by our suppliers, their environmental performance is also crucial. As a
consistent leader in the area, Volvo Cars was very clear on this aspect when
it introduced its environmental requirements for suppliers and contractors
for the first time in 1996.
These have been observed conscientiously by our suppliers. To meet Volvo
Cars requirements suppliers must, for example, comply with our
requirements when specifying chemical products. In addition, all suppliers
of production materials to Volvo Cars will be required to have implemented
an environmental management system by the year 2000 and all suppliers
and contractors will have to meet this requirement by 2002. As a support
measure, Volvo Cars is offering environmental training designed specifically
for suppliers and contractors.
Source: http://vcc.volvocars.se/environment/management/suppliers.asp
55
and Contract Review
Continuous improvement in the supply chain

The philosophy of continuous improvement underpins much of the
current activity in environmental management within supply chains.
Companies see the benefits of working together with their suppliers to find
ways of improving environmental performance.
Performance benchmarking schemes have a part to play here. For
example, Business in the Environments Index of Corporate Environmental
Management is now applied to the FTSE 350 companies in the UK. Having
been in existence since 1996, the index measures company performance across
a range of parameters, including engagement with the supply chain. This
measure consistently returned some of the lowest scores and company activity
has undoubtedly been driven by the need to address this issue.
In recent years, the questions used in the index have been amended so that
environmental performance is more directly measurable. It makes sense for
companies to collaborate to a greater extent to make demonstrable
environmental improvements.
Continuous improvement by suppliers underpins the approach taken by
Barclays, for example see http://www.society.barclays
.co.uk/environment_content.htm. Setting improvement targets is not
restricted to the private sector. Local authorities and other public sector bodies
are also active. For several years, Belfast City Council has actively encouraged
its suppliers to become more competitive by improving their environmental
performance.
Belfast City Council - Supply Chain Challenge and Supplier Awards

In May 1997, Belfast City Council laid down its 'Supply Chain
Challenge' which presented suppliers with an incentive to improve their
environmental performance and in so doing gain an opportunity to differ-
entiate, reduce costs and target the growing niche market of green pur-
chasers. The challenge was initially targeted at the Council's top 50 local
suppliers. The Supply Chain Challenge was followed by workshop train-
ing for these suppliers. The workshops reiterated the environmental busi-
ness case and provided guidance on available assistance.
Following the adoption in April 1998 of an environmental purchasing
policy, Belfast City Council went on to launch a Green Supplier of the
Year Award. The award once more reinforced the link between local eco-
nomic development, environment and purchasing. Resulting case studies
demonstrate how local companies can improve their competitiveness and
reduce their environmental impacts.
Source: Belfast City Council, 1997, 1998a, 1998b
56
and Contract Review
Supplier environmental improvement programmes are now common in a

wide range of industrial and commercial sectors. One of the best-developed
systems is that of the do-it-yourself retailer B&Q whose QUEST system is
well-known. QUEST has been developed over a period of some ten years,
having been stimulated by enquiries in the early 1990s about B&Qs timber
sourcing policy - see Appendix 11 for the B&Q case study. In the case of
B&Q, as in many other organisations, interest in supplier relationships extends
far beyond simple environmental performance improvement to issues of
sustainability.
57
Section 10
In Practice: Accounting

Specification
need and appraisal
Financial
whole life costing
Financial
review

How can accounting regimes foster environmental

purchasing?
A major issue for many organisations seeking to introduce environmental
purchasing is the apparent constraint imposed by budgetary and accounting
regimes. Environmentally preferred purchases are often more cost-effective in
the long term, while accounting regimes require savings to be demonstrable
over a much shorter period of time. Short payback periods and environmental
purchasing can be hard to reconcile. This is where accounting regimes need to
be sufficiently flexible to allow whole life costing exercises to deliver both cost
savings and environmental improvement.
It is often the case that budget holders or cost centres deriving benefit from
products and services do not pay the full costs associated with them. Waste
disposal charges, for example, are normally paid by a different budget holder
from the purchaser and user of the product.
In some organisations, financial directors may need to be persuaded,
sometimes by purchasers, of the benefits of environmental purchasing to their
organisations. Where this is done it leads to budget holders being allocated
budgets that reflect the true costs of goods and services.
58
Allowing budget holders to retain savings generated through

environmental improvements in purchasing gives them an incentive to make
further savings, but it can take time and effort to find opportunities to save
money and improve environmental performance. Providing incentives to
budget holders through more flexible accounting practices makes good
business sense.
Environmental purchasing is stimulated or constrained by how budgets
are allocated. When resource allocation takes account of all of the costs
associated with the purchase, use and disposal of products and services, the
business benefits of environmental purchasing begin to be revealed (see, for
example, Accounting for the Environment, Gray & Bebbington, 2001). In the
UK, the Environment Agency is the lead public body on Environmental
Accounting.
What information is required and how should it be

used?
The costs associated with a purchase will include costs which are often
hidden within overheads. All of the costs associated with the purchase, use
and end-of-life management of a product should be transparent and should be
fed back to those responsible for making purchasing decisions. The results of
whole life costing exercises need to be fed back to decision makers.
This has implications for management information systems. When
organisations are able to identify and trace these costs back to the point of
purchase, the environmentally preferred product is often found to be the most
cost-effective option. But organisations working without this level of detail
cannot identify the hidden costs or the opportunities they are missing.
The introduction of electronic procurement has implications for budgets
too. With some estimates putting the cost of raising an order at over 85,
electronic procurement offers potential savings to organisations. The
environmental impacts of electronic procurement - which for example offers
potential for smaller, more frequent deliveries - is still being debated.
The reconciliation of environmental purchasing with budgetary
constraints can be an issue for both private and public sector organisations.
The box opposite shows, for the public sector, a frequently asked question and
answer.
In the public sector, financial rules can also complicate the move to leasing
of products (rather than purchasing). In these circumstances, purchasers,
environmental managers, and accountants and other financial managers need
to address the legalities of options that present environmental benefits to the
organisation.
In recent years there have been moves in the private sector to introduce
new business tools such as total cost accounting and waste reduction
59
programmes. Conventional business relationships encourage suppliers to

maximise sales to their customers. The environment and the customer can lose
out under this arrangement. Business models in which both supplier and
customer have financial incentives to minimise resource consumption and
waste are now much more widely used as in the shared savings model (see
ENDS Report 1997 & 2001a) which reduces resource use and environmental
impact.
Q) How can contracting authorities balance their budgetary constraints with the
intention to buy green?
A) Although green products will often save the public purchaser money in
the longer term, they may have a higher up-front cost. If contracting
authorities want to make a balance between environmental choices and
budgetary restraints, they may define one or more variant options in
addition to their 'basic' option. In the variants they can define a higher
environmental performance. At the end of the tender procedure,
contracting authorities can decide which variant best meets their needs.
60
Section 11
Summary
Sustainable development
The UK Governments sustainable development strategy now provides the
policy underpinning for environmental purchasing activities. The strategy
contains four broad objectives, these are: social progress which recognises the
needs of everyone; effective protection of the environment; prudent use of
natural resources; and maintenance of high and stable levels of economic
growth and employment. These objectives have equal validity outside the UK.
All four objectives have links to purchasing. Purchasing activities
influence the quantities and types of resources consumed, and have a direct
bearing on economic growth and employment. Also, the considerations taken
into account in the sourcing of products and in the choice of suppliers affects
the potential for abating environmental damage and making social progress in
the supply chain.
Stakeholder and legislative pressure

Stakeholder pressure and the growth of environmental legislation have
prompted many organisations to employ environmental specialists and to
adopt formal environmental management systems. As well as providing a
structured approach to environmental control they can also place additional
demands on purchasing professionals since, according to ISO14001, certified
organisations must address all significant environmental aspects which the
organisation can control or over which it can have influence.
Corporate customers are now placing demands on their suppliers that
relate to the suppliers environmental performance. The electronics and
automotive sectors have been particularly demanding. For example, suppliers
to General Motors have been advised of the requirement to achieve ISO 14001
and have been set deadlines for meeting that requirement.
The benefits
Purchasing and supply chain professionals and others need to understand
the potential benefits of environmental purchasing, particularly where they are
required to make a case to senior management. The business arguments for
the environment becoming a mainstream issue for purchasing have been
described in this Guide. They are, in summary, to: reduce waste and improve
resource efficiency; secure the supply of goods and services; minimise business
risks; provide cost savings and added value; enhance corporate image; and
create markets for new products and services. The benefits to supplier
companies include those associated with product differentiation, management
61
Summary
of their public image and reputation, and securing their business position
against more stringent environmental legislation.
Good and effective practice

