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Green Purchasing & Sustainable Supply Chains

Aiden M. Cohen

Sustainability Senior Buyer

Green Purchasing Program Coordinator

City of Austin – Purchasing Office

aiden.cohen@ci.austin.tx.us

512-972-4008

October 2009

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Seminar Agenda

1. Introduction – My Background

2. Overview of the City of Austin

3. Overview of Sustainability in Austin

4. Best Value Contracts

5. Why Green? Problems and Solutions

6. Benefits of Responsible Purchasing

7. Eco-Labels, Calculators & Life-Cycle Analysis

8. Questions?

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Aiden Cohen: My Background

1.Sustainability Senior BuyerCity of Austin

2.Real Estate DevelopmentSouthern California

3.Supply Chain and Lean ExpertAerospace Industry

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City of Austin: Operational Overview

• City of 920,000 Residents; Greater Austin 1.4M People

• 300 Buildings; 6000 Structures

• 12,000 Employees

• Municipally Owned Electric Utility, Water Utility, Convention Center, Airport

• 30 Departments, Multiple Divisions in Each Dept.

• Register to do Business with the City:

www.ci.austin.tx.us/purchase/

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Vendor RegistrationVendor Registration

Main Purchasing Website:www.ci.austin.tx.us/purchase/

Vendor Registration Website:www.ci.austin.tx.us/vss/Advantage

Business Legal Name DBA as Appears on Invoices Commodity Codes Associated with Business Permanent Email Address

Vendor Registration Help: 512-974-2018

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Green purchasing includes the acquisition of products or services that have environmentally preferable characteristics such as…

1. Recycled Content or Easily Recyclable

2. Bio-based or Bio-Degradable

3. Energy and Water Efficient Products

4. Use Alternative Fuels or Renewable Energy

5. Eliminate Hazardous or Toxic Chemicals

6. Locally Produced

Definition of Green Purchasing

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What are We Really Talking About?What are We Really Talking About?

Green Goods and Services Must:

1) Greatly Reduce or Eliminate Negative Ecological Impacts

2) Must be Commercially Available

3) Provide Superior Performance at Lower Costs According to Lifecycle Analysis

4) Improve the Productive and Responsible Use of Financial and Natural Resources

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Tenants of Best Value ContractsTenants of Best Value Contracts

Env

iron

men

tal &

Soc

ial R

espo

nsib

ility

Total Cost of O

wnership

Effectiveness, Delivery, Availability

Considering More than the Initial Purchase Price

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Recognized as the:Recognized as the:

The Most Livable City in the Nation

and

The Best Managed City in the Country

City of Austin’sCity of Austin’s Sustainability Programs Sustainability Programs

Austin’s Green Purchasing Program Supports:

1. Water and Energy Conservation Initiatives

2. Purchase of Environmentally Preferable Products

3. Waste Stream Management – Reduced Solid Waste

4. Attracting ‘Green Entrepreneurs’ and Small Business Development

5. Cost Savings, Innovation, and Process Efficiencies

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Austin Climate Protection Program

Climate Protection Plan: Adopted Feb. 2007

• City Operations and Vehicle Fleet Carbon Neutral by 2020

• Reduce Climate Impact of Electricity Generation

>> Renewable Energy

>> Conservation

>> Power Plant Efficiencies

• Engage Community to Reduce Austin’s Carbon Footprint

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Austin Zero Waste Program

Zero Waste Plan: Adopted Jan. 2009

• 90% Reduction in Solid Waste by 2040

• Promote Market for and Use of Recycled Materials

• Use of Low Emissions Natural Gas Vehicles

• Increase Participation in Single-Stream Recycling

• Incentivize to Businesses & Manufacturers to Reduce

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New & Existing Buildings & Green Infrastructure

Leadership in Energy & Environmental Design (LEED)

• First Municipal Green Building Program 25+ Years Ago

• New Buildings Must be Certified LEED-Silver

• Optimize Existing Building Operations (EBOM)

• Use of Locally Sourced and Recycled Materials

• Green Building Techniques and City Codes

• Improve Interior and Exterior Air Quality (Clean Cities)

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Why Green Purchasing? A Reminder…

Highlight Problems and Potential Solutions:

…Describe Product and Service Categories…

…Avoid Common Pitfalls…

…Examples of Successful Implementation…

…Provide the Tools to Learn More and Measure your Impact...

