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MEPM Project report

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MEPM Project report

  1. 1. Masters of Engineering Project Management Advantages and limitations of Green Public Procurement: New Zealand case study Project Guide Himanshu Naik Anne Staal Student Id-15875013
  2. 2. Abstract Background problem: Historically “Green procurement” has been recognised as an advertising phenomena due to lack of attention paid to environment. In the last decade as the world faces problems associated with global warming, scientists started thinking about new techniques which can reduce environmental impact. However, there are few literatures available which explicitly discuss procurement practices and reducing environmental impact by implementing green procurement. In this research, we are going to find how green procurement can help the environment. It is seen that most of the public organisation procure material from SMEs, which can be used to enhance procurement base. Also, in New Zealand more than 95% of industries are SMEs (Collins, Lawrence, Roper, & Haar, 2010). So it is highly important to evaluate their procurement practises and their efforts to address environmental concerns. Purpose: The main objective of this study is to examine the advantages and limitations of green public procurement in public organisations. Findings: From the literature and interview conducted with executive reveals that there are certain factors which are vital for green public procurement such as organisational behaviour, political will, financial resources and legislations which can be acted as hurdles for implementation of green public procurement. Moreover, consumer behaviour is also an important element in green procurement. Though public companies don’t look for profit but if tax payers are not interested in environmental concerns it is highly unlikely that government or political class will pay attention to green public procurement. Key words: Green procurement, green purchasing, green supply chain management, corporate social responsibility, sustainability.
  3. 3. Acknowledgements This project would not have been possible without the help of my supervisor Mr. Anne Staal. His through guidance motivated me to do things in right and expected direction. He not only made me understand the depth of the topic but practical implications which will help me in real life to solve problems. I would also like to thank my parents, my younger brother and my entire friend circle who trusted me in entire completion period. Special thanks to Auckland University of Technology(AUT) for providing infrastructure such as library and other online resources.
  4. 4. Glossary of words EU: European Union GDP: Gross Domestic Product GPP: Green Public Procurement GPRP: Government Procurement Reform Program MNC: Multi-National Company PWC: Price Waterhouse Coopers SBN: Sustainable business Network SME: Small and Medium Industry UN: United Nations UNFCCC: United Nations Framework Convention on climate change
  5. 5. Contents 1.Introduction .........................................................................................................................................1 2. Objectives............................................................................................................................................2 3. Research question:..............................................................................................................................3 3.1. What are the advantages and limitations of Green Public Procurement policies?.....................3 3.2. How Green procurement can be implemented in New Zealand with help of SMEs?.................3 4. Literature review.................................................................................................................................4 4.1 What is green procurement?........................................................................................................4 4.2 What is relevance of green public procurement? ........................................................................5 4.3. How negative practices can be acted as hurdles for implementation of green procurement?..6 4.4. How policies can be acted as hurdles for implementation of green public procurement? ........7 4.5. What is real situation of New Zealand’s companies?..................................................................9 4.6. What are SMEs?.........................................................................................................................17 4.7. How green procurement can be fostered using SMEs?.............................................................18 4.8. Summary of literature review:...................................................................................................19 5. Research methodology: ................................................................................................................20 5.1. Research strategy.......................................................................................................................20 5.2. Scientific approach.....................................................................................................................20 5.3. Summary....................................................................................................................................21 6. Findings analysis and discussions: ................................................................................................22 6.1. supplier selection criteria...........................................................................................................22 6.2. Financial performance: ..............................................................................................................24 6.3Clients perspective:......................................................................................................................25 6.4. Legislative hurdles......................................................................................................................26 6.5. Summary:...................................................................................................................................27 7. Conclusion.....................................................................................................................................29 8. Recommendations and limitations...................................................................................................30 8.1. Recommendations.....................................................................................................................30 8.1. Limitations..................................................................................................................................30 9. Reference......................................................................................................................................31 10. Appendix 1 ................................................................................................................................34 Interview 1 ........................................................................................................................................34 Interview 2 ........................................................................................................................................36 Interview 3 ........................................................................................................................................38
  6. 6. 1 1.Introduction In today’s world, economy is going through dramatic changes because of cutting edge technologies. Several aspects of businesses are changing because of innovation and change in policy. After Rio earth summit, it is almost crystal clear that to maintain position in market one has to compatible with “Green” technology. (Brenton, 1994; Panjabi, 1992) after year 2000 market flourished with words such as green innovation, eco-friendly, sustainable, bio- degradable. Green procurement is essential part of operations and supply chain; in this analysis we are going to see the exact research questions on this topic. There is quick development in the division of environment. Environmental concerns of people increased in this decade because of globalization and hardened rivalry among organizations. As per PwC report there are certain variable includes which drives interest for green development, for example, customer interest, government strategies, foundation of UNFCCC and expanded familiarity with a dangerous atmospheric fear among the young people of world (PricewaterhouseCoopers 2008). Also subsequent to tolerating Kyoto convention it's just about compulsory for each nation to reduce its carbon outflow which is main impetus to catch venture. To address these difficulties numerous controller and government associations direct organizations to rehearse natural benevolent practices which in the long run helps for extreme objective of economic development.(de Costa Rica, 2008) Though numerous organizational administrators feel that ecological items are not essential because of the cost included. They are finding a way to minimize or decrease ecological effect by embracing new innovations at planning stage and putting resources into innovative work so they can diminish their appearance in carbon footprint. (PricewaterhouseCoopers 2008). Altruism is one of the reason yet practically shopper interest is main thrust behind green wave (PricewaterhouseCoopers 2008). Study led by PwC scholars revealed that although the clients are occupied with purchasing green items, they would prefer not to pay more for expense connected with benefit. Yet, while practicing environmental safety it ought to additionally be viewed as that how request will maintain for specific item.
  7. 7. 2 2. Objectives In this research we are going to find what are the advantages and limitations of Green Public Procurement. It has been seen that public procurement is approximately 16% of Europe’s GDP(Grandia, Steijn, & Kuipers, 2015). Thus focus of this study is on public organisation. It is also seen that 96% of New Zealand companies are SMEs (Collins et al., 2010) which are main suppliers to public organisation. To study green public procurement in context of New Zealand due attention should be paid to SMEs and their contribution for GPP.
