Non-PC businesses risk losing govt contracts

By Coran Lill

Friday 18th June 2004

Businesses stand to miss out on lucrative public service contracts if they fail to kowtow to a new "environmentally friendly" government practice.

They also face increased costs as a result of the move part of a push by the coalition government for businesses to embrace lofty environmentally sustainable principles.

At least 19 core government agencies including the police, Treasury, Transit and the New Zealand Defence Force have signed up to "Govt3" a Ministry for the Environment scheme promoting green-friendly spending habits.

Two contracts have already been signed following the initiative including a major police cleaning contract.

Under the three-pronged Govt3, members will be encouraged to:

think about the environment when buying products and services;

assess and minimise the impact of their operations on the environment; and

report on their environmental and "triple bottom line" performance.

Doing these things will help government cut down on energy use, waste sent to the tip and "to buy products that are better for the environment," the ministry's website claims.

Advocating environmentally friendly product purchases was a "major part of the initiative," Govt3 project manager Ross Wells said.

Auckland Chamber of Commerce chief executive Michael Barnett labelled the "greening of purchasing" potentially intimidatory and said not all businesses could afford expensive government-determined environmental values.

Government departments sitting with the knowledge that they cannot go out of business can move higher up the value chain, he said.

"Small businesses could well be excluded from doing business with government," he said.

Products on the Ministry for the Environment's long hit list include environmentally unfriendly office paper, cleaning products, wiring, computers, furniture, paint, ceiling tiles, office partitions and carpets.

The project is a pilot but a March briefing paper to Environment Minister Marion Hobbs said the Ministry expected Govt3 "to continue for a number of years."

It will be reviewed yearly.

The cost to businesses if government agencies permanently adopt the enviro-friendly practice is uncertain.

"We recognise that [environmentally friendly] products might sometimes be more expensive for central agencies. But this is not always the case," Wells said.

However, the majority of private sector organisations will need to lift their game to secure their place in the lucrative government contract loop.

Wells said the ministry was not advocating a minimum environmental standard because each government agency needed to make its own buying decision based on a number of factors including government "value for money" guidelines.

However, any business with the government-initiated Ecolabelling Trust's Environmental Choice label would easily pass any check, he said.

"But if they haven't got the tick, then there may be other ways."

The project was not designed to preclude businesses or create monopoly suppliers, he said.

The overwhelming majority of New Zealand businesses do not have the Environmental Choice label. Just 11 organisations are accredited and annual licence fees range from $750 to $17,500. A third of that money is spent on marketing the label and the supplier's involvement with it.

Smaller changes in government purchase practices would hopefully result in a major change overall, Wells said.

"We're hoping government agencies will move in this direction in a sensible way and that business can move in this direction as well."

The implications for businesses are minimal at this stage, Wells said, but they would face increased enquiries about their products and practices before contracts were awarded.

"We are encouraging [the agencies] to ask what the components are, how much energy does it use, what packaging do they come in and what happens to components at the end of their life."

In the longer term "it may mean that some agencies consider environmental issues more explicitly in their procurement criteria."

Govt3-type initiatives were common in countries such as Japan, the US, Australia and across Europe, Wells said.

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