IMPACT OF GREEN PROCUREMENT PRACTICES IN SMALL AND MEDIUM ENTERPRISES IN NIGERIA

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IMPACT OF GREEN PROCUREMENT PRACTICES IN SMALL AND MEDIUM ENTERPRISES IN NIGERIA

CHAPTER I: INTRODUCTION

               Background of Study

Green procurement is the purchase of environmentally friendly products and services; the selection of contractors and the setting of environmental requirements in a contract. Green procurement steams from pollution prevention principles and activities. According to Manitoba Green Procurement Network (2008), green procurement is also known as environmental purchasing  whereby  green procurement compares price,  technology,  quality  and the environmental impact of the product, service or contract. Nowadays, green procurement policies

are applicable to all organizations, regardless of size and green procurement programs may be as simple as purchasing renewable energy or recycled office paper or more involved such as setting environmental requirements for suppliers and contractors. Green procurement practice is also described as the integration of environmental performance considerations into the procurement process. Goods and services are considered green when they have a lesser or reduced effect on human health and the environment than competing goods or services that serve the same purpose.

Walker (2008) also suggests, “Green” products or services utilize fewer resources and are

designed to last longer and minimize their impact on the environment from inception to grave. In

addition, “green” products and services have less of an impact on human health and may have higher safety standards (pg. 5). Whilst some green products or services may have a greater upfront expense, they save money over the life of the product or service. Practicing green

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procurement demonstrates an organization’s commitment to considering and minimizing the environmental consequences of its activities thus makes both environmental and economic sense.

For the Small and Medium Enterprises(SME`s) sector to grow there is a huge need for producing and purchasing of raw materials that are environmental friendly and these small businesses adequately need to strengthen themselves by coming up with solid solutions that can be used when implementing green productions ICPAK (2013). Despite the fact that there are certain self- advanced strategies already adopted by the different sectors, there are also external efforts that need to be taken so as to facilitate the green procurement practice. In this case, various governments like the Nigeria Government through Vision 2030 aim to build a just and cohesive society with social equity in a clean and secure environment. Such secure environment can be found through Green Procurement.

According to Federal Acquisition Regulation (FAR, 2005), “Green procurement is described as the purchase of environmentally preferable products and services in accordance with one or more of the established national “green” procurement preference programs. These programs are to prevent waste and pollution, and they require executive agencies to consider environmental impacts, along with price, performance, and other traditional factors, when making purchasing decisions.” The following green procurement programs are preference of many organizations: Products manufactured from recovered materials, environmentally preferable products, Energy efficient products, Biobased products, Alternative fuels and fuel efficient vehicles, and Non- ozone depleting substances (pg. 7).

Various international companies have invested so much in green procurement practice for both long term need and for purposes of meeting their customers’ needs by applying green procurement practices. Organizations like Samsung Group, LG Group, Panasonic Group, TOYOTA Green Car, SAP, Ricoh, Ventura County in U.S.A and Nevada County in the U.S.A. According to California Integrated Waste Management Act (Assembly Bill 939), the County of Nevada acknowledges that in order to support the recycling ethic and to minimize environmental impacts, they will purchase recycled content and environmentally preferred products (pg 8-13).

The County of Nevada recognizes that their employees can make a difference in favor of environmental quality. Therefore, they will purchase recycled content and environmentally preferable products unless such products do not perform satisfactorily and/or are unreasonably expensive.

Organizations like Panasonic Group’s has its own Green Procurement Standards Ver. 6 (2012)

that requests, “The Panasonic suppliers establish an environmental management system and ensure comprehensive chemical substance management as well as expedite the reduction of greenhouse gas (GHG) emissions, resource recycling and conservation of biodiversity.” Being aware of the need to spread these initiatives across Panasonic supply chain, suppliers have been encouraged to request upstream suppliers to reduce their environmental impact. “We plan to contribute to global environment conservation with our suppliers by promoting eco-conscious

procurement activities.”

Non-governmental organizations like the United Nations Environmental Program (UNEP) and United Nations Office for Project Operations (UNOPS); the central procurement resource in the United Nations system, works towards including sustainability considerations in all its procurement. The UN Agencies strive to lead by example in their pursuit of green procurement.

This is through their many and varied UN activities. All UN organizations contribute to sustainable development in one way or another through economic development, poverty alleviation, healthcare, peace building, infrastructure support, or environmental protection. This is by ensuring the United Nations system embarks on a journey to move towards resource efficient management and climate neutrality (pg 3). The benefits to be realized out of this are

better risk management, preparing the organization for a resource and carbon-constrained future, improving staff morale, and cutting costs UNOPS Delivering Sustainable Results Annual Report (2011).

The airline industry has also adopted green economy measures whereby in every ticket purchased, passengers are notified how much carbon is emitted to the air due to the type of flight.