  8. 8. 3 3. Research question: 3.1. What are the advantages and limitations of Green Public Procurement policies? Sub questions: 1. What is green procurement? 2. How negative practices can be acted as hurdles or limitations for implementation of green public procurement? 3. How policies can be acted as limitations for implementation of green public procurement? 4. What is real situation in New Zealand in context of procurement? 5. How situation can be improved with help of planning and taking corrective measures? 3.2. How Green procurement can be implemented in New Zealand with help of SMEs? Sub questions: 1. What are the SMEs? 2. How green procurement can be encouraged using SMEs?
  9. 9. 4 4. Literature review 4.1 What is green procurement? After 1990s there has been an increasing importance to the fact which recognises “green procurement” as effective tool of reducing negative environmental impact which is related to production of goods till end of life cycle of that product (Ho, Dickinson, & Chan, 2010).It has been also seen that green procurement can be growth engine for stimulating innovation,(New, Green, & Morton, 2002) but to achieve fruitful results from public procurement there should be more efforts to be made (Günther & Scheibe, 2006).The word green procurement is originally coined in “Rio earth summit” in the conference of United Nations for “Environment and development”(Nikolaou & Loizou, 2015).The procurement can be called as green when there is environmental criteria is considered(Nikolaou & Loizou, 2015).Several scholar also considered “Green procurement” is growing because of voluntary acceptance of states. In 2013 European commission came up with executive report which explicitly points out importance of green public procurement (Nikolaou & Loizou, 2015).Though green procurement encapsulates future opportunities for sustainable environment it is quite unclear how green procurement can impact businesses in positive manner (Testa, Grappio, Gusmerotti, Iraldo, & Frey). So there is a wide disagreement among the scholars about green procurement (Arrowsmith, 2006). There can be more than these articles which defines green procurement but for this research we are considering optimum number of articles with all the possible perspective that can be included. When public authorities or private entities apply environmental preferences while purchasing or giving tenders or services it can be called as green procurement (Varnäs, Balfors, & Faith-Ell, 2009) However the environmental criteria is not always considered for decision making or while awarding the tenders rather it is considered for checking contractors capability of managing environmental work in project (Varnäs et al., 2009). Green public procurement is a process whereby contracting authorities aim to procure services and products that meet environmental requirements (Uttam & Roos, 2015). There can be different school of thoughts regarding the definition of green procurement but the essence is that all the researchers are focusing on environmental factor while implementation phase (Ninlawan, Seksan, Tossapol, & Pilada, 2010) In recent years, green public procurement has extended to sustainable public procurement, which involves the incorporation of both environmental and social considerations in the procurement of goods and services (Varnäs et al., 2009). Green Public Procurement is also defined by the European Commission as “a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods services and works with the same primary function that would otherwise be procured” (Uttam & Roos, 2015).Green public procurement includes so many social factor thereby it can be called sustainable public procurement (Walker & Brammer, 2012). In recent years many countries adopted roadmap for implementation of sustainable public procurement. It has been also seen that to implement sustainable public procurement expands new opportunities for green public procurement however in many countries implementation of sustainable public procurement doesn’t go beyond inclusion of environmental criteria.(Walker & Brammer, 2012).Green public procurement can also be seen as an important potential instrument of innovation policy (Ho et al., 2010) Implementation of green procurement can be useful for reducing carbon footprint.
  10. 10. 5 Also the inclusion of carbon footprint in Green Public Procurement can act as a strong stimulus for eco-innovation.(Alvarez & Rubio, 2015). According to World Bank report in 2013 several companies are including environmental criteria because of the importance of green factor associated in developed countries.(Alvarez & Rubio, 2015). In this section we have analysed different definitions of green procurement. In conclusion we can see that green procurement is process where environmental criteria are adopted to enhance efficiency or social dividend in case of public organisation or profit margin of private entities. 4.2 What is relevance of green public procurement? In previous question we have discussed the definition of green procurement now in this question we shall discuss the relevance of green procurement. In this research we will try to find out what is driving force behind green procurement, how it is economically viable to adopt green procurement as instrument to reduce environmental impact and carbon footprint(Abdallah, Diabat, & Simchi-Levi, 2010; Abdallah, Farhat, Diabat, & Kennedy, 2012). Altruism is one of the reason yet practically shopper interest is main thrust behind green wave.(PricewaterhouseCoopers, 2008). Systematic diagnostic study led by PwC scholars that however the clients are occupied with purchasing green items, they would prefer not to pay more for expense connected with benefit. Yet, while practicing environmental safety it ought to additionally be viewed as that how request will maintain for specific item. In PwC report interest figure is represented as follows. Today In future Percentage increase Business 48% 75% +56% Government 57% 76% +33% Consumer 54% 72% +33% Source:(PricewaterhouseCoopers, 2008) These figure indicates that how much demand is there for green factor based on systematic study. Several international organizations and scholars also highlight that GPP is likely to play a key role in the overall environmental policy since it may stimulate firms to adopt voluntary environmental management practices to increase their share in public procurement(Nikolaou & Loizou, 2015). European Union’s report suggested its member states to implement green criteria while giving tenders(Nikolaou & Loizou, 2015). Governments are trying to reduce the negative environmental impact of production and consumption by leveraging their influence as major procurers of goods and services (Grandia et al., 2015; Walker & Brammer, 2012).Public procurement of European union accounts for 16% of gross domestic product, this figure is more higher in japan and Asian countries .(Grandia et al., 2015).From this it can be evident that large amount of money is being spent on procurement if we use as innovative tool then it can be easy to achieve target of reducing environmental impact. Also we should also explain why we have chosen public organisations over private entities because public organisations are mainly controlled by government so all government policies are directly reflected in organisation’s policies. Furthermore, public organisations are not always profit oriented wider social angle is
  11. 11. 6 always there so people will get social dividend and there can be transformation of socio economic scenario. 4.3. How negative practices act as hurdles for implementation of green procurement? How to define “Greenwashing”? Greenwashing is defined as the act in which company gives false or misleading information to consumers to gain the profit. There are two types of greenwashing firm level and product level. Firm level green washing is defined as giving false information about the process for instance many companies advertise that they follows eco-friendly procurement protect the environment though they are not doing it(california, 2011; Laufer, 2003; Parguel, Benoît-Moreau, & Larceneux, 2011). On the other hand product level Greenwashing is giving false information about the product or service which is environment friendly (Mitchell & Ramey, 2011) We are going to see few examples to illustrate both levels of greenwashing. Firm level greenwashing: General Motors is one of the leading company in automobile manufacturing which claims that it is working in environmental sector by implementing different manufacturing and designing techniques but at the same time company fight for EPA regulations norms which are defined for cleaner air. So by studying these facts we get to know that how contradictory the claims of company whenever there is question of profit. Product level Greenwashing: LG electronics miss-certified the refrigerator with wrong energy consumption indicator than