How green procurement reduces costs and CO2 emissions simultaneously

Summary 

Sustainable procurement involves making purchasing decisions that benefit both the environment and business performance. Key principles of sustainable procurement include energy efficiency, waste reduction, low-carbon alternatives, and ethical sourcing. What is the relationship between cost and environmental impact? Green procurement can lead to long-term savings by reducing energy consumption, minimising waste, and optimising supply chains. How sustainable procurement reduces costs is evident in lower utility bills, waste management fees, and streamlined logistics. Also, how sustainable procurement reduces CO2 emissions through green products, eco-friendly transportation, and circular economy practices helps businesses lower their carbon footprint while driving both financial and environmental benefits.

---

Green procurement is all about making smart purchasing decisions that benefit both the environment and the bottom line. It’s the practice of buying goods and services that are environmentally friendly, promote sustainability, and reduce carbon footprints. 51% of businesses worldwide have already embraced sustainable procurement practices.

As sustainability becomes a key focus for organisations, adopting sustainable procurement is no longer just a trend – it’s a smart business strategy. By switching to eco-conscious suppliers and products, companies are finding they can lower costs while cutting carbon emissions. And it’s not just about saving the planet; sustainable procurement can increase your brand value by 15-30%, showing that sustainable practices resonate with customers, investors, and stakeholders alike.

Green procurement plays a crucial role in sourcing environmentally friendly products, services, and solutions. It involves not only choosing products that are sustainable but also considering the entire lifecycle of those products, from raw material sourcing to disposal. As 58% of global organisations now monitor their suppliers’ sustainability performance, it’s clear that businesses are placing increasing importance on ensuring their supply chain aligns with environmental values.

Key principles of sustainable procurement include:

Businesses can take meaningful steps towards reducing their environmental impact while sourcing products and services that align with both their sustainability goals and their values. 

1. Energy efficiency: Choosing products and services that require less energy to produce or operate, reducing the overall environmental impact. This can mean opting for energy-efficient machinery, appliances, or materials that help minimise resource consumption.
2. Waste reduction: Sourcing items that contribute to reducing waste, whether through durable, reusable products or those that can be easily recycled. This not only benefits the environment but also encourages businesses to adopt a more circular approach to resource use.
3. Low-carbon alternatives: Prioritising products and services that generate fewer carbon emissions throughout their life cycle. Whether it’s selecting lower-emission transportation options or materials with a smaller carbon footprint, these choices can significantly reduce a business’s overall impact on climate change.
4. Ethical sourcing: Ensuring that suppliers uphold fair labour practices and follow ethical guidelines when sourcing materials. This includes fair wages, safe working conditions, and support for local communities, ensuring that sustainability extends beyond just environmental concerns.

Making sustainable procurement a part of your business is a win-win—boosting both your sustainability goals and your financial success.

What is the relationship between cost and environmental impact? 

There is a common misconception that sustainable procurement is always more expensive. Many organisations hesitate to adopt sustainable procurement practices because they believe the upfront costs of eco-friendly products or services will be higher. However, this is not always the case. Nearly 45% of public sector organisations have already included sustainability criteria in their procurement policies, and by 2026, 70% of technology procurement leaders are expected to align their performance objectives with environmental sustainability.

The truth is that the initial investment in sustainable products and practices can often lead to significant long-term savings. For example, while energy-efficient appliances or renewable energy solutions may seem costlier at first, they tend to lower operational costs over time by reducing energy consumption. In the same vein, investing in sustainable packaging or waste-reducing processes can save money by decreasing waste management costs and avoiding disposal fees.

Moreover, reducing CO2 emissions is directly linked to cost savings in several ways. Energy-efficient solutions not only lower utility bills but also help reduce the overall environmental impact, contributing to long-term sustainability goals. Similarly, waste minimisation strategies can cut costs by streamlining operations, reducing raw material consumption, and lowering waste disposal fees.

When viewed through the lens of long-term financial planning, the relationship between sustainability and cost becomes clearer. Green procurement isn’t just about doing the right thing for the environment; it’s also a smart business strategy that drives efficiency, reduces waste, and, ultimately, cuts costs. So, the initial investment pays off, making sustainable procurement a win-win for both the planet and your budget.

