Sustainable Procurement Workshop Barbara Morton Mobile: London Borough of Richmond-upon-Thames 23 October 2008

Outline Welcome and introductions What is sustainable procurement Why do it? –Who is interested and why? –Benefits How to do it? –Task Force ‘building blocks’ Next steps

Sustainable Development Strategy 2005 ‘Securing the Future’ Shared vision, principles, priorities Long term interest in sustainable development UK to be recognised as amongst the leaders across EU Member States by 2009 UK Framework and Government Sustainable Development Strategy

The challenge - to purchasers Launched 12 June 2006 Covers whole of public sector: Central, local government, health and social care £150 billion per annum

What is Sustainable Procurement? What does is mean for you?

What is Sustainable Procurement? Best Value Value for Money Efficient use of resources Getting more from less Environmental ‘Green’ Social…. Sustainable procurement is good procurement

Definition “Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment”. Footnote: Sustainable Procurement should consider the environmental, social and economic consequences of: Design; non-renewable material use; manufacture and production methods; logistics; service delivery; use; operation; maintenance; reuse; recycling options; disposal; and suppliers' capabilities to address these consequences throughout the supply chain.” Procuring the Future June 2006

What is Sustainable Procurement?

Who is interested and why? Who is showing interest in sustainable procurement? ….and why?

Who is interested and why? Bursars? Headteachers? Governors? Parents? Students? Teachers? DCSF? Ofsted? Local community? Suppliers and contractors? Building Schools for the Future?

UK Sustainable Procurement Action Plan Launched March 2007 Clear priorities: Climate change mitigation Carbon neutral by 2012 Natural resource protection Biodiversity Illegal logging and sustainable timber Consult on need for ‘centre of sustainable procurement excellence’ Health sector and local government strategies too Scotland, Wales and Northern Ireland also active

Focus on Sustainable Operations on the Government Estate targets: Carbon dioxide emissions from offices Carbon dioxide emissions from road travel Water consumption Waste arisings Recycling Centre of Expertise in Sustainable Procurement Office of Government Commerce leads on procurement policy across government Government Delivery Plan published August 2008

Responses from UK public sector Local government Health and social care sector Policy priorities, including: –Sustainable community strategies –Promoting health and well-being –Local economic regeneration –Promoting environmental technologies

UK Local Government Sustainable Procurement Strategy Covers local government, municipalities Covers spending of over £40 billion per year Launched November 2007

Costing the Future: Securing Value for Money through Sustainable Procurement Inquiry into sustainability in public procurement Focus on public sector buildings Published June 2008 Conference held on 14 October 2008

Mayor’s Green Procurement Code Since launch in 2001, members have: –Spent £379 million on green products –Diverted 1.3 million tonnes of waste from landfill –In 2006, purchase of green products resulted in 175,000 tonnes of carbon dioxide savings (equivalent of yearly emissions of over 29,000 households) –244 suppliers in 2006 (125 in 2005)

Mayor’s Green Procurement Code Sustainable Product Directory Searchable: –Recycled Products / Sustainable products Sustainable Services –Office recycling: White paper, mixed paper, cardboard, plastic bottles, CDs/DVDs, aluminium and steel cans, printer cartridges

Benefits of Sustainable Procurement Saving money by consuming less: –Energy –Water –Materials Reducing waste Making better use of (limited) resources Sustainable design promotes environmental technologies –Kingsmead School

Sustainable Communities BedZed Sustainable Housing

Benefits of Sustainable Procurement (2) Promoting health through: –Food and drink –Cycling / green transport

Benefits of Sustainable Procurement (3) Educational benefits –Raise awareness of environmental and social agenda, locally and globally –Promoting inclusion Setting an example to local community See London Schools Environment Awards

Benefits of Sustainable Procurement (4) Stimulating local economy Diverse supply chains: –small businesses given a chance to compete LM3 tool (New Economics Foundation) –Money circulates in local economy = average 76% of local contractors’ spend –Estimated that if local authority shifted 10% of spend to local suppliers, extra £34M for local economy would be generated –see ‘Procuring the Future’ p64

Eight Doorways to Sustainability Purchasing and Waste Food and Drink Energy and Water Travel and Traffic Buildings and School Grounds Inclusion and Participation Local Well-being Global Perspective

Sustainable Schools Framework Umbrella approach Curriculum, Campus, Community Links to: –Eco-schools –Healthy schools –School Travel Plans –BREEAM –School Governor (for sustainability)

Delivering sustainability through procurement 2 Building Blocks of SPTF Flexible Framework Prioritisation Methodology –Risk-based –Helps focus resources Integrating sustainability throughout the procurement process

Flexible Framework Time Ambition Foundation Embed Practice Enhance Lead

Flexible Framework People Policy, strategy and communications Procurement process Engaging suppliers Measurement and results

Prioritisation Methodology Developed by Working Group 2 of Sustainable Procurement Task Force Structured approach to assessment of spend –Risk –Scope –Influence Standard approach across the public sector Focuses resources in areas with the greatest potential to improve sustainability Deliver improvements in priority areas ready for UK to be amongst the leaders by 2009