actual. Energy Star is third party organisation which rates the electronics product. But investigation it was found that eight out ten refrigerator consumes more energy than actual rated star. So this is a clear example of product level misleading in which with using energy efficient label product sold for higher profit margin. To figure out what are the driving variable behind "Greenwashing"? We need to see this theme from alternate point of view, for example, administrative, hierarchical and social. Since there is circuitous impact of all these elements soon individual and customer conduct. By considering these variables, we became acquainted with that there are three principles main impetus which makes ready for firm level greenwashing. There are outer and inside elements which are specifically in charge of greenwashing outside component incorporates motivating forces for Green item, discount in Taxes and so forth. Though roundabout variable incorporates requests from buyer and speculator. In spite of the fact that multifaceted nature in regulation is one of the main impetus behind the Greenwashing for instance if for some item emanation farthest point is set for specific nation which is need not be same for rest of the world so customary result of created world can be sold in libelling so as to create nations it as a green. Likewise, reformatory activity is not characterized for specific activity such a large number of MNCs are exploiting careless regulations. So from this it can be comprehended that firm regulations are important to abstain from greenwashing rate for that policymakers, government associations and supervisors ought to similarly take an interest to conquer the occasions of greenwashing. Government ought to proactively venture forward to make regulations about "Green" items and administrations. Commonly absence of clarity fills the need of organizations’. Words like "All Natural", "Bio-degradable", "Eco-accommodating" fill the need of organizations as there is no reasonable and straight forward definitions for this. Our third question is about management views and management decision that can change the company’s policy. So in this analysis we will see how managerial views can act as hurdle in
  12. 12. 7 implementation of green procurement. It is always the management’s decision which can lead a company to certain direction. Many author believe that most of the higher manager are stick to organisational inertia which is they are not willing to take any risk because of losing revenue. But in this competitive world this habit can be costlier than taking risk. In this research data is collected for different management level authorities and their hobbits are checked and on the basis of that analysis is done to find out how management decision can act as a hurdle. For this experiment questioner or interaction with people is the best way to know their opinion. In this report we are just discussing methodology and how we interact with people. In final report we will submit the details of interviews conducted of people and analysis of data collected. This will give us a unique opportunity to check whatever we have found out with literature is matched with real world problem and how to find solution depending upon that. 4.4. How policies can be acted as hurdles for implementation of green public procurement? This is most important question because it takes into consideration the pragmatic aspect of implementation. In this analysis we will try to find out what the hurdles are and how to overcome these. Green Public Procurement mainly under the severe financial conditions of the current economic crisis, during which time public expenditures should gradually be cut due to the flagship policy of the European Union for severe austerity measures(Li & Geiser, 2005; Nikolaou & Loizou, 2015). That means limited budgetary allocations is the main hurdle for implementation. Systematic study led by PWC suggests that buyers behaviour is also one of the reason it further elaborates that buyers are preoccupied with purchasing green goods and services but they refuse to pay extra coast associated with it (PricewaterhouseCoopers, 2008). From this example it is quite evident that consumer behaviour can act as a hurdle for implementation of green procurement. If consumer refuse to pay for green products, then it’s not economically viable for organisation to implement green procurement. Government policies should be conjunction with green public procurement. Suppose in coal based power plant if company decided to go for advanced technology which emits less carbon dioxide than previous then government should facilitate low tax on new technology or instruments. Most of the time it has been seen that government advertises for going green at the same time imposes higher tax on green products for higher revenue gain. We must also consider this paradox and reason associated with it. Lack of trust can be acted as hurdle for instance if government want to promote green policy then it should be first enacted in state owned organisation to set example for private players in market. They suggest that a state-owned web platform promoting both environmentally friendly products and displaying the best environmental performance of firms could shape necessary market conditions in order to provide new opportunities to exploit the green economy.(Nikolaou & Loizou, 2015).To find out solutions we have to consider hurdles in such a way that we can reach towards roots of problem. Hurdle analysis involves four major steps including demand management, market research, award and procurement processing.(Günther & Scheibe, 2006). If we go further, then we can subdivide each process to another.  Demand management: we can divide demand management into three further steps. Demand emergence, demand research and analysis and fixing of demand are significant factor that we should consider while doing hurdles analysis.  Market research: This is the most important because this involves lots of economics. In today’s era due to immense competition analysis of market is always prerequisite. Basically market research involves market observation, market prediction and communication to procurer who are involved in procurement process.
  13. 13. 8  Award: At this stage tender is prepared and rules regarding the procurement process will be formed. At this stage scrutiny of tenders is performed and based on requirement of procurer award is given. At this stage environmental criteria can be checked or further clause can be added according to procedure established by law.  Procurement processing: This step involves logistics of goods, accounting control and inventory management. As we have discussed these are main steps that we have to take into account for doing hurdle analysis. There are different stakeholders which can influence public procurement process. The State is an important factor, by implementing different rules, regulation and directives state can influence the decision making process. The citizens can put pressure on legislature to amend laws for green procurement positively or negatively. Hurdles analysis for local bodies proposes following hurdles for an implementation of green public procurement.(Günther & Scheibe, 2006) The main hurdles are no results of effort, no aim of local bodies for proposed goal, no consensus among stakeholders, not informed about different possibilities, uncertain legal position, very complex laws these are some factors. They also proposed lack of knowledge, delay in decision making process, not informed about alternative option, expensive production, lower functionality, user prejudice these are main obstacle regarding implementation of green public procurement. To summarise these are some hurdles that we have found in literature. According to Gunther and Schreiber hurdles analysis can be expressed in following way (Günther & Scheibe, 2006) Hurdles analysis Due to lack of efforts green procurement is not implemented Employees are not trained to adopt green procurement as operation tool. Green procurement is not one of aim of implementing agency. The aim of Green procurement is not reflected through legislative amendments and guidelines. Procurement guidelines of agency are not supporting green procurement though it aims for it. There are ambiguities concerning legal framework of green procurement. Established laws for green procurement are very rigid with respect to implementation perspective. Many times it has been seen that established laws prevents green procurement. Employees are not informed about importance of green procurement and services. It is difficult to identify green products and services within procurement market. Many user have prejudices concerning green products and services. Many times due to competition Green procurement is often obstructed by administrative procedures. Most of the times Follow up costs are not included in procurement decisions.
