Greening Procurement: A Path to Carbon Neutrality




May 15, 2023

Greening Procurement: A Path to Carbon Neutrality

As the global climate crisis intensifies, industries across the spectrum are under mounting pressure to mitigate their environmental impact. Among these, industries that rely heavily on equipment, such as those involved in the development and maintenance of infrastructure, the extraction of minerals, the generation of renewable energy, and agricultural activities, face unique challenges. A significant part of the solution lies in sustainable procurement of equipment and parts.

Sustainable Procurement: An Overview

Sustainable procurement is the strategic acquisition of goods and services that minimizes environmental harm while maximizing social and economic benefits. It takes into account the entire lifecycle of a product, from raw material sourcing to disposal or recycling. This approach can be a crucial tool in achieving carbon neutrality.

A report by the United Nations Environment Programme (UNEP) points out that sustainable procurement can slash greenhouse gas emissions by up to 20%. This is a significant figure, given that global carbon dioxide emissions from energy use stood at 33.1 gigatons in 2019, according to the International Energy Agency. A 20% reduction could therefore represent a decrease of over 6 gigatons, a significant contribution to global carbon reduction efforts.

Strategies for Sustainable Procurement

Lifecycle Assessment (LCA): Lifecycle assessment (LCA) is an essential tool for businesses aiming to minimize their environmental footprint. LCA evaluates the environmental impact of a product from the extraction of raw materials, through production and use, to end-of-life disposal. According to the Environmental Protection Agency, a comprehensive LCA can help identify potential reductions in greenhouse gas emissions of up to 42%.

Supplier Engagement: Engaging with suppliers on sustainability issues can lead to significant carbon savings. By working with suppliers who prioritize environmentally friendly practices, businesses can both reduce their own carbon footprint and promote industry-wide change. A report by the Carbon Disclosure Project found that suppliers who are actively engaged in sustainability initiatives can cut carbon emissions by up to 35%.

Second-hand Equipment: The purchase of used or refurbished equipment can significantly reduce the carbon emissions associated with manufacturing new products. The World Resources Institute estimates that the production of new industrial machinery contributes to approximately 6% of global CO2 emissions. By opting for second-hand equipment, industries can significantly reduce their contribution to these emissions.

Energy-efficient Equipment: Equipment that uses less energy not only reduces CO2 emissions but can also result in substantial cost savings over the equipment's lifetime. According to the Energy Star program, energy-efficient products can save businesses up to 30% in energy costs.

Local Sourcing: Sourcing locally can help to reduce transportation-related emissions, which were responsible for about 24% of direct CO2 emissions from fuel combustion in 2019, according to the International Energy Agency. Furthermore, local sourcing can stimulate local economies and potentially expedite delivery times.

Equipment Leasing: Leasing equipment instead of buying it can also contribute to carbon savings. As the Ellen MacArthur Foundation highlights, the circular economy model, which includes leasing and product-as-a-service arrangements, could reduce Europe's industrial CO2 emissions by 56% by 2050.

Transitioning to sustainable procurement requires a shift in mindset and approach. It involves recognizing the long-term economic, environmental, and social benefits that can be gained, rather than focusing solely on short-term cost considerations. It also calls for collaboration and engagement across the supply chain, and a commitment to continuous learning and improvement