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Following is the full text of the speech on "Environmental Aspects of Government Procurement" by Director of Government Supplies, Mr Nigel Shipman, at the Forum for Environmental Supply Chain Management today (October 10):
Environmental concerns and the purchasing manager
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No matter whether they are working in the private or the public sectors, purchasing managers have to face the issue of how far and in what way environmental concerns should influence their purchasing policies. When the environmentally-friendly product is also the one that represents best value for money, there may be no conflict between meeting environmental concerns and traditional purchasing objectives. But often the two do not match so easily. The product that is claimed to be environmentally friendly may be higher in price than the alternative or the functionality of the product may be lower in various respects.
Purchasing managers who are buying on behalf of their companies should consider relating any green purchasing initiatives to the corporate environmental policy, if one exists. Companies have increasingly found it advantageous in recent years to formulate a corporate environmental policy and their purchasing practices ought to be covered by that policy. Sadgrove (Note 1) has adduced the following list of benefits that companies may hope to obtain by purchasing environmentally sound products.
Benefits of buying environmentally sound products
Benefit Reason
Less risk * Reduced risk of harm to the workforce,
customers and the public
Lower costs * Reduced waste (for example, from
excess packaging)
* Reduced energy costs
* Cheaper consents from regulatory
authorities (for example, for
discharging to the public sewage
system)
Fewer legal * Reduced risk of causing pollution
Concerns (and ensuing court action)
* Less reliance on raw materials
which could be banned in future
Less attention * Reduced threat from
From pressure environmentalists
groups
Satisfied *Competitive advantage in the
Customers market-place
* Increased customer satisfaction
and loyalty
This list of benefits could be applied to government as well as to private sector procurement. In addition, all parts of the machinery of Government have a special obligation to be attentive to environmental concerns in the course of their work.
Environmentally-responsible purchasing in public procurement overseas
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As environmental concerns are now universal, most governments have an environmental policy as part of their main policy aims. Many governments have sought to align public procurement with their environmental policy. The Swedish Government has stated that it intends "to ensure that public procurement is used as an instrument in the promotion of ecologically sustainable development". In pursuit of that aim, the Swedish Public Procurement Act provides for the environmental impact to be taken into account together with other considerations in tender evaluation. Other Scandinavian countries have adopted a similar approach. For example, in the tender evaluation process of National Procurement, Denmark, there is careful assessment of environmental factors both in the manufacturing process and in the features of the finished product and this assessment can have a substantial influence on the purchasing decision. This evaluation process is assisted by the widespread use by European manufacturers of environmental quality accreditation labels, such as the Nordic Council White Swan, the European Union Flower or the German Blue Angel label.
European law may also provide for environmental factors to be considered in the public procurement of all member states. The European Commission proposed earlier this year that public authorities within the European Union should be obliged to take into account environmental considerations when awarding public works contracts or purchasing new equipment. If adopted by governments and the European Parliament, the new rules, contained in two draft directives, would introduce the first ever reference to environment in European public procurement legislation. For the first time, purchasers would have to consider "environment" alongside traditional factors such as "price" and "quality" before choosing the best bid. The changes would affect public supply, service and works contracts and public utilities in the water, energy and transport sectors.
Similarly, in the United States measures have been taken to ensure that environmental factors impact upon purchasing decisions. In September 1998 President Clinton signed Executive Order 13101 which obliges executive agencies to identify and purchase environmentally preferable products and services through affirmative action. "Environmentally preferable" is defined to mean 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. This comparison may consider raw materials acquisition, production, manufacturing, packaging, distribution, reuse, operation, maintenance or disposal of the product or service."
GSD's environmentally-responsible purchasing programme
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In Hong Kong, as the deterioration of the local environment has become more noticeable, environmental issues have received more prominent coverage in major Government programmes. In his 1999 address to the Legislative Council, the Chief Executive put forward a programme for reducing pollution and waste as a key component of his vision to make Hong Kong an ideal home. Environmental awareness has been promoted in departments through the Green Manager scheme and by requiring Controlling Officers to prepare annually an environmental report. As environmental improvement is a clearly stated Government policy aim, we can develop purchasing programmes that support this aim. Accordingly, the Government Supplies Department (GSD) has formulated an environmental goal. This is:
"To be sensitive to the environmental impact of purchasing decisions and to take account of legitimate environmental concerns while continuing to achieve best value for money in the purchasing programme."
