A business' green procurement policy should strive to purchase products and services that have less negative impact on the environment. Environmental considerations forms part of the evaluation and selection criteria, which could cover, depending on goods and services to be purchased, their manufacture, transport, packaging and disposal.

"Sustainable Development" was the key concept of the 1992 Earth Summit in Rio, as governments and international organizations committed themselves to take action to protect the environment as in integral part of long-term economic development. Environmentally-responsible consumption and production is seen as an essential part of the strategy to improve environmental quality, reduce poverty and bring about economic growth, with resultant improvements in health, working conditions, and sustainability, and is highlighted in Chapter 4 of Agenda 21. In particular, organizations were called upon to exercise leadership in the promotion of environmentally sound goods and services.

In many developing countries public procurement of goods and services forms the major part of government expenditure. Economic activity of such magnitude has far-reaching implications and governments, international organizations, and donors have a responsibility to take the environmental impacts of their activities into account. A move towards favoring goods and services whose manufacture, use and disposal is conducted with a view to environmental impacts not only has direct environmental benefits, but also sends a strong message to manufacturers and suppliers that the issue is taken seriously.

Since Rio, the response of the private sector has been impressive, with many multinational organizations developing effective environmental management policies. Green procurement (also called 'environmentally responsible procurement) is now no longer new to Europe, North America, and developed countries. The public sector has lagged behind somewhat, although many local authorities in developed countries have now introduced environment management systems which include procurement policies.

Two Approaches to Green Procurement

Business has evolved two approaches to integrating environmental considerations into procurement decisions. These can be termed a "Product Approach", which examines goods and services and attempts to rate them according to environmental impacts, and a "Supplier Approach", which looks at the supplier (preferably a manufacturer or service provider) and rates the organization as a whole.

Companies employ both approaches with differing degrees of thoroughness. Some devote considerable resources to environmental "policing", sending environmental auditors to carry out in-depth examinations of suppliers, operations and supplies, whilst for others it is little more than a token gesture.

A Product Approach typically uses the tools of life-cycle analysis and total cost analysis to attach an environmental rating to a proposed purchase. Supplier Approaches seek ways to rate companies and suppliers according to their overall environmental performance, typically using questionnaires and outside audits and rating systems, such as Environmental Management Systems.

Both approaches have associated advantages and disadvantages, depending on the procurement patterns of the organization involved and the degree of centralized oversight that a particular funding or UN agency wishes to exert.

Integration with existing procurement regulations

Green procurement does not seek to re-write the book on procurement, but merely to add an environmental dimension to the decision-making process. The standard purchasing criteria, of price, quality and availability, remain paramount. The environmental impacts of a good or service procured can be seen as part of the "quality" criterion.

Whilst every organization should establish a "de minimus" - a list of items which they will not purchase, green procurement should not normally be seen as being prescriptive, and restrictive to procurement staff. There will be occasions where a product's exceptionally competitive price will be an over-riding factor in a procurement decision, despite negative environmental factors. On the other hand, there will be occasions where a product's negative environmental impact, or particular environmental advantage, prove to be decisive in a procurement decision.

The importance of a green procurement policy is that procurement staff are asked to consider environmental impacts, and are allowed to make decisions accordingly. It can make a significant difference to an organization's environmental performance, as well as send a powerful message to businesses that the environment is taken seriously.