There is no single way to implement environmental purchasing that is
right for all organisations - this Guide has not provided one prescription to
fit all circumstances. But the most effective approaches to environmental
purchasing do have some common features. Good and effective practices tend
to be:
integrated with an organisations overall business objectives, and its
environmental and procurement strategies, and supported by clear
backed by senior level commitment and the allocation of responsibilities,
and owned by those responsible for delivery; and
well communicated throughout the organisation and beyond.
Getting started
An environmental purchasing policy is a sensible starting point. This is
often developed as part of an overall environmental policy. In these
circumstances, environmental purchasing policy can take account of the results
of any environmental reviews undertaken as part of the environmental
management system, and the significance of the indirect impacts of purchased
goods and services can be assessed.
For an effective environmental purchasing strategy, the link needs to be
made with environmental management systems. This can be done most
effectively in the assessment of significant environmental aspects. The
assessment of bought-in goods and services should consider the potential
environmental impacts of suppliers and service providers actions and
processes, and it should also consider the environmental impacts associated
with products themselves and their constituent materials.
A draft IEMA code of practice for certifiers of environmental management
systems and EMAS verifiers is included in this publication. The draft code
describes the types of evidence that might be required where procured goods
and services embody some of an organisations significant environmental
aspects.
Environmental purchasing in practice

In subsequent sections of this publication, the actions that can be taken by
purchasers and supply chain managers at key stages in the purchasing process
are described. The key stages are: identification of need, product specification,
62
Summary
supplier qualification and appraisal, tendering and tender evaluation, contract

management and review, and accounting.
The guide makes extensive use of case studies to illustrate good practice at
various stages of the purchasing process. Purchasers and supply chain
managers and their colleagues who wish to embark on a supply chain initiative
now have a plentiful supply of techniques and examples to help and guide
them. Further sources of information are also available at the web sites listed
in this guide.
Conclusions
The Guide pays particular attention to two key challenges. The first is
how to incorporate environmental purchasing into an organisations
environmental management system. A draft IEMA code of practice is
suggested. The code needs to be given further consideration but it should be
an important first step in linking the formal requirements of an environmental
management system and the stages in the environmental procurement process.
The second challenge is to integrate environmental considerations into
financial systems and procurement strategies. The Guide offers a number of
supporting mechanisms for doing this.
Ten years ago purchasing was the poor relation in environmental activity.
Today, purchasing and environmental professionals and others recognise the
strategic importance of the supply chain in the transition to a more sustainable
world. This Guide gives an account of the progress that is being made -
environmental purchasing is beginning to play a meaningful role.
But more needs to be done. The Institute of Environmental Management
and Assessment, the Chartered Institute of Purchasing and Supply, and the
NHS Purchasing and Supply Agency hope that this publication encourages
more environmental professionals, purchasing and supply chain professionals,
and others to take up the challenge.
63
Appendix 1
The Environment Agencys Procurement Strategy
This document has been created to provide a demonstrable structured approach to

environmental risk assessment and management. Therefore, every contract (goods,
services, civils) the Environment Agency lets over a value of 10,000 will have an
environmental risk assessment. Parts 1, 5 and 6 of this document are mandatory and
are to be completed by Procurement in consultation with the client as necessary. The
remaining parts (2 to 4) need only be completed if the Part 1 assessment indicates the
contract is high risk. This work (parts 2 to 4) will be led by Procurement with input
from the client and HO/REMA (Head Office/Regional Environmental Management
Advisors) as necessary.
Contract title _____________________________ Contract No. _______________
Part 1: High level environmental risk assessment
The following generic risk questions should be answered in relation to the marketplace
(rather than an individual supplier) and it is accepted that many of these judgements
may be subjective.
1 Does the purchase or the service provider have the potential for high energy
consumption? (For example, a pump uses a significant amount of electricity
during its life whilst pumping water. Similarly, a supplier providing a power
washing service for mobile plant will also use excessive energy, particularly water,
electricity and waste water treatment.)
Answer: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 Is the product made of - or does the service provider use - unsustainable

materials? (Do the materials grow back in a reasonable time frame, for example
rock armour is unsustainable in that once the rock is quarried, it does not grow
back. Softwood timber from managed forests grows back relatively quickly and
is considered sustainable.)
Answer: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 Could the item or the service provider cause a pollution incident in the
performance of Agency work? (A piece of mobile plant with non-biodegradable
oils and hydraulic fluids could cause pollution. An inert piece of material, such
as sand or aggregates, will not cause pollution.)
Answer: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Are excessive emissions (to land, air or water) caused during the manufacture
of goods used directly or by service providers? (For example, highly
processed/manufactured goods are often energy intensive. Therefore, considerable
64
Appendix 1
energy will have been used, with subsequent high emissions, to make them. Steel,
a car, chemicals and crushed aggregates are highly processed and therefore have
major impacts in this category. In comparison, timber and rock armour are cut,
sawn/quarried and therefore have marginal impacts in this category.)
Answer: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Is there an environmental public relations risk to the Agency in purchasing

the product or service? (For example, any purchase of tropical hardwoods will
result in negative public relations, as would the purchase of virgin paper.)
Answer: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total number of yes questions: . . . . . . . . . . . . . . .
If the answer was yes to three or more questions proceed to parts 2, 3, 4, 5 and
6. If the answer was yes to two or fewer questions, proceed directly to parts 5 and 6.
Part 2: Agency influence with supply base

Before risks can be assessed and a strategy determined, the Agency must first
identify the degree of influence it has with the supply base. The prime reason for this
is to ensure that significant resources are not expended on risk analysis where there is
little scope to manage or influence the current marketplace.
To begin this assessment, the Agency must take a long hard look at itself from the
markets perspective. The objective of this inward examination is to determine how
important the Agency is to the supplier and how easy the Agency is to work with.
The Agencys degree of influence relates directly to its importance as a client and
the nature of the business relationship. Generally, the Agency will be able to make
demands or transfer risk only where it is a key client and/or where it has a positive
business relationship. There is no prescribed model for this assessment, but detailed
below are some points that a supplier would consider:
Does the Agencys environmental name/reputation influence us?
Is the Agency an easy customer to work with?
Is the Agency an intelligent client informed in its dealings?
Is the Agency efficient in its business dealings with us (does it meet time
commitments)?
Does the Agency pay on time?
Is the Agency a key client we need to have in order to win business with other
organisations? (some flood defence consultants must have the EA as a client in
order to have credibility with other organisations)
65
Appendix 1
Does the Agency represent more than 0.5 per cent of our turnover?
Of the products/services that the Agency buys, is it the main customer of those
products within our portfolio?
Is the Agency open to change to make itself easier to work with?
By working with the Agency, do we become better?
Do we operate in a saturated market? (Are there numerous suppliers or product
choice?)
Does the Agency have low switching costs from one supplier/product to another?
Detail below the conclusions of the review of the Agencys position with the supply
base:
...............................................................
...............................................................
...............................................................
...............................................................
From the review, indicate the general degree of strength/influence with the supply base:
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Weak Average Strong
Part 3: Detailed environmental risk/impact assessment
Step 1 Detailed risk assessment

This is normally undertaken by the contract or project team. To help the team, a
list of more than 30 broad commodity areas, assessed by the Environmental
Management Unit should be used as the basis for discussion. The debate should be
based around a brainstorm of the potential risks and impacts of the project.
Step 2 Management action

From Step 1, the high level and detailed environmental risks have been established.
The next step is to rank the risks, determine the method of risk management, allocate
responsibility to a member of the project team and agree a target date for resolution.
The method of management could involve addressing the risks through supplier
selection, specification, evaluation and negotiation. Or it is possible that the risk is not
being managed due to lack of influence within the market.
66
Appendix 1
Detailed risk assessment and management action
Risk: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rank: . . . . . . . . . .
Action: . . . . . . . . . . . . . . . . . . . . . . . . Whom: . . . . . . . . . . . Date: . . . . . . . . . . .
Risk: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rank: . . . . . . . . . . .
Action: . . . . . . . . . . . . . . . . . . . . . . . . Whom: . . . . . . . . . . . Date: . . . . . . . . . . .
Part 4: Other information
...............................................................
The risks and management measures identified form the first step in the
environmental procurement strategy. The second step involves continuous
improvement over the life of the contract (where appropriate). This is dealt with
through Key Performance Indicators (KPIs) and through proactive contract
management that is covered in other modules of Contract Management Systems.
Part 5: Regional or Head Office Procurement Manager comments
...............................................................
...............................................................
Part 6: Approval of environmental procurement strategy
Procurement representative . . . . . . . . . . . . . . . . . . . . . . . Date . . . . . . . . . . . . . . .

