What Does It Mean When Procurement Goes Green?

Green purchasing by companies is up in a down economy. Our recent October 2009 survey of more than 450 companies found that over the past 12 months there was a 63 percent increase in green purchasing, from computers to chemicals to cleaning supplies. Perhaps even more encouraging, none of the respondents from large companies (those with revenues over $1 billion) identified any decrease in buying green.

But when it comes to businesses buying green, what do they really mean?

Last year, we formed the GreenBiz Intelligence Panel to take a regular pulse of the green business world. Each month, we ask the 2,550-member panel questions about a wide range of issues and trends. And each month, several panel members point out that while our survey questions are absolute, there is still a lot of gray when it comes to corporate sustainability initiatives. They're right, of course, and nowhere is this more apparent than for those responsible for purchasing and procurement at companies large and small.

As if to illustrate this challenge, one panel member posed the following question to highlight the lack of tools when making a purchasing decision. "Is it better to buy a 'compostable' product shipped all the way from China or a recycled Styrofoam product produced in the USA (that will be recycled after use)? Always buying a 'green' product may not necessarily be a 'green' practice." While conducting a survey of businesses who are grappling with these issues can't solve them, they can tell you what your peers are doing. For the members of the GreenBiz Intelligence Panel, the need for useful information is an ongoing interest.

Leading the Way: Office Supplies, Cleaning Products, and Computers

As Joel Makower noted in the 2009 State of Green Business report, Information technology "is one industry experiencing a ‘race to the top,' in which companies are both cooperating and competing to create high standards of performance." During our recent survey, we asked panel members to identify all products that they are purchasing based upon green criteria. Cleaning products and office supplies lead in their respective categories (78 percent and 57 percent respectively). Computers and other IT hardware were called out by 55 percent of the companies responding.

Office supplies led all product categories by a long shot, with 78 percent of survey respondents reporting that they evaluate these as part of their green procurement standards. It turns out that size matters: Only 53 percent of companies with revenues over $1 billion consider office supplies when buying green. We've seen similar findings from other surveys, where fewer than 5 percent of companies with revenues under $10 million flatly stated "I will not pay a premium for a green product" compared to 19 percent of companies with revenues over $1 billion. In fact, there's good news for those companies targeting small business buyers: 70 percent say that for some products they would pay a premium that exceeds six percent of a comparable product's cost.

Fifty-seven percent of healthcare companies surveyed placed computers at the top of their lists, with office supplies and cleaning products a distant 29 percent. There's more good news for green computing as half of the 140 professional services companies who participated in this survey evaluate hardware using green criteria.

None of this was particularly surprising as there are a number of popular certifications and ratings for these product categories, such as the Forest Stewardship Council's certification for paper and wood products, Green Seal for cleaning products, and the EPEAT standard for computers.