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Govt should use environmentally friendly suppliers

Media Release

26 June 2006

Business tells Government to throw its multi billion dollar purchasing power behind environmentally friendly suppliers

The Government needs to start preferring suppliers who have gone to the trouble of securing its environmentally friendly credentials.

More than a decade after the Government initiated its Environmental Choice label – a key part of its Govt3 sustainable procurement initiative – some state buyers are still awarding contracts apparently based on lower cost only.

Local and national government buyers also need to consider "best value for money over whole of life".

In a speech prepared for delivery to the annual Public Sector Procurement, Tendering and Contracting conference in Wellington today, Lyn Mayes, of the New Zealand Business Council for Sustainable Development says: "What business hears from Government is that they need to demonstrate product stewardship. What business sees in practice is that environmental performance counts for little in the tender process."

She also pointed to a major policy shift to sustainable procurement by the world's biggest retailer, Wal-Mart, which would make sustainability core business in the US almost overnight. The retailer giant is aiming major reductions in its greenhouse gas emissions.

Lyn Mayes says the Environmental Choice label was initiated by the New Zealand Government over a decade ago and provides a key plank to its "Govt3" sustainable procurement initiative which is being rolled out across departments. There is now a much wider range of Environmental Choice labeled products on the market with real choice, particularly in the paints and paper categories. However, businesses that may have invested a lot to gain accreditation are still finding tenders do not include, or value, their environmental credentials and contracts are still being awarded apparently based on lowest cost.

"If the government is serious about showing leadership then its tendering process must prefer those companies who have the Environmental Choice, Forest or Marine Stewardship Certification, Energy Star or other independent programme verification. These have been described to industry as effectively 'tickets to entry' but suppliers who don't have a ticket are still allowed into the game."

The Business Council says some departments and local councils are clearly taking this seriously and the Ministry for the Environment has led by example with the design and fit-out of its Environment House building. Around the country Environment Canterbury and Massey Leisure Center have included sustainable design principles and Auckland and Christchurch councils have a sustainable procurement policy for their vehicle fleets.

"These appear, however, to be the exception not the rule.

"If the people responsible for purchasing are judged on their ability to drive a price bargain then sustainability is unlikely to be a key motivator. It is only when senior management ensures that social and environmental considerations are assessed, alongside the obvious economic ones, that change will occur," Lyn Mayes says.

What government buyers consider important should be made clear in tender documents.

"If we want consumers to change their buying preferences then those of us responsible for public or private procurement need to lead the way. It is fascinating to note that since the worlds' largest retailer, Wal-Mart, took the decision last year to introduce an 'ethical' supplier code. All of its global manufacturers and suppliers have had to respond to retain their business.

"Wal-Mart buys globally from 6800 suppliers and sells to more than 138 million customers a week at 6200 stores – it has one of the largest private transport fleets in the world and if it achieves its aim of reducing emissions by 25% in just this one area, it will keep 26 billion pounds (llbs) of CO2 out of the air – a target some nations aspire to. A decision to sell organic cotton products now makes the retailer the largest global purchaser of organic cotton.

"If Wal-Mart, the global retail brand which appears to be the antithesis of sustainable consumption, can build a model sustainable store in Texas that uses revolutionary materials, technology, and processes to reduce the amounts of energy and natural resources required, they are doing it with an expectation that their suppliers will deliver. Overnight sustainability has become core business in the US. If the US catches a cold the rest of us will soon be sneezing into tissues made from recycled or sustainable fibre.

"Wal-Mart is doing this because it makes good commercial sense. They also recognize that it is the right thing to do. Here in New Zealand we have many examples of companies demonstrating product stewardship for example, the voluntary Packaging Accord and the various industry take-back systems for mobile phones, white-ware, computers, paint and used oil.

Business Council members have been showing leadership in extended producer responsibility. Vodafone and Telecom provide take back facilities for mobiles; Toyota and Honda have designed new hybrid technologies which reduce vehicle emissions and petrol consumption; Holcim are using recovered used oil as a substitute fuel and Coca Cola are pioneering public "out and about" recycling.

"While this will ultimately help change the dynamics of the market place, the Government should kick start this by making responsible purchasing and disposal decisions. The Government spends billions of tax payer dollars each year with all sorts of suppliers. While its Govt 3 programme is an excellent framework for sustainable procurement in the public sector it will only really bear fruit if best value for money means more than just the best price and transparency."


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