Special report on green procurement: How green are UK buyers willing to go?

Renewable energy: the burning issue
IT: energy-intensive technology
Company transport: green mobility
Video conferencing: the new face-to-face meeting
Green paper: going glossy
Energy efficient lighting: intelligent illumination
Furnishing sustainably
Green flooring
Greening cleaning
Green mobiles
Prospects for procurement

In 1993 Japanese printer manufacturer Kyocera used market research to examine the way large organisations regarded environmental concerns. This year it repeated the study to see if their attitudes had changed. The results were revealing.

Kyocera’s researchers surveyed 340 UK employees of organisations with over 1,000 staff. Of these, just 41% said their employer had a clear policy on maintaining an environmentally conscious office, down from 54% in 1993.

So while climate change is becoming a mainstream issue it seems company purchasing decisions are trailing far behind.

One-fifth of those surveyed said they scrutinised suppliers for environmental credentials and one-third said they would pay extra for environmentally sound products and services. But in 1993 this figure was 60%.

Kyocera believes this lack of interest in green purchasing has more to do with the subject’s complexity than apathy. Fifteen years ago, companies were obliged to do little more than recycle printing paper. Today they need to factor in the disposal of cartridges and printers, energy used in print processes and whether the paper they buy has been recycled or comes from a sustainable source.

Buyers often lack sufficient training or experience, with many sending lengthy questionnaires to suppliers who complain that questions on environmental impact are irrelevant and time-consuming.

There are exceptions. Companies like Legal & General run workshops for their buyers on corporate responsibility and climate change to encourage them to “think green”. And difficult decisions such as whether to pay a premium for a greener product go to an environmental committee.

But perhaps the greatest barrier to greater take-up of low carbon products is commercial pressure.

Office furniture supplier Bisley conducted a similar survey to Kyocera’s this year to determine how highly sustainability ranked in its clients’ choice of products.

Although awareness of green issues featured prominently and was routinely included in specifying products, when it came to buying it scored low. The price, it seemed, matters more.

Some green products have been adopted more quickly than others. Take-up has been slow for longer term investments like low-energy information technology equipment and recycled office furniture. Products such as green energy, meanwhile, have leapt ahead.

This appears the direct result of increasing numbers of large companies wanting to go carbon neutral. Whatever their reasons, the supply market for a range of “in demand” green products is whirring into action.

Renewable energy: the burning issue

Burning fossil fuels to generate electricity is the largest single factor causing climate change in the UK so it is encouraging to see businesses making a large-scale effort to switch to renewable energy sources.

In 2006 Royal Bank of Scotland reduced by 210,000 tonnes of CO₂ the group's carbon footprint in the UK and Ireland through buying over 70 per cent of its electricity from renewable sources. From October 2007 this will rise to 100%.

BT recently extended its green energy contract with N-power and British Gas Business to provide 1 terawatt hour (TWh) of renewable energy and 1.2 TWh of accredited combined heat and power (CHP) each year.

The annual saving in carbon emissions should be on a par with that generated from the electricity consumption of more than 300,000 households.

About 30% of the energy bought by O₂ comes from renewable sources, When its contracts come up for review in 2008, it plans to raise this to 100%.

Companies including the Co-operative Bank, Fresh & Wild, Ben & Jerry's and the Guardian have all switched to green energy supplier Ecotricity.

But renewable energy suppliers are struggling to keep up with demand from large organisations. This year Vodafone was unable to renew a contract with British Gas that would have maintained its supply from 100% renewable sources. Until October 2008, just 20 per cent of its energy will come from renewable sources.

Simon Mendham, Vodafone’s energy manager, said there was no decline in the current premium for renewable energy. Vodafone, he said, was now paying 5-10% more for renewable energy compared with its first contract, set up in 2005.

Hugo House, marketing manager for renewable electricity supplier Good Energy, noted it takes time to bring on line new forms of renewable generation. The planning process for wind farms is lengthy and growing global demand for the turbines was leaving them in short supply.

