So procurement is all about savings?
Absolutely not! The function we play drives cost effectiveness, innovation, ethical transparency, and legal protection (among many other critical purposes). But arguably, the most important aspect is the impact on the environment.
We know that procurement needs to understand and build sourcing practices which fit the corporate strategy, but I’d argue that we can go much further by introducing new innovative solutions, cultivating potential suppliers, and influencing policy and processes.
A key case in point is the procurement of electricity, heating oil, and gas used in our buildings. Traditionally, in de-regulated markets, these are sourced as “commodities”. In regulated markets, the supply is often treated as a monopoly and bucketed in the “out of procurement scope” category.
But by side-lining these categories, we miss the opportunity to make a major impact on the environment.
How do some companies deal with environmental issues?
The weakest I’ve seen is when the sustainability teams focuses on recyclable cups in the canteen and toilet paper from recycled sources. While well-meaning, these initiatives have almost no impact on the environmental footprint…. Especially when at the same time, the organisation is more than happy to fly people via business class around the globe on a regular basis.
We then move on to the easy solution of buying carbon credits… If we can’t reduce our usage, we’ll pay to plant trees in a carbon capture scheme. A little like paying someone to take away your rubbish, this really should be a last resort.
As you step up the ladder of environmental concern, organizations might invest in LED lighting and more efficient boilers. This starts to reduce consumption, but still misses the point that the energy put into the system can still be produced using non-renewable sources.
So procurement, buys electricity from green tariffs – Energy tariffs where a percentage of the energy produced is from wind, solar, nuclear or water. Even so, there is often, still a proportion of brown energy and, although more cost competitive than 100% carbon zero tariff, I believe our aspiration should be more than a warm and fuzzy feeling of “better than nothing”.
Where should procurement be aspiring?
The UK Green Building Council has published a framework, aligned with the WorldGBC Net Zero Carbon Buildings Commitment, which was launched at the Global Climate Action Summit in September 2018.
It deals with issue of energy within buildings and many of the same approaches can be used to drive the sourcing policy.
AND IMPORTANTLY IT CAN BE CHEAPER THAN NON-GREEN TECHNIQUES
The framework sets out a holistic approach to building design that aims for Zero Net Carbon. That means – through the whole life of the building, (construction, occupation and re-use), that the building generates as much energy as it consumes.
At the most basic level, the design of a building plays a major part in the total lifecycle cost and emissions. This includes the materials used in the building fabric, the insulation, intelligent building management systems, solar panel, the type of glazing and even the right paint. Procurement involvement and application of TCO (total lifecycle) models during the specification can be critical in creating a building that is inherently green.
Then during occupation, procurement should be driving provision of equipment that minimises the energy usage by increasing efficiency and reducing waste. Ideally, this should be tackled at installation, because retro-fitting is often much more expensive, but equally procurement should be aware of the need for green guidance during re-fits and equipment re-tenders.
Finally, we come to the provision the energy itself. Here, the concept of additionality is important. For a building to be truly net-zero, you need to be able to prove that the energy consumed is coming from additional capacity that is being added to the network. That means investment in self-generation (like onsite solar or wind turbines)… or alternatively, that the agreement with a supplier is resulting in them adding new capacity.
For this to be credible, the energy supplier should only be providing green energy and be able to prove that the energy provided is directly from renewable sources. PPA’s (Power Purchasing Agreements) and sourcing directly from the generators can ensure that your organisation is actively driving the expansion of the renewable sector.
And… as a last resort, any left-over energy requirement can (for the moment) be offset. Realistically, this should be capped and a transition plan developed, as offsets are likely to be phased out as a green-energy alternative and the ability to state that your buildings are truly Zero Carbon.
The role that procurement can play at all stages can help ensure that environmental procurement is embedded and forms a key element of both the building’s and facilities’ management activity.
Through early intervention, we can help achieve truly Zero Carbon buildings and ideally Carbon Negative buildings for our staff, customers and the environment in general.