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Overview on Green Purchasing –Policies, Trends, Practices and Influence in

Hong Kong and Asia

Ms Linda W P HoChief Executive Officer

Green CouncilHong Kong SAR, China

May 23, 2009

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Presentation Outline:I. About the Green CouncilII. Green purchasing – Demand for and Supply of

Green Products III. Identification of Green ProductsIV. Government Green Procurement (GGP)V. Private Sector Green PurchasingVI. Future Outlook

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I. About the Green Council

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Green Council

• Established in 2000• Non-Government Organization (NGO)• Non-Profit-Making Organization• Non-Partisan Environmental Organization

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Major Objectives

1. To enhance the environmental awareness of the general public

2. To assist local and international enterprises in improving their environmental performance

3. To help Hong Kong establish a greener image worldwide

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II. Green PurchasingDemand for and Supply of Green Products

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What is Green Purchasing?

Green Purchasing

Quality Cost Delivery

+

Environment=

+ +

Source: The Green Purchasing & Green Public Procurement Starter Kit

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Life Cycle Impacts

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Office SupplyMotorcar

PC

Paper

Furniture

Work wear

Distribution

Food

Hotel & Meeting

Banking

Lighting Electrical Appliance

CanteenCatering

ServicesProducts

Parts and MaterialsCleaning

Printing

Printer

Construction

ElectricityEnergy

Target Fields of Green Purchasing

Integrated Circuit

Source: The Green Purchasing & Green Public Procurement Starter Kit

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Green Purchasing Encompasses• Raw materials and components used by the buyer

organization for manufacturing products or services• Finished products or services for their own use

• Examples– Recycled content products– Environmentally preferable products– Bio-based products– Energy- and water-efficient products– Alternative fuel vehicles/alternative fuels– Non-ozone depleting substances– Other environmentally innovative alternative products

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III. Identification of Green Products

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Which Criteria to UseTypes of Product Environmental LabellingBased Upon ISO Standards[Note: ISO 14000 series guidance, not certification

standards]

Type I Guidance for leadership certification (ISO 14024)Multiple criteria, life cycle considerations (LCC)

Type II Guidance for self-declared claims (ISO 14021) Self-declaration / Claims by manufacturers

Type III Guidance for information (ISO 14025) LCA-based; self-declaration verified by independent third

parties

Other Types/Programse g single attribute or sector labelling

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Why Select Type I• World’s first/earliest ecolabelling programs (Germany Blue

Angel in 1977), most widely known• High credibility (mostly government initiated and follow

international standards -- ISO 14024 / ISO 14020)• Operated by public or government commissioned

entities to minimize conflict of interest• Open and transparent criteria development processes with

multiple stakeholders’ involvement• Precise and quantified criteria based on full life-cycle

considerations which enables identification of overall environmental performance leaders

• Independent third-party certification processes• Can be easily incorporated into tendering documents• Possibility of international/regional mutual recognition

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Global Ecolabelling Network (GEN)

A non-profit association of environmental performance leadership identification, certification, labelling and recognition organizations from around the world

www.globalecolabelling.net

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GEN Members

Asian Members

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IV. Government Green Procurement (GGP)

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Green Procurement – Solution to Climate Change?

• products and services contribute directly and indirectly to climate change across their respective life cycles

• some products are less impacting than others

• Type I ecolabels help identify and confirm environmental leaders

• climate change benefits (avoided impacts through choices

made) can be quantified (relatively)

• examples:

household appliances - potential avoidance of 50%

automobiles even more significant potential

paper products - potential 30% avoidance

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Why Government Green Procurement?

• Group buyers• Huge purchasing power• Easy to demonstrate effectiveness• Role model for business and general consumers• Using market forces to stimulate greener

products with competitive prices

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Mandatory GGP Approaches in Asia

• China - Government Procurement Act-- Enacted July 2006, enforced January 2007

• May preferentially purchase ecolabelled products• Japan - Law on Promoting Green Purchasing

– Enacted May 2000, enforced May 2001• Korea - Green Purchasing Law

– Enacted December 2004, enforced July 2005• Thailand – Government Management Plan

– Promulgated in March 2005

2020

Typical Requirements in Mandatory Green Procurement Legislation

• Organization’s green purchasing policy, plan, goals• Designated product categories, specific criteria, and

other requirements• Compliance requirements (target)• Provision of information, assistance, training• Monitoring and reporting mechanisms• Awards to best performers

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Pros & Cons of Mandatory Approach• Pros:

– Governments work better when regulated by law– Clear targets and designated product categories– Consistent practices across nation and institutions– Easy to trace performance

• Cons:– Need additional administrative resources to keep a

fair playing field– Conflict with the voluntary nature of ecolabelling– May be seen as trade barrier

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Green Procurement Becomes One of the HKSAR Government’s Policies (2005-2014)

Product Eco-responsibility (PER) Bill - legal framework for implementing producer

responsibility schemes (PRS) - which is a key policy initiative in the ‘Policy

Framework for the Management of Municipal Solid Waste (2005-2014)’ for waste reduction, recovery and recycling

GPP in Hong Kong

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Green Procurement Becomes One of the HKSAR Government’s Policies (2005-2014)

