Reducing Purchasing-Related Carbon Emissions

April 3, 2008

WELCOMEWELCOME

Purpose & Learning ObjectivesPurpose & Learning Objectives

The purpose of this workshop is to help youunderstand:

• The business case for reducing carbonemissions

• Types of emissions (Scope 1, 2 & 3) and howthey related to purchasing

• How purchasing can be used as a tool toreduce carbon emissions

• Top 5 carbon-intensive product/services• Best practices of leading companies

Workshop AgendaWorkshop Agenda

Introduction

Context

Using Purchasing as a Tool

Top 5 Areas of Focus

Break – 10:00 a.m.

Guest Speakers

Tools and Resources

Next Steps

About the Sustainability Purchasing NetworkAbout the Sustainability Purchasing Network

• What is the SPN?

• What does the Network offer?

• Why participate?

• Who can join?

• Who’s leading the way?

AcknowledgementsAcknowledgementsSilver Sponsors:Gold Sponsors:Platinum Sponsor: Premium

Supporters:

SPN is a program of:

Context:Context:

The Business Case for Reducing CarbonThe Business Case for Reducing CarbonEmissionsEmissions

Trends in Carbon ManagementTrends in Carbon Management

•Consumer pressure

•Carbon disclosure

•Carbon labelling

•Full lifecycle accounting of products/services

•Carbon supply chain management

Traditional Organizational DriversTraditional Organizational Drivers

•Stakeholder pressure–Investors–Employees–Consumers

Traditional Organizational DriversTraditional Organizational Drivers

•Regulation–Europe–North America

Traditional Organizational DriversTraditional Organizational Drivers

•Costs– Energy– Transport– Waste disposal– Raw material costs– Insurance– Access to capital

New Business Opportunities New Business Opportunities DriverDriver

• Develop and market low-carbonproducts/services

• Enhance existing brand/rebrand

• Examples: Dell Radio Taxi

Saltspring Coffee West Jet

Large Group DiscussionLarge Group Discussion

Question: Where do you feel purchasing canmost greatly reduce your organization’s GHG?

Context:Context:

Understanding and MeasuringUnderstanding and MeasuringCorporate Carbon EmissionsCorporate Carbon Emissions

Types of Carbon EmissionsTypes of Carbon Emissions

• Direct emissions– Generation of electricity, heat or steam– Physical or chemical processing– Transportation of materials, products,

waste and employees– Fugitive emissions

Direct EmissionsDirect Emissions

• Purchased electricity• Supply chain

– Extraction and production of purchasedmaterials and fuels

– Transport-related activities– Electricity-related activities– Leased assets, franchises, outsourced

activities– Use of sold products and services– Waste disposal

Indirect EmissionsIndirect Emissions

Bell Canada Direct and Indirect EmissionsBell Canada Direct and Indirect Emissions

1. Measure2. Reduce3. Offset

Three Steps to Reducing Carbon EmissionsThree Steps to Reducing Carbon Emissions

• Greenhouse gas inventories– Method to measure of impact within defined

organizational and operational boundary

• Product carbon footprints– Tool useful for supply chain (indirect) impacts– Allows product comparisons

GHG Inventories and Product FootprintsGHG Inventories and Product Footprints

GHG InventoriesGHG Inventories• Define boundary• Map out direct/indirect emissions• Select base year• Identify and collect data• Gather emissions factors for each activity• Calculate emissions• Set target

GHG InventoriesGHG Inventories

Supply Chain Supply Chain ‘‘HotspotsHotspots’’

• GHG inventories make ‘hotspots’ moreapparent

• Product carbon footprints make highintensity carbon areas apparent

Supply Chain Supply Chain ‘‘HotspotsHotspots’’: Examples: Examples

• Vancity:– Premises energy use– Paper use– Employee commuting– CEO air travel

Supply Chain Supply Chain ‘‘HotspotsHotspots’’: Examples: Examples

• Bell:– Electricity for telecom network– Vehicle fleet– Electricity for heating and cooling

buildings– Gas & fuel for buildings and fixed back-

up generators

Example of Supply Chain Example of Supply Chain ‘‘HotspotsHotspots’’

• Mountain Equipment Co-op GHG TransportFootprint 2005– Logistics department identified ‘hotspots’

> Duplicate POs > Canadian shipping (70% impact)

• Consider GHG inventory or business goals andrelevance of categories to guide value chainchoices