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The Problem:

• Millions of Dollars Spent on Hazardous Waste Disposal

•1 in 3 Cleaners Contain Harmful Ingredients

• Hazardous Materials in everyday products linked to brain, thyroid, reproductive problems

Hazardous Substances

Minneapolis, MN 3-year “Green” Cleaning Program:

• Cost Savings from Metered Dilution System

• Fewer Sick Days for Custodial Staff

• Reduced Solid and Hazardous Waste

• Improved Indoor Air Quality (IAQ)

• Smaller Storage Footprint (Less Inventory)

• Less Packaging and Transportation

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Water• Toxic Run-off Causes Water Turbidity &

Kill Aquatic Ecosystems

• Carpet Production ~10 gal Water per Yard

• ~40% of Bottled Water is Tap Water

• 3 Gallons of Water to Bottle 1 Gallon

Solutions:

• Low-flow Toilets and Showerheads

• Water Fountains and Reusable Containers

• Products that Use Less Water in Manufacturing Process

• Irrigation Optimization

• Water and Waste Water Treatment and Pumping is Energy Intensive – Water Conservation Programs

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Air Quality

• Outdoor pollutants cause lung disease and asthma

• Indoor VOC levels 10X higher than Outdoors

• Ground-level Ozone & Smog don’t respect City and State Borders

Solutions:

• Low-Emissions Vehicles and Alternative Fuels (Propane Landscaping Equipment)

• Energy Efficient Lighting, Electronic Equipment, and Sensors

• Locally Sourced and Produced Products (Less Transportation)

• Energy Optimization, Conservation, and Building Programs

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Solid Waste - Landfills

• Many Landfills are Running Out of Space

• 70% of Heavy Metals in Landfills from Electronics

• 70% of Mercury-Lamps are Not Recycled

• Old Electronics Sent Overseas Where Environmental Laws are Lax

• Approx. 25M Gallons of Paint Sent to Landfills, Less than1/2 Properly Handled

• California Buys Enough Carpet to Cover 47 Miles of 4-Lane Highways Each Year

• Approximately 90% of Single-Serve Water Bottles Sent to Landfills

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Biodiversity & Habitat

• More than 11,000 Species Near Extinction

• 1 in 5 Bird Species Threatened

• Wetlands Reduced by 50% in Past Century

• 50% Reduction in Forest Cover over 200 Years

• 60% of Fisheries Below Sustainable Capacity

Solutions:

• Fair Trade Policies with Countries or Companies that Promote Environmental Responsibility

• Product Sustainability as Part of Award Criteria

• Locally Sourced and Produced Products

• Champion Alternatives to Hazardous Chemicals and Petroleum Products

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• Electronic Equipment Consumes 26% of Electricity in Offices

• Lighting is ~7% of U.S. Electricity Consumption

• More than 50% of Electricity is from Coal

• 95% of Vehicle Fuel is Petroleum-based

• Forecast Temperature Increase 10° by 2100

Energy & Global Warming

Solutions:

• A report from Government Technology estimates that energy-efficiency initiatives can yield $1.5 million in yearly savings for an average annual IT budget of $74.6 million and average IT energy costs of $8.9 million annually.

• Use Best Value and Life-Cycle Analysis to Incorporate Sustainability Criteria into New Contracts

• Champion Alternatives to Hazardous Chemicals and Petroleum Products

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Doom & Gloom Recap:

Collapsing Ecosystems

Crumbling Infrastructure

Foundering Economy

Are people really doing ‘green purchasing’ in these

bleak times? YES!

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Small Business Opportunities

Develop New ‘Green’ Businesses for Competitive Edge or Niche

Participate in City Educational Opportunities (i.e. Green Gardening, Small Business Development Program, SMBR, Trade Groups, etc.)

Compete with Larger, More Established Firms

1. Reduce Costs through Conservation Best Practices

2. Offer Innovative Green Products or Services

3. Link to City’s Sustainability Initiatives

Attract Investment Capital with Business Plans that Save Water, Energy, Money, and Reduce Environmental Impacts

Develop a Competitive Advantage with Green as a Core Strategy…

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Community Benefits of Green Purchasing

• New Green Collar Jobs and Growth Companies

• Attract Intellectual and Financial Capital

• Avoid Greenhouse Gas & Ozone Emissions

• Divert Landfill Waste – Longer Landfill Life

• Encourage New Business to Use Recycled Waste Stream

• Communicate to the Vendor Community with One Voice

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Build a Responsible Purchasing ProgramBottled Water Example

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Lean Six Sigma: Reducing Waste

7 Types of Institutional Waste

D = Defects (Low Quality and Rework)

O = Over Specification (Too Specific, or Inflexible for Alternatives)

T = Transportation (Keep it Local When Possible)

W = Wait Time

I = Inventory (Standardization of Common Products)

M = Motion

P = (Over) Production

Continuous Improvement Philosophies Can be Implemented While Protecting the Integrity of the Purchasing Process.

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Green? Absolutely. Here’s what’s driving it:

1. Green Purchasing Acts as a Catalyst to Save Money

and Implement Best Practices

2. Energy Efficiency & GHG Mitigation Policies

3. Responsible Purchasing Policies at All Levels of

Government

4. Social Responsibility Initiatives

How do we Measure the Benefits?