  14. 14. 9 Green products have less functionality than conventional product. Green products and services are much more expensive than conventional product. Many times green procurement causes extra work. There are no sufficient alternatives available within green procurement market. Scope of green procurement is too small Customers are often refuse to pay extra cost associated with green products. Given Scope of green procurement is not used effectively. Many organizations used “greenwashing” for effective marketing. Lack of managerial vision is also obstacle to implementation to green procurement. Strategic decision can be made to obstruct green procurement. Source:(Günther & Scheibe, 2006) 4.5. What is real situation of New Zealand’s companies? In last section we have seen hurdles for implementation of green public procurement. Now we shall consider New Zealand case study. What is the current situation regarding environment policies, what is market situation and how green procurement can be implemented? Sustainability refers to incorporating social and environmental criteria in business which can provide competitive edge and economic profit in market.(Collins et al., 2010). In case of New Zealand there has been two stories one focuses on advantages during economic crises as green technologies helps business to effective management of waste disposal and energy efficiency. On the other hand, some school of thoughts suggests that at the time of economic hardship purchasing power parity of consumers reduced so people would tend to buy more inexpensive product than “Green” products which are relatively expensive than its counterpart. In 2009 there was survey conducted of managing directors to know then situation of sustainability practices in New Zealand. There was economic recession going on at that time. It was found that 30% stakeholder responded positively for that survey. It was seen that more than 736 companies participated in that 15 % companies responded in same manner as before.(Collins et al., 2010) and because of this it was possible to maintain track record of company. In addition to sustainability survey also identifies who is responsible for decision making and barriers and drivers for that. It has been seen that before recession there was increasing trend regarding sustainability which was stopped after global economic crises.(Collins et al., 2010). But according to survey though sustainability was important factor there was no consensus about definition of sustainability. Some companies were practicing environmental criteria and some companies followed social causes. Moreover, it has been seen that majority of companies are following social causes for sustainability than environmental concerns. The survey was conducted and financed by charter institute of management account which is UK based organisation. The Sustainable Business Network (SBN) was also non-financial partner and New Zealand Business Council for Sustainable Development (NZBCSD) is new partner (non- financial) which was interested in sustainable practices in New Zealand.
  15. 15. 10 Profile of organisation: The latest survey was conducted in 2010.There was total 736 participant companies out of them 30% were responded positively. The survey was mailed to participant through hard copy or online medium. 15% participant responded similarly to last surveys which were conducted in 2003 and 2006. It was seen that New Zealand’s profile is different than other developed countries like UK and US Because 99% business consists of small and medium type of industry. According to Ministry of Economic Development small industry can be defined as which has less than 20 employees. The industry sectors the survey respondents self-identified with was: 18% Finance, property and business services 12% Manufacturing 11% Retail, hotel, restaurants 7% Community, social and personal services 6% Transport 5% Construction 4% Agriculture, hunting, forestry & fishing 2% Electricity, gas and water 0% Mining and quarrying 34% Other 2010 survey indicates different environmental practices followed by firms to reduce impacts. In following figure environmental practices of NZ organisations are given. Environmental practices by NZ SMEs in 2010 Source:(Collins et al., 2010) From the graph above, it has been seen that most of the companies follows recycling as prefer way of reducing environmental impacts furthermore more than ninety-nine percentage of company in New Zealand are SMEs so this graph can be valid impetus for our analysis.(Collins
  16. 16. 11 et al., 2010). Some noteworthy facts about New Zealand’s SMEs are, only 17% have target for water recycling and 16% participant stated that they did have targets for emission reduction. The finance and account department which is responsible for allotting funds stated that they do not have modern system to accommodate environmental related expenses. Sixty-four percentage of companies also admitted that managing director is responsible for environmental strategies that indicates that environmental practices are subject to economic viability there is no fixed strategy to tackle environmental impacts. There is one more observation which clarifies that environmental practices followed by firms are proportional to revenue. Furthermore, it clarifies that firm’s practices are mainly to build market image than its environmental cause. Also real practices can be verified at the time of economic crises when there is low demand and stiff competition. In 2010 when survey was conducted there were mixed results about performance of companies and it can be seen that volume of company was deciding factor to check their environmental performance. Though larger companies were consistent in environmental practises, smaller and medium industries tended to avoid environmental practices. Survey results showed similar finding like there were 3% large companies which couldn’t continue environmental practices whereas 4% medium and 11 small companies relinquished environmental practices at the time of economic crises (Collins et al., 2010) Impact of economic crises on environmental practices of firm This was litmus case for New Zealand companies because for public organisations or private entities have to face measures taken by central bank in terms of monitory policies and it has been seen that most of the public organisation and governments adopts austerity measures to control economic balance. The 2010 survey suggested that results are mixed. From 2003 to 2010 there is increase in number of firms which campaign based on clean and green energy. In 2003 to 2010 there was increase of 13% which is marginally high when we compare on the basis of New Zealand firms size because it’s easy for bigger companies to adopt changes than smaller which has smaller resources. It was also seen that most of large company’s uptake in environmental practices were high. Furthermore, it can be concluded that company’s environmental practices depend on size of the firm. Social practices by New Zealand firms Source:(Collins et al., 2010) From this graph it can be seen that most of the companies followed charity as a corporate social responsibility practice. Furthermore, it can be added that New Zealand companies preferred
  17. 17. 12 social practices over environmental practices. More than 60% of companies followed local social practices (Collins et al., 2010). When we analyse the bar graph it can be further clarified that after charity and local services most of the companies followed job training as tool to compete in market. Very few companies follow social innovation and other small mediums as a way of doing sustainable practise. From the analysis we can conclude that more New Zealand companies are engaged in social practises than environmental practises. How strategic approach of procurement can help to get better results? Waikato regional council has come up with new procurement rules which can be ice breaker for New Zealand public procurement organisations (counsil, 2016). It advocates how effective planning can translate into risk minimisation. Three points that are mentions while considering procurement these are 1) Procurement should be planned with respect to type, risk and value of procurement. That means procurement practices of organisation should have multidimensional approach to avoid risk. 2) Organisational image, which should be unbiased towards all the supplier so that it can retain and benchmark criteria which are essential for effective implementation of green procurement. 3) Organisation should select right supplier or it should set certain precedence while selecting right supplier. Furthermore, selection of supplier is very important because every supplier has its own image which can cascade positive or negative effects. 4) Suppliers selection is vital aspect. There are certain criteria mentions which can be applied while supplier selections these are methodology, risk management, track record, reputation, financial viability, reputation and commercial experience. One more government report published in 2010 by Ministry of Business and Innovation of New Zealand government stated that how reforms can make procurement more cost effective and can save revenue (innovation, 2010). Furthermore, in that report key result areas are defined like scope of procurement, capacity building, improved business accountability and sustainability (innovation, 2010). Scope for procurement is explained in following diagram:
  18. 18. 13 From this diagram we can define scope of procurement and also give an idea about different organisations where government can focus for better implementation of procurement norms and better optimisation. This government model also advocates the advantages and achievements by New Zealand governments after successful implementation of new procurement policies. Before Now There was no unified or model legislation for assigning contract. Regulatory measures are there to meet critical requirement of contract. There was no channel available for information sharing for tender process. Special agencies are establishes to convey information about tendering processing and transparency. There were no grievance redressal mechanism in placed to address suppliers concerns. Now there are multiple agencies which take into account suppliers feedback and suppliers also satisfied about it. There was shortage of skill procurer Now it is very easy for skill procurer to migrate to New Zealand. There was demand supply mismatch because there was demand for procurement training There are plenty of courses available for training and certifications. Source:(innovation, 2010)
  19. 19. 14 There is also one more government body which works to improve overall situation in procurement norms is New Zealand Government Procurement Reform Programme (GPRP) which is government body (government, 2010). This GPRP explains chain of success concept which means that procurement is combination of several logical steps and if at each stage efficiency is attained then it would be easy to deliver success. GPRP suggested some valuable insights regarding procurement process about traditional procurement behaviour it further added how procurement was considered to be administrative work rather than opportunity for innovations (government, 2010). We will see how new approach of procurement has changed dynamics of procurement through graphical representation.  Traditional approach of procurement: Image source:(government, 2010) The new approach for procurement takes into consideration core research methodology and perhaps professional approach of ethical due process (government, 2010). It is also focused on collaborative research approach than individual research.  New approach for procurement: With process mapping Image source:(government, 2010)
  20. 20. 15 At each stage key results area are defined to enhance productivity and life cycle assessment is done to avoid losses at each stage of process. These steps ultimately This diagram explains how strategic approach for procurement can be value addition lead to profit maximisation. Source:(government, 2010) Procurement lifecycle: This study report basically divides procurement into three different sections which are planning, sourcing and managing and these three subtopics are further divided into eight different parts. We will see how we can implement these strategies to minimise the risk. Furthermore, this is object oriented approach which takes into consideration specific areas to be targeted. In this approach benchmark is already set to compare growth of projected output  Project initialisation: In this phase procurement plan is made and key results area are decided. For successful implementation of project stakeholder engagement plan is made with agreement of stakeholders for better interaction in project. At this stage of procurement planning documentation is done and strategies for fund allocations are decided for key requirements.
  21. 21. 16  Stakeholder identification: In this stage stakeholders are identified for successful implementation of project because stakeholders are main drivers of any project. In following diagram stakeholder engagement plan is made for smooth functioning of project. Furthermore, key stakeholders are determined and they are prioritised as per their influence in the project. This project management approach is followed over conventional operational management approach to gain more productive results.  Stakeholder engagement plan for procurement Image source:(government, 2010) In this plan different players in procurement are identified like suppliers, government bodies, vendors and procurement managers for effective coordination and interaction.  Policies: This is a very important issue element as procurement procedure should be transparent towards buyers and suppliers. Government should enable platform which can enable procurers to do business in fair and transparent manner. There are some approaches that government should follow while procurement of goods and services and these are mentioned in following diagram: Image source:(government, 2010)
  22. 22. 17 From this table it can be illustrated that which approach to be followed according to situation in market and stakeholders interest associated with it. In this illustration we have learned strategic approach to procurement and consequence of management approach to procurement. 4.6. What are SMEs? A small and medium company can be considered as company which employees 50-200 employees (Gunasekaran, Rai, & Griffin, 2011). The employee strength can be different depending upon country (Psillaki & Daskalakis, 2009). SMEs play very important role because it employees and due to small capital it encourages entrepreneurship which is driving force for any business to run. New SMEs are seen as a significant component of the solution to countries development issues (Olawale & Garwe, 2010). It is also notable fact that SMEs are not just vital in developed economy they also played very important role in developing economy (Singh, Narain, & Yadav, 2013). In New Zealand SMEs are playing very important role not just in the context of industrial output but in term of employment. In New Zealand 96% of industries are SMEs and they employ nearly 40% of workforce that indicates how they drives the growth engine for job market in New Zealand (Voges & Pulakanam, 2011). It can be also explains by researcher that due to limited access to institutionalise finance and resource restriction growth of SMEs are limited if they get exposure of institutionalise support (Beck & Demirguc-Kunt, 2006). In following diagram countries wise distribution of SMEs are explained: Source:(Beck & Demirguc-Kunt, 2006) European commission formally come up with classification of SMEs on the basis of several different factors such as employee strength, turnover and balance sheet performance on the basis of that it has provided the definitions of SMEs in following diagram
  23. 23. 18 Image source:(commission, 2016) In this we have discussed what is the definition of SME, on which factor it can be classified and what are the economic relevance of SMEs. In the next sub question now we shall focus on green procurement using SME as medium of engine for growth. 4.7. How green procurement can be fostered using SMEs? Small businesses are more dynamic in nature which employees more people with competitive capital investment. At the same time they are also responsible for pollution in UK that figure is almost near to 70% of total industrial pollution (Walker & Preuss, 2008). But many times it has been seen that these small firms manage their environmental performance due to lack of resources. There are different ways which like we can see this problem through supply chain point of view which means consumer can force their supplier to avoid certain type of material or use of material which is environmentally certified. Due to use of certain environmentally product cost can be escalated that is where actual problem lies.  Local government are key player in the field of procurement because most of their supply is sourced from SMEs. Local Agenda 21 provides information that if we can force local government for pro-environment legislation for their supply we can attain goal of green procurement at certain extent.  Another way of implementation is voluntary strategic green procurement than via Corporate Social Activities rather than legislative enforcement (Walker & Preuss, 2008)  Most of the public procurers sourced their products from SMEs. Moreover, public companies should provide ample amount information so that small companies will get due benefit of that for their regulations and implementation. There are drivers which actually enable SMEs to implement green procurement. Image source:(Lee, 2008)