Purchase contracts arranged by GSD on behalf of Government departments and the Hospital Authority last year amounted to HK$6.8 billion. This is a relatively small figure when set against total Government and private consumption expenditure of HK$864 billion. Yet as a Government department, it is important that we are seen to take the lead in mitigating any adverse environmental impact of our purchases. If Government departments fail to demonstrate such awareness and concern, then the Government will be in no position to persuade industry and the general public to be responsive to environmental concerns. We have therefore developed an environmentally-responsible purchasing programme that demonstrates our commitment to minimising environmental damage in the course of our work. We are also promoting the concept of green purchasing through our website.
Waste reduction
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This programme forms part of a broader waste reduction programme. Waste disposal has become a critical issue in Hong Kong. Each day close to 50,000 tonnes of solid waste are deposited in the public filling areas or the three strategic landfills. This extent of waste disposal is unsustainable and, as there is limited scope for creating additional landfills or public filling areas, the emphasis must be on achieving greater waste reduction by moderating consumption and greater recycling.
The efforts being made by the Government and by key sectors of the local community to reduce waste are coordinated by the Waste Reduction Committee, which was established in February 1999. The Committee has established task forces to develop and promote waste reduction initiatives in areas which, because of the nature of their activities, are prone to generate considerable amounts of waste, including public and private housing, the hotel and construction sectors and the airport community. The Waste Reduction Task Force for the Government was set up in June 1999 to devise effective measures to reduce waste throughout the Government's internal operations. The Task Force set itself four main objectives for its first year's work :
(1) to reduce the consumption of environmentally-sensitive products within Government departments;
(2) to reduce the use of packaging materials and to avoid unnecessary packaging;
(3) to make greater use of recycled products and to make Government departments' own waste available for recycling; and
(4) to take environmental factors into account in the purchasing process.
As the central purchasing agent for Government departments and the Hospital Authority, GSD is well placed to put these objectives into practice in its own purchasing work and to encourage others to give them support.
Consumption
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Reducing consumption of environmentally-sensitive products is a key ingredient in any environmental protection or waste reduction programme. Minimising the use of paper is an important aspect of this programme and one where some success has been achieved. Consumption of photocopying paper by Government departments between January and September 2000 was 14% below the rate of consumption in the same period of the previous year. Some of this improvement should be attributed to the greater use of electronic data interchange. Much of the routine information that is distributed around Government departments, such as the daily summaries of press and media reports, are now distributed electronically rather than by facsimile. The Government Gazette is now published in electronic format, to reduce the number of printed copies that are required. It is now common practice for the agenda and papers for inter-departmental meetings to be distributed electronically, so that recipients only have to print the key reference material they need to have with them at the meeting. The Government Supplies Department's own electronic tendering system was launched in April 2000, reducing the amount of tender documentation that has to be distributed in paper format.
The greater use of electronic media has been supplemented by various "good housekeeping" practices which departments have been urged to follow. For example, we have been equipping departments with printers that use both sides of paper and, where only one side has been used, it is the normal rule that the other side must be used for subsequent work before the paper is scrapped. We also aim to reduce consumption by purchasing reusable and longer-lasting products, such as refillable ball-point pens and pencils and long-life alkaline batteries.
Conservation of energy is an important aspect of reduced consumption. We purchase products that have low electricity consumption, including refrigerators and fluorescent tubes with energy saving features. For products such as individual room air-conditioners or water pumps where electricity consumption may vary significantly between brands, we take account of the additional electricity costs when calculating the price of each offer. The Government is seeking to make use of more effective air conditioning and lighting systems that target the areas that need cooling and illumination. Moreover, the degree of cooling in government offices was reduced this summer as part of the energy saving measures.
Packaging
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A substantial contribution to waste reduction can be made by providing greater attention to packaging. While sufficient packaging to protect the goods from damage during transit or storage is a necessary requirement, some packaging may contribute little to protection or be made of environmentally sensitive materials when more suitable alternatives are available. An example of inappropriate packaging is GSD's former requirement that suppliers of bales of cloth should have them delivered in cardboard boxes. As the box end could not support the weight of the bale of cloth, the boxes were often broken at the time of delivery. We therefore dispensed with this unnecessary requirement. We now try to ensure that all packaging is functional and not superfluous. We have included in our tender specifications a special packaging requirement which obliges contractors to declare that they have avoided unnecessary packaging. There are also specific requirements on certain packaging materials, for example, cardboard boxes must be made from 100% recovered fibre. We also have a contract providing for the collection for reuse or recycling of surplus boxes and other packaging material.