Project manager/sponsor . . . . . . . . . . . . . . . . . . . . . . . . . Date . . . . . . . . . . . . . . .
Regional/HO EMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date . . . . . . . . . . . . . . .
Regional/HO Procurement Manager . . . . . . . . . . . . . . . . Date . . . . . . . . . . . . . . .
67
Appendix 2
Barclays environmental supply chain management
Background
Barclays is one of the largest financial services groups in the United Kingdom
operating in over 60 countries around the world and because of its size it has a
considerable impact on the environment. This arises indirectly through its supply chain
and the products and services purchased.
Barclays has a significant expenditure on external products and services: in excess
of 2bn p.a. and it is the second largest IT buyer in Europe. In November 1999 an
environmental, social and ethical supply chain project was established as a joint
initiative between Group Environmental Management and the Barclays Sourcing
Network.
Action
A five-stage approach to incorporating environmental considerations into the
procurement process was developed.
1 Policy:
An updated and practical policy was developed, together with a set of governing
principles. The policy was then integrated into the main Barclays environmental
policy statement. The following text is an extract from Barclays and the
environment: Our Policy Statement, Supply Chain Management:
Barclays is committed to working with suppliers to secure an improvement in

environmental performance. Our assessment of suppliers will assign appropriate
weighting to these issues within the sourcing process. It will also promote, where
appropriate, the implementation of management systems. Indirectly, this will
encourage improvement further down the supply chain.
Sir Peter Middleton, Chairman, October 2000.
2 Risk ranking:
Looking at the goods and services procured and across the Barclays life-cycle of the
product (manufacture - purchase - use disposal) an initial environmental risk-
ranking model was developed by WSP Environmental Limited, in partnership
with Barclays, see Barclays Risk Ranking Approach.
3 Standardisation:
In order to be able to assess the environmental performance of potential suppliers,
WSP Environmental Limited developed question sets relevant to the suppliers
product/service for inclusion within formal tender documents. The number and
nature of the questions were determined by the risk ranking of the product/service.
The questions were drawn from the following topic areas:
68
Appendix 2
environmental management systems, reporting and legal compliance;

supplier management, how the suppliers manage their suppliers;
environmentally beneficial products, focusing on the availability at commercially
acceptable cost;
sustainable forestry;
take-back of electronic and electrical equipment, end of life disposal issues; and
partnership approach, taking the dialogue on environmental issues beyond the
tender process.
A number of scoring guidance notes and evaluation matrices were developed to
assist purchasing professionals to score the responses provided by the potential
suppliers.
4 E-enablement:
To enable Group-wide delivery of environmental supplier management an intranet
web site was built and integrated into the 7-step Sourcing Model approach to
purchasing.
5 Development of relationships:
For key suppliers, issues are discussed including: environmental performance,
products supplied, packaging and waste. Small and medium sized enterprises who
were successful in the tendering process - and likely to benefit from an
improvement in environmental management - are encouraged to enter into the
bespoke Barclays Plc Supplier Coaching Programme delivered by Groundwork
UK.
Results
The specialist environmental input sits behind the Intranet site, and so 160
sourcing professionals across Barclays do not need to have significant training or
knowledge of environmental issues. However, by using the user-friendly tools
provided, they are able to gather relevant and valuable environmental information
during the tender process. This, in turn, enables environmental issues to be given
appropriate weighting within overall commercial decisions. In addition,
environmentally preferred products are identified during the tender process and, where
commercially viable, purchased. This assists with the real objective of continual
environmental improvement in supply chain management.
Barclays risk ranking approach - understand the risks

The assessment considered environmental criteria across a number of stages in the
life cycle of the product or service from manufacture and provision to use and disposal.
Products and services were given a risk ranking of very high, high, moderate or low.
No product or service achieved a very high environmental risk rating. This is due to
the largely office-based nature of Barclays operations and activities. In addition social
69
Appendix 2
and ethical concern were prioritised. These included employment policy and practice,
and reputation risk. Products and services were given a risk rating of high, moderate
or low. The criteria are listed below
Climate Change (potential for) Local Air Quality

Global Warming Solid Waste
Ozone Depletion Land/Water Contamination
Resources Hazardous Materials
Sustainable Resources Exposure To Barclays
Resource Consumption Legal compliance
Pollution (Potential For) Reputational risk
These factors reflect the relevant key performance indicators currently proposed by
the UK Government (Sustainability Counts).
For both environmental and social/ethical issues the risk rating would dictate the
level of management action to be taken during the sourcing process.
Product/Service Environmental Social/ethical Social/ethical

risk rating employment employment
practices practices
rating rating
Desktop - personal computers High Moderate High
Fleet acquisition High Moderate High
Office supplies (paper High Low High
products only or paper and
non-paper products)
Air travel Moderate Low Low
Corporate clothing Moderate High Low
Health benefits and insurance Low Low Low
Training Low Low Low
70
Appendix 3
Belfast City Councils

environmental supply chain management
Belfast City Council has involved its buying team very closely in the process of
environmental purchasing, to the extent that the team has been trained in
environmental management and auditing. The Council has based its approach to green
purchasing on an assessment of environmental risk and profile risk.
Green purchasing risk varies according to the actual environmental impact of the
purchase and also with the perception of those outside the organisation. A purchase
can be classified as having a high or low environmental risk, for example, in terms of
the:
sustainability of the raw materials used;
energy consumed in the conversion process;
environmental impact in use;
ability to be reused or recycled; and
biodegradability at the end of its useful life.
A purchase is also classified as having a high or low profile risk, for example, in
terms of the:
publics perception of whether the purchase is environmentally friendly;
potential for adverse publicity associated with the purchase; and
potential to detract from the organisations good environmental practice.
Environmental risk is relative and is concerned with actual knowledge and the
precautionary principle. Profile risk is concerned with perceptions of those outside
the organisation, what they think the organisation should be doing (albeit perhaps
uninformed) and the potential for adverse publicity to detract from the other good
environmental work the organisation is engaged in.
To understand profile risk, one need only consider the adverse profile impact
that the Brent Spar disposal had on Shell who, it is now thought with the benefit of
hindsight, was actually behaving in an environmentally responsible manner!
In the first stage, purchases are classified by placing a tick against both the
environmental and profile risk, see the table opposite) For illustrative purposes, the
purchase of paper has been taken. Paper has a comparatively low environmental risk,
in that the debate is still going on as to whether recycled paper is good for the
environment per se. However, to those outside the organisation, what the organisation
is perceived to be doing about paper and whether recycled paper is used, has the
potential to undermine the Councils reputation.
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Appendix 3
The categorisation of green purchasing risk
Purchase Environmental Risk Profile Risk
Low High Low High
Paper
Purchase B
Purchase C
Purchase D
etc.
The next step is to position purchases within a green purchasing risk matrix.
The matrix helps in the development of appropriate purchasing strategies. In the table
overpage, a range of purchases have been positioned within the matrix for illustrative
purposes.
72
Appendix 3
Green purchasing risk matrix