Good Energy, he said, would like to see more businesses generating their own renewable energy. “Changing the energy infrastructure to one where electricity is generated where it is needed, using clean technology, is the best way forward,” said House.

He said just one major investment could reduce the energy costs of a business and give it a new and saleable product – electricity.

However, compared with countries like Germany, the current payment for selling electricity back to the UK grid is low. Use of ‘feed-in tariffs’, as adopted by the German government, subsidises power produced renewables by buying it at a premium price.

Over the next three years RBS will invest £55 million on tests for renewable energy systems including photovoltaic panels, solar thermal systems and wind turbines. At this stage, however, it is unsure what percentage of its total energy use the systems will generate.

HSBC expects solar panels and wind turbines it has fitted to two of its UK buildings to generate about 30,000 kWh per year, potentially saving more than 500 tonnes of CO₂ over the buildings’ useful life.

Panels at its Bricket Wood site cover over 200 m² and in the first year generated over 20,000 kWh of electricity, reducing its carbon footprint by 7.5 tonnes. Once it has accumulated data covering a full year in operation, HSBC expects to be able to determine what percentage of its total energy use the systems will meet.

High street store Marks and Spencer, meanwhile, is looking into 'anaerobic digestion' or using waste from its stores and farms to generate energy.

But Mendham thinks there is less of an argument for local generation in the UK. Wind turbines and solar panels are used to generate electricity at power stations in Egypt and Greece. But with a lack of government subsidy, an unreliable climate and payback periods stretching from 10 to 20 years, the decision in the UK is harder.

IT: energy-intensive technology

Up to a quarter of the energy consumed in a typical office is used to power IT equipment. Of this, almost half is energy wasted by computers, with a further third wasted by servers.

Despite this, companies are still proving slow to switch to more energy efficient equipment. Few of the companies interviewed for this article were able to detail their energy efficiency requirements for IT purchases. Very few realised their suppliers could offer these products.

But some companies are starting to make headway. Under Legal & General’s “green” IT equipment project it will shortly send out a questionnaire to its IT suppliers asking if their products meet the US Energy Star certification for energy efficiency.

The survey will also ask about the internal power efficiency of products, their power consumption, noise emissions, and whether they are made using recycled or bio-based plastic materials. With a clearer picture of the market, Legal & General can then set targets.

Another encouraging move was the June launch of the Climate Savers computing initiative, which aims to improve the efficiency of computers and their components by 90% and commits its members to supplying products that meet or exceed the Energy Star guidelines. Initial signatories included Dell, Google, Hewlett Packard and IBM.

On the demand side, businesses signing up to the initiative pledge to buy highly efficient computer and volume server systems and to use power management tools on desktop computers.

If the targets are met, the initiative should cut annual greenhouse gas emissions by 54 million tonnes, saving more than $5.5 billion in energy costs.

In 2002, office equipment supplier Brother became the first company worldwide to achieve TCO’99 certification for a laser printer, given to its HL-7050/7050N model. It is now permitted use of the environmental label on 47 products.

With the exception of thermal printing faxes, all Brother’s printers, faxes and “multi-function centres” meet the international Energy Star standard.

HP was a founding partner of the Energy Star label, launched in 1992. In March 2007 HP introduced the first business PCs to meet Energy Star 4.0’s hardware standards. At 80 per cent efficiency, the new computers are 33 per cent more efficient than their predecessors.

Thousands of printers, PCs, notebooks, and monitors produced by HP are approved by eco-labels worldwide, including the US Environmental Protection Agency’s electronic products environmental assessment tool (EPEAT) and Energy Star, Canada’s Environmental Choice, Germany’s Blue Angel, the Chinese CECP energy, and the Scandinavian IT eco-declaration.

HP is quick to note that its products with eco-labels are no more expensive than those without.

Company transport: green mobility

The number of businesses enforcing a ‘diesel-only’ policy for their vehicles fleets almost doubled between 2003 and 2006 to 31%, according to research by fleet management company Arval.

