Sustainability – designed to be
signed, sealed and delivered
Strategic Audit
Environmental management systems in
the Victorian Government January 2012
Published by the Commissioner
for Environmental Sustainability
Melbourne, Victoria, January 2012.
©The State of Victoria, Commissioner
for Environmental Sustainability 2012
This publication is copyright.
No part may be reproduced by any process
except in accordance with the provisions of the
Copyright Act 1968.
Printed by: Sovereign Press
6 Traminer Crt
Wendouree
Victoria 3355
Printed on recycled paper.
Authorised by the Victorian Commissioner for
Environmental Sustainability, 16/570 Bourke
Street, Melbourne, Victoria 3000
ISBN 978-1-921147-18-0
For further information contact the Office of the
Commissioner for Environmental Sustainability,
phone +61 3 8636 2197 or visit
http://www.ces.vic.gov.au
Disclaimer
This report may be of assistance to you and
every effort has been made to ensure that the
information provided is correct. It is based
largely on data and information provided by the
Victorian Government. The Commissioner for
Environmental Sustainability does not guarantee
that the report is without flaw of any kind or is
wholly appropriate for your particular purposes
and therefore disclaims all liability for any error,
loss or other consequence which may arise from
you relying on any information in this publication.
Contents
From the commissioner ________________________________________________________________ 5
Designing sustainability with contracts ______________________________________________________ 5
Key Messages ___________________________________________________________________________ 7
1
Victorian Government Architect’s perspective ___________________________________________ 8
Why design matters ______________________________________________________________________ 8
Part 1 – Contracts: designed to be a sustainability device _______________________________ 12
The power of state contracts______________________________________________________________ 13
Co-benefits – why bother? _______________________________________________________________ 17
How to leverage environmental change through contracting ___________________________________ 18
2
3
Part 2 – Contracts: designed and applied _______________________________________________ 24
Greener Government Buildings – designing the energy performance contract ____________________ 26
Melbourne Health designs a contract clause and takes a sustainability lead _____________________ 34
Victoria Police designs a holistic approach __________________________________________________ 36
Part 3 – Environmental management and performance 2010–11 _________________________ 42
Environmental management ______________________________________________________________ 43
Reporting schemes _____________________________________________________________________ 43
Whole-of-government environmental performance 2010–11 ___________________________________ 46
Greenhouse gas emissions _________________________________________________________ 47
Energy use in office buildings________________________________________________________ 48
GreenPower ______________________________________________________________________ 49
Waste in office buildings ____________________________________________________________ 50
Paper consumption ________________________________________________________________ 51
Water use in office buildings ________________________________________________________ 51
Transport ________________________________________________________________________ 52
Procurement______________________________________________________________________ 54
Department and agency environmental management ________________________________________ 55
The approach _____________________________________________________________________ 55
Department of Business and Innovation ______________________________________________ 56
Department of Education and Early Childhood Development _____________________________ 58
Department of Health ______________________________________________________________ 60
Department of Human Services _____________________________________________________ 62
Department of Justice______________________________________________________________ 64
Department of Planning and Community Development__________________________________ 66
Department of Premier and Cabinet __________________________________________________ 68
Department of Primary Industries ____________________________________________________ 70
Department of Sustainability and Environment _________________________________________ 72
Department of Transport ___________________________________________________________ 74
Department of Treasury and Finance _________________________________________________ 76
Environment Protection Authority ____________________________________________________ 78
Sustainability Victoria ______________________________________________________________ 80
Appendix _____________________________________________________________________________ 82
Endnotes _____________________________________________________________________________ 84
A resource efficient public sector will have lower impacts.
Sustainability versus efficiency is a false choice. The taxpayer, and
the citizen – and future generations – deserve both.
Sustainable Procurement Task Force, UK, 2006.1
Pirelli has a deep commitment to sustainability. Our corporate
strategy is one of continuous innovation to offer better products
with improved fuel efficiency and the highest safety standards, as
well as to develop manufacturing processes that are safe for the
environment and safe for our employees, and provide sustainable
growth and well-being in local communities. This is an integral
part of our strategy as a premium brand: the premium products
we offer integrate these values and we are recognized for them..