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Green Can Save GreenKing County, WA

In 2008, King County, WA spent $54M on qualified green goods:

Office Products = $7.5M

Operations & Maintenance = $650,000

Vehicles = $46M

Recycling Services = $90,000

Saved $837,000 compared to conventional goods!

Asphalt and Concrete Reuse = $300,000

Toner Cartridges = $250,000

Re-tread Tires = $250,000

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Furniture Repair: NYCFurniture Repair: NYC

New York City - Saved Over $100,000

• Contracted with a Local Firm for $15,000/year to Repair Office Furniture

• 1000 Pieces, 66 Tons Avoided in 2 Years

• $10,000/year in disposal costs avoided

• Local Jobs Created

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Santa Monica, CA

• Saved 5% by Implementing Green Cleaning

• Reduced Sick days & Improved Worker Health and Performance.

Chicago Public Schools, State of Massachusetts, City of New Jersey, Alameda County, Montgomery County, City of Minneapolis, Austin Convention Center

Eco-LabelsGreen Seal, EcoLogo

Green Cleaners

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• Specify EPEAT registered machines

• Save up to 60% of energy use

• Avoid hazardous waste disposal

• Reduce material waste and water pollution

• Earn recycling income (ARS)

• Accrue tax breaks for donations

Computers

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Greener Vehicle Fleets & Infrastructure$4 per Gallon Gasoline?!?

San Jose, CA 2007

Increased Clean Vehicles

Tracked Ridership and Fuel $$

Advocated within Industry

Mandatory Annual Reports

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Hybrids Cost More Initially but Save $ by:

1. Cutting fuel use by up to 50%2. Having lower maintenance costs3. Yielding a higher resale value

For more info on hybrids: www.newdream.org/procure/hev.pdf

Washington State set minimum fuel-efficiency standards (30 MPG) and restricts purchases and use of SUVs by state agencies

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CFL & LED Lighting

Washington D.C. saved $1.5M Over 5 Years

First Christian Church used CFLs and T-8 lamps, LED Exit signs, and timers – Saving $6,000 Annually

Typical CFL Saves $30 per Year

CFL Last 5X to 20X Longer

Look for Rebates

Require Energy Star for Appliances

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• Duplex Printing Copiers Can Reduce Paper By ~ 40%

• Energy Star Lowers Energy ~ 60%

• Energy Star or EcoLogo for LEED Credit

Copiers, Printers, Fax Machines

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City of Portland, OR

Reduced Usage by 15%

Meet or Exceed EPA

Aim for 30-100% PCW

Prefer Chlorine-Free

Seek Alternative Pulp

Saved More Than $10,000 in the 1st year

Copy Paper

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King County, WA:

• Saved $275,000 in 2007 Using Remanufactured Instead of OEMs

• Remanufactured Costs 30-60% Less than OEMs

• No Up-front Costs – Save Immediately

• Cut 5-9 lbs of Waste per Cartridge

Remanufactured Toner Cartridges

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Remanufactured Toner: Washington D.C.

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NJ Higher Education Partnership for Sustainability (NJHEPS)

Group Fuel-Cell Discount Saved More Than $340k

Group Discount on Wind

State of Wisconsin

Biggest state green power purchase in the country

City of Austin

Largest Municipal Purchaser of Renewable Energy in the Country

Green, Renewable, and Distributed Energy

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Climate Initiatives & Purchasing: Energy Efficiency

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Responsible Purchasing Policies

Survey of 135 Governmental Purchasers:

Collectively spend ~$60B Annually

2/3 Have ‘Green’ Purchasing Policies

86% Say Environmental Factors are “Very Important” or

“Important” When Making Purchasing Decisions

Most Use Energy Star, LEED, Green Seal, and EPEAT

9 out of 10 will do MORE Green Purchasing in 2010

Download the free report: www.ResponsiblePurchasing.org

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Fair Trade and Sweat-free Policies

NYC Resolution 762 Fair Trade Resolution: “ … the Council of the

City of New York strongly encourages the purchase of Fair-Trade

certified coffee, especially by City agencies that use taxpayers’

money to purchase coffee.”

Portland, OR Sweatshop Free Procurement Policy & Code of

Conduct for Apparel Contractors “… procure uniforms and clothing

in a manner that integrates sweatshop free procurement practices

that include social equity, fiscal responsibility, and community and

environmental stewardship.”

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3 Responsible Purchasing Principles:

1. RECOGNIZE GREENWASH: Rely on life-cycle

assessments or third-party standards, not on unverified

supplier claims

2. STANDARDIZE PURCHASES: Use spending power to

reduce costs, make environmentally preferable products

cost-competitive

3. CALCULATORS: Evaluate total costs, wastes eliminated,

and other benefits

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7 Sins of Green-Washing7 Sins of Green-Washing

Green-wash (green’wash’, -wôsh’) – verb: the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.