  24. 24. 19 From the above diagram it is evident that there are three main drivers which can enable SMEs to implement green procurement which are environmental championing, monitoring (specially buyer’s trends), and public and regulatory pressure which are the main drivers behind the implementation There are mainly five drivers for green procurement in SMEs that are following  Process: The SMEs can focus on operational factor for green implementation like energy savings, alternative energy sources, source based emission reduction and mass based control which can be acted as drivers for green procurement in context of process.  Organisation: The organisation should have environment management system which can give training to its employees and other suppliers regarding environmental policies and changes adopted by organisation for implementation of green procurement.  Supply chain: In this section consumer perspective takes into consideration alternatively demand side management is achieved in context of environmental friendly procurement.  Relationship perspective: In this environmental communication plan are considered for external stakeholder engagement. 4.8. Summary of literature review In this literature review we have referred to a range of articles to find out relations between different green procurement practices of public authorities and their environmental impacts. We have also discussed what are the hurdles for implementation of green public procurement. We have found that legislative hurdles, financial constraints act as barrier in literature. We will verify our claim of literature with interview findings.
  25. 25. 20 5. Research methodology In this research study, procurement practices of public organisations are studied and analysed to find out environmental impact and how it can be reduced by green public procurement. In this valuable study I have got opportunity to study different aspects of green public procurement, what are hurdles for implementation of green public procurement. Though there are several pieces of research paper which talks about public procurement , still there is further scope for development (Green, Morton, & New, 1996). Research has been done in the field of green procurement but there are some gaps in terms of environmental impact of green procurement, its viability in financial domain and other issues associated with green procurement. Green public procurement has to be in line with business and for this lot more research is required to address different clauses and technicalities (Varnäs et al., 2009) In one of the research question we have seen what are the hurdles for implementation of green public procurement and causes associated with it. In interview also we confirmed that factor such as organisational behaviour, limited budgetary allocations, legislative hurdles are main causes are the main hurdles are the main hurdles for implementation. Similarly, we found disagreement between literature findings and data collection such as involvement of green criteria in procurement process and implications of that. From this it can be inferred that literature finding and practical findings are not same always because each literature has different contexts such as economic situation, geographical terrain and other factor which can influence the results. 5.1. Research strategy There are mainly two types of research methods that are widely followed (Creswell & Clark, 2007; Patton, 1990). These two methods are qualitative and quantitative. Qualitative method which takes into account literature, and information which is widely available. Qualitative method does not deal with just number but it takes into account opinions, line of thoughts and wider perspective of particular object that is why we have adopted for this study. Unlike qualitative method in quantitative method data is collected and processed to check already established principle or hypothesis where there is little scope for wider perspective. However qualitative method gives us flexibility to accommodate different thought, opinions and principle which are beyond our expected thought process (Bowen, 2009). 5.2. Scientific approach (Bell & Bryman, 2007) mentioned that sometimes it is difficult to opt one method or theory from one literature. Because it is almost difficult to find the literature which has same line of thought which is required for our concurrent research. To overcome this difficulty in most research inductive approach is used in which literature is used to propose new literature along with qualitative data. In this research study inductive approach is followed. Which means existing literature is used along with qualitative data to propose new hypothesis. We have extensively used different articles on green public procurement and sustainability to find out environmental impact of procurement. To verify our facts, we have conducted interviews with procurement officials. And on the basis of information which they have provide hypothesis is verified. Detail discussion of this interviews is done in results section of this this research study.
  26. 26. 21 5.3. Summary Based on literature and interview findings research pros and cons of green public procurements are proposed. Though there are can be some errors and drawbacks but maximum attempts are taken in the direction of making research pragmatic and dynamic in nature.
  27. 27. 22 6. Findings analysis and discussions: Three companies participated in survey process. In following table profiles of respondents is given company A B C Type Electronics/manufacturing manufacturing Public organisation Respondents profile Procurement officer Procurement officer Supply chain officer To find the advantages and limitations of green public procurement interviews are conducted. To get structured response from respondent interview questions are divided in four different sections. These sections are tender criteria, financial performance, consumer’s perspective and measure of financial performance. These questions can be subdivided further but to keep it simplified, classification is done in four sections only. In first section selection criteria is discussed. 6.1. supplier selection criteria Interview A 1) Do you involve green selection criteria in your supplier selection process? Yes 2) Do you evaluate supplier’s history before assigning contract? Yes 3) Does involving green criteria while assigning contracts economically beneficial? May be 4) Do you believe that green supplier can build positive image of your organisation? Yes 5) Do you believe that green public procurement has future in upcoming years in the context of your organisation? Yes
  28. 28. 23 Interview B 1) Do you involve green selection criteria in your supplier selection process? Yes: No: May be: 2) Do you evaluate supplier’s history before assigning contract? Yes: No: May be: 3) Does involving green criteria while assigning contracts economically beneficial? Yes: No: May be: 4) Do you believe that green supplier can build positive image of your organisation? Yes: No: May be: 5) Do you believe that green public procurement has future in upcoming years in the context of your organisation? Yes: No: May be: Interview C 1) Do you involve green selection criteria in your supplier selection process? Yes: No: May be: 2) Do you evaluate supplier’s history before assigning contract? Yes: No: May be: 3) Does involving green criteria while assigning contracts economically beneficial? Yes: No: May be: 4) Do you believe that green supplier can build positive image of your organisation? Yes: No: May be: 5) Do you believe that green public procurement has future in upcoming years in the context of your organisation? t  
  29. 29. 24 Yes: No: May be: Inference and discussion: From answers it can be clear that there is consensus among the respondents about involving green criteria and evaluating supplier’s history before assigning contract. This can clearly imply advantage of Green public procurement. Because of this supplier will tend to make greener product which are environmental friendly and secondly only those companies will get contract which are practising environmentally friendly policy which increases competition and possibility of innovative products. Similarly, if focus is given to corporate image and future of green procurement then it can be found that there is no consensus of respondents which indicates limitation of green public procurement. This reduces possibility of implementation of green public procurement because of lack of confidence of respondents about future of it in volatile market situation. 6.2. Financial performance: Interview A 1) Do you think it is possible to link financial criteria with “Green criteria”? May be 2) Do you believe that financial performance can be improved with help of “Green” public procurement? Yes 3) Do you implement any other methods other than financial performance to measure green public procurement? Yes Interview B 1) Do you think it is possible to link financial criteria with “Green criteria”? Yes: No: May be: 2) Do you believe that financial performance can be improved with help of “Green” public procurement? Yes: No: May be: 3) Do you implement any other methods other than financial performance to measure green public procurement? Yes: No: May be: Interview C 1) Do you think it is possible to link financial criteria with “Green criteria”? Yes: No: May be: 2) Do you believe that financial performance can be improved with help of “Green” public procurement?
