#industry-focus/procurement/green-procurement

How to Implement a Green Procurement Strategy

Buying green has become a key part of corporate social responsibility and an increasingly important part of the supply chain. With the European Commiss...

Freddie Pierce
|May 28|magazine11 min read

Buying green has become a key part of corporate social responsibility and an increasingly important part of the supply chain. With the European Commission having announced a review of public procurement laws and increasing pressure on corporations to prove their green credentials, the green procurement market is a growing concern.

The European Commission’s move to overhaul public procurement laws is a step in the right direction as it acknowledges a need for greater flexibility in procurement rules. For Stefan Foryszewski, co-founder of OB10, the electronic invoicing network, the evaluation of EU procurement legislation has come at the right time.

“Two years ago, it was quite a hot topic,” says Foryszewski of the e-procurement industry, “and there was quite a lot of activity looking at electronic solutions such as ours; but I will say, with the credit crunch, I think a lot of companies put their focus elsewhere. If we’re talking corporate social responsibility, I think it had dropped down the agenda.”

Now though, with companies around the world emerging from the recession, albeit cautiously, green is once again becoming more important. “This has been more evident in the US. The US government is promoting the green agenda and, as a result of that, it is starting to get higher on the buyers’ agenda,” he adds.

The European Commission’s evaluation of procurement will not be completed until Spring 2011, when “the findings will be used to inform reflection on the need for a modernization of EU procurement rules”.

E-INVOICING

In the meantime, there have been some significant advances in green buying, with OB10 just one of many companies behind a green solution. The way its electronic invoicing network operates is to allow suppliers to create invoices on their computer systems, then transmit the data directly to OB10, which submits the data straight into the corporate accounting system. It may seem a rather simple answer to the paper invoice but its environmental implications are quite astounding. When you consider that in excess of 30 billion paper invoices are issued each year, and that OB10 has so far been responsible for saving 8,000 trees, the potential for e-invoicing could transform procurement globally.

“CSR and green targets are forming one of the components of corporate buying decisions; more and more so, they’re moving to electronic trading, electronic invoicing being one of those components,” explains Foryszewski.

He refers to a specific agenda in the European Commission to promote the use of electronic invoicing. Again, there is evidence that this would have a huge environmental impact. “If all European businesses moved to electronic invoicing, then the saving over five years would be a staggering 238 billion euros,” he says, citing figures published by the Commission.

GOVERNMENT SUPPORT

The UK has remained dedicated to green purchasing, with the Mayor of London’s Green Procurement Code demonstrating just that. The Code helps businesses based in London to reduce their environmental impact through responsible purchasing.

On the other side of the Atlantic, the U.S. Environmental Protection Agency’s Environmentally Preferable Purchasing (EPP) scheme supports the federal government in its commitment to buying green and, in doing so, stimulates market demand for green products and services.

The North American Green Purchasing Initiative (NAGPI) argues the case for green procurement for governments and companies alike. With the Canadian federal government the largest single buyer in Canada, with C$11.6 billion spent on products and services each year, the NAGPI believes it can have a huge impact on green buying trends in the country. The NAGPI has formed a Steering Committee comprising groups and agencies working with green purchasing in North America. One of its aims is to create a “unified voice” to engage manufacturers, purchasers, politicians, the media and the general public. In turn, this will help the committee develop a database of supporting tools and procurement policies for use across North America.

Like Foryszewski, the NAGPI believes more can be done to address the growing interest in green procurement and to promote its benefits to businesses. While North America is acting on the demand for support for green purchasing, Europe is waiting on the European Commission to take the lead. Whatever happens, companies like OB10 will continue to play their part in green procurement.