Environmental Competitiveness: "Green" Purchasing

By Mebratu, Desta | International Trade Forum, January 1, 2001 | Go to article overview
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Environmental Competitiveness: "Green" Purchasing

Mebratu, Desta, International Trade Forum

Exporting Better

Consider environmental issues in procurement to reduce total costs and make your enterprise more competitive.

Environmental procurement means systematically building environmental considerations into your day-to-day procurement decision-making and operations. Its objective is to help you procure the most suitable and "environmentally preferable product" that meets your enterprise's needs.

You might be sceptical. After all, building environmental concerns into procurement might seem only to add to your costs, force you to buy products of inferior quality and cost you time and effort. In fact, "going green" can make your products more attractive to big buyers and consumers, reduce waste disposal and operating costs, and help you comply with increasingly stringent environmental regulations.

Why environmental purchasing?

Today, environmental procurement is an increasingly important issue and decision-making tool for small and medium-sized enterprises (SMEs) in developing countries and economies in transition. It can be ignored by an enterprise only at peril to its long-term survival. Among the external factors pressuring enterprises to take account of the environment:

Big buyers demand it

Trade is increasingly global, even for SMEs. Many large enterprises now require improved environmental performance throughout their supply chain. For example, they are applying ISO 14000, which is an international standard on environmental management systems. This standard requires companies to incorporate environmental considerations into their procurement procedures, including ensuring the improvement of their own suppliers' environmental performance.

"Green" products more effective

New generations of products and technologies are more environmentally "friendly". These "cleaner products" and "cleaner technologies" are also usually more efficient and cost-effective. SMEs will need to keep pace with these new developments.

Legal requirements

An increasing number of products that are harmful to the environment (especially chemicals) have been banned by international conventions and treaties. Some companies are exporting their products and relocating industries to developing countries and economies in transition. This can carry serious longterm risks to the countries that import harmful products and technologies, risks to the health of the environment and of the population. These countries will find their competitiveness in the world marketplace being affected by substantial "hidden" environmental costs.

Consumer pressure

Due to pressure from consumers, various countries have started to put forward restrictions on importing certain consumer goods. For example, governments have introduced legislation that limits the use of specific chemicals in processing textiles. The constraints will increasingly affect SMEs whether they export directly to these markets or supply to enterprises that do.

Potential benefits

This says nothing about the positive side of embracing environmental procurement. The benefits of adoption are as significant as the costs of not changing your approach:

Can reduce costs

Environmental procurement reduces your costs. Some costs in procurement are visible: price; transport; etc. Others are "invisible": losses due to inefficient use of resources; product liability; and the like. Environmental procurement can help reduce overall costs for the short, medium and long term by introducing a life-cycle perspective.

Compliance with regulations

Environmental procurement helps you meet regulations. Adopting the approach at an early stage can help your enterprise meet progressively stricter environmental regulations at a lower overall cost.

Pleases consumers

Environmental procurement can help you keep pace with consumers' preferences. The demand for environmentally safe products is being increasingly felt in developing countries and transition economies as well as in developed countries.

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