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08/15/2011

Buyers feel forced to commit environmental sins

Environmental protection is expensive. Thus, many buyers find themselves in a catch-22 situation because the lower the value of the goods, the faster the cost benefit will be neutralized. Companies nonetheless doing their purchases with a view to conserving resources will be able to create a positive image for themselves.

Especially in developing countries and in newly industrializing nations, global sourcing brings about negative concomitant effects because, there, environmental standards are so low that buyers must decide between economic necessities and their good conscience. "Every company should be aware of its responsibility and do without suppliers from countries with bad environmental policies", demands Duran Sarikaya, Managing Director of Kloepfel Consulting. Asia and Africa especially still have to catch up in terms of environmental protection. But buyers frequently have no choice: "Sometimes it's inevitable to buy from there because in some areas of material there is an extremely steep cost differential, and they would then no longer be competitive." A trailer manufacturer would see the heap of steel but not its origin. "The industry must fight about every single cent", says Sarikaya.

Before this backdrop, increasing transport and logistics costs might have a positive effect on environmental protection because these costs would render the goods so expensive that, for some buyers, it will pay off to return to regional or local sourcing. In case of raw materials only to be found abroad, rising prices might however result in savings in another area and thus, for example, terrain after the exploitation of mineral resources might not be reclaimed. Sarikaya sees a remedy by increasing the import duties on such products.

Alternatively, buyers could have their customers pay for their environmental awareness – either through higher end-product price or ethical values such as loyalty or benefits of reputation. Some companies try to polish their reputation by supporting green projects, for instance by reforestation. Yet, so far, environmental protection takes last place among the challenges which companies identify for their buyers: According to a poll among 106 heads of purchasing departments of large mechanical engineering companies in Germany conducted by the Institut für Demoskopie (Institute for Public Opinion Polls and Research) in Allensbach on behalf of Kerkhoff Consulting, a mere two percent of all persons polled consider increasing environmental standards to be a top subject in the coming decade.

■ Kirsten Seegmüller