Bitumen Macadam Arboricultural services
Bulk container bins Broken stones etc.
Catering franchise Cleaning materials
Electrical equipment Cleaning services
Grounds maintenance Domestic bins
Hi Ready Mix concrete Economic appraisals
Reprographics machinery Forcing and bedding bulbs
Top soil Furniture
IT equipment
Landfill capping
Landfill gas collection
Litter bins
Paints and oils
Pool treatment chemicals
Strategy development consultancy
Timber
Top dressing sand
Tyres
Vehicles and vehicle maintenance
Waste disposal
Env. Works contracts
Risk
Brushes Advertising and design services
Cash collection services Paper
Cleaning Animal feedstuffs
Conveyance of dead bodies Craft, antique and gift shop services
Corporate uniforms Event organisers
Design-and-place advertisements External publications
Lo Employment Agency services Floral decorations
Fitness equipment Graffiti removal and obliteration
Fruit and vegetables Office stationery
IS software Promotional items
Mulholland organ cleaning Replacement banqueting chairs
Occupational health services Security services
Protective gloves Taxi services
Radio system
Staging units
Sunbeds
Travel Agency services
Lo Profile Risk Hi
73
Appendix 4
Environmentally-preferred Actions (ICLEI 2001a)

The table lists environmentally-preferred actions relating to characteristics
important at different stages of the product life-cycle. The nature of the environmental
benefits associated with these actions are indicated by dots in the relevant column under
Environmental Consequences. Examples are then given of purchasing choices that
embody these preferences.
Product Ecological Environmental Action

characteristic alternative consequences - Examples -
Emissions
Material
Energy
Waste
Material Recycled Use recycled toilet and towel papers

Composition material Procure refuse sacks made of recycled plastic.
Renewable Choose recycled concrete or crushed rock

material rather than gravel as a construction material
No toxic Use chlorine-free paper, PCB-free electronics

substance or PVC-free floor coverings
Transport Short distance Buy your fruits and vegetables from local
producers
Transport Make use of rail and boat versus road and

means plane transport
Manufacturing Taking into Choose a producer that has an environmental
account the management system
environment
Packaging Reduction Prefer recyclable, easily returnable or, if

possible, no packaging at all
Product use Durability Buy long-term guaranteed carpets
Repairability / Choose computers that can be upgraded and

Upgradability do not need to be replaced completely when
becoming outdated
Compatibility When changing for a recycled paper, test its

with equipment compatibility with copiers and printers before
/ user habits distributing it throughout your organisation
Energy Choose low energy light bulbs to save energy

requirements (and reduce your annual cost by up to 70%)
Safety for users Use alternative pesticides or alternative

methods of pest control
End of life Re-use Buy refillable toner cartridges for laser and ink
potential jet printers
Recyclability When buying white goods, make sure that

they can easily be dismantled and their
material recycled
Disposal Use biodegradable synthetic vegetable-based

hydraulic oil for fleet maintenance
74
Appendix 5
Environmental Labels
The EU eco-labelling scheme

These labels consider the whole product life-cycle, so they have the value of
defining greener across a number of criteria. A product bearing an eco-label of this
sort can be expected to have better environmental properties itself and also be produced
in a less polluting plant than its unlabelled equivalent.
The European Unions eco-labelling scheme is one such multi-attribute scheme.
Qualifying goods and services carry a daisy symbol, indicating that they have a lower
environmental impact than similar products performing the same function. The
rationale behind the EU eco-label scheme is set out as follows:
Empowerment of the individual through consumer choice is a central principle
of the scheme. By setting strict ecological criteria for product groups, the scheme
enables consumers to make reliable and informed decisions in the marketplace. By
making purchase decisions simpler for consumers who are concerned about the
environment, the scheme actively encourages manufacturers to design products with
reduced environmental impacts. http://www.defra.gov.uk/environment/ecolabel/
index.htm
The scheme can be applied to any products other than food, drink or
pharmaceuticals and certain medical devices. To date, criteria have been developed for
15 product groups. Groups under consideration include televisions, vacuum cleaners
and furniture. In September 2000 the scheme was re-launched by Regulation No
1980/2000 which extends its scope to cover services as well as goods, and enables
retailers to apply for the eco-label.
Other multi-attribute labels

According to the OECD in their report Greener Public Purchasing published in
2000, Among OECD countries, Austria, Canada, France, Germany, The Netherlands,
Korea, the Nordic Countries (Norway, Sweden, Denmark and Finland), Japan, United
States and the European Union are running multiple-criteria environmental
certification systems. Most schemes enjoy governmental support. In Canada, the
national eco-labelling scheme has been privatised. In Norway and Sweden, an
environmental organisation runs a parallel scheme to the official Nordic Swan.
Switzerland has not developed an official eco-labelling scheme and intends to adopt the
EU eco-label.
In the US, there is no government-run or government sanctioned eco-labelling
programme, rather there are two privately run programmes. While there is no direct
link with the USA Environmental Protection Agencys Environmentally Preferable
Purchasing Program, information and technical expertise offered by these programmes
is being used within specific procurement actions.
75
Appendix 5
EU eco-labels (April 2002)
Product group Published in the Official Journal of the EU
All purpose cleaners L189 - 11 July 2001

Bed mattresses L302 - 12 November 1998
Copying paper L210 - 10 August 1999
Detergents for dishwashers L167 - 02 July 1999
Dishwashers L242 - 12 September 2001
Footwear L77 - 20 March 2002
Hand dishwashing detergents L214 - 19 July 2001
Indoor paints and varnishes L5 - 09 January 1999
Laundry detergents L187 - 20 July 1999
Lightbulbs L216 - 14 August 1999
Personal computers L242 - 112 September 2001
Portable computers L242 - 12 September 2001
Refrigerators L13 - 19 January 2000
Soil improvers L242 - 12 September 2001
Televisions L87 - 4 April 2002
Textile products L57 - 05 March 1999
Tissue paper L142 - 29 May 2001
Washing machines L16 - 21 January 2000
Batteries for consumer goods Study completed, work suspended
Converted paper products ditto
Furniture Criteria under development
Hard floor coverings ditto
Rubbish bags Study completed
Tourist accommodation Criteria under development
Tyres Feasibility study completed
Vacuum cleaners Criteria under development
Source: http://europa.eu.int/comm/environment/ecolabel/producers/productgroups.htm
Single-issue, single criteria labels

A number of eco-labelling schemes have sprung up which focus on one issue, or
one stage of the product life-cycle. It is possible to identify two broad categories here,
the first of which addresses a single issue and a single criterion. This is explained below.
Energy labels are used widely on electrical equipment such as computers and
domestic appliances. The European scheme for energy labelling of white goods
provides one example of a mandatory eco-labelling scheme. In these schemes energy
efficiency labels must be displayed at the retail outlet on household appliances such as
fridges, freezers, washing machines, dryers and lightbulbs. The labels have information
regarding the energy efficiency of the product by way of a ranking from A (the best) to
76
Appendix 5
G (the worst). Basic product information, such as size of compartments, is also

provided to help purchasers make sense of the absolute energy information. Running
cost information is not mandatory, but it has been added to labels produced by Scottish
Hydro.
These mandatory labels are an important element of market transformation policy.
Whilst they provide consumers with information, they also provide a simple tool for
governments to use in highlighting performance standards. For example the sale of
fridges and freezers in the least efficient groups, D and E was banned in the European
Union from September 1999 an act which will eventually raise the average efficiency
of fridges in use. It is likely that this approach will continue to be extended. In the
UK at least, A-G energy efficiency ratings are available for domestic boilers. Beyond
energy efficiency, similar labels provide water consumption information for washing
machines.
Energy Star: The Energy Star Office Equipment Program is a self-certification
programme dedicated to reducing energy consumption. It was developed in 1992 by
the USA Environmental Protection Agency to reduce energy wasted during idle periods
by personal computers, printers, fax machines, copiers and scanners. Machines with
this logo should power down after a period of not being used, and then power up when
used again. (see http://www.epa.gov/epahome/hi-energystar.htm)
Single-issue, multi-criteria labels

