GREEN PURCHASING AND GREEN PROCUREMENT IN MOTION

JFS Newsletter No.4 (December 2002)

In recent years, green procurement activities have expanded and taken root in various sectors in Japan. The three main players driving this movement are governments, companies and NGOs/citizens.

National and local governments are implementing green procurement in order to reduce their own environmental impacts and to promote awareness and green purchasing activities among suppliers and citizens.

Many companies, desiring to contribute as corporate citizens to the establishment of a sustainable society, also want to reduce the potential environmental risks caused by their own suppliers and reduce costs by reviewing production and business processes from the perspective of the environment.

Japan ranks first in the world with the number of companies that hold ISO 14001 certification, a global standard for environmental management practices. Many companies have begun adopting green procurement practices as a part of their efforts to implement ISO 14001. Not only do they reduce waste emissions and the use of paper and electricity in their companies, they also go a step further to consider the indirect effects of their procurement activities on the environment.

The third major player is civil society, including citizen organizations, environmental NGOs and the general public. They act on the conviction that buying is as powerful as voting, and that they can influence industry to make it more eco-friendly through their purchasing activities.

Let us describe the activities of each of the three players.

In April 2000, the Japanese government adopted a series of laws to address the pressing issue of the waste disposal facilities being pushed to capacity. These laws include the Basic Law for Establishing the Recycling-based Society, the Law on Waste Disposal and Cleaning, the Law for Promoting Effective Utilization of Resources, the Law for Promotion of Sorted Collection and Recycling of Containers and Packaging, the Law for Recycling of Specified Kinds of Home Appliances, the Law on Construction Material Recycling, the Food Recycling Law, and the Law on Promoting Green Purchasing.

In 1970, 14 laws that regulate pollution were adopted in rapid succession, and these indeed were a driving force for Japan's measures on pollution. The adoption of eight environment-related laws in 2000 will play an important role in shaping the framework for a recycling-oriented society and promoting effective measures.

The laws on recycling were adopted to reduce the 400 million tones of industrial waste and 50 million tonnes of general waste generated annually, and to cut down on the volume of waste being sent to final disposal facilities. The Green Purchasing Law was enacted to promote recycling, so that recycled products would be better accepted in the market.

The objectives of the Green Purchasing Law are to "promote and disseminate products and services (eco-friendly goods) that contribute to reducing the negative impact on the environment and to build a society with less burden on the environment and is sustainable."

To that end, the law encourages the public sector, including the government, (1) to promote the procurement of eco-friendly goods, and to (2) provide information on such goods.

As early as January 2001, the government issued basic guidelines and a list of 101 designated procurement goods and their standards. The law went fully into force in April that year. It obliges national governmental bodies to formulate green procurement policies and to follow them. The law also requires the bodies to compile records of their purchasing and disclose this information publicly.

In February 2002, 50 more items were added to the list of designated procurement goods, and the government decided to add 17 items pertaining to public works activities. http://www.env.go.jp/en/laws/policy/green/index.html

The Green Purchasing Law only asks local municipalities to make efforts to follow the law, but actually, many local authorities are already promoting green purchasing and procurement on their own. Below are a few examples.

Tokyo Metropolitan Government set the Procurement Guide for Eco-friendly Goods 2000.

Shiga Prefectural Government formulated "Basic Guidelines for Shiga Green Purchasing," and supports the Shiga Green Purchasing Network set up in 1999.
Reducing, Reusing, and Extending The Life Of Stationery Items

In business circles, green procurement or preferential purchasing of environmentally-sound parts and materials are becoming more prevalent among larger companies. Canon, Ricoh, Sharp, Matsushita Electric are among those that have adopted guidelines for green procurement and promote green purchasing as a part of company-wide efforts.

Take the example of Matsushita Electric Industrial, which has strengthened its efforts to conduct green procurement with 3,600 suppliers, who account for 70 to 80 percent of the Matsushita Group annual procurement of 2.2 trillion yen (about U.S.$18 billion). The procurement divisions of 11 companies in the Matsushita Group agreed to add environmental criteria to the three existing criteria of "quality," "cost" and "delivery" when selecting parts and materials. Based on their Green Procurement Standards Manual, they implement green procurement for all items covered under raw materials, supplemental materials, supplies and equipment, and commercially-available components as well as components made under subcontract.

