Thinking Big to Move Markets
The growing power of large institutions buying green
By Kelly Panciera
Sometimes bigger is better. When it comes to influencing markets, that is. Large institutions -- including federal agencies, state and local governments, colleges and universities, and private companies -- are critical partners in New American Dream’s efforts to shift markets and make greener, more socially responsible choices available to everyone.
Why large institutions? For one thing, they buy a lot of stuff! State and local governments alone spend over $400 billion every year on goods and services. Can’t picture that kind of money? If the average American household spends $27,394 per year on expenses other than housing (according to the Bureau of Labor Statistics), $400 billion represents the combined purchasing power of almost 15 million households.
And unlike individual consumers, institutions don’t usually drive to the store to load up on supplies. Instead, they contact manufacturers directly, developing contracts that allow them to specify exact characteristics of the products they buy -- including environmental and human health characteristics. So if an institutional purchaser says, “I want post-consumer recycled content” ... or “renewable energy” ... or “less toxic paint,” suppliers try hard to meet that demand.
And that’s where New American Dream comes in. We’re working directly with institutions to help them leverage their buying power toward greener and safer products. We help institutions develop environmentally sound specifications and work together on contracts. The efforts of these institutional purchasers present a clear, unified message to industry of what is expected of them, motivating manufacturers to modify their product lines, for example, by increasing the amount of recycled content in their papers or reducing the toxins in their cleaning products. This makes environmentally preferable products more widely available and affordable for institutional and individual consumers alike.
Taking Steps Toward Making Change
Of course, there are challenges. Every commodity presents obstacles that must
be overcome to make green purchasing viable. In the past, institutions
interested in buying safer cleaners unintentionally made it difficult for
manufacturers to respond to their green requests by using different criteria.
New American Dream’s Institutional Purchasing Program stepped in to help by rallying potential buyers around a single set of criteria. Institutions such as the Commonwealth of Massachusetts, the City of Santa Monica, and others created enough demand for safer cleaners that some companies actually reformulated their products to meet New American Dream’s criteria. In fact, many of these companies certified their products to prove they meet the criteria. Before New American Dream’s work began, no cleaning products were certified by Green Seal, the independent environmental standard-setting and certification rganization. Green Seal’s standard formed the basis of New American Dream’s criteria, and now 85 are certified!
Progress with Paper, Cars, and Computers
Many organizations have been purchasing 30 percent post-consumer recycled
content copy paper for years, but now there are even more environmentally
preferable options on the market. Demand is increasing for copy paper with higher post-consumer content processed without the use of chlorine (which can
release dangerous toxins into the environment). Even with papers using virgin
content, institutional demand has helped increase the amount of pulp harvested
from sustainably managed forests, as opposed to pulp from clear-cut timber and
other less sustainable forestry practices.
However, prices for many of the greenest copy papers are higher than their conventional counterparts, creating a significant financial barrier for many organizations. New American Dream and other organizations are doing all they can to help institutions overcome this problem. New American Dream, for instance, recently conducted a nationwide survey in order to better understand how environmental and other factors affect copy paper prices. We will be sharing the results with purchasers to make it easier to negotiate better prices for environmentally preferable papers.
Unlike paper, encouraging institutional buyers to purchase greener automobiles poses a different challenge entirely -- supply. Demand is so great for hybrid- electric vehicles that manufacturers cannot keep up with orders for these fuel- efficient, less polluting cars. Both institutional and individual consumers report wait times of six months or more. Manufacturers are so overwhelmed that Toyota will be increasing production of the Prius in 2005 -- doubling the 47,000 hybrid-electric cars they currently supply to the U.S. market! To further encourage manufacturers to increase production of hybrids to meet growing demand, New American Dream is assisting institutional fleet purchases of hybrids while also pressuring industry through a letter-writing campaign.
Computers are another commodity New American Dream has its sights on. Unfortunately, there are not many computers on the market that address the demand for less toxic components, recyclable design features, safe recycling and disposal options, and other environmental and human health attributes. Thanks to pressure from groups like the Silicon Valley Toxics Coalition, this is starting to change. Both Dell and Hewlett-Packard have recently announced efforts to expand their product take-back and recycling programs, and Dell has eliminated its controversial use of prison labor. Institutions are already seeing improvements in manufacturer responses to requests for cleaner computers. For instance, Massachusetts recently asked companies to compete for $70 million worth of computer equipment across the state. They stipulated that manufacturers must report on their compliance with New American Dream’s Principles for Purchasing Environmentally Preferable Computers. Far from hampering the process, Massachusetts received 15 offers from companies willing to monitor their environmental impact to garner more business.
Because they are uniquely positioned to move markets, institutional purchasers will continue to play a key role in creating consumer pressure. But institutions can’t do it alone -- it’s essential for institutions and individuals to work together. The more demand we can create, the more changes we’ll see in products we buy!
Kelly Panciera is Research Associate for the Center for a New American Dream.