Recycling
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We have promoted the use of recycled paper in government departments. The current contract for photocopying paper specifies that at least 50% should be from recycled fibre, while that for toilet paper specifies at least 98% recycled fibre. We have arranged for recycled paper to be used for the printing of government forms. Where there is considered to be a need for virgin paper, this must be drawn from renewable forests. We are promoting the use of remanufactured toner cartridges in government departments and are seeking to widen the models for which a remanufactured cartridge will be supplied. Retreaded tyres are being used on a wide range of government vehicles for a trial period, without compromising vehicle safety.
GSD has assisted departments in making waste products available for reuse or recycling. Recycling bins have been provided in Government offices. We have made contracts for collection of paper waste, used lubricants, used transformer oil, scrap metal, toner cartridges, used televisions and various other products for recycling purposes. We also have a contract for the recovery of silver from used x-ray and photographic film fixing solution.
Environmental factors in the purchasing process
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We take account of environmental factors in the purchasing process. Subject to necessary functional and quality performance considerations being met and at an economically rational price, we aim to avoid single-use disposable items and to purchase products with the following attributes :
(1) improved recyclability, high recycled content, reduced packaging and greater durability;
(2) greater energy efficiency;
(3) utilising clean technology and/or clean fuels;
(4) which result in reduced water consumption;
(5) which emit fewer irritating or toxic substances during installation or use; and
(6) which result in smaller production of toxic substances, or of less toxic substances, upon disposal.
We have already revised several tender specifications to remove features that may cause harm to the environment, as alternative environmentally-friendly products are available. This has included a move from mercury to alkaline batteries, use of phosphate free detergents and avoidance of trichloroethane in correction fluid. Earlier this year we made a contract to provide that all government diesel vehicles would be supplied with ultra low sulphur diesel. We have been keen to go further in making our tender specifications environmentally friendly but, as general purchasing managers, we are conscious of the limitations in our knowledge of environmentally damaging features and of the alternatives to them. We therefore recognised the need for expert advice.
In January 2000, the Environmental Protection Department commissioned the Hong Kong Productivity Council as consultant to devise environmentally-responsible specifications for those products that we purchase on a regular basis. The consultant has examined our existing specifications for these products and advised on the amendments that should be made to remove features that may be environmentally damaging or give rise to waste disposal problems and to encourage and support recycling and environmentally responsible manufacturing practices. This work has involved:
* identifying and undertaking product category grouping according to respective product functions, characteristics and environmental features;
* evaluating the green product specifications available and associated assessment or certification practices currently implemented in overseas countries;
* providing in-depth evaluation and justification for buying green products in lieu of their ordinary counterparts;
* investigating product availability in the local and international markets if green product specifications are to be imposed;
* recommending practical methods for verifying, assessing and testing the quality of products; and
* developing a marking scheme for tender evaluation.
A draft of the consultants' report has been discussed by the Waste Reduction Task Force for the Government and the final revised report is expected shortly.
Conclusion and the way ahead
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It may be fair to say that it is only in recent years that Hong Kong has awoken to the need to prevent further deterioration of the local environment. Yet there is now broad community support for stronger measures of environmental protection and the Chief Executive has given a clear lead, to which each department is responding through its own environmental programme. A move to environmentally-responsible purchasing will be an important part of the Government's strengthened environmental protection programme.
We have a long way to go before environmental considerations influence purchasing decisions as thoroughly as they do in Scandinavian countries and in other parts of the world where the government and the community at large have demonstrated strong commitment to environmental enhancement over many years. We shall continue with the existing measures and look for new opportunities to avoid unnecessary consumption of environmentally-sensitive items, to minimise packaging and to promote reuse and recycling. The consultants' report will provide a blueprint for a thorough revision of tender specifications to avoid using environmentally-sensitive products when acceptable alternatives exist. An important initiative for the future will be to make greater use of recognised environmental standards, such as the ecolabels, in our purchasing work. This year our purchasing and stores management activities were awarded ISO 9002 accreditation in recognition of the high quality standards that are maintained. Our next step will be to seek ISO 14001 accreditation in order to bring our processes up to an acceptable level of environmental awareness and commitment.
GSD is thus playing its part in the Government's strengthened commitment to environmental protection that will help to make Hong Kong a quality living environment.
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Note 1: Sadgrove, Kit, "Purchasing and the Environment" in Farmer and van Weele (eds.), Gower Handbook of Purchasing Management, (Second edition, Aldershort 1995), p. 227.
End/Tuesday, October 10, 2000
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