Busting the green products cost more myth

Here at ECO-Buy, we frequently get asked the question, “do green products cost more?” The simple answer is: NO.

Like many new technologies when first introduced to the market, green products’ costs may start high. But as demand increases and technologies improve, costs reduce quickly. Solar panels are a good example, with prices falling from around $10 per watt in 2000 to around $1-2 per watt in 2012 (not including incentive schemes). Alongside this there is the rapidly rising cost of energy, which means that energy efficient products and independent sources of energy become even more attractive. Thus these often outdated impressions of the former cost create a lingering misconception while true costs become increasingly competitive.

Some green products remain more expensive up front due to the materials and processes that must be used to avoid environmental impacts. Even still, these products can still be less expensive if you look at them on a whole-of-life basis. The use and disposal costs of many products can significantly outweigh any difference in purchase price. These may include commissioning, energy, consumables, regular maintenance, and disposal levies.

On the other hand, many of the common characteristics of sustainable products consequently save money, such as:

  • Energy and water efficiency;
  • Reduced use of consumables;
  • Lower hazardous material content;
  • Longer life and greater upgradeability;
  • Reduced packaging and waste; and
  • Ease of recycling.

Marks & Spencer recently released their 2012 corporate social responsibility report, in which they revealed their sustainability program, Plan A, had actually saved them £105 million over the last year. When the plan was introduced in 2007, they expected it to cost the company around £200 million, but by year 3 they had started seeing a financial benefit from increased efficiency and better management. Procurement initiatives like replacing corporate fleet with greener vehicles, streamlined logistics, upgrading delivery fleet, reducing packaging, use of video conferencing over travel, buying green IT equipment, energy efficient store fit-outs, and buying and generating renewable energy all added to the savings. See more on the business case behind Plan A here.

Many companies’ 2 or 3 year payback requirement would prevent them from realising these benefits, actually costing the company in the long run. We recommend all purchases be evaluated on their total cost of ownership (TCO), which incorporates the purchase price, operation, maintenance and disposal.

Sustainable purchases do, of course, come with a number of environmental and social benefits, which all add to the triple bottom line.

ECO-Buy can help your organisation with whole of life costing, establishing the business case for green products, and other sustainable procurement needs. Contact us for details or advice.

Article provided by Sara Redmond-Neal, ECO-Buy Business Program Manager.