For many companies, however, this move to greater fuel efficiency was spurred by rising fuel prices rather than concern over emissions. They have proved much slower to adopt other more environmentally beneficial options such as liquid petroleum gas, bio-diesel, bio-ethanol and electric hybrid vehicles.

An Energy Saving Trust survey of 231 companies this year found only four out of ten companies offering the option of a company car with lower emissions.

More surprisingly, fewer than half of the companies with a corporate social responsibility policy considered the impact of vehicles as part of their policy. Of firms that did allow greener vehicles, only 27 per cent offered incentives to encourage take-up of this option.

A more heartening statistic was that larger companies, which due to the size of their fleets have a proportionately greater environmental impact, were more likely to offer a green option.

More than two-thirds gave employees the choice of using a low emission vehicle, compared with just a quarter of firms with fewer than ten employees.

Under PricewaterhouseCoopers’ Green Fleet initiative, employees can choose from a range of low emission (under 120 gr/kg CO₂) hybrid or bi-fuel vehicles. Advice on the vehicles and on cleaner fuels is available on the company’s intranet.

Staff can also opt to join its Go Carbon Neutral programme to make their car travel “neutral” by planting sufficient trees to absorb the CO₂ emissions generated by their vehicle. So far, 16 per cent of employees have opted to voluntarily offset their emissions through monthly deductions from their pay. Now in its third year, the scheme has seen 1,500 trees planted, offsetting 1,161 tonnes of carbon.

Legal & General employees are encouraged to choose a low emission company car such as dual fuel. Coach services are offered as an alternative to car use, interest-free loans are available to buy rail season tickets and there are showers for cyclists.

Despite the perks, it knows some staff will carry on driving. As the Energy Saving Trust points out, cars are motivational status symbols. Taking away this employee benefit could therefore risk staff retention and recruitment.

Video conferencing: the new face-to-face meeting

Video conferencing has been around since the 1990s and was hailed by many as the answer to needless business travel. But despite its promise, the technology has been slow to catch on.

Legal & General installed sophisticated equipment in its Kingswood offices but found many staff still preferred face-to-face meetings, which the company sees as crucial to building trust and relationships.

Video conferencing technology also needs fine-tuning. Common complaints include jerky pictures, time delays and crashes and finding reliable suppliers can be a struggle.

But some companies say the technology is due for a reappraisal. In the last five years RBS has invested over £25 million in technologies such as video-conferencing, audio-conferencing and remote computer access.

PwC has installed or upgraded facilities in all of its major offices and claims it last year cut travel by 1.77 million kms through use instead of telesuite facilities, an emissions saving equivalent to 300 tonnes of CO₂.

As carbon offset consultancy CarbonNeutral points out, “new generation” services are likely to improve take-up, with new products including HP’s Halo and Cisco’s TelePresence.

Sales staff at software supplier Gael Quality cut their road travel by seven days each month using the online collaboration services of web conferencing technology firm WebEx. The service has meant staff can now hold up to five “virtual” meetings in one day, compared with two before. And they can stage global, online sales events for up to 90 people.

WebEx disputes the view that staff always want to meet face-to-face. Of 2,240 adults surveyed for its research this year, it said one-third felt face-to-face business meetings were both unnecessary and counter-productive. What was less clear, however, was whether they wanted to do away with the meetings altogether or use video conferencing.

Green paper: going glossy

For many companies, “greening” the office begins with paper use. Switching to recycled or sustainably-sourced paper is the most obvious change and it can lead to considerable savings, reducing both waste directed to landfill and carbon emissions.

Waste & Resources Action Programme (WRAP) estimates the average greenhouse gas savings from using recycled paper instead of it going to landfill at 1.4 tonnes of CO₂ for every tonne of paper and cardboard.

Data was taken from 112 companies, including BT, Carillion, Ernst and Young, KPMG, Sainsburys, Tate & Lyle and all London’s boroughs, for the 2005/06 purchase report of the mayor of London’s green procurement code and London Remade, an agency promoting sustainable waste management in the capital.

Between them, over the course of a year the organisations bought 23,000 tonnes of recycled paper and board, saving 53,000 m³ of landfill space, 690,000,000 litres of water, 621,000 kgs of air pollutants and 32,000 tonnes of CO₂.