  30. 30. 25 Yes: No: May be: 3) Do you implement any other methods other than financial performance to measure green public procurement? Yes: No: May be: Inference and discussions: It is often seen that financial performance of company is always verified by financial variables such as stock price, market capital, revenue growth etc. critical evaluation of answers can suggest that there is no consensus of respondents about linkage of financial performance of company to green procurement which imply limitation of green public procurement in context of financial performance. Unless managers and executives do not believe in financial merits of green procurement it is hardly to be implemented. 6.3Clients perspective: Interview A 1) Are clients willing to pay extra cost associated with “green” criteria? Yes 2) Do you have plans in your organisation to improve environmental literacy? (like training program) May be 3) Do you believe that consumer driving force can impact your green procurement implementation? Yes Interview B 1) Are clients willing to pay extra cost associated with “green” criteria? Yes: No: May be: 2) Do you have plans in your organisation to improve environmental literacy? (like training program) Yes: No: May be 3) Do you believe that consumer driving force can impact your green procurement implementation? Yes: No: May be Interview C 1) Are clients willing to pay extra cost associated with “green” criteria? Yes: No: May be 2) Do you have plans in your organisation to improve environmental literacy? (like training program) Yes: No: May be
  31. 31. 26 3) Do you believe that consumer driving force can impact your green procurement implementation? Yes: No: May be Inference and discussions: Though there is no agreement of respondents about employee training program and premium coast associated with green procurement, companies mutually agree that consumer demand can be driving force for implementation of green procurement. It has been that many consumers wanted premium products but they are not willing to pay cost associated with it. It can be also inferred that if public companies emphasised on green public procurement then it can be possible to implement green procurement in entire supply chain due interconnection of different suppliers in supply chain which is vital advantage of green public procurement. In New Zealand more than 95% companies are SMEs (Collins et al., 2010) which are suppling to public companies can implement green procurement if public companies stick to its demand for green products which eventually helps the environment. 6.4. Legislative hurdles Interview A 1) Do you face any legal constraints while implementing green procurement? No 2) Do you get subsidy for procurement of green products? No 3) Is your supplier involved in “Greenwashing”? (Note: Greenwashing involved false environment practices.) No 4) Does your company have alternative strategy to tackle “Greenwashing” tactics of rival companies or suppliers? May be Interview B 1) Do you face any legal constraints while implementing green procurement? Yes: No: May be 2) Do you get subsidy for procurement of green products? Yes: No: May be 3) Is your supplier involved in “Greenwashing”? (Note: Greenwashing involved false environment practices.) Yes: No: May be
  32. 32. 27 4) Does your company have alternative strategy to tackle “Greenwashing” tactics of rival companies or suppliers? Yes: No: May be Interview C 1) Do you face any legal constraints while implementing green procurement? Yes: No: May be 2) Do you get subsidy for procurement of green products? Yes: No: May be 3) Is your supplier involved in “Greenwashing”? (Note: Greenwashing involved false environment practices.) Yes: No: May be 4) Does your company have alternative strategy to tackle “Greenwashing” tactics of rival companies or suppliers? Yes: No: May be Inference and discussions: On the point of legal issues while implementation there is ambiguity among the respondents. One possibility is that, there are different environmental laws for different industries so for different industries corresponding hurdles can be different. From the answers is also evident that companies are least interested in training program as companies do not see any direct benefit attached to this. 6.5. Summary In this section crux of interview questions is discussed in context of original research questions. First research question is about limitations and advantages of green procurement. Critical analysis of interview questions suggests that there are few advantages of green procurement as follows  Green Procurement increases completion among the suppliers which is helpful to reduce environmental footprint.  GPP also helps to build positive image of public organisation which helps to build creditability of public organisation.  GPP allows public organisation to attain resource efficiency by using alternative material In legal aspects of interview questions, respondents mentioned about legal hurdles and financial constraints which indirectly gives idea of limitations of GPP. In context of research question there are more limitations which are expressed by respondents as follows  Green procurement increases the price of product which cause public organisations to spend more on procurement.  Green procurement can also cause inflation of basic commodities if core sector public companies opted for green procurement which can reduce affordability of product.  Respondents showed lack of confidence when asked about future of procurement.
  33. 33. 28  Responded pointed out legal and legislative obstacle which are limitations of Green Public Procurement. Second research question is specifically about SMEs. Respondents mentioned that most of their customers are public bodies which further demonstrates that in New Zealand to implement Green Public Procurement focus must be given to SMEs.
  34. 34. 29 7. Conclusion Hence it can be concluded that Green Public Procurement has inherent advantages and disadvantages. To implement Green public procurement entire supply chain should be focused on. Public companies procure goods from different small companies that is why entire supply chain should be targeted to get maximum positive output from green public procurement. From analysis it can be stated that implementation of Green procurement is dependent on several different factors such as financial resources, legal constraints and governments support. Literature finding and respondents information is summarised for each sub-research questions for simplicity in following explanations;  It tells that green procurement is an activity which takes into account environmental perspective in procurement.  Due to mass procurement in public organisation targeted procurement approach can reduce environmental footprint.  Environmental practices adopted by New Zealand companies are proportional to their revenue strength (Collins et al., 2010)  More than 95% companies in New Zealand’s are SMEs which should be emphasised to get better green procurement results.