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Green Council’s Roles in Hong Kong Green Purchasing

• Actively collaborate and participate in pertinent consultations and initiatives led by HKSAR Government and other organizations

• Organize and conduct conferences/seminars/workshops on Green Purchasing for various audiences

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Promotion of Green Purchasing for Hong Kong Industries by Green Council

Key Initiatives:– Hong Kong Green Label Scheme

(HKGLS)

– China Environmental Label

– Cyber Green Centre

– Hong Kong Green Purchasing Charter

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GPP in ChinaMinistry of Finance united with SEPA published “Implementation Guidance on Government Procurement Based on Environmental Labeling Products”

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With consideration of public procurement reform and environmental labeling products markets, Ministry of Finance and SEPA release updated products lists for selected certified environmental labeling products categories

The official “guidance” requires every public sector organization to take active measures to consider and use these product lists

Launched on Jan 1, 2007 at central and provincial levels and on Jan 1, 2008 at other levels

GGP in China

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China Environmental LabelChina Environmental Label

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GGP in Japan

•Law on Promoting Green Purchasing•Enacted May 2000, enforced May 2001•All state institutions obligated to purchase designated procurement items (200 products in 18 categories)

•All central government ministries, 47 prefectural governments, 12 designated cities and 50% of 700 cities practicing green purchasing

•For designated items 95% green products•Labels referenced by government purchasers:Eco-mark 94.4% ; Energy Star 37.3% ; GPN Data Base 28.4%.

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Japan Eco Mark

265

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Green Purchasing Law - Enacted December 2004, enforced July 2005

Recently, the number of Korean ecolabelled products has risen dramatically. Korean ecolabelling criteria exist for 111 product categories; 5320 products had received certification as of 2007

•GGP in Korea

29 49 49 70 82 94 102 107 111 12285 110 130 182 287 306 453 5781000

1196

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GGP in Thailand

Government Management Plan – as of March 2005, all government agencies have been required to begin and continue to buy green products by 2009

By 2011, all government departments within the agencies must be purchasing green products

25% compliance in 2008 → 100% compliance expected by 2011

Set green purchasing levels in targeted product and service areas:

25% in 2008 30% in 200940% in 2010 60% in 2011

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• Ecolabel product criteria used in procurement technical specifications (precise, quantitative and certified + clear distinction from alternative products)

• Ecolabelling and ecolabelled products flourish due to mandatory green procurement -- obvious and major incentive [as long as products are also otherwise comparable in quality, overall performance, etc., with the competition]

• Green procurement helps guide product categories selectionfor ecolabelling (e.g. office equipment)

• Green procurement may help to trace effectiveness but diminish the voluntary nature of ecolabelling

• Awareness-raising through green procurement

Eco-labelling and GGP Relationship and Synergy

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Key Elements for Success

• Commitment and support from top-level and purchasing department(s) officials and staff

• Enough green products to choose from good information dissemination

• Task force to promote, with objectives, targets and programs• Identification of green products based upon practical,

scientific methodology and open/credible/fair process

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Difficulties Encountered

• Decentralization of purchasing power• No appreciation and/or application of life cycle cost

considerations (e.g. compact fluorescent lamps)• New/revised procurement laws may include complex bidding

procedures• “Price preference” difficult to “sell” and/or implement• Procurers’ familiarity with and loyalty to long-standing

suppliers [who may not offer green products]• Fear of being challenged by non-green product suppliers

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V. Private Sector Green Purchasing

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Green Purchasing Networks (GPNs) in Asia

• Promotion of green products production, marketing, consideration, selection and purchasing by businesses –manufacturers and marketers (as well as their suppliers and consumers)

• Attention not limited to Type I labelled products

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VI. Future Outlook

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Future Outlook

‧Government Green Procurement has demonstrated effectiveness, but still has plenty of room for improvement

‧"Greening the supply chain" is a must for business under international pressure

‧Private sector green procurement is the step to Corporate Social Responsibilities (CSR)

‧Green procurement and eco-labelling should be promoted and operate together

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• Commitment [initial and sustained support and participation] from HKSAR Government

• Major public utilities and corporations support bulk purchasing

• Significant and ever expanding support from Small- and Medium-Sized Enterprises (SMEs) as both suppliers and consumers

• Determination and widespread application of an appropriate and useful definition of ‘environmentally preferable [“green”/ “greener”] products’ pursued and achieved through a sound scientific methodology and an open/credible/fair process

Future OutlookA Hong Kong Green Purchasing Network (HKGPN):

Four Key Conditions for Establishment

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HKGPN Features Required for Success

• Sustained [and ideally increasing] commitment and support from top-level officials and purchasing department personnel

• Enough quality, alternative green products in the market to enable targeted and competitive procurement

• Good information dissemination and sharing• Task force to direct the establishment and promotion of

appropriate objectives, targets and programs • Identification, distinction and confirmation of

“green”/“greener” products based on scientific methodology and open/credible/ fair processes

Future Outlook

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Thank you

Green Council Contact Details:Website www.greencouncil.orgEmail info@greencouncil.orgTelephone (852) 2810 1122Facsimile (852) 2810 1998