Governments and corporations are seeking environmentally friendly suppliers—and that can mean big profits for companies that go green.
By Julie Moline

Kermit the Frog may have lamented that it’s not easy being green, but suppliers of environmentally responsible products and services are finding that there has never been a better time to be green.

Companies large and small, colleges and universities, nonprofits and NGOs, along with government agencies, from the federal government to the pokiest of local municipalities, are making concerted efforts to adopt procurement strategies that give preference to environmentally sound products and practices. The interest in all things green is sweeping, from the bulbs in light fixtures and the paper in copiers to the vehicles in fleets and the computers on every employee's desk. These organizations’ objectives are far-reaching, too, beginning with a desire to be responsible stewards of the planet and including the need to save financial and other kinds of resources—time, natural, human. At some organizations there’s even a willingness to rise above the lowest-price at- all-cost mentality, allowing buyers to purchase certain green products even if they’re more expensive than conventional ones.

Buyers have become so sophisticated in their green procurement efforts, in fact, that they’re considering the environmental track record of every company in their supply chain when they choose vendors. That means there’s a focus not just on whether a supplier offers a green product, but also on whether it exhibits green best practices in manufacturing and distributing that green product.

The Private Sector
Corporations are looking at ways to green up their consumers, too. General Electric, BP and DuPont all have programs that seek to reduce their and their customers’ environmental impacts. Wal-Mart has stepped up as an unlikely leader, using its ubiquity and purchasing power to educate and enlighten customers on the benefits of energy-efficient and nontoxic products. That initiative, called Sustainability 360, began last year, and also included a summit bringing together suppliers to figure out ways to move away from using nonrenewable energy in manufacturing the goods that Wal-Mart sells. One quick result of the summit was an agreement by manufacturers of laundry detergent to produce more concentrated formulations. That offers a triple benefit: It reduces packaging, lowers the cost of shipping, and produces fewer emissions during transportation.

Philips Electronics has also been a leader in encouraging its suppliers to better their environmental track records as it works to boost its own energy efficiency, water conservation and responsible manufacturing. (It is seeking to reduce or eliminate hazardous substances such as lead and mercury used in the manufacturing process). For two years in a row, Philips was ranked the top-performing company in its sector (cyclical goods & services) by the Dow Jones Sustainability Indexes. “We’re proud of this achievement,” says Barbara Kux, chief procurement officer at Philips. “But besides what we’ve been able to accomplish internally, we’re also looking at our entire supply chain to deliver an even greater impact.” Suppliers must agree to commit to sustainability and ethical practices to continue doing business with Philips, she explains. Philips, which is interested in helping vendors meet its own green criteria, created self-assessment tools so suppliers could follow Philips’ example. Beyond that, regular audits, using internal and external auditors, nudge suppliers toward compliance. (Noncompliant companies, Kux says flatly, are rejected by her organization.)

Another area where there is significant opportunity for green suppliers is in construction. The quick embrace of green building has led to an explosion of newly built and/or retrofitted buildings that consider every conceivable detail that could be made green: in the structure itself (construction materials), the interior design (green flooring, furniture and fixtures), maintenance (cleaning supplies and paper products), heating and cooling (alternative energy sources, insulation and coated windows), lighting (energy- efficient fixtures/bulbs and skylights), water use (restricted flow devices), and landscaping (green roofs, xeriscaping and composting). LEED certification is the ultimate objective; along the way, buyers are looking for recycled materials, from lumber to concrete to paint, and for supplies that come from renewable sources (upholstery fabrics made from soy rather than petroleum, hardwood flooring made from bamboo).

In Portland, Oregon, one of the most environmentally savvy cities in the U.S., green purchasing case studies are posted on the city website as a way to share its experience with the quality, price and performance of the green products it’s testing out. You can read about Portland’s experience with recycled and extended-life antifreeze in city owned vehicles, vegetable-based inks, retreaded tires, rerefined motor oil and solar-powered parking meters.