These labels are also concerned with only one issue, or one stage of the product
life-cycle. However, they take into account a number of factors related to that issue.
The Forest Stewardship Council (FSC) label for timber is one of the best-known
schemes of this type.
Forest Stewardship Council: The FSCs objective is to promote timber from
sustainably-managed forests. The FSC itself is an independent, non-profit, non-
governmental organisation that brings together groups such as the forestry profession,
indigenous peoples organisations, environmental and social organisations and the
timber trade to work towards this goal. Under the FSC umbrella, independent
certifiers use agreed standards relating to the social, environmental and economic
aspects of forest management to assess producer forests. Once certified, timber and
timber-based products originating from a forest or woodland are eligible to carry the
FSC Trademark. Because purchasers prefer timber bearing this mark as an indication
of its sustainable production, FSC provides a market incentive for producers to adopt
good forestry practice.
Marine Stewardship Council: The MSC is following the lead of the FSC, with
the mission of promoting sustainable fisheries. It was founded by Unilever and WWF
in 1996 and became fully independent in 1998. Its aim is to educate the fisheries
industry by establishing and promoting standards, and acting as an accreditation body
for sustainable fisheries. It has developed principles and criteria against which the
performance of fisheries around the world will be measured by accredited certification
77
Appendix 5
agencies. Fisheries that achieve certification will be able to use the MSC label on their
products. Three trial certifications are about to begin in Alaska, UK and Australia.
Internet sites
http://www.gen.gr.jp/members.html gives an overview of eco-labels and their web
sites by the Global Eco-Labelling Network (GEN).
http://www.snf.se/bmv/english/criteria.htm provides lists of the criteria applied in
granting the Swedish eco-label Bra Miljoval (good environmental choice) to the fol-
lowing product groups: cleansers, dishwasher detergents, laundry detergent, soap and
shampoo, stain removers and bleach, toilet cleansers, washing-up liquid, electricity, tex-
tile and public transport.
http://www.blauer-engel.de/englisch/index.htm offers information on experiences
gained over 20 years of the German eco-labelling scheme. It lists the Blue Angel crite-
ria for a range of nearly 100 products in the following groups: paper, office supplies and
furniture; electrical products and appliances; heating plants and solar technology; build
and renovate; sanitary and hygiene supplies; canteen and kitchen supplies; horticulture;
traffic; and batteries.
http://europa.eu.int/comm/environmental/ecolabel/prodgr.htm gives the environ-
mental criteria to be complied with for the award of the EU flower eco-label. Products
listed are: washing machines, refrigerators, tissue paper, dishwashers, soil improvers,
mattresses, indoor paints and varnishes, footwear, textile products, desktop and
portable computers, laundry detergents, detergent for dishwashers, copying paper and
light bulbs.
http://www.svanen.nu/NordicKritindex.htm provides the criteria for the products
and services of 24 product groups, which have been assigned the Nordic Swan ecolabel.
http://www.ec.gc.ca/office/html/Default.htm gives criteria for green offices.
http://www.epa.gov/epaoswer/non-hw/procure/index.htm gives product informa-
tion for about 40 products of the following product groups: construction, landscaping,
paper, park and recreation, transportation and vehicles.
78
Appendix 6
Products Covered by
Greener Public Purchasing Initiatives
Product or Product Types Initiative
Canada:
Cleaning products, compost, construction and Ontario-based GIPPERs Guidelines.
demolition materials, energy efficient lighting
products, engine oil, additives and synthetic
oils, paints, paper, plastics, rubber, packaging.
Denmark:
Office equipment (photocopiers, computers), Action Plan for a Sustainable Public
office furniture (terminal tables), writing and Procurement Policy, General
copying paper, cleaning agents, paints Handbook, and Product Oriented
(buildings and ships), lighting products, Guidelines.
organically-grown foodstuff, transportation
equipment, cables and at local level: school
furniture and working clothes.
Germany:
Office equipment (paper, furniture, Handbook on Environmentally-
computers, copiers, printers, batteries); Sound Purchasing (published by the
vehicles (cars, buses, trucks, motorbikes, tires, Federal Environmental Agency).
lubricants, fuels); construction and
infrastructure materials (isolating materials,
windows and window frames, paints and
varnishes, materials for road-construction);
gardening materials (pesticides, fertilisers,
compost); heaters; sanitary equipment; pipes;
cleaning products; refrigerators; dish-washers.
Japan:
Recycled paper, fuels, office automation Action Plan for Greening
equipment, washing machines, room air Government Operations.
conditioners, vehicles, automatic vending
machines, pollution treatment equipment,
construction materials.
79
Appendix 6
Product or Product Types Initiative
Switzerland:
Paints, thermal insulation materials, Practical information by the Co-
green roofs, ordination of Federal Services
radon protection. concerning Building Organisations
(KBOB).
Electronic appliances E2000 Programme
Batteries, pipes for electric cables Swiss Telecom PTT
Construction and civil engineering materials, Ecological Purchasing Project (Canton
vehicles, products for hospitals, cleaning of Zurich)
products
United States:
Paper, vehicular products, engine coolants, Buy-Recycled Programme
lubricating oils, tires, construction products, [Environmental Protection
structural fibreboard, laminated paperboard, Agency (EPA)].
carpet, floor tiles, patio blocks, building
insulation products, transportation products,
traffic control cones, traffic barricades, park
and recreation products, playground surfaces,
running tracks, landscaping products, hydraulic
mulch, yard trimmings compost, non-paper
office products, office recycling containers,
office waste receptacles, plastic desktop
accessories, toner cartridges, binders, plastic
trash bags. There are over 50 product
categories covered by this programme.
Office equipment (computers, monitors, Energy Star

printers, fax machines, copiers); exits signs, (EPA & Department of Energy).
appliances, construction products (windows,
roofs), lighting technologies,
industrial/commercial technologies (e.g.
motors, air conditioners) and others.
Product categories: business cards, cafeteria- Environmentally Preferable Purchasing

ware, cleaners, construction materials, Programme (pilot projects between
copiers, degreasers, glues/adhesives, EPA and other federal agencies).
architectural paints. Service categories:
conferencing, custodial services,
construction/renovation services, green
power, printing.
80
Appendix 7
The Environment Agencys Supplier Environmental

Evaluation Model - for high-value/high-risk contracts
Using the matrix

The elements of the evaluation matrix (shown below) have been chosen to
represent the key measures of the environmental maturity or capability of suppliers.
Each statement in the matrix reflects a different level of environmental capability.
The supplier is sent a pack containing a copy of the matrix with which to assess
his own capability, and providing the necessary justification for the score assigned on a
separate sheet. The supplier is also sent a questionnaire seeking a range of evidence on
the policies and organisation of the company - the questionnaire links into the matrix
headings.
The Agency Procurement Officer and the Environmental Management Unit staff,
as appropriate, will then assess the evidence provided, together with the statements
made in support of the self-assessment. The result of the assessment should be a score
for each element, which can then be transferred to a simple profile chart.
In most cases the questions can be linked directly to each of these profile attributes
(for example, element 4 of the matrix on Environmental Management Systems links
closely to question 4 on the form). The EA will need to use any information provided
by the supplier to support and justify the capability levels assigned to a supplier. Thus,
question 5 regarding communications would be assessed by taking into account any
evidence provided in response to the questionnaire.
Constructing the profile

Once the suppliers score has been determined (levels 1 to 5 for each element), the
resulting mark is transferred to the chart, producing a graphical representation of their
environmental capability profile.
The second line on the chart identifies the supplier whose profile is considered to
be best in class. This can then be used as the target for all other suppliers to aim for to
ensure ongoing improvements in environmental performance.
The third line is the preferred profile for suppliers. This is defined internally, so
the Agency needs to decide what constitutes a realistic target for suppliers of that
product or service. This will not preclude suppliers from achieving best in class status,
but will be seen as a target to be reached by all suppliers.
Seeking further information