• To determine category relevance, consider:– Large size relative to the company’s direct emissions and

purchased electricity– Contribution to organization’s risk exposure– Deemed critical by stakeholders– Control to undertake or influence reductions

Accounting for Supply Chain EmissionsAccounting for Supply Chain Emissions

• Scope 3 GHG emissions– Not necessary for companies to report details of

the wide range of activities that Scope 3 covers– Determining what to report - consider:

• Scale• Importance to your business• Stakeholders

Indirect Emissions: Advice from the CDPIndirect Emissions: Advice from the CDP

• Product carbon footprints• Supply chain disclosure

Techniques for Supply Chain EmissionTechniques for Supply Chain EmissionMeasurementMeasurement

Product Carbon FootprintsProduct Carbon Footprints

• Considers all raw materials and processes required toget a product to market

• Calculates the carbon footprint through LCA• Identifies opportunities to make significant additional

cuts in emissions and energy costs• Allows forward-thinkers to develop low-carbon

products

• Product Lifecycle– Raw materials– Raw materials distribution– Manufacturing– Distribution– Retailing– Consumption/Product use– Disposal

• Single supply chain has emissions from multiple sitesand operations

Lifecycle AnalysisLifecycle Analysis

Example of Example of Product Carbon Footprints: TrinityProduct Carbon Footprints: TrinityMirror NewspaperMirror Newspaper

• Operational emissions make up less than 1/5of total carbon footprint; 80% of the carbonfootprint is processed and raw materials usedby other companies in the supply chain

• Energy source, rather than energy use, inpaper manufacturing is the main driver ofcarbon emissions

Example of Product Carbon Footprints:Example of Product Carbon Footprints:Marks & SpencerMarks & Spencer

• Stores, fleets represent approximately 10% offootprint

• Example: Clothing• 80% of company’s clothing footprint is from washing and

ironing• First step to reduce product related emissions is a

program to lower wash temperatures on clothing to 40ºC(potential to reduce UK’s household electricityconsumption by 0.25%)

LCA WalkerLCA Walker’’s Potato Chipss Potato Chips

• Example: Walker’s Snackfoods

Potato Farming WarehousingShipping Landfill

RecyclingFrying

Context:Context:

How Purchasers Can Reduce CarbonHow Purchasers Can Reduce CarbonEmissions Throughout The Supply ChainEmissions Throughout The Supply Chain

• Direct emissions: Scope 1– Heating fuel– Transport emissions (transport of materials,

products, waste and employees)

Reducing Direct Emissions ThroughReducing Direct Emissions ThroughPurchasingPurchasing

• Direct emissions: Scope 1– Fuel combustion for heating

• Reduce need for heating• Buy greener fuels• Buy green fuel generators• Buy green power

Reducing Direct Emissions ThroughReducing Direct Emissions ThroughPurchasingPurchasing

Case Study: Bell Canada Replaces Fuel WithCase Study: Bell Canada Replaces Fuel WithClean EnergyClean Energy

• Renewable Energy– Wind and solar

• Replaced diesel generators with 41 wind turbinesand 12 solar panels installed at remote northernsites ( 12,153 litres of diesel per site, and energysavings in fuel transport)

• Surplus power generated from the wind/solarsystems used to heat the on-site building

– Hydrogen fuel cells• Piloted and then expanded use of hydrogen fuel

cells to fuel telecommunications equipment• Hydrogen fuel cell-powered back-up generators

operating in Ontario, Québec and Alberta

Case Study: Bell Canada Replaces Fuel WithCase Study: Bell Canada Replaces Fuel WithClean EnergyClean Energy

• Direct emissions: Scope 1– Fuel combustion for transport (transport of

materials, products, waste and employees)• Green fleets

– Prevent trips– Lease/Buy efficient vehicles– Buy clean fuel vehicles– Reduce emissions during travel (buy routing software,

ensure proper maintenance of vehicles, train driverson anti-idling, etc.)