1. The Sin of Fibbing2. The Sin of the Lesser of Two Evils3. The Sin of No Proof4. The Sin of the Hidden Trade-Off5. The Sin of Irrelevance6. The Sin of Vagueness7. The Sin of Worshiping False Labels

http://sinsofgreenwashing.org/

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The Shades of Green Claims

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The Best Green Claims

Life-Cycle Based Criteria

Balanced Stakeholder Development Process

Transparent Administration

Independent Product Verification

Multi-Tiered (e.g. bronze, silver, gold)

Continuously Improved

Independent Verification and Standards

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Eco-labels: Do you know what these mean?

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RPN: Responsible Purchasing GuidesProduct Categories:

Bottled Water Carbon Offsets Cleaners Computers Copy Paper Fleets Vehicles Fluorescent Lights Graffiti Remover Green Power Office Machines Paint Remanufactured Toner Tires, Wheel Weights

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Life-Cycle Analysis: News Flash!

Wal-Mart: Requires Life-Cycle Analysis Eco-labeling on ALL Products

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The Next Steps…Green Corporate RatingsEvaluation of companies, not just products…

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Cooperative Spending: Use Group Purchasing

Some of the Cooperative Contracts Available:

U.S. Communities, TXMAS, DIR, GSA, Inter-locals

U.S. Communities:

18 contracts aggregate massive purchasing power

Open to Local & State Governments, Schools, Colleges, and

Nonprofits

Use the RPN database to find green certified cleaners &

copy papers on U.S. Communities contracts

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Web-Based Tools: Responsible Purchasing Network (RPN)

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Lifecycle Cost AnalysisLifecycle Cost Analysis

Lifecycle = P + (O+M+T+L+E) – S

Where:

P = Initial Purchase PriceO = Operational CostsM = Maintenance CostsT = Training and Customization CostsL = Logistics Costs (Inventory, Transportation, Packaging)E = Environmental Costs (Disposal, Emissions, Permits)

S = Salvage Value (Recycle, Scrap, Resale Value)

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Green Savings: Calculate the Benefits

Sustainable Purchasing Calculators Available:

ENERGY STAR for Electronics & Appliances

EPEAT for Computers

EPA for Green House Gases

Life-Cycle Analysis

RPN Calculators: Cleaning Supplies, Remanufactured

Toner, Drinking Water, Fleet Vehicles, Lighting & More.

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GHG and Carbon Calculators

www.ghgprotocol.org/calculation-tools/all-tools

The Greenhouse Gas Protocol Calculation Tools - World Resources Institute’s (WRI) and the World Business Council for Sustainable Development’s (WBCSD) work in conjunction with the Corporate Accounting and Reporting Standard for calculating a GHG inventory.

www.carbonfund.org/business/calculator

The Carbonfund.org business calculator measures office emissions based on utility bills, number of employees, or office space. Businesses can also use the calculators to measure emissions from employee commutes, owned fleets, travel, events, paper purchases and shipping.

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Other RPN Calculators Available• Bottled Water

Bottled Water Calculator compares costs and impacts of bottles of water vs. tap water

• Cleaners CalculatorQuantify the environmental benefits of using "green" janitorial services and products.

• Computer CalculatorUse calculators from EPEAT and Energy Star to measure the impact of computers.

• Hybrid CalculatorUse the Hybrid Calculator to compare hybrid electric (HEV) and conventional vehicles.

• Lighting CalculatorsENERGY STAR and CFL manufacturers measure the impact of lighting in terms of cost savings and mercury content

• Office Electronics CalculatorsENERGY STAR and EPEAT to measure the impact of equipment in terms of costs and energy use.

• Paper CalculatorMeasure the environmental benefits of switching to recycled content copy papers.

• Power CalculatorUse these tools to compile data on environmental impacts of electricity consumption.

• Toner Cartridges CalculatorCompares costs and wastes associated with remanufactured cartridges

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Green Purchasing SummaryGreen Purchasing Summary

• Catalyst for Cost Savings and Implementation of Best Practices

• Achieve City’s Environmental and Social Responsibility Missions

• Cost Neutral, Reduces Waste, and Can Save $$ While Being Environmentally and Socially Responsible

• Creates Local, Well-Paying, Sustainable Jobs and Industries

• Enhances Employees and Community Health and Reduces Healthcare Costs

• Consistent with Our Goal of Being a World-Class “Green City”

For more info, Aiden Cohen, Sustainability Senior Buyer, at 972-4008

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Thank you. Questions?

www.ci.austin.tx.us/purchase/

Aiden Cohen

Green Purchasing Program Coordinator

City of Austin – Purchasing Office

512-972-4008

aiden.cohen@ci.austin.tx.us