In many cases, once the profile has been completed there will be no need to seek
any further information. However, dependent upon the level of risk associated with the
contract and the level of detail provided by the supplier, it may be necessary to seek
more information on specific issues. This can be done using Part 2 of the Form.
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Appendix 7
Part 2 is designed to identify the top five risk areas associated with the purchase of
the particular products or services, such as waste minimisation and energy efficiency.
The information provided in response to the question on these five risk areas can then
be subjected to more detailed scrutiny. The issues that need to be addressed to achieve
the required environmental improvement can subsequently be identified.
The Agency can then assess the performance measures operated by the supplier, in
managing and measuring their compliance and development, for their suitability and
the degree of comprehensiveness to the products or services to be purchased.
Where there is some concern over the appropriateness of the measures, the Agency
may choose to include a number of its own in any subsequent specification. A sample
number of measures are included in Part 3 of the enquiry document. Where
appropriate, these sample measures could be further developed to create the next
generation of base line data, from which the subsequent environmental improvements
can be determined.
Categorising of suppliers
The profile can be used to determine where each supplier fits within the Agencys
marketing strategy to target effort on environmental improvements to the supply chain.
A supplier who is assessed predominately at Level 1 will generally be seen as being
UNAWARE within the definition in the marketing plan. This will usually mean that
the company has made no real effort to consider the environmental impact of supplying
the products or services. It is likely to be primarily price-focused or cost-focused in
those areas that offer a direct return to the business (for example, energy consumption).
Any environmental benefits will only arise as a by-product of the cost or production
changes implemented by the business to maintain its market competitiveness.
A supplier who is assessed predominately at Level 2 or 3 will be seen as a
SETTLER. The supplier will generally be aware of environmental issues associated
with any product or service provided and will be looking to incorporate their impact
into the production and purchasing activity. The extent to which they are included will
depend directly upon the individuals commitment to or influence over the business
policy. The basis of any consideration will be either risk avoidance, in the case of
pollution and potential prosecutions, or cost reduction, in the case of energy
consumption and waste minimisation.
A reactive rather than pro-active approach is likely and there will be wide variations
across the total business operation. The level of personal commitment to
environmental issues is the key driver in determining the extent to which the business
incorporates environmental issues into its everyday operations. Personnel in the
business will probably give personal views on what is being done rather than referring
to an organisational strategy. Initiatives will be specific to functions and their benefits
will be uncoordinated.
A supplier who is assessed predominately at Level 4 or 5 will be seen as a
82
Appendix 7
PIONEER. The supplier will be fully familiar with the concept of environmental
impact analysis and will always include appropriate environmental considerations in
their own purchasing decisions. They will have a formal method of evaluating
performance, possibly using a formal environmental management system and the
company will be either registered or working towards EN 14000 registration. Each
department will have its own internally developed targets aligned to an overall
organisational target with clearly defined associations to the business objectives. There
will be a formal audit of performance, either internally or externally based, and a good
system of communication of achievements and reporting methodology.
Note to supply companies

This matrix is for self-assessment of environmental maturity. The score to be
entered for each item is the Level that most closely corresponds to the companys
assessment of its position. Justification for each of the scores should be included with
the completed matrix, on the form. Suppliers may also receive a supplier questionnaire
- the questions also relate to this matrix.
83
Appendix 7
Supplier environmental evaluation matrix
Element Level 1 Level 2 Level 3 Level 4 Level 5 Score
Policy (1) No policy An unwritten set of Unadopted Formal policy but Environmental
guidelines environmental no active action plan and
policy set by commitment from regular review with
departmental top management commitment from
manager top management
Organisation (2) No environmental Environmental Environmental Environmental Environmental

management or responsibility is the responsibility post manager management fully
any formal part time function reporting to ad- accountable to integrated into
delegation of of someone with hoc committee line environment management
responsibility for limited authority or management and committee chaired structure with clear
environmental influence and no authority unclear by a board delegated authority
impact reporting member
requirement
Review (3) No review Informal review of Review of Formal review of Formal review
undertaken limited areas of the organisation all company undertaken on
company undertaken, no operations, actions behalf of board,
follow-up actions plans agreed and action plans signed
taken supported by off by board as part
management of integrated
management plan
No EMS in place Processes in place EMS available to all EMS in place EMS fully
EMS (4) for individual parts of company, across company, integrated into
impact areas, no but no reporting required, business, regular
co-ordinated requirement to regular review of review of
systems implement, or performance by performance by
report on specific top management top management
areas and supplier
evaluation
programme
No Informal plan in Formal plan in Formal plan in Comprehensive

Communication communications place for company place for company place for company plan in place
programme (5) plan in place with ad-hoc covering staff and
communications suppliers
with support
No audit Informal review of Formal audit of all Formal audit of Externally verified
Audit programme processes as part compliance issues EMS against policy audit of EMS
programme (6) of other audit and general audit and performance against policy and
regimes of other processes targets performance
targets
No external Annual report and Annual report and Annual Annual

Reporting (7) reporting accounts includes accounts includes a environmental environmental
the company review of report published as report published as
environmental environmental part of company part of company
policy statement activity external reporting external reporting
including external
verification of audit
findings
84
Appendix 7
Justification for self-assessment by supply company
Profile element Score Justification
Environmental policy
Organisation
Review
Environmental Management
Systems
Communications programme
Audit programme
Reporting
Graphical Profile of Supplier Score
Element Level 1 Level 2 Level 3 Level 4 Level 5
Environmental policy
Organisation
Review
Environmental
Management Systems
Communications
programme
Audit programme
Reporting
Supplier
Best in class
EA profile
Number and date of prosecutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
Appendix 8
Nortel Networks - Environmental Procurement
Nortel Networks is currently implementing its corporate policy and procedures on

environmental procurement which will provide operational control of
environmental considerations relative to the purchase of goods and services from
suppliers. We are establishing a global process for defining, communicating and
maintaining core supplier environmental requirements.
Nortel Networks suppliers will be required to supply information relative to their
environmental performance to one principal database. The goal of the supplier
evaluations is to enable a better vendor selection process.
Nortel Networks is developing one set of criteria and standard communication tools
for supplier evaluation. The supplier will be required to complete our core
environmental initiative. Areas covered in the core environmental requirements
include:
environmental management system maturity;
legislative compliance record;
environmental initiatives; and
use of hazardous substances.
Nortel Networks core environmental requirements (CER) initiative is the first phase
of a program that will integrate environmental considerations into all supply
management operations. The initiative contains a process for defining,
communicating and maintaining a list of core requirements for our suppliers. These
core requirements will form the foundation of the environmental procurement
program and will be applied universally to all Nortel Networks suppliers.
Increasingly, customers want to know about the potential environmental impacts of
Nortel Networks products and services. In North America and Europe the major
telecommunications providers have joined together to sign environmental charters
that clearly establish supplier responsibilities. In addition, the European Union has
drafted legislation that would, when applied, restrict materials that are used in some
Nortel Networks products, require product content declarations, and mandate
product take-back and recycling. Only with the support of our supply chain
partners, can Nortel Networks deliver the environmentally responsible products
expected by our stakeholders.
The CER initiative requests suppliers to assess their programs against our
expectations and complete a declaration outlining to us any potential environmental
issues. Using supplier assessments and our own assessments of market issues, more
thorough assessments and requirements will be applied to a small subset of the
supply base. The implementation of this additional, risk-based list of expectations
will begin once Nortel Networks has successfully communicated the core
environmental requirements - which are really minimum expectations - to suppliers.
Source:
http://www.nortelnetworks.com/corporate/community/environment/supplies_mgmt/sup_mgmt.html
86
Appendix 9
Stora Enso Environment Management
Stora Enso, the manufacturer of magazine papers, newsprint, fine papers and
packaging boards, considers EMAS and ISO 14001 to be the best tools available to
ensure continuous improvement in environmental performance everywhere the
company operates.
The European Unions latest Environmental Action Program emphasises the need to
use market-oriented and consumer-oriented tools to promote sustainable
development. The new EMAS Regulation encourages the use of the EMAS logo to
signify continuous improvements in environmental performance.
Stora Enso welcomes such opportunities to provide stakeholders with relevant
information on the companys environmental performance. Some 83% of the
companys paper, pulp and board production capacity around the world is certified
to EMAS and ISO 14001, making Stora Enso one of the most environmentally-
advanced paper manufacturers in the world.
Stora Enso considers EMAS and ISO 14001 to be the best tools to ensure
continuous improvement in environmental performance everywhere the company
operates. The company prefers to use such widely compatible tools to communicate
environmental performance.
EMAS and ISO 14001 can incorporate environmental impacts throughout the
supply chain from the forest to the mill, on to the printers, and finally to the end-
consumers. This is now possible thanks to the adoption of the same approach by an
increasing number of Stora Ensos suppliers and customers.
The EMAS logo will be used in all relevant marketing communications material to
symbolise Stora Ensos commitment to environmental improvements. Product-
specific information will be available in the form of a standardised environmental
product declaration. This declaration scheme has been developed in cooperation
with printers, merchants and manufacturers, in order to provide customers with
relevant environmental information. The environmental product declaration
scheme is at present in its final testing phase.
Stora Enso is preparing to withdraw from the Swan label, an eco-labelling
programme set up by the Nordic Council of Ministers, for all graphic papers (coated
fine papers, newsprint and magazine papers). As a global company, Stora Enso
requires tools that are recognised and supported worldwide to control and
communicate the companys environmental performance. This greater geographical
scope is one reason why Stora Enso believes EMAS and ISO 14001 are the best tools
to ensure continuous improvement in performance. Since the direct use of the
EMAS logo on products and packages is not possible at the moment, Stora Enso
office papers will continue to bear the Nordic Swan label for the time being.
Source: http://www.storaenso.com
87
Appendix 10
Sainsburys Raising the Standard