At BT, 96% of copier and general office paper is produced using a minimum of 70% recycled material, a dramatic rise from 2% in 2003.

Meanwhile a switch to recycled paper by Marks and Spencer, which uses some 175 million sheets of A4 at its stores and head offices, saw it secure a cheaper rate than it had been paying for standard copier paper. The company opted not to name its supplier.

Legal & General moved to 100% recycled copier paper in 2004 and in 2006 began using 55% recycled content for its marketing material.

The 18 month delay may sound a long time, but Legal & General said it took this long to see an increase in demand for paper suitable for marketing material from other companies and with it came a reduced price.

Prices for recycled coated and copier paper may have dropped but paper suppliers are still struggling to come up with a lower cost uncoated paper suitable for digital printing.

Legal & General uses 640 tonnes every year of this type of paper for application forms and letterheads and is keen to make the switch. But it would not be able to justify the move without an improvement in supplies and competition.

Jay Risbridger, managing director of the Green Stationery Company, has been selling recycled stationery for 16 years. Historically its customers have been ethical businesses and dedicated individuals seeking green alternatives.

But the last two years have seen all types of business approach the company and their interest, he suggests, is more than fleeting. Risbridger said businesses understand the issues and are interested in hearing how they can justify the increased upfront cost of greener products.

The cost is less of an issue for larger businesses which can negotiate better prices by bulk-buying. Medium-size organisations are more likely to struggle.

As Risbridger notes, green products are not always inherently more expensive but they do have to compete with products that are sold in massive quantities.

His advice to buyers unable to achieve lower prices through volume purchases of items like paper or envelopes is to consider buying more specialised products like recycled letterhead paper or recycled printer cartridges. In some cases, he says, these can be cheaper than the mainstream product.

Risbridger also warns that a drop in price can mean a drop in quality. If buyers want a sustainable solution they should think beyond the upfront cost of a stapler, pen, folder or IT accessory. Paying slightly more, he says, may get them a product that will last longer.

Buyers should also consider a product’s full life cycle. Stationery supplier British Loose Leaf not only uses recycled content for its ring binders and lever arch files, it takes back for recycling everything it sells once it is no longer needed.

Energy efficient lighting: intelligent illumination

David Madams, Commercial Lamps managing director, says demand from businesses for energy-efficient and longer-life lighting has grown exponentially in the last year. But he points out the primary motive has been cost-cutting.

On the whole, he adds, office lighting is fairly energy efficient because fluorescent lights – a common fixture – can be as much as five times more efficient than incandescent lights.

Commercial Lamps sells to universities, national retail chains, hotels, police forces and local authorities and low energy bulbs make up 60% of sales.

Companies can make further savings by installing technology such as occupancy sensors that automatically switch off lights when rooms are not in use.

Many newly built offices come with this sort of technology as standard but other companies are retro-fitting motion sensors. Vodafone has cut the hours its sites are lit up and has installed automated systems and motion sensors in toilets as well as offices.

RBS uses a digital addressable lighting interface (DALI) system – an intelligent lighting control that responds sensitively to changes in ambient light and occupancy.

Furnishing sustainably

Last year, furniture supplier Bisley detected an environmental note creeping in to its clients’ buying patterns. “Our customers seemed to be saying, ‘Don’t just give us a cabinet, give us corporate responsibility’,” said Gary Carr, Bisley’s marketing manager.

But their new interest was not always backed up by knowledge nor was there a clear understanding of the issues involved.

Questionnaires sent in by clients to Bisley, which supplies steel filing cabinets, asked about compliance with the Waste Electrical and Electronic Equipment (WEEE) Directive, designed to minimise the environmental impact of electrical equipment once it becomes waste.

Clients wanted evidence too that products were certified by the Forest Stewardship Council – a guarantee that wood has been sourced sustainably and ethically.

But Bisley sells neither electrical nor wooden products. The company’s main environmental impact is the carbon emissions produced manufacturing and transporting its steel cabinets.