How green procurement reduces costs

Companies with strong environmental, social, and governance (ESG) credentials often see a reduction in costs by 5-10%. Green procurement plays a central role in helping companies achieve these savings while simultaneously supporting sustainability goals. Let’s look at some of the key areas where sustainable procurement can lead to significant cost reductions:

1. Energy efficiency: Investing in energy-efficient products and services can directly cut operational costs. For example, energy-efficient lighting, appliances, and machinery consume less power, resulting in lower utility bills. Similarly, opting for energy-efficient building designs or renewable energy sources reduces long-term energy expenses and boosts overall cost efficiency.
   
2. Waste reduction: Sourcing products that are recyclable or biodegradable helps reduce waste disposal and waste management costs. By choosing packaging or products designed to minimise waste, companies can decrease the need for landfill space and reduce fees associated with waste removal. Also, sustainable waste management practices can help companies achieve better resource recovery and lower their environmental impact.
   
3. Supply chain efficiency: Working with suppliers who prioritise sustainability can lead to improved overall supply chain efficiency. Suppliers that use eco-friendly practices often focus on optimising logistics, such as reducing transportation distances, switching to fuel-efficient delivery methods, and consolidating shipments. These actions not only reduce transportation expenses but also lower carbon emissions, making your entire supply chain more cost-effective and environmentally responsible.
   
4. Lifecycle cost savings: Long-term cost reductions can be realised when investing in products with lower maintenance needs or longer lifespans. For instance, durable materials that last longer reduce the frequency of replacement, saving money on procurement and maintenance. Products designed with longevity in mind may also require fewer repairs, resulting in lower ongoing operational costs.

By incorporating these strategies into procurement decisions, businesses can see a reduction in operational costs, while also contributing positively to the environment. Green procurement is not only a sustainable choice but a strategic one that drives efficiency, reduces waste, and generates long-term financial benefits.

How green procurement reduces CO2 emissions

The global energy-related CO2 emissions grew by 1.1% in 2023, adding 410 million tonnes and setting a new record high of 37.4 billion tonnes. While this increase highlights the challenges of reducing emissions, the growing deployment of clean energy technologies such as solar PV, wind, nuclear, heat pumps, and electric cars has played a critical role in slowing the pace of emissions growth. 

In fact, without these technologies, the rise in emissions would have been three times greater. This shift towards clean energy is part of a broader trend that is helping to decouple economic growth from environmental impact, and sustainable procurement plays a key role in driving further reductions in CO2 emissions.

Sustainable products: Choosing products with a smaller environmental footprint is one of the most direct ways to reduce emissions. This includes selecting low-carbon or energy-efficient materials that require less energy to produce or transport. For example, using sustainably sourced timber or recycled materials in construction can significantly lower the carbon emissions associated with building projects. Similarly, adopting energy-efficient electronics and appliances reduces the overall energy consumption, lowering CO2 emissions over time.

Eco-friendly transportation: Shifting to low-emission delivery methods or local sourcing can greatly reduce transportation-related emissions. By prioritising suppliers that use electric vehicles, biodiesel, or other low-emission transport methods, businesses can lower the carbon footprint of their supply chain. In addition, sourcing products locally or regionally reduces the distance items need to travel, decreasing the associated emissions from long-haul transportation.

Circular economy: Embracing a circular economy model, which focuses on recycling, reusing, and refurbishing materials, has substantial environmental benefits. By reducing the demand for new raw materials and minimising waste, circular practices help lower emissions associated with manufacturing, extraction, and disposal. For example, recycling materials such as metals, plastics, and paper requires less energy than producing new materials, resulting in significant reductions in CO2 emissions.

Incorporating these sustainable procurement practices helps reduce the carbon footprint across the supply chain, promoting a more sustainable and low-carbon future. By prioritising sustainable products, eco-friendly transportation, and circular economy principles, businesses can contribute to the global effort to slow the rise of CO2 emissions, driving both environmental and economic benefits.

Reduce costs and CO2 emissions simultaneously with Kronos Group 

At Kronos Group, our procurement consulting services help you reduce both costs and CO2 emissions simultaneously. By adopting sustainable procurement practices, we guide you in sourcing energy-efficient products, eco-friendly materials, and low-carbon alternatives that lower operational expenses. 

Our expert consultants optimise your supply chain, reducing waste and transportation-related emissions while improving efficiency. With a focus on ethical sourcing and circular economy principles, we ensure your business not only meets sustainability goals but also drives long-term cost savings. Partner with Kronos Group to create a smarter, greener procurement strategy that benefits your bottom line and the planet.

FAQs