Green Sourcing Make Dollars and Sense

David BaumannCEO, Counsel

and ConsultantTechNexxus

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Overview

• What is Green Sourcing vs Green Washing?• Why Going (and Staying) Green Makes Sense

– Corporate Responsibility– Reduce Cost– Reduce Risk (Cradle to Grave)

• Domestic• International

– Tax Benefits• How to Grow Green• Green Strategies• Green Sourcing Tips for Outsourcing Professionals• Green Sourcing Tips for Outsourcing Providers

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Green Sourcing

• What is Green Sourcing– Purchasing goods or services that have a reduced adverse impact on health and the

environment– Requirements in contractual relationships with suppliers to require goods, services,

policies and practices that reduce adverse environmental impacts or promote positive environmental impacts

– Acceptance of responsibility for the environmental consequences of actions and decisions

– Corporate direction encouraging the consideration of environmental factors in decision – making

• Incorporate standards that consider– Suppliers with established environmental policies and programs embedded into their

products, programs and processes– Whether materials can be reduced, recycled, returned, or reused– Vendors who offer an Extended Product Responsibility (EPR) program– IT commodities must be certified to meet sustainability standards where possible– Physical building standard certifications (e.g., LEED certification)

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Why Green Outsourcing Makes Dollars and Sense

– Corporate Responsibility– Public Perception– Marketing Advantage / Competitive Differentiation– Product Diversification– Reduce Cost

• Energy• Disposal• Compliance

– Reduce Risk (Cradle to Grave)• Domestic• International

– Tax Benefits

360 – Degrees of Green

Green Sourcing Process

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Green Retail Facts

• "63 million American consumers are eating organics."

"61.9% of Consumers say they use some type of environmentally-friendly product."

"20% Price premium they are willing to pay for "clean, green products over non-sustainable alternatives."

"59% of Retailers are saying that implementing a responsible and green-oriented sourcing and procurement plan is a crucial element of success."

"89% of Retailers see at least some value in green initiatives."

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Green Washing

• Green Washing– Disingenuously spinning products or services as environmentally friendly– Beware of the “Green Sheen” (and new FTC rules)

• The “Six Sins of Greenwashing” (TerraChoice)– Sin of the Hidden Trade-Off: e.g. “Energy-efficient” electronics that contain hazardous materials. – Sin of No Proof: e.g. Shampoos claiming to be “certified organic,” but with no verifiable

certification. – Sin of Vagueness: e.g. Products claiming to be 100% natural when many naturally-occurring

substances are hazardous, like arsenic and formaldehyde– Sin of Irrelevance: e.g. Products claiming to be CFC-free, even though CFCs were banned 20

years ago– Sin of Fibbing: e.g. Products falsely claiming to be certified by an internationally recognized

environmental standard like EcoLogo, Energy Star or Green Seal. – Sin of Lesser of Two Evils: e.g. Organic cigarettes or “environmentally friendly” pesticides

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Green Drivers

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Awareness vs Action

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Cost Drivers

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Why Going Green Matters

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Triple Bottom Line

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How to Grow Green

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IT Sustainability Standards

IT Sustainability Standards• EPA Energy Star Rated

Desktop and notebook (laptop) computers, integrated computer systems, desktop-derived servers and workstations bearing the EPA ENERGY STAR logo are capable of entering a low-power state to reduce significantly the energy it uses. Energy Star is the most widely recognized certification system

• The Electronic Product Environmental Assessment Tool (EPEAT) Products rated bronze, silver or gold under the EPEAT ratings. Ratings based on: Energy efficiency, Design (product longevity/life extension/toxic materials/recyclability), Product take-back, Packaging, and Overall environmental performance of the manufacturer

• If Information Technology (IT) commodities do not meet sustainability standards, then further review is required to ensure: the respective company has an environmental policy in place and an established environmental program is operational, the use of energy-efficient components are embedded into the manufacturing process, and the vendor’s procurement policy includes responsible purchasing from like-minded companies that offer sustainable products

ISO 14001 certification

• ISO 14001:2004 gives the generic requirements for an environmental management system. – Whatever the organization's activity, the

requirements of an effective EMS are the same.

– ISO 14001:2004 does not specify levels of environmental performance.

– ISO has many other standards dealing with specific environmental issues.

– framework for a holistic, strategic approach to the organization's environmental policy, plans and actions.

• Requires, a commitment to compliance with applicable environmental legislation, along with a commitment to continual improvement – for which the EMS provides the framework.

ISO 14001 approval of Products indicates that these issues have been vetted:

• Design and functionality of the product

• Extraction and processing of materials

• Manufacturing processes• Packaging and distribution• How the product is used• Recycling, reuse and disposal

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Green Strategies

Black Book of Outsourcing 2009

Green Sourcing Tips for Buyers

• Cultivate Support for Buying Green• Develop a “Cradle to Grave” View of your Lifecycle Supply Chains• Build the Business Case for Going Green (e.g., energy audit)• Identify Key Regulatory Drivers and Risk Mitigation Factors• Develop a Formal Green Sourcing Program and Market It• Build Green into Your

– Goals and Objectives– Specifications– Cost Models / Sensitivity Analyses– RFx (and vendor due diligence / reference checks)– Contracts, Schedules and Contract Management Programs

• Carefully manage power, water and other environmental costs in Contracts

• Measure and Manage Your Progress and Report the Results18

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Green Sourcing RFx Questions

• Have you optimized the energy utilization of your data centers, and what steps would you take to optimize the environmental efficiency of our operations?

• How do your pricing methodologies and processes encourage the use of energy efficient strategies like virtualization and cloud computing?

• Do you have a Social and Environmental Corporate Responsibility Program?• Do you have an environmental management system (EMS)?• Do you consider environmental issues in the design process?• Do you provide any data on your company’s environmental impacts?• Are any toxic materials used in your operations or processes? If so, please identify.• Do you have energy efficient production technology?• Do you have facilities running on renewable energy?• What are your waste management strategies (i.e. recycling or landfill or composting)?• Do you incorporate any recycled material, particularly from post-consumer sources, in your production?• Are you Forest Stewardship Council (FSC) certified?• Are you Sustainable Forestry Initiative (SFI) certified?• Are you ISO 14001 certified?• Are your computers, and computers proposed for our operations, EPEAT Bronze, Silver or Gold?

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Green Sourcing Tips for Providers

• Assess Your Green Strengths and Market Them• Identify Green Marketing Opportunities, E.g.,

– Outsourcing to reduce carbon footprint, power, etc.– Green outsourcing matters to customers

• Avoid Greenwashing– “Don’t underestimate people’s intelligence or overestimate their interest”

• Factor environmental costs / benefits into pricing models (e.g., disposal)

• Re-evaluate Supply Chain Models (e.g., JIT may be inefficient)• Identify Tax and Grant Opportunities and Share the Benefits• Monitor/Comply with REACH and Carbon Offset regulations• Develop best practices for reducing environmental impacts

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TechNexxus

• IT and Business Process Outsourcing Consulting• Integrated Business, Technology and Legal Services• Focus on Technology, Communications and Environment• Green Sourcing Group• Clients include 70% of the Fortune 100 and a majority of the Fortune

500• Headquarters in Potomac, MD (outside of Washington, DC)• 60 Consultants• David Baumann

– dbaumann@technexxus.com– www.TechNexxus.com

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APPENDIXTechNexxus Green Sourcing Tips

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Green Metrics

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Power Usage Effectiveness

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Where Does It All Go?

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Data Center Infrastructure Efficiency

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Other Metrics

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Kill-A-Watt Tactics