Risk based approach Expenditure Environmental impact Socio-economic impact Existing activity Scope to do more Influence on the market Reputational risk

Risk - Environmental impact Themes Emissions to air and water, waste to landfill Resource use Environmental quality Sub-Themes CO2 and methane emissions Other air emissions Emissions to water Waste to landfill Hazardous substances Materials Energy Other natural resources Water Biodiversity Local environment

Risk – Socio-economic impact Themes Health Education and Employment Communities and other social Sub-Themes Health Education Employment Community Developing world supply chains Diversity Other Socio-economic impacts

UK Public Sector Priorities

Priority areas Construction Health and Social Work Food Uniforms, clothing and other textiles Waste Pulp, paper and printing Energy Consumables – office machinery and computers Furniture Transport

Summary Now you have for each spend area a total: –Amount of spend £ –Risk scoreout of 24 –Scope to do more scoreout of 18 –Influence scoreout of 8 Use these values/scores to determine overall priorities and plot approach matrices

Prioritise Action - Risk and Spend Risk Spend >0.5% Secure Cost DrivenAcquisition Critical

PRIORITISE ACTION

Taking action Addressing the major issues Supported by a (sustainable) procurement policy and action plan Examples Key elements

The Procurement Process Specification Supplier qualification and appraisal Identification of need Contract management and review Tendering and tender evaluation Accounting: whole life costing Barbara Morton CIPS/IEMA/NHS PASA 2002

A proverb “If you always do what you’ve always done, you’ll always get what you always got” –i.e.challenge and question repeat purchases

Who defines need and who buys? Who defines the need / requirement? Who specifies? Who buys? Link to (sustainable) procurement policy and action plans

The waste hierarchy Re-use Recycle/compost Waste prevention Energy recovery Disposal

The procurement hierarchy Replace Reduce Return Reuse Recycle End-of-life management Re-think!

Defining the need “The main possibilities for ‘green purchasing’ are to be found at the start of a public purchase process, namely when making the decision on the subject matter of a contract.” (EU Interpretative Communication, 2001) the need of the procurement should always be framed within the parameters set by the organisation’s policies ask: –what is the procurement aiming to achieve? –do we really need the purchase? –do we need it to this specification? –what happens to the product at end-of-life? –how does this procurement impact upon our (environmental) objectives and policies ?

Defining the need purchase a coffee machine or a hot drinks service? purchase a new carpet or lease a floor-covering? purchase new fax machines or software to enable faxes to be sent and received from desktop computers? purchase photocopiers or a reprographics service? contracts for waste collection or waste management? Must involve budget-holders

The Procurement Process Specification Supplier qualification and appraisal Identification of need Contract management and review Tendering and tender evaluation Accounting: whole life costing Financial evaluation Financial review

Specification Focus on functionality to be delivered Specifying more ‘sustainable’ alternatives Government - sustainable timber Recycled content products –Mayor’s Green Procurement Code FairTrade? Organic?

ECO-labels

Quick Wins 54 Environmental Minimum Product Standards and ‘Best Practice’ Computers, printers, scanners, photocopiers Paper, envelopes Cars Boilers Fridges, Freezers, Televisions Light bulbs Textiles Detergents

The Procurement Process Specification Supplier qualification and appraisal Identification of need Contract management and review Tendering and tender evaluation Accounting: whole life costing

Suppliers How to choose a more (environmentally and socially) responsible supplier? What can you ask? What should you ask suppliers? Use of questionnaires Encouraging improvement

The Procurement Process Specification Supplier qualification and appraisal Identification of need Contract management and review Tendering and tender evaluation Accounting: whole life costing

Evaluating bids Direct link to specification Looking for the bid that offers ‘real’ value Important to know what good looks like Criteria established at early stage of process (budget-holders again)

Evaluating bids Questions: Capital versus revenue issues? Invest to save? Encourage the market to develop more sustainable products and services –Take back packaging and ‘waste’ –Closed loop business models

The Procurement Process Specification Supplier qualification and appraisal Identification of need Contract management and review Tendering and tender evaluation Accounting: whole life costing

Contract management and review Who is responsible? What can be achieved over lifetime of contract? Baselines Key performance indicators Measure improvement Drive innovation

Next Steps Identify priority spend areas Baseline – to measure success Aim to incorporate sustainability requirements as early as possible Influence demand – through others Promote innovation – work with markets Demonstrate success!

Useful material Mayor’s Green Procurement Code: Sustainable Product Directory Procuring the Future June 2006 UK Sustainable Procurement Action Plan March 2007 Local Government Sustainable Procurement Strategy November 2007 OGC publications: –Buy green and make a difference – environmental issues in public procurement –Buy and make a difference – social issues in public procurement CIPS/IEMA/NHS PASA Environmental Issues in Purchasing

Sustainable Procurement Workshop Thank you for your attention Barbara Morton Tel: