Businesses vote to spend hundreds of millions with sustainable suppliers

New Zealand businesses with annual sales of more than $44 billion have voted to make sure at least six of their top10 suppliers are providing sustainable goods and services.

The decision is expected to influence hundreds of millions of dollars in buying decisions.

The businesses are members of the New Zealand Business Council for Sustainable Development.

They have voted for a rule change which means each firm will begin procuring sustainably – and ensure this applies to at least six out of their top 10 suppliers by value - within the next 36 months.

The Business Council's Chief Executive, Peter Neilson, told a conference of procurement specialists at Auckland this morning the new rule was a decision to show leadership, walk the talk, and will have a significant impact.

The Business Council's 73 member companies employ more than 60,000 people and their $44 billion in annual sales equate to more than 34% of gross domestic product by value. They include major and smaller companies from a range of sectors, including The Warehouse and Eco-store in retail, to banks, Telecom and Vodafone in communications to Summit Quinphos and Fonterra in agriculture, and Toyota, Honda and BMW in the motor industry.

About 72% of members surveyed have already dropped suppliers for environmental or ethical reasons.

Mr Neilson says Business Council members have also voted to measure and report on their carbon footprints within a year.

The new rules also apply to any new members.

Mr Neilson says the sustainable procurement decision will help the country in its transition to a low-carbon economy which can not only lift business profits, but also protect the environment and people.

Member companies had generally made financial gains from acting sustainably - by reducing emissions, energy use travel and other costs. Whole-of-life pricing on goods generally ensured lower-costs over the life of a product.

One member company, operating a hotel chain, was saving millions in electricity by switching to long-life light bulbs (5000 in one hotel alone).\

"The move to procuring sustainably, measuring and lowering emissions and lifting profits will also put businesses in a stronger competitive position as the world goes green. Within the next few years we expect to see all products going into Europe carrying full carbon content labels," Mr Neilson says.

He told delegates: "It's a pity 5% of New Zealand business people still think climate change is a problem for later, and 12% who think it is not a problem. Put your money on the 56% who want to get and keep out in front on climate change. They will be the winners and your secure suppliers for the future.

"The 'do-little, as late as possible' people are running what Ernst and Young calls one of the top 10 strategic risks facing business today: 'radical greening'.

"This is a mix of a wide variety of pressures driven by consumer and regulatory demands here and internationally. Of course, it is only a risk to those who appreciate it too late.

"New Zealand cannot afford to run this strategic risk as a nation. We cannot afford delay simply to placate those who must adjust most, or resist adjustment."

The Business Council member companies' decision to procure sustainably follows the organisation's advocacy of sustainable procurement by Government agencies. The Government is now directing 34 core agencies, with annual procurement budgets of $6 billion for their own services, to buy sustainably.

The Business Council says it now also wants local government to follow, and possibly save ratepayers millions longer-term.