Green IT & Green Hosting

Green Contracting and Greenwash

24/08/10

Most businesses are not green behind the ears - they can see 'greenwash' coming a mile off.

Overhyping green credentials will usually backfire badly.

Most people will be very familiar with the term 'Greenwash'. With an increasing number of businesses keen to demonstrate their green credentials, a tendency towards hype or sales 'spin' is often inevitable. It is something that has bedevilled those intent on promoting true green practices and principles within their businesses.

A recent example of a serious attempt to demonstrate 'good' green credentials is the coverage of the new HQs for two of the UK's largest professional services and accountancy firms, Ernst & Young and PriceWaterhouseCoopers, both moving to new eco-friendly buildings just yards apart.

The press coverage has been impressive and clearly both companies have made enormous efforts to demonstrate their environmental credentials by giving staff the ability to control their own environments and demonstrate low carbon credentials. PWC's building, for example, uses power generated by a bio-diesel fuelled combined heat and power plant in the basement, which led perhaps unfairly to one blogger's comment: "'PriceWaterhouseCoopers' UK HQ to run on cooking oil".


Getting Back to Basics
Low carbon credentials are an essential in the modern economy. Greenwash is not. There is still some way to go before these low carbon credentials go beyond good intentions to behaviour that is both measured and driven in commercial contracts, in order to achieve the requirement in the Energy Act 2008, which obliges the UK to achieve a 20% cut in emissions by 2020, and potentially more ambitious EU and central government targets under review. Marketing spin will now no longer be adequate.

Customers are increasingly requiring businesses to demonstrate green credentials, or to assist it to save energy by reducing its reliance on carbon resources. The public sector leads the way, in particular by demanding green credentials from all tendering businesses.

This involves not only an analysis of compliance with objective 'green' measurements, but also demonstrating that the bidder is a good 'citizen' by demonstrating robust and achievable corporate social responsibility aims.

How to Avoid Greenwash
True 'green' contracting calls for more than a tick-box response to green issues, or a few badges or certifications:

• Green should deliver tangible financial benefit. This may be by saving energy or increasing the return on investment on projects by using green measures
• Green should also deliver carbon benefits and drive behaviour change, whether this is in relation to ways of working, including flexible working, reducing travel costs or by encouraging environmental consciousness; for example, in relation to recycling.

Too often, at present, green credentials are demonstrated in a 'tick the box' manner, where suppliers are asked to produce requisite credentials, but these do not carry through to the performance of the contract.

For example, in many public sector contracts, the prequalification tender will require compliance to appropriate environmental standards, e.g., IS14 001, an environmental management system to measure and document a business's environmental impact or to demonstrate that the company has a corporate social responsibility policy. But these remain factors in the evaluation of the supplier, rather than contractual issues that later drive the behaviour of both the customer and the supplier to seek cleaner ways of working.

A co-ordinated strategy that avoids a tick-box mentality is essential, in order to drive the behaviours that will truly set measurable targets, without costing the earth (in financial terms at least). Steps that the customer can take in its contracts include: Demanding true compliance with environmental standards, such as ISO14 001 (including rights to audit), capability of the standards and engaging in continuous improvement programmes to drive behaviour beyond their compliance with a notional standard or self audit.

Require compliance with, or measurement against, non-legally binding standards. A good example that has become increasingly popular is the EU Data Centre Code of Conduct. This is not intended to be a legally binding standard, but, in the public sector at least, is gaining traction as a standard to which data centre operators to the public sector must demonstrate compliance. If actual notification under the scheme is not possible, then it may be possible, in contractual terms, to require equivalent standards to be achieved short of notification.

To focus on measureable key performance indicators to measure carbon reductions and savings. A carefully constructed plan would include future compliance with the reporting requirements under the Companies Act 2006, to be introduced from 2012.

Driving behaviour by use of service levels or service credits for achieving set environmental standards; eg, carbon/low carbon energy considering power mix or adoption of specific improvements or innovations in a continuous improvement programme. Measuring innovation in a contractual sense is always going to be difficult, but is possible to achieve with the right metrics laid out in the contract.

All well and good, but how exactly can a supplier drive good environmental behaviour?

Well, reduce the spin, for one thing. Many marketing claims (about green or otherwise) often do not stand up to close scrutiny. Ultimately, the best way for customers to avoid greenwash is to present straightforward marketing communications and messages. This is consistent with the Advertising Standards Authority Codes of Conduct.

Moreover, if an available product or service is potentially a 'green product or service', then, in substantial contracts at least, suppliers may well be able to share the benefits this might yield by driving behaviour. Equally, where the bargaining power is adequate, there is no reason why customers should not be required to engage in their own improvements and analysis of their environmental practices, as a means of improving efficiencies.

Also, make sure your practices comply with the standards you are proclaiming for your products or services. Customers may require a more detailed audit of suppliers' own behaviour in future, and any inconsistencies between a supplier's own standards and the benefits its products or services deliver for suppliers could well become a highly fertile ground for contract negotiations.

Under the Companies Act 1996, directors' duties have now been added. They are under an obligation to consider, in each case, the impact of a business on the environment. Ultimately, greenwash can only be avoided where top management of a business is fully engaged and committed in this way to demonstrating real environmental credentials.

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