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The session will begin shortly. Guidance for Leadership in Sustainable Purchasing Chapter 4: Purchasing Category Guidance Procurement of Professional Services March 17, 2015 GoToWebinar Orientation You should be seeing something like this… Gray microphone indicates you are muted Hand button allows you to “raise your hand” Radio buttons indicate which audio input you are using Text box for submitting questions to the moderator 1 1 Audio Troubleshooting There are two audio modes… Option 1: Telephone Option 2: Computer Microphone If you are on the telephone and your Audio panel looks like this or this, the moderator CANNOT unmute you and you will NOT be able to speak. You must set the radio button to “Telephone” and enter the Audio PIN provided. 2 Joining the Discussion How to ask to be unmuted… Option 1: Raise your hand Option 2: Submit a request via Q&A pane Microphone turns green when you’ve been unmuted Click button to raise or lower your hand I’d like to say something. Can you unmute me? 3 Recording This session is being recorded and will be posted as a resource for public access. 4 Chapter 2. Create the Program 5 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 6 Education Sessions Schedule February 24: Creating a Sustainable Purchasing Program March 5: Running a Sustainable Purchasing Program (Part 1 of 3) – Understanding and Launching Strategy Cycles March 10: Running a Sustainable Purchasing Program (Part 2 of 3) – Spend Analysis March 12: Running a Sustainable Purchasing Program (Part 3 of 3) – Planning Strategies, Implementing & Reporting March 17: Professional Services March 19: IT Hardware and Services March 24: Transportation March 26: Paper April 1: Cleaning and Sanitizing Chemicals for Facilities Care April 8: Landscaping and Grounds Maintenance April 15: Electricity April 22: Food April 29: Construction and Renovation May 6: Furnishings All sessions take place from 11:00-12:30pm ET. 7 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 8 Key Terms Sustainable Purchasing Program (all-caps) A sustainable purchasing program that has all four components the Council considers essential for a program to be capable of achieving genuine leadership. Achieving genuine leadership means taking meaningful responsibility for all the significant environmental, social, and economic consequences of the organization’s purchasing. 9 Key Terms Strategy Cycles provide a flexible process for a group of key stakeholders collaborate to: • understand opportunities for improvement; • prioritize strategies for addressing them; • commit to specific strategic actions; • implement those actions; and • measure the results over time. 10 Key Terms Strategy (capitalized) A specific area of focus for which a plan of action is being developed or has been developed. Examples could include an organization’s “Electricity Strategy”, “Supplier Diversity Strategy”, “IT Strategy”, “Human Rights Strategy”, etc. There are several types of Strategies an organization might prioritize for their Sustainable Purchasing Program: • A category Strategy • A Strategy focused on a specific aspect of the supply chain’s environmental, social, and economic performance • A supplier-specific Strategy 11 Key Terms Strategy Plan (capitalized) A planning document that describes, in detail, the projects/activities that make up an organization’s Strategy in a given area of focus. In this cycle, we’re going to develop a strategy for managing the consequences of our fuel purchasing. We’ll call it our “Fuel Strategy.” Fuel Strategy Plan Boss, we’d like you to review and approve our Fuel Strategy Plan. We got the green light! Now, we can implement our Fuel Strategy Plan! 12 Key Terms Environmental, Social, and Economic Performance Environmental, Social, and Economic Consequences Positive or negative influences on the natural, social, and market systems on which life, communities, and commerce depend. Leadership in sustainable purchasing involves thinking expansively and holistically about these influences and identifying how to optimize them in order to advance a positive future. 13 Worksheet handout available for download: www.sustainablepurchasing.org/performance 14 Key Terms Program Leader Generic term for the person who leads an organization’s Sustainable Purchasing Program. A wide range of professionals have been found to be serving the Program Leader role. In some organizations, the Program Leader is a Sustainable Purchasing Coordinator, in others it’s a sustainability staffer or someone in Environmental Health & Safety, and so on. 15 Key Terms Implementation Team The individuals that will implement the projects within a Strategy. These could be the same as the Strategy Team, but often it will include staff with specific implementation expertise. (E.g., Print Shop Manager is on Strategy Team, but implementation responsibility is passed to Print Shop Foreman.) 