The Sustainable Purchasing Leadership Council (SPLC), whose members include institutional purchasers from the public and private sectors, is working with suppliers, NGO’s, and government partners to develop a shared and strategic approach to purchasing. The council hopes to align standards, certifications, specifications, and specifications to promote and reward marketplace innovation that advances environmental, social, and economic performance.
SPLC Executive Director Jason Pearson will be at the upcoming Green California Summit, to lead sessions on designing and running a purchasing program using the guidelines SPLC members are developing. In an interview with Green Technology, he discusses the background and goals of the council’s efforts.
What is the mission of the SPLC?
The mission of the Sustainable Purchasing Leadership Council, broadly speaking, is to support and recognize leadership in sustainable purchasing. To do that we've brought together a community of leaders, all of whom are dedicated to the idea that large institutional purchasers have an opportunity to use their economic influence to promote and reward innovation in the market place and advance a sustainable future. In practice what we end up doing is creating a shared program of guidance, benchmarking, recognition and core leadership in sustainable purchasing.
Who are the members?
The council includes a really broad range of professionals. We have members from the private sector, the public sector (government at the federal, state, and local levels) and non-governmental and academic organizations.
Typically, the individuals who are involved in the work of the council are engaged in one of three roles that we've defined as part of the structure of the council. They may be a purchaser; that is, their role within their organization is to play a management role in coordinating or guiding the purchasing of their organization. They may be a supplier. For us us that they play a market-facing role within an organization that is delivering goods and services that are purchased by large organizations.
The third role is that public of interest advocate. The public interest advocate participants may be program staff within non-governmental organizations, such as environmental organizations or social justice or labor organizations or they may be government staff.
Those three roles of purchaser, supplier, and public interest advocate are typically the roles under which professionals are involved. Within their organizations they might have titles like chief procurement officer, or chief sustainability officer, or program officer. They might be in the chief financial officer’s office or be a CFO.
What motivated the creation of the SPLC?
The SPLC grew out of an opportunity and some shared challenges. If we look at any large modern economy like the U.S. economy, institutional purchasers play a very significant role in driving the economy. The U.S. Gross Domestic Product is about $15 trillion. We estimate that about two thirds of that, or $10 trillion dollars, is being driven by institutional purchasing demands—purchases by federal, state, and local government or by large organizations such as universities, hospitals, hotels and banks. They are buying goods and services and in doing that are providing the economic signals that are driving the economy.
There’s an opportunity for institutional purchasers to send economic signals into the marketplace that can advance a sustainable future. That's the opportunity side. I think everyone who has been involved in creating the SPLC is excited by the idea that institutional purchasers could play a really important role in promoting and rewarding the kind of marketplace innovation that we want to see.
However, institutional purchasers who want to seize that opportunity and who have been trying to seize that opportunity have been facing challenges. One of the challenges is just the challenge of coordination. Individual institutional purchasers who have been trying to send sustainable purchasing signals into the marketplace have been doing so on their own. They've been developing their own systems and so what we've seen is a lot of similar but different signals.
That's a challenge because it means that each of them has to reinvent the wheel. Whether they're chief procurement officers or purchasing directors, they don't have access to resources to help them to signals that are consistent with those sent by their peers in the marketplace.
As a result, the supplier community has to respond to a really diverse set of requests and that is proving to be a challenge for them. Some of these requests are coming in the form of requests for eco labels or standards or certifications. We've seen such a proliferation of different types of eco labels and standards and certifications that the landscape has become quite confusing for purchasers. It has also become confusing and sometimes frustrating for suppliers.
The vision of the council is to bring all of the relevant stakeholders together to get agreement on what leadership looks like, so that purchasers can send consistent signals into the marketplace. Suppliers can respond to a consistent set of signals, and when they are developing new innovative goods and services they can have confidence that their innovations will be rewarded in the marketplace.
Is “sustainable purchasing” the same thing as “environmentally preferable purchasing”?
First, in terms of scope, where environmentally preferable purchasing tends to focus on environmental risks and opportunities, sustainable purchasing includes an emphasis on environmental, social, and economic risks and opportunities associated with purchasing.