Supermarket chain Sainsburys has launched a programme Raising the Standard,
to assess levels of environmental management among its own brand suppliers and to
raise their environmental awareness. The programme, designed to minimise risks to the
retailer, forms part of its efforts to build corporate integrity, while suppliers are offered
the chance to make significant cost savings, improve their management systems and
reduce their own risks.
The companys 2000 Environment Report included a commitment to determine
and incorporate own-brand supplier environmental requirements into management
and audit mechanisms by March 2002 and to implement a periodic risk assessment of
own-brand products, across the life cycle.
Suppliers Guide
To accompany this ambitious commitment, a suppliers guide on reducing
environmental impacts was developed.
Sainsburys long-term goal, says the guide, is for all own-brand suppliers to be able
to demonstrate comprehensive and meaningful engagement with all the environmental
issues affecting their business. They are encouraged to adopt environmental
stewardship of products, processes and services both in manufacturing on-site and over
the life cycle of the product.
The guide sets out the four priority areas that Sainsburys has identified for
environmental management. They are energy, transport, packaging and waste.
Examples are also given for each of the four areas. For example, reducing the pack size
of Sainsburys oat and bran flakes by 24% has saved 7.2 tonnes of carton board, saving
landfill and packaging producer responsibility costs, as well as enabling more units to
be packed per case and per pallet, and per unit of shelf space in stores.
Suppliers are invited to join Sainsburys in reducing environmental impacts in each
of the priority areas. For example, suppliers are asked to help the supermarket reduce
the amount of packaging it uses, increase recycled content and design packaging to
facilitate recycling.
The guide also outlines some of the product initiatives Sainsburys is involved with,
including:
Marine Stewardship Council
Integrated crop management
Farm biodiversity action plans
Ensuring product labels comply with the Governments Green Claims Code.
Self-assessment
The guide contains a single-page questionnaire comprising ten questions. It is
based on Business in the Environments Index (that Sainsburys already participates in),
88
Appendix 10
and a weighting system was devised to enable returns to be scored. The score measures
each suppliers engagement with environmental issues and environmental management.
The questionnaire used seeks to highlight and drive performance in the following
areas:
policy and responsibility;
targets and objectives;
environmental management systems and audit;
stakeholder communications and employee training;
environmentally focused supplier programme; and
environmental stewardship.
Pilot Programme
The guide, including the questionnaire, was tested prior to issue in a pilot
programme involving some 20 suppliers. Five examples of suppliers who have made
cost savings in the programme are listed in the box below.
Examples of cost savings in the pilot programme

A meat supplier saved 8t/yr of packaging saving 15,000/year; and cut water
pollution at source saving a further 20,000.
A cider supplier purified water and reduced effluent, saving circa 200,000.
A hygiene paper product supplier reduced use of stretch-film by 35%, saving
circa 62,000/year.
A household cleaning supplier saved approximately 250/tonne in special waste
through donating product.
A canned fruit supplier conserved energy and reduced waste through their
environmental management system, saving circa 500,000.
Going forward
The guide and questionnaire was sent to 1,250 own-brand suppliers in 2001.
Feedback from suppliers has been encouraging and has shown that levels of engagement
vary widely across industry sectors and even within sectors. The information provided
by returns to the questionnaire has allowed Sainsburys to assess future needs and to
target areas for follow up action.
Sainsburys plans to extend the Raising the Standard programme over the next
two years to ensure that the early success is built on and it is likely that more examples
of best practice across the supply base will feature heavily in future efforts to raise the
environmental performance of suppliers.
89
Appendix 11
B&Qs QUEST for Suppliers

Since 1990 we have insisted that our suppliers be aware of the environmental and
social issues associated with their products and that they have a written environmental
policy and action plan to address them.
Our supplier assessment programme started with the Supplier Environmental
Audit (SEA). In 1991 less than 10% of our suppliers had produced meaningful
environmental policies and action plans. The SEA resulted in good progress being
made but we wanted to develop the process further.
In 1995 we replaced the SEA with QUEST. QUEST is an acronym that stands
for QUality, Ethics and SafeTy and is B&Qs internal environmental management
system. Through QUEST we assess the quality, environmental and social performance
of our supply base using ten principles, five of these are based on environmental and
social performance and five are based on quality performance.
For each QUEST principle, suppliers are awarded a grade from A to E. An A
grade is reserved for leadership, commitment and innovation and a grade E for a major
problem which contravenes our environmental policies. The grades in between reflect
good or average performance accordingly.
Results for the social and environmental principles at the end of 2001
Principle Description Score
6 Environmental policy and awareness

Grade B or above
7 Environmental action and achievements
Grade B or above
8 Working conditions for factories in developing countries
(those applicable) - Grade B or above
9 Packaging and environmental claims
Grade B or above
10 Timber and other wooden products (those applicable)
Grade A or above
Maintaining and building on our achievements will be key in preparing our

business for an increasingly sustainable future and QUEST will continue to be central
to our social responsibility programme. To incorporate changing trends and sustainable
development issues we recently reviewed and updated the QUEST principles that
suppliers are assessed against.
For those suppliers that operate or wish to operate under the external
environmental management system ISO 14001, we now recognise this standard within
90
Appendix 11
the QUEST assessment process. However, suppliers must comply with QUEST
standards in addition to the ISO standards.
Building on the progress of the ethical standards that QUEST has help us to
achieve, B&Q created a new ethical code of conduct for supply chains. It sets
inspirational standards for us and our suppliers to assess and monitor factories all over
the world, not just in developing countries, and now forms the basis of the eighth
QUEST principle. Suppliers will be able to use the code of conduct as a guide to
factory assessment, and inspiration for factory improvements.
We have expanded the tenth QUEST principle from only addressing the timber
issue to include all B&Q product policies such as timber, paint, peat and toxics. It is
now called Product Integrity. Suppliers will report progress and be assessed against
their contribution to relevant B&Q policies covered by this principle.
Sustainable development is now incorporated within QUEST, this will
acknowledge those suppliers who are preparing for the challenges of an increasingly
sustainable future. They will need to provide evidence of this through their policies,
actions and the way they run their business across a broad spectrum of economic, social
and environmental issues.
The environmental principles have been changed to reflect these revisions and our
new approach. Below are the new B&Q environmental and social priorities:
Principle 6 Environmental policy and awareness
Principle 7 Environmental track record and targets
Principle 8 Supply chain transparency
Principle 9 Packaging and labelling
Principle 10 Product integrity
The other five QUEST principles continue to address quality related matters and
B&Qs Quality department has a dedicated team working on supplier evaluation.
QUEST will continue to maintain standards and inspire improvements to ensure
that we continue to reduce our impacts on the environment and improve the quality of
life for the people making and buying our products around the world.
91
Useful Web Sites
Chartered Institute of Purchasing and Supply

http://www.cips.org
Institute of Environmental Management and Assessment
http://www.iema.net
NHS Purchasing and Supply Agency
http://www.pasa.doh.gov.uk
Environmental Supply Chain Forum
http://www.greensupply.org.uk
Joint Procurement Policy & Strategy Group (Higher Education)
Environmental Issues in Procurement and Sustainable Procurement
http://www.jppsg.ac.uk/sustainability
Sustainable development in government, improving performance
http://www.sustainable-development.gov.uk/sdig/improving/contextf.htm
ICLEI Eco-procurement Initiative
The International Council for Local Environmental Initiatives
http://www.iclei.org/europe/ecoprocura/index.htm
ICLEIs Green Purchasing Good Practice Guide found at
http://www.iclei.org/ecoprocura/info/good_prac.htm
Environmentally Preferable Purchasing
US EPA homepage
http://www.epa.gov/opptintr/epp/
Environment Agency (UK)
http://www.environment-agency.gov.uk
The HM Treasury and DETR Joint Note on Environmental Issues in Purchasing

http://www.hm-treasury.gov.uk/guid.html
EU flower eco-label
http://europa.eu.int/comm/environmental/ecolabel/prodgr.htm
European Eco-Procurement initiative

