Low carbon procurement back on the menu

A GROUNDBREAKING partnership between public and private sector promises to create demand for lower-carbon products in the catering sector. Nick Hughes reports.

 

The shift towards a low carbon economy was one of the pillars of David Cameron’s promise - on becoming Prime Minister - to lead the “greenest government ever”. Fast forward two years and those innocent days when the word ‘economy’ was often prefixed with ‘low carbon’ or ‘green’ seem like a distant memory.

 

For advocates of sustainable development, the Utopian vision was one that saw suppliers of affordable low-carbon goods and services winning contracts at the expense of laggards who failed to fully embrace the green agenda.

 

The reality has proven very different. The prolonged period of economic depression has meant that, where procurement is concerned, cost still reigns supreme leaving green innovators to reflect on whether their investment in low-carbon technologies was really worth it.

 

In launching a brand new initiative this month aimed at stimulating demand for low-carbon goods and services, business secretary Vince Cable admitted that such products are still not reaching the market at the pace, in the quantities and at the price needed. “Without a visible, credible and committed customer demand suppliers lack a key incentive to invest in developing the low-carbon products of the future,” said Cable.

 

The new scheme aims to change all that. Spearheaded by The Prince of Wales’s Corporate Leaders Group on Climate Change and the Department for Business, it brings together major public and private sector customers – including the Government Procurement Service, BT and BSkyB - in establishing joint Procurement Compacts for low to zero carbon goods and services in three pilot sectors: catering, transport and energy (bio-gas).

 

In essence, the compacts are a call-to-arms to suppliers in these sectors to participate in an open dialogue about how they can work with their customers to bring progressively lower-carbon goods and services to the market. There are no legally binding targets - just commitments from the signatories that if suppliers can deliver low carbon products and services at an acceptable price, they will buy them.

 

The hope from those driving the initiative is that the compacts will provide the impetus for a shift towards low carbon procurement in the three sectors involved. Their challenge will be in convincing suppliers that they intend to make good on their commitments.

 

There is a common paradox that has so far hampered the commercialization of low-carbon technologies. Mitigating climate change requires new goods and services that are not yet commercially available or only available at excessive cost. Because they’re not available customers don’t ask for them and because there is no demand, companies who try to innovate don’t have grounds for new investment. As a result, low carbon goods and services struggle to reach the market and customers have few options available to them.

 

Economic uncertainty has exacerbated the problem with buyers of catering goods and services in both the public and private sectors invariably resorting to lowest-cost tender processes to meet exacting budgetary demands.

 

Martin Chown, director of government procurement projects for the Government Procurement Service, admits that “one of our key objectives is delivering savings for the public sector” but he also adds “the opportunity is there to see how we can do that in a more sustainable way”.

 

In catering, in particular, there are substantial opportunities for carbon savings through better procurement. Cable cited the example of a family run baker that received a grant from the Carbon Trust to install new ovens, which resulted in carbon savings of up to 40%. “Multiply that across all the ovens used in the public sector and that becomes an excellent saving,” he enthused.

 

The greatest strength of the compact is its simplicity, according to Cable. There are no complex logorithms in place to calculate the carbon performance of goods and services. If suppliers or foodservice operators can demonstrate improvements in carbon efficiency arising from the manufacture, supply, transport and operation of catering services they will be looked on favourably during the tender process. “You’ve got to make this relatively simple to get past procurement officers in government,” says Cable. “If it’s too complicated people will go back to the lowest-cost tender process.”

 

But its simplicity may also turn out to be the scheme’s greatest weakness. As the Carbon Trust pointed out during the launch event, measuring the impact of carbon is not a simple process. Much of the carbon impact of food products, in particular, is not in operational carbon but carbon embedded in products at the production end of the supply chain. Cable, however, made no apologies for excluding embedded carbon from consideration in the compacts. “It would be incredibly difficult to apply and may end up with nothing being done. Our main task is to get to first base,” he said.

 

If the government’s recent performance on sustainable procurement is anything to go by, the partnership may be wise in not seeking to run before it can walk. Defra was recently found to be falling short of meeting its own buying standards on food procurement; proof, in the opinion of Sustain, that “the government is not prioritizing sustainability when it comes to buying food with taxpayers money”.

 

For the scheme to work, catering suppliers will need to be convinced that the signatories are committed to delivering on their promises. Keith Warren, director of the Catering Equipment Suppliers Association, welcomed the initiative but added that it was in need of refinement, and recommended the setting up of a cross-departmental strategy group committed to driving the agenda forward.

 

Ultimately, the proof of the compacts’ potential to deliver real change will be in their ability to provide a competitive advantage to suppliers who can deliver low-cost carbon goods and services and thus overcome some of the barriers to their development.

 

As Neil Carson, CEO of chemicals company Johnson Matthey, noted: “The risk is that you have to invest R&D money into something that may turn out to be unsuccessful. The second risk is that there may not be a market for these products. These compacts should remove the second risk at least.”

 

The intention is undoubtedly a good one. The onus will now shift onto suppliers to engage with an initiative that could, in the best-case scenario, provide a catalyst for the long-awaited shift towards a low-carbon economy.

 

Key questions

 

What is a Procurement Compact?

 

It is a statement of commitment of public and private sector customers to buy progressively lower-carbon goods and services providing they meet operational needs and can be delivered cost-effectively

 

What does it mean for the catering sector?

 

Signatories including Lloyds Banking Group, Nottingham University Hospitals NHS Trust, the Government Procurement Service and BSkyB have stated their ambition to purchase lower carbon catering goods and services taking into account food procurement, transportation, distribution, preparation and waste management.

 

How can suppliers get involved?

 

Suppliers can express their interest in supplying lower-carbon goods and services or simply offer opinions on the Procurement Compact by completing a short questionnaire at www.cpsl.cam.ac.uk/procurement.

 

 

What happens next?

 

Further details on the compacts will be released throughout the rest of the year. In the longer-term, the plan is for joint public/private steering groups to be established and yearly updates on progress to be given.

 

 

 

 

 

 

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