Filippo Bettini, Head of Group Sustainability and Risk Governance, Pirelli Group.
Provided by Pirelli, January 2012.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
From the commissioner
5
Designing sustainability with contracts
The preparation of a strategic audit report is a statutory function of my role as the
Commissioner for Environmental Sustainability.
Specifically, the presiding Act, the Commissioner for Environmental Sustainability Act
2003 (the Act) (s. 8), stipulates that the commissioner must conduct annual strategic
audits of, and prepare reports on, the implementation of environmental management
systems by Victorian Government departments and agencies.
The Act (s. 3) also defines an environmental management system (EMS) as: ‘the
organisational structure, policies, practices, processes and procedures for implementing
environmental management, including systems for designating responsibility for and
allocating resources to, environmental management’.
The strategic audit is therefore not limited to an analysis of Financial Reporting Direction
24C data to determine the effectiveness of departments’ and agencies’ EMS programs.
Instead I take a broader view, as evident in last year’s strategic audit. There I explored
the organisational structures and cultures that underpin and guide practical efforts and
presented case studies to better illustrate the theoretical insights.
In this year’s strategic audit I extend the discussion commenced in Structures for
Sustainability2 to consider how contracts and contracting processes can leverage
environmental outcomes. I also explore the possibilities of improving resource efficiency and
improving sustainability outcomes through the contract – a multidimensional mechanism.
Contractual relationships require parties to recognise their mutual dependence and thus their
mutual interest in developing a cooperative relationship.3 Contracting is therefore not only a
financial or performance issue; it is also a people issue. Additionally, contracts are a matter
of design and in this regard I welcome the views of the Victorian Government Architect,
Geoffrey London, ‘Why design matters’ – the perspective that precedes this report.
Report structure
Part 1 – Contracts: designed to be a sustainability device provides a study of
government contracting and the development of key performance indicators that can
deliver improved efficiencies and reduce greenhouse gas emissions.
Part 2 – Contracts: designed and applied provides case studies, including the
Greener Government Building program, where the benefit of energy and water efficiency
and financial savings are intrinsic to the contract.
Part 3 – Environmental management and performance 2010–11 provides analysis
of Victorian Government departments’ and agencies’ environmental management
systems implementation and performance.
Contractual relationships
require parties to recognise
their mutual dependence
and thus their mutual
interest in developing a
cooperative relationship.3
Contracting is therefore
not only a financial or
performance issue; it is
also a people issue.
The strategic audit
process is conducted
on the basis of a ‘no
surprises’ approach.
Strategic audit methodology
The audit is evidence-based, using information obtained from departments and agencies
and their annual reports. Stakeholder consultation and independent research, as with
all work undertaken by my office, are an integral part of the process to assist in the
evaluation of data and the analysis of trends.
Information obtained from annual reports is taken as authoritative and therefore only
limited data verification is undertaken in relation to Financial Reporting Direction (FRD) 24C
information. Qualitative information is drawn from interviews, case studies and workshops.
The strategic audit process is conducted on the basis of a ‘no surprises’ approach.
Stakeholder engagement is undertaken to ensure departments and relevant agencies are
aware of the scope of the audit and the commissioner’s draft findings.
Departments and agencies covered by the strategic audit
Department of Business and Innovation
Department of Education and Early Childhood Development
Department of Health
Department of Human Services
Department of Justice
Department of Planning and Community Development
Department of Premier and Cabinet
Department of Primary Industries
Department of Sustainability and Environment
Department of Transport
Department of Treasury and Finance
Environment Protection Authority Victoria
Sustainability Victoria
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
7
Key messages
Mary D. Nichols, Chairperson of the California Air Resources Board, commented
after attending the United Nations Climate Change Conference of Parties in Durban,
December 2011 that the job of acting on global warming would increasingly fall to state
and local governments.
