Environmental Purchasing Guide

Department of the Environment and Heritage, 2003
ISBN 0642 54955 9

Rationale and Benefits of Environmental Purchasing

The Australian Government is the largest purchaser of goods and services in Australia, spending more than $16 billion a year. It can use its purchasing power to achieve substantial environmental benefits and at the same time reduce its costs. Environmental purchasing can achieve a number of benefits:

reduce energy and water consumption (which can reduce costs)
improve resource use efficiency
reduce waste (which can reduce waste disposal costs)
reduce environmental health impacts of products and services
reduce pollution
provide markets for new environmentally preferable products
"close the loop" on recycling, improving the viability of recycling
provide leadership to the community
encourage industry to adopt cleaner technologies and produce products with lower environmental impacts

Reducing environmental health impacts and pollution can reduce costs to the Australian community of addressing these effects. In addition, by creating markets for new products, environmental purchasing can contribute to the establishment of new local businesses and jobs.

Public procurement can improve markets and assist the diffusion of innovations. One relevant example is the role US Federal Government purchasing played in improving the energy efficiency of computers.

Computers are more energy efficient than ever before because government purchasers are buying Energy-Star compliant computers. Some computer manufacturers were reluctant initially to design energy-efficient machines because they did not believe a market existed for them. The [US] Federal Government's $5 billion in annual purchases, however, represents approximately seven percent of the world market. Once the Government expressed its preference for energy-efficient computers, manufacturers began producing them. The computers are now available to any consumer at no additional cost.¹

Many environmental purchasing decisions can be win-win outcomes for the organisation, providing multiple environmental benefits and cost savings.

In 2002, BP Australia, as part of its Green Office Program in the Guildford Office (Sydney) replaced disposable polystyrene cups with ceramic mugs. It was a simple but very tangible example of how an environmental initiative can deliver real business value. It resulted in:

* 156,000 fewer polystyrene cups to landfill per year;
* direct financial savings of $4,680 annually (one-off purchase of ceramic mugs cost $1,580);
* approximately 10% less waste (cups plus the cardboard and plastic packaging);
* improved staff satisfaction and morale, motivation towards Program; and
*improved customer image.

It's cheaper to buy everyone a brand new mug year-on-year than disposable cups!!" Rosemary Warnock, Business Unit Leader, BP Lubricants, 2002

Examples of benefits from environmental purchasing in the USA include the following.

In 2001, King County, WA spent $3.8 million on goods and services it considered environmentally preferable and saved $580,000 in the process.
Cape May County, NJ, switched to an integrated pest management approach which saved $45,000 over five years, while doing its part to reduce the 4.5 billion pounds of chemicals used each year in the United States to control insects, rodents and weeds.
In 2001, Massachusetts spent $86 million on recycled-content and environmentally preferable products. The State's sustainable design initiative is saving $17 million annually in operation, maintenance and utility costs.²

Environmental considerations can easily be integrated with other purchasing requirements, such as safety, price and performance when selecting products.

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