  35. 35. 30 8. Recommendations and limitations 8.1. Recommendations From the answers of interview questions and literature findings there are some recommendation proposed which are mentioned as follows:  For any public organisation selection of supplier’s history is crucial step which can be useful for public organization in long run in two aspects of building positive image and keeping sustainability in operation.  To implement Green Public Procurement public organisations have to take initiative in terms of giving subsidy, suppliers training to overcome the doubt of future of Green Public Procurement among the small suppliers.  Government should simplify environmental law in context of implementation and can implement concept of environmental audit which should take into account all aspects related to environment other than financial indicator.  Public organisations should campaign about green procurement by which it can attract mass attention which can become driving force of Green Public Procurement from demand side.  Government should give subsidy in monetary form or in tax to help organisations to balance their expenditure. 8.1. Limitations There are some inherent limitations of this studies which are mentioned as follows  Respondents selected for this survey are from different geographical locations of New Zealand which can affect result of studies because each council and local bodies have different norms of public procurement.  Results obtained from three respondents cannot be generalised for SMEs due to their different types.  It is assumed that information provided by respondents is true and based on their own experience.  Literature used for this study is limited which cannot accommodate every information about green public procurement.
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  39. 39. 34 10. Appendix 1 Interview 1 Questioner for Engineering Research Project Note: The data obtained from this interview will be kept anonymous and only used for academic purposes. Questions:  Supplier selection 4) Do you involve green selection criteria in your supplier selection process? Yes 5) Do you evaluate supplier’s history before assigning contract? Yes 6) Does involving green criteria while assigning contracts economically beneficial? May be 7) Do you believe that green supplier can build positive image of your organisation? Yes 8) Do you believe that green public procurement has future in upcoming years in the context of your organisation? Yes Financial performance 9) Do you think it is possible to link financial criteria with “Green criteria”? May be 10) Do you believe that financial performance can be improved with help of “Green” public procurement? Yes 11) Do you implement any other methods other than financial performance to measure green public procurement? Yes  Clients and Employee perspective 12) Are clients willing to pay extra cost associated with “green” criteria? Yes 13) Do you have plans in your organisation to improve environmental literacy? (like training program)
  40. 40. 35 May be 14) Do you believe that consumer driving force can impact your green procurement implementation? Yes  Legislation and legal obligations 15) Do you face any legal constraints while implementing green procurement? No 16) Do you get subsidy for procurement of green products? No 17) Is your supplier involved in “Greenwashing”? (Note: Greenwashing involved false environment practices.) No 18) Does your company have alternative strategy to tackle “Greenwashing” tactics of rival companies or suppliers? May be Date: 09/06/2016
  41. 41. 36 Interview 2 Questioner for Engineering Research Project Note: The data obtained from this interview will be kept anonymous and only used for academic purposes. Questions:  Supplier selection 19) Do you involve green selection criteria in your supplier selection process? Yes: No: May be: 20) Do you evaluate supplier’s history before assigning contract? Yes: No: May be: 21) Does involving green criteria while assigning contracts economically beneficial? Yes: No: May be: 22) Do you believe that green supplier can build positive image of your organisation? Yes: No: May be: 23) Do you believe that green public procurement has future in upcoming years in the context of your organisation? Yes: No: May be: Financial performance 24) Do you think it is possible to link financial criteria with “Green criteria”? Yes: No: May be: 25) Do you believe that financial performance can be improved with help of “Green” public procurement? Yes: No: May be: 26) Do you implement any other methods other than financial performance to measure green public procurement? Yes: No: May be:  Clients and Employee perspective 27) Are clients willing to pay extra cost associated with “green” criteria? Yes: No: May be 28) Do you have plans in your organisation to improve environmental literacy? (like training program) t  
  42. 42. 37 Yes: No: May be 29) Do you believe that consumer driving force can impact your green procurement implementation? Yes: No: May be  Legislation and legal obligations 30) Do you face any legal constraints while implementing green procurement? Yes: No: May be 31) Do you get subsidy for procurement of green products? Yes: No: May be 32) Is your supplier involved in “Greenwashing”? (Note: Greenwashing involved false environment practices.) Yes: No: May be 33) Does your company have alternative strategy to tackle “Greenwashing” tactics of rival companies or suppliers? Yes: No: May be Any feedback and suggestions Date:
  43. 43. 38 Interview 3 Questioner for Engineering Research Project Note: The data obtained from this interview will be kept anonymous and only used for academic purposes. Questions:  Supplier selection 34) Do you involve green selection criteria in your supplier selection process? Yes: No: May be: 35) Do you evaluate supplier’s history before assigning contract? Yes: No: May be: 36) Does involving green criteria while assigning contracts economically beneficial? Yes: No: May be: 37) Do you believe that green supplier can build positive image of your organisation? Yes: No: May be: 38) Do you believe that green public procurement has future in upcoming years in the context of your organisation? Yes: No: May be: Financial performance 39) Do you think it is possible to link financial criteria with “Green criteria”? Yes: No: May be: 40) Do you believe that financial performance can be improved with help of “Green” public procurement? Yes: No: May be: 41) Do you implement any other methods other than financial performance to measure green public procurement? Yes: No: May be:  Clients and Employee perspective 42) Are clients willing to pay extra cost associated with “green” criteria? Yes: No: May be 43) Do you have plans in your organisation to improve environmental literacy? (like training program) Yes: No: May be
  44. 44. 39 44) Do you believe that consumer driving force can impact your green procurement implementation? Yes: No: May be  Legislation and legal obligations 45) Do you face any legal constraints while implementing green procurement? Yes: No: May be 46) Do you get subsidy for procurement of green products? Yes: No: May be 47) Is your supplier involved in “Greenwashing”? (Note: Greenwashing involved false environment practices.) Yes: No: May be 48) Does your company have alternative strategy to tackle “Greenwashing” tactics of rival companies or suppliers? Yes: No: May be Any feedback and suggestions Date:

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