‘Instead of waiting for ... some grand bargain, we have to keep working on the ground’.4
The Victorian public sector, including local government, is addressing the many aspects
of ecologically sustainable development in its operations. The task is complex; it requires
innovation, leverage and fiscal responsibility. This strategic audit report considers how
contracts can be designed and applied to assist in the process and I encourage serious
consideration of the following:
> Contracts are powerful mechanisms that should be used by the Victorian
Government’s departments and agencies to design outcomes which improve resource
efficiency and support environmental sustainability.
> The Victorian Government should use its market power to foster innovation that
leads to resource efficiency and environmental sustainability.
> Heads of departments and agencies need to increase their personal commitment
to environmental sustainability and ensure their executive teams are accountable for
sustainability outcomes across all operations.
Professor Kate Auty
PhD, MEnvSc, Dip Int Env Law
(UNITAR), BA(Hons)LLB, MAICD
Commissioner
for Environmental Sustainability
Victorian Government Architect’s perspective
Establishing the brief
for the project is a
necessary first step.
And a good brief goes
considerably further
than a listing of room
areas, functions and
their relationships.
Why design matters
An appreciation of high-quality architectural design is too often dismissed as
merely subjective. This view derives from an understanding of good design as
a surface treatment, as a kind of iron-on visual veneer that is subjected to the
judgement of taste. The appearance of a building is important in many respects,
but it is only one of many factors that contribute to an understanding of a highquality design, many of which are directly quantifiable.
...firmitas, utilitas, venustas...
As early as 15 BC, Vitruvius, the Roman architect, scholar and engineer, asserted in his
book De Architectura that architecture can be judged by how well it measures up to three
criteria: firmitas, utilitas, venustas – commonly translated as firmness, utility and delight.
These time-tested criteria still prevail, but we now expect additional levels of performance
from our buildings.
We could stretch a long bow and suggest that Vitruvius had in mind, when he spoke
of utility, the manner in which a building performed in environmental terms – that is, its
ability to maintain a consistently comfortable interior temperature in both hot and cold
conditions and, in doing so, to use as little energy as possible; its ability to move air and
light through the building; its ability to admit the sun during winter; and the efficiency
of the way water and power is distributed through the building and waste is disposed.
Firmness could have included the use of materials that leave a minimal ecological
footprint, that can be recycled, and which avoid waste. Delight could be enhanced by
our knowledge that the building we are judging is not contributing to a negative impact
on the environment. If Vitruvius had considered all these factors as part of his three
criteria, he could have claimed that those buildings that met these expectations were
‘green’ buildings. And all these factors are quantifiable.
We have an increasing number of new buildings that would satisfy such an enhanced
testing by Vitruvius, but we could do considerably better. It is beneficial to understand
that the way architectural services and buildings are procured has a profound effect on
the quality of design that results.
Establishing the brief for the project is a necessary first step. And a good brief goes
considerably further than a listing of room areas, functions and their relationships.
A good brief sets out the qualitative values for the project; the key ambitions that deal
with how the building is to be experienced. For example, is the building to have a strong
civic dimension? Is it to be warm, open and accessible? Is it to have gravitas? Is it to
be flooded in light or shaded and cool? Is it to have intimate or grand spaces? How
environmentally sustainable will it be? Establishing these values allows a client to be well
informed and clear in their expectations. At the same time, a good client will value design
and understand what it can provide, allowing them to demand and recognise it.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
9
The process
Government and institutions typically go through a two-stage process to select an
architect. In the process with which I’m most familiar, the first stage seeks an expression
of interest (EOI) from architects. The EOI advertisement is where the key ambitions of the
project need to be spelt out with absolute clarity. If these ambitions are not articulated
from the outset, it is difficult to subsequently graft them on. And this is the process that
attracts the most appropriate architects for the job; the ones best suited to meet the
stated ambitions. To encourage ecological sustainability, this ambition and the level of
achievement being sought for the building should be clearly set out in the EOI.
The second stage is the request for proposal (RFP), in which those architects shortlisted from the EOI process demonstrate their capabilities. The RFP should pursue and
reiterate the ambitions introduced in the EOI, including the foregrounding of green issues,
rigorously testing the architects’ abilities to meet these expectations. During this stage
of the process I prefer to see the short-listed architects offered a modest honorarium to
develop, in a limited period, a design approach to the project, which is then presented to
a selection panel. This allows a testing of the architects’ skills and a final selection to be
based on their demonstrated capacity to respond to the project’s ambitions.
