Shaping a green procurement strategy: Q&A with Yalmaz Siddiqui
[Editor's note: Office Depot's Yalmaz Siddiqui will offer insight on sustainable purchasing best practices during a workshop today at the GreenBiz Forum in New York.]
At least 45 countries have embraced national policies requiring public agencies to buy greener products and services. Businesses are using similar commitments to drive more efficient and environmentally sensitive supply chains.
While the U.S. Green Building Council's LEED system has become a commonly used guidepost for green building, there is no equivalent today for sustainable procurement. The Sustainable Purchasing Council aims to make the process simpler, with input from the nonprofit community and big companies like Office Depot that are creating strategies of their own.
Yalmaz Siddiqui, co-chair of the SPC steering committee and senior director of environmental strategy for Office Depot, offers advice for how to "buy better."
Heather Clancy: When it comes to what Office Depot uses for its own operations, what are your specific sustainable purchasing goals?
Yalmaz Siddiqui: We have an overall strategy to buy greener, be green and sell greener. ... The way you framed the question was specific sustainable purchasing goals. That, to me, implies a target, a specific goal you are trying to achieve, that is qualified. I would say our goal is to buy greener, as a concept, as an idea, and then measure performance against that qualitative objective ...
From a procurement standpoint for our own operations, what we have been really thinking about are economic and environmental hot spots. We know that from both a spend standpoint and impact standpoint, we spend a lot on energy. We manage 35 million square feet of building. So, the decisions we make from a procurement standpoint around lighting, around energy management, actually drive a very significant lifecycle environmental footprint. It's not just energy and carbon. Embedded in the use of energy are a whole series of impacts around water use, toxicity and pollution, etc. So the first focus has been on greener procurement of energy using technologies, particularly lighting and software that can control energy usage.
HC: Why did you pick that first?
YS: Two reasons. One, we know there is a tremendous focus on carbon emissions and carbon footprint reduction in society and the corporate world. We also know that is where the biggest bang for the buck is from a lifecycle environmental impact and long-term cost reduction, as well. So, we tried to find the sweet spot from the two dimensions of sustainability: meaning that environmental and economic [improvements] were both achieved through that focus on lighting. …
The other major category that we focused on was office supplies for ourselves. Office supplies and paper are very material products. We are associated with paper, so for our own internal use, we have gone from 30 percent of our paper from marketing being FSC-certified in 2008 to 70.4 percent in 2011. [In addition], 87 percent of the copy paper we use internally is 30 percent or more post-consumer recycled content. And the majority of the cleaning products for our operations are greener.
Really, the categories are energy-using devices, paper and cleaning products.
Photo courtesy of Office Depot
HC: What investments did this require? How did you find the money to make the lighting change, for example?
YS: Procurement and construction had to make the case. [They] had to test different technologies, try different lighting options. They actually tested a lot of different options with a lot of vendors, then selected one with the right fit from a combination of price, quality of light, degree of efficiency gained, and estimated savings and rate of return. All of that goes into what we call an expenditure justification model, an EJM. After which things get approved or not approved. We have had four rounds of energy-efficient product procurement EJMs all get approved.
HC: How important is it to win the support of senior management?
YS: For major investments like energy efficiency, definitely we need to earn the support of senior management. For paper, there has been a long-standing agreement to use 30 percent recycled or FSC paper partly as a corporate citizenship and walking-the-talk type of motivation. If we are out there selling greener paper and taking a stance on this topic, we want to be buying in line with our selling. We also believe that a product like paper is very visible within the workplace, and if you want to be considered an environmentally enlightened company, that is definitely a product that must be part of your platform.
HC: How would you rate your progress?
YS: I would give us a solid B+. I think there is no one in the A or A+ or A- world right now for sustainable procurement. If I look at what is perfection in terms of sustainable procurement, I don't think it is defined yet. In terms of a true methodology to look at your buying habits, look at the categories that have highest impact (whether it's social or environmental or economic), rigorously decide how you're going to make that purchasing more sustainable, how to manage the trade-offs, deciding which categories go first.
I think we are pretty sophisticated, but there is no universal definition yet. Nor is there a universal program, yet. We'd like to leverage our insight and experience to help create that perfect program.
Photo courtesy of Office Depot
HC: As a global retailer, Office Depot has a big role to play in helping businesses and individuals reduce their own environmental impact. How green are the products on your store shelves?
YS: The aspiration is qualitative: to source greener products for resale. Let me give you the numbers. In 2007 [in North America], we had 5,200 products with one or more environmental attributes like recycled content, remanufactured, plant-based materials, compostable, rechargeable, energy-efficient, nontoxic. All those single attributes. Leapfrog to 2011, and we had over 10,000, so a near-doubling. On the recycled attribute alone, we had 3,600 SKUs [in 2007] with some recycled content. In 2011, we had 6,200. …
Out of those 10,000 products, 3,700 have a credible eco-label that goes beyond the industry norm. …
When you consider that we have about 7,200 active products, the green product assortments is about 14 percent. But we also track green sales: 28 percent of our sales are for products that have environmental attributes.
HC: Do the results differ depending on the country or region?
YS: It's definitely different, and the difference is customer pull. Our environmental program is very customer-driven, very customer-centric. In North America, for example, we did a lot of work to understand the environmentally preferable purchasing policies and practices of major institutional buyers. … We tried to distill their requirements into the approach that we have taken. We are reflecting back their approaches. We recognize that eco-labels aren't big yet, but are increasingly in the future. Contrast that with Germany, where nearly 100 percent of our green products are eco-labeled. To give you another example, in the U.K., there is less focus on green attributes and more on transparency and chain of custody.
HC: When will sustainable procurement practices become commonplace?
YS: When it is truly defined and defined as more than environmental procurement. When it is desirable from a business standpoint, recognizing that economics are part of sustainability and you can do sustainable procurement in ways that can save your organization money, either immediately or over time.
Once you define sustainable procurement as something that includes economic preferability as well as social preferability and environmental preferability, then you can have the discussion about motivation.
For more about Siddiqui's sustainability philosophy, listen to this GreenBiz podcast.
Image courtesy of Office Depot.