Business Going Green:
Green supply chain requirements mean major changes for small Missouri businesses

Businesses resisting the notion that they may someday have to monitor their greenhouse gases, water use, packaging and product toxicity may be handing over business to those who embrace going green. The two largest buyers of products in the United States, the federal government and Walmart, are beginning to require their suppliers to track and reduce environmental impacts.

The federal supply chain turned a deeper shade of green when President Obama signed Executive Order 13514 in October 2009. EO 13514 requires that 95 percent of all new government purchasing contracts seek products and services that are energy and water-efficient, non-toxic or less-toxic, contain no ozone depleting chemicals and are made from plant-based or recycled materials. The executive order also mandates that federal agencies work with existing vendors and contractors to reduce the environmental impacts throughout the supply chain.

The General Services Administration, the government agency that oversees billions of dollars of federal procurement annually, issued a 65-page report in April in response to EO 13514. In July, a Federal Times article summarized the key components of the report, which will have far reaching implications for government contractors:

• Government contractors will have to track their greenhouse gas emissions or risk losing new contracts. This policy could take effect in 2011 or 2012.
• Vendors that create an inventory of their overall greenhouse gas emissions could get preferential treatment when bidding on contracts, and companies could get extra credit for tracking emissions throughout their supply chains and getting third-party verification of their findings.
• Contractors demonstrating low emissions could also be given set-aside contracts in the same way that small and disadvantaged businesses are today.

Last month the GSA announced a "GreenGov Supply Chain Partnership and Small Business Pilot Program" to assist small government suppliers with the new greenhouse gas reporting requirements and emissions reduction efforts.

Among the 58 companies that have joined the partnership is Bullseye International, an affiliate of Kansas City's Magic Touch Cleaning. The Missouri company, owned by Gary and Trish Walker, provides cleaning services and supplies to the federal government.

"The GSA approached us to be in this program because they knew that we were committed to being as green as we could be," says Gary Walker.

Commitment will help the Walkers meet the 2 percent of greenhouse gas emissions reduction that the pilot program requires.

"It's crazy because as a company we have been green for over seven years, but after the first webinar that we just attended for the program we had to sit down and really look at every aspect of our business to see how we could reduce emissions," says Walker.

"There is one vehicle that we've decided we are going to have to pull out of our inventory. It's an older vehicle with over 200,000 miles and it's very inefficient. We're going to have to replace it with a hybrid or something much more efficient."

By participating in the pilot program and making the tough business decisions necessary to reduce their emissions, the Walkers are staying one step ahead of regulations, and of market demands. The government isn't the only buyer that wants its suppliers to become more sustainable. GSA's program is the public sector equivalent of an initiative developed by retail-giant Walmart.

Walmart's sustainability index will track performance in the areas of energy and climate, material efficiency, nature and resources, and people and community for more than 100,000 global suppliers. Suppliers will be required to report to Walmart, and they will be evaluated and rated for each section as "above target," "on target" or "below target." One of the main components of the energy and climate assessment area is whether or not companies are measuring their greenhouse gas emissions.

The index isn't just informative; Walmart's sustainability assessment FAQs explicitly states: "[I]n the future we do intend to reward those suppliers who have measured impacts and show progress toward meeting stated reduction goals."

So how can small businesses prepare themselves to meet the GHG measurement and reduction requirements of the two biggest product buyers in the United States? Tracking, calculating and reducing GHG emissions adds an entirely new level to the process of running a business, and many small business owners don't even know where to start.

"As a small business owner I don't know if I could take all of these steps on my own, without the support of the GSA. It's a very overwhelming process; it's hard to know where to start. I'm always making efforts to go greener, but I don't think that I would have the tools or knowledge to measure the changes that I am making without the agency's guidance," says Walker.

"We're starting by identifying all activities that release greenhouse gas emissions. These include electricity/gas use, waste disposal/recycling, business travel, owned or controlled vehicles, employee business travel, and staff commuting. It's a tall order."

The EPA has developed guidance documents and conversion calculators specific to small businesses. The Greater Kansas City Chamber of Commerce also has an excellent carbon footprint calculator and many other tools for small businesses wanting to go green.

After the measurement process has begun it's important for businesses to identify ways to reduce emissions. The Walkers have already started this process by deciding to replace their old delivery van.

Once the process is in place, it becomes much simpler to continue to monitor progress. As Walker says, "This is an incredible upfront investment of time and energy, but it's worth it. Once we get it all plugged in, it will be pretty easy moving forward."

The Walkers and the other businesses participating in the pilot program are preparing for what will one day be required of every business.

"This program is giving me the tools to be fiscally and environmentally smarter, and its helping me prepare for the inevitable," observes Walker."

This story was featured in the December 2010 newsletter