So the company saw an opportunity to help buyers make better informed purchasing decisions. Together with the Office Furniture and Filing Manufacturers Association (Offma), the trade association for UK-made office furniture, it set out to calculate greenhouse gas emissions product-by-product using figures and emission standards from the Department for Environment, Food and Rural Affairs (Defra) and the World Business Council on Sustainable Development.

Bisley’s figures on the emissions generated making and moving its products lets buyers compare the environmental impact of buying a UK-produced cabinet with that of transporting by ship a large, heavy filing cabinet bought abroad.

An even more environmentally-friendly alternative is to use furniture from a more sustainable product such as FSC-certified wood. Better still, and cheaper, are recycled products.

The number of UK companies now buying recycled furniture is tiny, according to John Ross, managing director of recycled furniture supplier and consultancy Ogilvie Ross. Most, he says, believe the products are sub-standard.

Ogilvie Ross relieves businesses of their unwanted wooden furniture, inspects and cleans it and where necessary refurbishes or remanufactures the product, then sells it on.

A high quality product that might normally cost £300 brand new comes with a £50 price tag and a 10-year warranty, says Ross.

Currently Ogilvie Ross works with small- to medium-size organisations such as Scotland’s local authorities, but Ross sees no reason why its operation couldn’t be scaled to suit large corporations.

Ross envisages a national network built on the reach of the community-based organisations now picking up unwanted furniture. After refurbishment at Ogilvie Ross warehouses, the same community organisations could sell the furniture or Ogilvie Ross could stockpile it for sale to larger companies.

The company is currently engaged on a project for an office that will take 900 people and calculates it will take from 12 to 18 months to accumulate enough timber furniture for its plans.

“The client saves a pot of money, the community sector has guaranteed work, and they divert hundreds of tonnes out of landfill,” says Ross.

Green flooring

London Remade’s 2005/06 purchasing report details the first reports from London organisations buying recycled carpet and rubber flooring. Combined, the 112 companies that took part in the report bought more than 19,000 m² of recycled carpet.

US-based company InterfaceFLOR began production of its ‘Cool Carpet’ in 1973 to help businesses take a more sustainable approach to floor covering. Since its European launch in 2005, Interface has sold over 2 million m² of Cool Carpet to companies in the UK and elsewhere in Europe.

Though its product is not recycled, Interface claims Cool Carpet is “climate neutral” as it calculates and offsets any greenhouse gases emitted at all stages of the carpet’s life – from buying the raw materials, manufacture, transport, active use and maintenance through to disposal. Over 50,000 tonnes of carbon has been offset through offset specialists Climate Care.

Greening cleaning

London-based Via3 Office offers an eco-friendly and ethical contract cleaning service to businesses. Its cleaners use non-toxic chemical products and are promised a living wage and opportunities for career development.

Green mobiles

Green Mobile is an environmentally-friendly mobile and landline phone service run in partnership with the Woodland Trust and Friends of the Earth.

The tariff plants five trees and donates £25 for each new mobile connection to the green charities. They also get a 6 per cent cut of all ongoing mobile and landline bills.

To discourage the environmentally hazardous and “frivolous disposal” of mobile phones, the company also gives £50 cash back to customers who keep their old handsets. Customers can also choose to buy a refurbished phone.

Prospects for procurement

The evidence that businesses are going green when buying office products remains mixed. For some it appears limited to looking for ways to recycle paper.

Even those that claim to be making strides seem to be heavily focused on paper consumption and renewable energy, despite the high level of carbon emissions generated by inefficient IT equipment.

In part their hesitancy can be attibuted to cost and green products certainly still carry a premium. But as demand and volume rises, prices are falling, as demonstrated by the recycled paper market.

Few companies interviewed for this article were prepared to name their green suppliers. It is arguable that being more open about their chosen suppliers could drive up demand and further reduce prices.

By working together businesses might play a greater role in spurring the growth of a still small but growing market. But right now, traditional attitudes to revealing information, particularly with regard to supply chains, appear to be prevailing.