16 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 17 Approach to Purchasing Guidance The Purchasing Category Guidance provides the following: • clusters of significant environmental, social, and economic impacts; • best available actions to address the identified impacts; • external and organizational benefits • anticipated challenges • metrics and indicators that teams can use to track progress • policy and specification language and resources to assist in implementing the proposed actions, and • undecided issues 18 Approach to Purchasing Guidance Why use the Purchasing Category Guidance? • Provides reliable information consistent with how a cross-functional team operates within the context of this guide. • Can expedite the Strategy Planning process outlined in Chapter 3 19 Approach to Purchasing Guidance Organizational Considerations Existing organizational priorities e.g., strategic plan, guiding principles, regulations, policies, advancing brand leadership, existing reporting requirements, existing rating/certification requirements, improvements to business units, etc. Cost e.g., initial cost, return on investment, total cost of ownership, etc. Performance improvement potential e.g., tons of CO2e reduced, gallons of water saved, improved indoor air quality, increased user satisfaction, etc. Implementation logistics e.g., feasibility within an existing long-term contracts, opportunity to improve upon expiring contracts, scalability, transferability Organizational risk tolerance e.g., taking a temporarily conservative approach to new initiatives due to unforeseen market volatility, brand management, etc. Resource availability e.g. financial and human resources Functional performance What are the functional performance needs for individual products and services procured by an organization? How does this relate to the opportunities available to purchase products with improved environmental, social, or economic performance? 20 Approach to Purchasing Guidance Types of Recommended Actions Policy Recommendations Many categories recommend exploration of existing policies and finding ways to improve them. Institutionalizing this inquiry process could result in significant cost savings for the organization as well as a more strategic use of funds that are spent. Operational Recommendations Sometimes the largest opportunities for mitigating the environmental, social, and economic impacts associated with purchasing require leveraging operational changes. Operational changes often provide benefits for seemingly unrelated purchasing categories. Purchasing Recommendations How can the organization buy better? 21 Approach to Purchasing Guidance Download this table as a handout at www.sustainablepurchasing.org/resources DETAILED GUIDANCE SOLUTION STRATEGIES TO CONSIDER Strategy Description Example Efficiency Reduced impact through reduced use Implementing a Purchase-to-Pay IT system reduces impacts associated with printing and transporting paper documents. Process change Design the impact out of a process Air pollution from medical waste incineration is reduced by switching to reusable surgical tools that are steam sterilized. Behavior change Implement programs to shift attitudes and practices Voluntary “green office” competitions reduce energy and material consumption, while increasing recycling. Combining Projects Combine multiple projects into a single positive ROI project An energy efficiency project is combined with a solar project. Energy savings offset the solar costs for a good overall ROI. Engage suppliers and hold accountable for a specific impact Some universities require apparel manufacturers to permit independent audits of factory conditions and provide retribution-free grievance and remedy processes. Product substitution Choose a different product with lower ESE impacts Chemical costs and workers compensation insurance premiums reduced by switching to green cleaning products. Supplier substitution Choose a supplier with lower ESE impacts Making evidence of bribery or extortion automatic grounds for suspension of business with a supplier. Servicizing Convert a product acquisition to a long-term service relationship Instead of owning copiers, establish a pay-per-copy service relationship so that the price of each copy reflects the true cost. In-source In-source a function to better reduce impacts Hiring LEED expertise in-house to optimize and streamline green building across all of org’s construction and renovations. Out-source Outsource when an external party can better reduce impacts Contract out utility bill management to firms that leverage energy market expertise to cut energy and carbon costs. Offsetting Pay for an impact reduction to offset impacts elsewhere Buying carbon offsets; paying to put land in permanent conservation to offset development of other land. Supplier engagement accountability & 22 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 23 Professional Services Defined Professional Services Industries characterized by low capital intensity, high knowledge intensity and a professionalized workforce. Examples include legal, consulting, architectural, engineering, public relations, and financial firms. While organizations tend to find a low per dollar risk associated with professional services purchasing, high purchase volumes can make this one of the most important categories for organizations to address. This guidance focuses on impacts or consequences associated with the use phase of professional services. 24 25 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 26 Professional Services Impacts Understanding Part 1: Why should we care? Environmental and social impacts from travel. Regular travel from the provision of professional services results in a variety of environmental impacts. The impacts vary by the mode of transportation itself distance traveled, among other factors. Additionally, social and economic impacts directly affecting individual employees can result from regular or excessive job-related travel. Environmental impacts from service deliverables development and transport. Depending on the type of service deliverable, impacts from printing, packaging, and shipping can have negative environmental impacts. Note: The impacts presented above represent a common cluster of impacts related to the procurement of services. Because of the variation in impacts associated with service providers (e.g. legal, public relations, or human resources provider impacts; local versus distant providers), the impacts appear in an order associated with the amount of control the purchasing organization holds in influencing the service provider’s environmental, social, and economic performance improvement. 