Buy It Green network (BIG-Net) of the International Council for Local
Environmental Initiatives (ICLEI)
http://www.iclei.org/europe/ecoprocura/network/
Green Purchasing Workbook
http://www.epe.be/workbooks/gp/index.html
Guide on Waste Prevention
http://www.informinc.org/wawgate.htm
Swedish eco-label information
Provides lists of the criteria applied for granting the Swedish eco-label Bra
Miljoval (Good Environmental Choice) to the product groups: cleansers, dish-
washer detergents, laundry detergent, soap and shampoo, stain removers and
bleach, toilet cleansers, washing-up liquid, electricity, textile and public transport.
http://www.snf.se/bmv/english/criteria.htm
Blue Angel criteria

Offers information brochures detailing the experiences gained in 20 years of
92
Useful Web Sites
German eco-labelling and lists the Blue Angel criteria for a range of nearly 100
products of the following groups: paper, office supplies and furniture; electrical
products and appliances; heating plants and solar technology; build and renovate;
sanitary and hygiene supplies; canteen and kitchen supplies; horticulture; traffic;
batteries.
http://www.blauer-engel.de/englisch/index.htm
Nordic Swan ecolabel

A website providing the criteria fulfilled by the products and services of 24
product groups.
http://www.svanen.nu/NordicKritindex.htm
Global Eco-Labelling Network (GEN)

Overview on eco-labels and their Web sites.
http://www.gen.gr.jp
Criteria for green offices.

http://www.ec.gc.ca/office/html/Default.htm
Product information for about 40 products of the product groups construction,

landscaping, paper, park and recreation, transportation and vehicles.
http://www.epa.gov/epaoswer/non-hw/procure/index.htm
Carillion plcs Environment Policy

http://www.carillionplc.com
GreenNet
The network for green purchasing within National Procurement Ltd Denmark.
http://www.ski.dk/det%20groenne%20indkoebsnet/Groen%20samletmenu.htm
The European Green Purchasing Network

Homepage for European Partners for the Environment
http://www.epe.be/
Eco-design checklists from the Centre for Sustainable Design

http://www.cfsd.org.uk/nepd
EU Home Page
http:///europa.eu.int/
Envirowise
http://www.envirowise.gov.uk
Product-specific purchasing guides from the US EPA

Covering food service-ware, copiers, cleaners, carpets, electronics and meetings.
http://www.epa.gov/oppt/epp
Business in the Environment is the business led campaign for environmental

responsibility of Business in the Community.
http://www.business-in-environment.org.uk
The Higher Education Partnership for Sustainability of Forum for the Future -
including Sustainable Purchasing.
http://www.heps.org.uk
93
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Society of Purchasing Officers in Local Government (1998), Environmental Purchasing

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Warner, K.E and Ryall, C. (2001), Greener Purchasing Activities within UK Local
Authorities, Eco-Management and Auditing, 8, 36-45.
Wastebusters (2000) The Green Office Manual, London, Earthscan.
Whitaker, Brian (1998) The IBM experience and some further thoughts, Environment
Council Seminar: Supply Chain Management - the missing link to improve environmental
performance?, London, 24 February.
96
IEMA Draft Code of Practice
on Incorporating Environmental Issues
into Supply Chain Management
In cases where procured goods and services contain the significant
environmental aspects in an organisations environmental management
programme, there should be:
a commitment to environmental supply chain management or
environmental purchasing in the organisations environmental policy and
procurement strategy;
a programme of environmental supply chain management action
containing objectives and targets against which progress can be
measured;
a clear link between these objectives and targets and the general
environmental goals of the organisation as a whole;
evidence that this programme also takes account of the organisations
commercial position vis--vis environmentally-significant purchases;
evidence that responsibilities for the delivery of this commitment are
assigned within those parts of the organisation responsible for the
acquisition of goods and services and for environmental management;
evidence that sufficient resources are available within relevant parts of the
organisation to fulfil the policy commitment and achieve the related
evidence that appropriate training is provided to enable purchasing staff to
discharge their responsibilities within the environmental supply chain
management programme;
evidence of an understanding by purchasing staff of the contribution their
function can make to environmental performance improvement in the
organisation;
evidence of joint working between environmental and purchasing staff in
the implementation of the environmental supply chain management
programme;
a mechanism for two-way communication with suppliers about the
operation of the environmental supply chain management programme;
progress monitoring and performance measurement, with reporting
mechanisms to purchasing and environmental management; and
audit of the environmental supply-chain management process within the
normal environmental management audit cycle; and
The review of any environmental management system that includes a
significant environmental supply chain management element should be carried
out by a group that includes purchasing and supply chain managers.

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Environmental Purchasing

The Chartered Institute of Purchasing and Supply

The National Health Service - Purchasing and Supply Agency

Design and Production

The practice of environmental purchasing has been a much-neglected

Russell Foster, Chief Executive, IEMA

I am grateful to Barbara Morton of the Manchester School of Management

Printed on Green Coat velvet Plus

I am sitting in the BA lounge at Brussels airport. Today I met some MEPs

I welcome this Practitioner Guide and the initiatives it describes. It

Dr Alan Knight OBE

2 The Environmental Context . . . . . . . . . . . . . . . . . . . . . . . . 4

3 The Case for Environmental Purchasing . . . . . . . . . . 9

4 Taking the First Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5 In Practice: Identifying Need . . . . . . . . . . . . . . . . . . . . . 24

6 In Practice: The Specification . . . . . . . . . . . . . . . . . . . . 28

7 In Practice: Supplier Qualification and

8 In Practice: Tendering and Tender Evaluation . . . 50

7 Environment Agencys Supplier Evaluation Model . . . . . . . . . . . . . . 81

Useful web sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

References and relevant publications . . . . . . . . . . . . . . . . 94

Purpose of the Guide

to take the appropriate action. In particular, it should allow you to:

understand the business reasons for implementing environmental

The Guide should help you to find information on environmentally

integrated with an organisations overall business objectives and its

supplier qualification and appraisal, tendering and tender evaluation, contract

The Environmental Context

Organisations in the public and private sectors are showing an increasing

social progress which recognises the needs of everyone;

All four objectives, to a greater or lesser extent, have a connection with

Many organisations have accepted the need to develop their

Environmental regulation and legislation: much environmental

the Producer Responsibility Obligations (Packaging Waste)

By directly affecting the market for products, legislation changes the

External benchmarks: organisations are faced with a number of external

Business in the Environments Index of Corporate Environmental

environmental performance of companies, with the prospect that good

Public policy development

Markets and consumer demand can be guided towards products and

Source: Sixth Environmental Action Programme

The international dimension

Integrated Product Policy is an EU term. It is an approach to reducing the

The Case for Environmental

According to Business in the Environment, No company can solve its own,

Early proponents of environmental supply chain management included

If environmental purchasing is new to an organisation, purchasing and

management. The business case for the environment becoming a mainstream

reduce waste and improve resource efficiency;

To reduce waste and improve resource efficiency

For example, a vehicle manufacturers collaborative work with a

To secure the supply of goods and services

To minimise business risk

part of suppliers can result in unwelcome media coverage. The

To provide cost savings

To provide added value

To enhance corporate image

recycled products or those with a high recycled material content; and

In 1999, the giant US electronics and aviation business Raytheon entered

In the public sector

Public procurement represents 14% of GDP for the EU as a whole over

A recent OECD document on Greener Public Purchasing and the ICLEI

Examples of public sector initiatives around the world

Austria Procurement Service Austria is an organisation operating a