– Support flexible work policies with appropriatetechnology

Reducing Direct Emissions ThroughReducing Direct Emissions ThroughPurchasingPurchasing

• E3 Fleet Participant:– Rate participants on:

• fleet action plan training and awareness• idling reduction• vehicle purchasing• fuel data management• operations and maintenance• trip and route planning• utilization management• fuel efficiency• GHG performance

Case Study: Fleets at the Resort MunicipalityCase Study: Fleets at the Resort Municipalityof Whistlerof Whistler

• Biodiesel Fleet– B20 Biodiesel Fuel– Fire trucks– Five school buses

• Alternative Powered Vehicles– Electric vehicles– Gas/electric hybrids

• Bus Fleet– B5 Biodiesel blend through BC Transit contract

with West Coast Biodiesel (112,000 litres/yr)– Cost =/<, no modifications to engines or

infrastructure

Case Study: Fleets at the Resort MunicipalityCase Study: Fleets at the Resort Municipalityof Whistlerof Whistler

• Trials– Propane Test Project

• Six vehicles with test conversion kits• Measure test emissions against baseline

– Diesel Engine Emissions ReductionProject• Install and test Diesel Oxidation Catalysts

(DOCs) on heavy-duty vehicles

Case Study: Fleets at the Resort MunicipalityCase Study: Fleets at the Resort Municipalityof Whistlerof Whistler

• Indirect emissions: Scope 2– Purchased electricity

• Heating/cooling buildings• Other activities• Green power source• Install controls to reduce use• Buy monitoring software to improve efficiency of building

HVAC systems• Buy BC Hydro green power certificates

http://www.bchydro.com/business/gpcerts/gpcerts3621.html

Reducing Direct Emissions ThroughReducing Direct Emissions ThroughPurchasingPurchasing

Case Study: MEC Wind PowerCase Study: MEC Wind Power• Mountain Equipment Co-op

GHG Buildings Footprint 2003– Building energy consumption

and GHGs by fuel type– 2 Alberta stores responsible for

56% emissions– Purchased 100% windpower

• Indirect emissions: Scope 3 (Supply Chain)– Extraction and production of purchased materials

and fuels– Transport-related activities– Leased assets, franchises, outsourced activities– Use of sold products and services– Waste disposal

Reducing Direct Emissions ThroughReducing Direct Emissions ThroughPurchasingPurchasing

• Product Lifecycle– Raw materials– Raw materials distribution– Manufacturing– Distribution– Retailing– Consumption/Product use– Disposal

• Single supply chain has emissions from multiple sitesand operations

Lifecycle AnalysisLifecycle Analysis

• Wal-Mart Packaging Scorecard– Evaluates sustainability of packaging:

– greenhouse gas emissions related to production,– material value,– ratio of servings to packaging,– cube utilization,– recycled content,– innovation,– the amount of renewable energy used to

manufacture the packaging,– recovery value of the raw materials and,– emissions related to transportation of the

packaging materials

Reducing Indirect Emissions: PackagingReducing Indirect Emissions: Packaging

• Wal-Mart Packaging Scorecard– Not mandatory– Suppliers receive a score per package relative to

competitive packages. The scorecard considersprimary and secondary packaging as well as transportpackaging such as pallets

– Goal to reduce overall packaging 5% by 2013,estimated to prevent 667,000 metric tons of carbondioxide from entering the atmosphere

– First month of use:– 2,268 vendors logged onto the site– 117 products had been entered into the system

Reducing Indirect Emissions: PackagingReducing Indirect Emissions: Packaging

• Example: Packaging EmissionsComparison

• GHG (landfill): 1kg garbage=1.7 kgCO2 in landfill

• GHG of recycling (newsprint): -2.81 tCO2/t

• GHG of source reduction (newsprint): -3.81 t CO2/t

Indirect GHG ReductionsIndirect GHG Reductions

• Buying Greener Paper– Shift from30% to100%post consumerrecycled paper

Case Study: Paper Purchasing at VancityCase Study: Paper Purchasing at Vancity

• Reducing paper use– shifting to member e-communication– introduced robust recycling programs– set printers to automatically duplex– reduced the size of waste bins to increase

awareness– reward staff who are ‘caught’ using

reusable mugs and lunch containers

Case Study: Paper Purchasing at VancityCase Study: Paper Purchasing at Vancity

• Reducing waste– are shifting the way we communicate with our

members from paper-based communications toonline communications

– introduced robust recycling programs– set our printers to automatically print on both sides of

the page– seek to purchase only 100% post consumer recycled

paper– reduced the physical size of our waste bins to

increase mindfulness among staff– reward staff who are ‘caught’ using reusable mugs

and lunch containers

Case Study: Paper Purchasing at VancityCase Study: Paper Purchasing at Vancity

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs• Questionnaires:

– Language seeking information or data on greenhouseemissions/energy reductions

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs• Questionnaires:

– Language seeking information or data on greenhouseemissions/energy reductions

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs• Questionnaires:

– Language seeking information or data on greenhouseemissions/energy reductions

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs• Questionnaires:

– CDP questionnaire

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs• Contract Language:

– Contract Clauses indicating environmental performance orrequiring standards

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs

Carbon Disclosure Project (CDP - CDProject.net)• Largest registry of Corporate Greenhouse Gas

Emissions in the world• Searchable• Many corporate reports are disclosed

Tools for Purchasers to Reduce GHGsTools for Purchasers to Reduce GHGs

CDP’s Supply Chain Leadership Collaboration• Launched May 2007• Wal-mart, Tesco, Coca-Cola, Loreal, Cadbury-

Schweppes• Infrastructure of CDP (questionnaire, database) used

for supply chain• Tiered approach - 1) top suppliers, 2) larger supply

group with internal reporting, 3) public disclosure• Focus on public procurement initially in Canada

Reduce Your Greenhouse Gas EmissionsReduce Your Greenhouse Gas EmissionsThrough Purchasing: 5 Focus AreasThrough Purchasing: 5 Focus Areas

1. Paper

2. Fleets

3. Packaging

4. Local Procurement

5. Electronics

• Reduce

• Track emissions per use

• Procure

– Focus efforts

– Communicate goals and requirements (contractlanguage, custom specs)

– Work with suppliers as required

– Bulk buying/buying clubs

Focus Area #1: PaperFocus Area #1: Paper

Focus Area #1: PaperFocus Area #1: PaperExample: Paper Specifications

• Example: Catalogue PaperProcurement at MEC

– 88% of paper use

– Focused green paper procurementefforts

– Difficult to source catalogue paperswith high recycled content

Focus Area #1: PaperFocus Area #1: Paper

• Right-size vehicle types

• Alternative fuels (ex. biodiesel)

• Alternative vehicles (ex. hybrids)

• Maintenance

• Driver training

Focus Area #2: FleetsFocus Area #2: Fleets

Focus Area #2: FleetsFocus Area #2: Fleets• Example: City of San Jose Green Fleets

Focus Area #2: FleetsFocus Area #2: Fleets• Example: City of San Jose Green Fleets

– Lease/purchase the “cleanest” vehicles possible

• Light-duty EPA-rated LEV

• Heavy-duty CARB certified low emissions

• Alternative fuel vehicles procured when use appropriateto application, where lifecycle cost analysisdemonstrates economic feasibility and when fuelinginfrastructure exists

Focus Area #3: PackagingFocus Area #3: Packaging

•Measure packaging contribution to overallwaste and hours/$ required tounwrap/manage/dispose•Specify right-sized packaging•Require locally recyclable materials•Require supplier take-back•Communicate goals and work with suppliers•Bulk wrapping for bulk orders

Focus Area #3: PackagingFocus Area #3: PackagingExample: Nike Packaging Requirements

• Shoe Boxes• Standard boxes made from 100 percent recycled paper,

80 percent post-consumer content• Paper usage reduced by 16 percent by decreasing the

depth of the hinged lid and size of the “rollover” orfolding edge at the end of the box.

• Printed with water-based inks• Contain no glues, coatings or staples

Focus Area #3: PackagingFocus Area #3: Packaging

Example: Nike Footwear Packaging

Focus Area #3: PackagingFocus Area #3: PackagingExample: Nike Footwear Packaging

•Shoebox Procurement•Production originally fell to each factory, outsourced locally•Designed and produced packaging themselves and initiallycentralized production in US•Contracted to 2 US companies with factories in Asia

•Results•Nike reduced cardboard/box 16%

•5,000 t cardboard each year•19,350 t GHG (recycling only)

Focus Area #3: PackagingFocus Area #3: PackagingExample: Nike Packaging

• Reduce carbon intensity of globalized supplychains

• Create and deepen relationships with localsuppliers as a way to hedge against climatechange

Focus Area #4: Local ProcurementFocus Area #4: Local Procurement

• Example: Purchasing Local Food at UVic• UVic Greenhouse Gas Assessment and Analysis

– Greenhouse Gas (GHG) project to quantify emissions fromenergy use, transportation, food and material resources