27 Professional Services Impacts Understanding Part 2: What else should we know? Social and economic benefits from the procurement of diverse suppliers. An organization’s investment in small, minority-owned, veteranowned, women-owned, service-disabled, and/or HUBZone suppliers and social enterprises. Environmental impacts associated with the service provider’s facility. • • • • electricity use. water consumption impacts of building services waste management. Social impacts of the service provider’s workforce and organizational practices • • • • • Health, safety and well-being of employees Workforce diversity Employee training and development Employee engagement and satisfaction Ethical behavior and compliance Service provider’s supply chain impacts of ongoing purchasing. • • Embedded electricity. Purchase of products (e.g., furniture, IT products, office supplies, microwaves, etc.). Service provider’s local community and economic investment. • • • • Sponsoring employee volunteering. Pro bono or in-kind service Philanthropic donations Community 28 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 29 Purchasing Recommendations Action and Results: What makes a difference? Make organizational investments allowing for potential reduction in service provider travel. For example, investing in high quality video and teleconferencing services will greatly enhance the ability to reduce the need for contractor travel. Work with potential and current service providers to invest in similar and compatible equipment to ensure this investment will improve the environmental, social, and economic impacts associated with contractor travel. Design contract to incorporate a travel policy preferring the lowest environmental impact possible. Incorporate considerations for local and long-distance travel, as well we overnight trips. *Consider this an opportunity to test improvements to the organization’s current travel policy for employees!* Minimize impacts of service deliverables. Look for providers who have the understanding of and capacity for how to provide the necessary deliverables with the least environmental, social, and economic impact possible. Determine consistent screening criteria for service providers and encourage proliferation of that information in the market. Seek out existing supplier analysis tools that address the organization’s preferred screening criteria and encourage potential service providers to report data into those data repositories. 30 Challenges The following challenges exist when attempting to improve the environmental, social, and economic impact of professional services purchasing: • Variations in significant impacts of service providers. • Lack of consistent scoring criteria for suppliers • Determining appropriate and consistent leadership criteria for service providers across sectors • Service providers’ ability to claim the benefits of employee actions • Addressing emerging standards 31 Agenda 1. Context 1. Upcoming Pilot Program Education Sessions 2. Key Terms 3. Approach to Purchasing Guidance 2. Procurement of Professional Services 1. Impacts and Findings 2. Purchasing Recommendations 3. Further Exploration West Coast Climate Forum & Alameda County 3. Q&A + Discussion 32 33 Emissions By Scope Type and Category Supply Chain GHG Inventory Meta-Analysis Draft Results; 3/10/15 Funded by StopWaste Emissions By Organization Type and Purchasing Category Supply Chain GHG Inventory Meta-Analysis Draft Results; 3/10/15 Funded by StopWaste Professional Services Types Contributing to GHG Impacts for Public Agencies Research Question: Are there certain types of professional services that contribute to more to public agency climate impacts? • • • • Engineering and Architecture Employment Services Management Consulting Community Programs (for public agencies only) Supply Chain GHG Inventory Meta-Analysis Draft Results; 3/10/15 Funded by StopWaste 37 Next Steps: Learning from Others Alameda County is leading research to learn from other leading public agencies on the effectiveness of current efforts to procure more sustainable professional services. Research Question: What are the most effective strategies in public agency contracting that reduce impacts of the service provider, both in contract delivery and overall climate impact of the service provider’s operations? • Share results with the forthcoming Climate Friendly Purchasing toolkit, a project of the West Coast Climate Forum • Incorporate learnings into Strategy Cycle for Alameda County 38 Questions 39 Education Sessions Schedule February 24: Creating a Sustainable Purchasing Program March 5: Running a Sustainable Purchasing Program (Part 1 of 3) – Understanding and Launching Strategy Cycles March 10: Running a Sustainable Purchasing Program (Part 2 of 3) – Spend Analysis March 12: Running a Sustainable Purchasing Program (Part 3 of 3) – Planning Strategies, Implementing & Reporting March 17: Professional Services March 19: IT Hardware and Services March 24: Transportation March 26: Paper April 1: Cleaning and Sanitizing Chemicals for Facilities Care April 8: Landscaping and Grounds Maintenance April 15: Electricity April 22: Food April 29: Construction and Renovation May 6: Furnishings All sessions take place from 11:00-12:30pm ET. 40 Summit workshops will feature Guidance-based training, case study presentations, and peer-to-peer dialogue. www.sustainablepurchasing.org/summit 41