Many companies apply two tiers of selection criteria for green procurement, the first evaluating the supplier as a company (judged by the use and quality of ISO 14001 or some other environmental management system) and the second evaluating the environmental aspects of the actual materials or parts.

Large companies who actively conduct green procurement understand that this effort will enhance their competitiveness. As global warming progresses and societies attempt to shift toward sustainability, reduction of carbon dioxide emissions and waste, recyclability and other environmental aspects are areas that can provide a competitive edge for companies.

In such a situation, companies that can select suppliers who provide materials and parts with low environmental risks and have environmental management systems to continuously reduce their environmental impacts and costs hold a key for competitiveness.

Sony Corporation not only uses green procurement in the selection of suppliers, but also created Green Partner Guidelines in order to form partnerships with suppliers of parts, devices and raw materials, in order to enhance the level of their environmental consideration. http://www.sony.net/SonyInfo/procurementinfo/index.html

Tokyo Gas also implements green procurement by setting procurement guidelines not only for products and parts but also for construction works and services.

As a result of all these activities, one can now tangibly sense an increasing level of green procurement activities in Japan in recent years. We now introduce one of the driving forces, the Green Purchasing Network (GPN), established in February 1996 by companies, governments and consumers' groups in an effort to promote green procurement and green purchasing.

GPN started with 73 affiliate organizations (40 companies, 20 governments and 13 other organizations) and they had increased membership by over 35 times to reach 2,668 affiliates (2,038 companies, 362 governments and 268 other organizations) as of June 2002.

The GPN is a unique organization that may be difficult to find in other countries. It plays a pivotal role in green procurement activities and movements in Japan. The GPN is a loose-knit network that promotes green procurement activities at all levels by:

- promoting greater awareness of green procurement
- giving awards to excellent green procurement initiatives
Winners of Japan's 5th Green Purchasing Awards
- creating purchasing guidelines
- setting up databases of on environmentally-sound products
- issuing data books
- conducting surveys and research in Japan and abroad
- helping to set up regional green purchasing networks

The GPN revised its Green Purchasing Principles in June 2001. One of the most important revisions was to place "consideration of the actual need for the goods" as the overarching principle, recognizing that before deciding to purchase something it is necessary to consider basic questions like "Do we really need this product?" and "Can we think of other options, such as repairing the existing products, sharing products or renting products?"

Recently, the GPN formulated guidelines for hotels and inns that cover important points to be considered when one seeks environmentally-conscious accommodations. This is the first set of environmental guidelines for hotels and inns in Japan and the fifteenth set of guidelines from the GPN.

For reference, the GPN guidelines so far have covered the following 15 product and service categories: printing/information paper, copiers/printers/facsimile machines, toilet paper, tissue paper, personal computers, office stationery, lighting, automobiles, refrigerators, washing machines, office furniture, air-conditioners, televisions, uniforms/business wear/working wear, offset printing services, and hotels/inns.

More on GPN Green Purchasing Principles, Guidelines, activities:
http://www.gpn.jp/English/index.html

Not only business circles, but also local governments and NGOs throughout Japan are proactively formulating green consumer guides for their own regions. According to Green Consumer Research Group, there are more than several dozen of such green consumer guides in total in Japan.

Local governments aim to the raise awareness and activities of citizens by providing green consumer guides or by getting local people involved in preparing such guides. Citizens' groups and NGOs increasingly recognize their great collective purchasing power, despite the small impact of each individual consumer.

GPN has launched what it calls "Eco Shop Navigation" on its website, to respond to consumer requests to get information on shops selling environmentally-sound products in their region. Users just click their region (prefecture) and select the product category to purchase to obtain a list of shops in the region.

These days, many local governments who are actively tackling environmental issues and almost all large companies are conducting green procurement activities. In the near future, green procurement will become a daily routine for all local governments and companies above a certain size.

>From a global perspective, one of the characteristics of environmental activities and movements in Japan is that such movements have been driven by industry rather than by consumers. One could say that the green procurement movement is also driven more by industry and local governments than by consumers. The next challenge for local governments and companies will be how to raise the awareness among general consumers and how to increase numbers of green consumers.

Green procurement by large consumers in the economy (i.e., companies and governments) has huge potential impacts on industry reorganization and the competitiveness or survival of individual companies. Many further developments and initiatives are expected in this field. Please keep an eye on the JFS website for updates.