Portland, like many cities, also gives preference to small, local, and women and minority-owned businesses in its quest to be green. The vegetable-based ink it uses is supplied locally by Great Western Ink. Exterior latex paint from MetroPaint, another local organization, is consolidated, meaning it’s sourced from the city’s hazardous waste collection program, filtered and blended with other discarded paint. This process is far less resource-intensive than manufacturing new paint; reusing 10 gallons of latex paint saves 1,060 kilowatt hours, enough energy to power the average Oregon household for a month, the city claims. And since recycled paint involves minimal processing, no new VOCs (volatile organic compounds, a pollutant that can cause health problems) are produced during its formulation.

The Public Sector
The government is a voracious consumer—and is probably the single largest purchaser of green products in the nation, if not the world.

The government’s efforts to buy green date back several decades, but became formalized in 1997, when Federal Acquisition Regulations (FAR) were enacted to reflect the government’s preference for environmentally sound and energy efficient products and services. An affirmative procurement program was established, favoring items that contained the maximum “practicable” content of recovered materials. The choice of wording allowed some discretion on the buyer’s part, allowing him or her to balance availability, cost and performance in a purchasing decision.

More recently, the FAR issuing agencies amended their procurement rules to complement the Energy Policy Act of 2005. The amendment now requires all federal acquisitions of energy-consuming products and all contracts for energy consuming products to be
ENERGY STAR rated or Federal Energy Management Program (FEMP) designated products. Products in either case are in the upper 25 percent of energy efficiency in their class.

In January 2008, NASA, the Department of Defense and the General Services Administration announced they were requiring all new computer purchases to meet Electronic Product Environmental Assessment Tool (EPEAT) standards as well. These standards cover everything from energy efficiency to the level of toxic materials used in manufacturing to the recyclability of components. The three departments join the Department of Energy, the earliest adopter of EPEAT products. The DOE has integrated
EPEAT into agency requirements and purchased more than 10,000 EPEAT computers, valued at more than $10 million, in fiscal 2007.

Not surprisingly, the Environmental Protection Agency has acted as a lead agency in developing green purchasing policies and programs. One of its most sweeping achievements is Environmentally Preferable Purchasing (EPP), a practice for buying products and/or services that have a less impact on the environment and human health than competing products and services that serve the same purpose. The website (epa.gov/oppt/epp) is a massive clearinghouse of information, tools, tips and best practices in EPP.

The idea behind EPP was not only to help federal buyers buy green and contractors to sell green, but to use the federal government’s enormous buying power to stimulate market demand for green products and services in the private sector as well. Although it’s geared mostly toward the consumer (government and otherwise), there are several areas on the EPP site that will help vendors understand green purchasing requirements, and find the information on standards and requirements that they’ll need for bids. Several sample contracts are posted, covering everything from recycled paper and copiers to hydraulic fluid and insulation made out of recycled denim. There are also links to green contract language and specifications used by federal and state governments and others to buy environmentally preferable products and services. Also worth a look is EPP’s Promising
Practices Guide (epa.gov/oppt/epp/ppg/toc.htm), which includes 16 success stories highlighting how government agencies have successfully incorporated environmental concerns into the purchasing process.

A tool called the EPP
Assistant helps buyers analyze products from cradle to grave so they can prioritize their EPP efforts by purchase type. The tool, developed as a joint venture between the EPA and the Texas Commission on Environmental Quality, lets buyers drill down to a granular level; they’ll be able to see the relative environmental impact of each commodity, and compare two different purchasing scenarios to determine which offers the best outcome.

Interestingly, the creators of the EPP site are especially sympathetic to small and midsized businesses, and acknowledge that many SMBs have difficulty navigating the complex and often arcane rules of government procurement. Accordingly, the site has an excellent FAQ section, an entire area called “information for vendors,” details on preference programs for small, minority- and women-owned small businesses, and the email addresses and phone numbers of EPP experts at each agency.

Many major government agencies and individual states have their own dedicated green purchasing websites; for example, The Department of the Interior’s, called Greening the DOI, can be found at doi.gov/greeningnew; and the state of Massachusetts has an in-depth EPP microsite on its main mass.gov site.

With so many tools to help you, and so much demand from both private sector and public sector buyers, now is the time for small businesses to start seeing green and reaping the many rewards of being environmentally friendly.

Julie Moline is a freelance writer, editor and editorial consultant in New York City.