Second, in terms of approach, environmentally preferable purchasing has often been approached on a contract-by-contract or category-by-category basis. EPP has been defined by what EPP looks like for cleaning products, what EPP looks like for light bulbs, what EPP looks like for paper.
When we talk about sustainable purchasing we're talking about a strategic approach to purchasing that looks at the entire portfolio of spending of an organization. That involves looking at all the money that is spent on goods and services and trying to understand across that entire portfolio of spend where the biggest risks and opportunities are for advancing environmental, social, and economic performance.
Some would say that the operations of large corporations are major causes of environmental degradation. Are these same organizations likely to make sustainability a priority for their purchasing?
Our industrial economic system exists in its current form as the result of thousands and thousands of experiments in trying to build an industrial and economic system that will do the best job we know how of delivering goods and services that provide value and improve quality of life for the people who participate in that system.
The best we've been able to figure out is this current industrial economic system, in which we do pretty well. We deliver a lot of really useful and valuable business services. We have managed to extend quality of life for a lot of people, but in the process we have ended up doing some damage and we're continuing to do some damage.
The real question for us as a society is how do we, as quickly as possible, promote and reward the kinds of innovations that will continue to advance our quality of life and deliver goods and services that we want, but reduce some of the unintended and undesired damage.
It's too easy to blame the companies who happen to be on the front lines of the damage or the problem. You could as easily blame all of us for having created the demand for those companies' goods and services.
What we're trying to do with the Sustainable Purchasing Leadership Council is to create a constructive conversation between the people who create the economic demand, the purchasers, and the people who are in a position to deliver the kinds of innovation we want. And we want to create a constructive conversation that gives the suppliers some guarantee that if they deliver, if they develop new technology and new approaches, that innovation will be rewarded.
What is the relationship between SPLC’s efforts and existing standards or certification programs?
As a council we are very supportive of existing standards and certification programs. We see the council as a way to promote and strengthen the best standards and certifications that in the market place.
Within certain product categories a lot of work and time has gone into building some really high quality standards and certifications. Where those high quality standards and certifications exist, we want them to be used and we want our work to support the use of those standards and certifications.
Is the drive to improve the effectiveness of purchasing programs connected to efforts to reduce greenhouse gas emissions?
Absolutely. For many of our institutional purchasing members, climate change and reducing greenhouse gas emissions associated with their purchasing are top priorities.
The first member of the council was the U.S. General Services Administration. When they did an analysis of the greenhouse gas emissions associated with their purchases of goods and services, they concluded that the greenhouse gas emissions associated with their purchases of goods and services were nine times their onsite emissions.
That same ratio would be true for many organizations. The greenhouse gas emissions that are associated with the goods and services that the organization buys can be an order of magnitude larger than the greenhouse gas emissions associated with the organization’s onsite activities. If a large purchasing organization can find ways to shift their purchasing they have an opportunity to significantly reduce the emissions for which their economic demand is responsible.
It almost sounds as if sustainable purchasing could have more impact than other approaches to greenhouse gas reduction.
The levers for influence vary based on where you are in an organization. If you are looking for where economic demand could potentially be influenced because the professionals who manage it are in a position to influence that demand, then institutional purchasing is certainly the largest single concentrated, professionally managed source of economic demand in the modern industrial economy.
The Council provides guidance, for example, on how to exercise leadership in purchasing of a broad range of goods and services, including electricity, energy systems, vehicles, fuels, transportation services, construction contracting, and food services. All of these categories of purchasing have been demonstrated to significantly affect the greenhouse gas profile of a large organization.
However, I would not want to say that purchasing is more important than other opportunities. Regulatory action by federal and state agencies can also be very powerful.
Even when purchasers are required to practice EPP, if they cannot easily find green options they are not necessarily mandated to seek them out. Will the work the SPLC is doing change this?
First, I would emphasize that we discourage organizations from measuring their success what percentage of their spend qualifies as green or sustainable.
Instead, we would encourage an organization to look at where there are opportunities are to improve the overall environmental, social and economic performance of their purchasing and then to measure how much of an improvement they are able to achieve in those areas. In some cases, this might be achieved by “green purchasing”, but in other cases, improvements might be achieved by other strategies, such as reducing waste, improving internal efficiencies, or changing the way that they use specific products.
This is, to a certain extent, this is the difference between leadership and compliance. A leadership organization looks to understand where it is today and how to have some confidence that it is improving its performance moving forward.
The way in which an organization assesses its performance may not relate to whether or not it is buying green products. It may look, for example, at the overall estimated greenhouse gas emissions associated with its purchasing within a certain category. Or it might look at the extent to which it has managed to reduce sourcing of a key type of product from suppliers or parts of the world that are known to have high levels of illegal or unethical production practices, and the measure for the organization would be how much it has managed to improve its own suppliers’ performance or reduce its sourcing from problematic suppliers or regions.
As we establish new benchmarks and metrics for organizations, we can help them get out of the trap of trying to find compliant products as a way to have confidence that they are improving… and instead develop alternative measures that allow them to measure their actual environmental, social and economic performance.
Are there any product categories where the opportunities for improvement are particularly big?
We see opportunities for improvement in every category in the market place. Probably the way to answer your question is to identify for you the eight priority categories that our stakeholders have identified as the categories we are focusing on in 2015.
Those categories are: chemically intensive products, building construction and renovation, electricity purchasing, food service purchasing, information technology hardware and services, professional services, transportation and fuels and wood and agrifiber products. These are categories of goods and services that we have seen a lot of large organizations prioritizing as areas where they want to be exercising leadership. There is already a lot or momentum within some of those categories, but there is also a lot of room for improvement as well. Those are the categories where we are focusing in 2015.
Is there any doubt that sustainable purchasing is the future of purchasing, just as the efficiency has become the norm in the field of energy?
There is no doubt in my mind that what we call sustainable purchasing today will simply be accepted best practice in the future. We define sustainable purchasing as purchasing that recognizes all of the environmental, social and economic risks and opportunities associated with institutional purchasing. Another name for that is simply strategic purchasing. If you are a large organization and you want to be strategic about your purchasing you will be thinking about these risks and opportunities. While today it makes sense to talk about this as sustainable purchasing, the reality is that this is simply strategic purchasing. I would expect that any large organization looking to be strategic will be doing purchasing this way in the future.
A lot of work has been done to highlight social or environmental costs that might not show up in the price tag of a product. Will purchasers be willing to consider such costs and pay more for less damaging options, or will the “good” choices have to cost the same?
The full environmental, social and economic costs of a particular good or service might not be embedded in its price today, but leadership organizations—strategic organizations—recognize that those environmental, social and economic costs may be embedded in the price tomorrow. There is every likelihood that as our economy evolves—and as the regulatory frameworks and the social contexts in which our economy exists evolve—costs that are externalized today will increasingly become internalized costs. Strategic companies know that, they recognize that, and for that reason they are looking to be leadership companies today so that are ready for the market environment of tomorrow.
Are companies likely to find themselves at a disadvantage if they don’t pay attention to this revolution in the purchasing field?
Yes. The momentum we see toward a strategic approach to purchasing is not partisan. It crosses party lines, it crosses political lines. The people who are involved in this movement who are involved in this shift toward strategic purchasing and sustainable purchasing are simply people who are looking forward and recognizing where the future of the market is headed. They are preparing themselves for that future.
How much of a role are government purchasers playing in changing this field?
Federal, state and local governments have been very powerful proponents of sustainable purchasing and strategic purchasing and they are very active in the work of the council.
Government spending as a proportion of GDP is somewhere around 12-15% of GDP, or about $2.5 trillion.
As businesses consider the relative power of sustainable purchasing they should recognize that an increasing number of government purchasers are starting to think about and enact sustainable purchasing programs. Even if government is the only category of purchasers who act on this, that will affect 12-15% of the market place, at a minimum.
Thank you. We are happy that you can join us at the Green California Summit.
Thank you, we are very excited to be coming out to present. I look forward to the event.
Source: http://www.green-technology.org/
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