– Food working group working on local food procurement forGHG reduction, food system and economic/social benefit

Focus Area #4: Local ProcurementFocus Area #4: Local Procurement

• UVic food working group– Factors affecting local food purchases:

– Examined purchasing methods (Large contracts, spotbuying, specialized contracts) for areas most conducive tolocal suppliers

– Contract award on 'best value' - financial, and quality,reliability, delivery, and other criteria set by UVic

– Rising fuel costs and the rising Canadian dollar are eveningout cost competition between local foods and places likeCalifornia

– NAFTA and TILMA pose barriers for local procurement.TILMA lowers threshold from $25,000 to $10,000

Focus Area #4: Local ProcurementFocus Area #4: Local Procurement

• UVic food working group• Purchasing:

– UVic Purchasing protocol of “local wherepossible”

– Focus impact at the level of ‘chefpurchasing’; responded to contractdiscrimination worries by requesting the 'chefpurchasing limit' for direct purchases beincreaed raised from $500 to $2500

Focus Area #4: Local ProcurementFocus Area #4: Local Procurement

• Reduce packaging

• Recycled content or bio-based materials

• Require end-of-life considerations (suppliertake-back)

• Maximize energy efficiency

– Equipment

– Power Supplies

Focus Area #5: ElectronicsFocus Area #5: Electronics

• GHG Reductions Using EPEAT– Every 1000 EPEAT purchased & discarded units recycled:

• Reduces energy use 1.2 million kWh (power 101houses/yr)

• Reduces greenhouse gas emissions 90 million tonnesMTCE (71 cars off the road/yr)

– Also• Reduces municipal solid waste 34.7 metric tons (waste of

18 houses/yr)• Reduces hazardous waste 17 metric tons• Reduces toxic materials, including lead & mercury, by

136 kg

– Electronic environmental benefits calculator:www.nerc.org

Focus Area #5: ElectronicsFocus Area #5: Electronics

• Example: California Integrated Waste ManagementBoard (CIWMB)– Upgrade desktop computers processor chips from Intel 486

to Pentium Overdrive POD83

– Procurement staff worked with the vendor to reducepackaging

• Moved from standard "boxed" processors to bulkpackaging

– 500 boxes and foam packing reduced to 5 boxes

– Total packaging materials and storage spacerequirements was reduced by 95%

Focus Area #5: ElectronicsFocus Area #5: Electronics

Carbon OffsetsCarbon Offsets

OffsetsOffsets

• Measure• Reduce• Offset

– Mitigate emissions you can’t reduce• Invest in projects that avoids or absorbs

equivalent GHGs

Types of OffsetsTypes of Offsets

• Types of offsets:– Renewable energy projects– Energy efficiency projects– Protecting or increasing forest ecosystem

capacity

Offsets - StepsOffsets - Steps

• Define goals• Evaluate options in marketplace• Invest in one project, or a “portfolio”• Ensure quality

– Additionality– Verification

• Communicate commitment

10 minute Break10 minute Break

Please stretch your legs and grab somerefreshments

Carbon PanelCarbon Panel

University of British ColumbiaUniversity of British ColumbiaLarry BerglundLarry Berglund

Director of Supply ManagementDirector of Supply Management

Offsetters.comOffsetters.comJames TanseyJames Tansey

Co-founderCo-founder

Saltspring CoffeeSaltspring CoffeeMickey McLeodMickey McLeod

OwnerOwner

Tools and ResourcesTools and ResourcesYour resource CD contains:

– WRI: GHG Protocol and Calculators

– WRI: Office Guide to Climate Change + Calculators

– Carbon Trust: The Carbon in All We Consume

– Carbon Trust: Carbon Footprints in the Supply Chain

– SPN Backgrounder: Carbon Neutral Supply Chains

– Strandberg Consulting: Guide to Going Carbon Neutral

– SPN Business Case Guide to SP

– Sustainability Purchasing Trends and Drivers

– BSR: Guide to Voluntary Offsets

Workshop EvaluationWorkshop Evaluation

• Content / Information Level

• Expectations

• Length of Session

• Format

• Questions on the session?

Upcoming EventsUpcoming Events

• May 15th - Reducing Toxins in the SupplyChain (Learning Circle)

• June 12th - Fundamentals of SustainabilityPurchasing (Workshop)

Thank you!Thank you!www.buysmartbc.com

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