As the design advances through close consultation between the client group and the
architect, a design review process can help verify the direction in which the design
is developing and confirm that, within the plethora of competing requirements, the
ambitions set out in the EOI are retained as a clear point of focus and able to be realised.
As the design advances
through close consultation
between the client group
and the architect, a design
review process can help
verify the direction in which
the design is developing ...
For example, if a designand-construct process
is entered into, the
architect is working for
the builder rather than the
client. In this instance, a
strategy needs to be in
place that enables the
client’s expectations and
the qualitative design
intentions to be realised.
Designing for sustainability
While the architect’s work is developing, decisions will be made about how the project
is to be procured, including the form of contractual arrangement to allow the project to
be built. Governments use a range of procurement processes, some more friendly than
others, for realising sustainable outcomes as part of a broader ambition for design quality.
Each procurement process needs strategies in place to ensure that quality is protected.
For example, if a design-and-construct process is entered into, the architect is working
for the builder rather than the client. In this instance, a strategy needs to be in place that
enables the client’s expectations and the qualitative design intentions to be realised. This
can occur through quality benchmarking and a design intent document forming a part of
the contract.
Value management is a strategy that can leave a building poorer in terms of design quality.
Too often, this process is used for short-term cost savings without a sufficient appreciation
of the long-term outcomes. For example, a layer of sunscreens may be removed for
budgetary purposes without allowing for the fact that the heat load this deletion generates
in the building will lead to significant energy use in cooling the building over an extended
period of time. This, in turn, challenges our understanding of ‘value for money’, an
important ambition in government work. As has been broadly argued, value for money
needs to be assessed over the life of a building rather than through its initial cost.
The quality of design and the level of sustainability can be monitored and achieved
through early and careful consideration of procurement processes. Another effective
strategy is to tie the achievement of design outcomes to the sale of government land for
development projects and being prepared to negotiate the sale price if public benefits
can be demonstrated from the design.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
11
Legislating for sustainability
It is also possible to legislate for better design and sustainability outcomes. I was
once a sceptic about such a possibility, but have come to believe that it can be done.
The example of State Environmental Planning Policy (SEPP) 65 in New South Wales
is a compelling instance of legislation lifting the bar on apartment designs in Sydney
and specifying a number of performance standards that result in better environmental
performance. The State Environmental Planning Policy No. 65 – Design Quality of
Residential Flat Development was introduced in 2002 and was intended to elevate
design as an important measure in planning decisions. SEPP 65 sets out levels of
amenity that must be achieved, including solar access, cross-ventilation and sound
separation between apartments. Included within the SEPP is a process for expert
advisory panels to assist local councils with assessments of proposals, bringing
informed design judgement to the process.
Achieving high-quality architectural outcomes and associated high levels of
environmental performance involves processes that require ongoing scrutiny – but
there are two necessary initial moves: become an informed client and commission
good architects.
Geoffrey London
Victorian Government Architect
Contracts: designed to be a sustainabilty device
C
The power
p
of state contracts__________________________________________ 13
Co-benefits – why bother? ___________________________________________ 17
Co-be
How to
t leverage environmental change through contracting _______________ 18
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
13
The power of state contracts
Achieving sustainability is a complex and challenging endeavour. The Commissioner for
Environmental Sustainability Act 2003 (s. 4) defines ecologically sustainable development
as a ‘concept’ that includes the ‘principle’ (among others) that decision-making processes
should effectively integrate both long-term and short-term economic, environmental, social
and equity considerations.
Developing practical approaches to aid decision making and achieve sustainability is an ever
evolving task that is increasingly becoming a core focus of many governments, businesses
and communities. In this strategic audit report, the use of contracts as a mechanism to foster
innovation, promote resource efficiency and deliver environmental sustainability is examined.
A contract is mostly commonly seen as a legal instrument, different from, but augmenting
the approach promoted by the Victorian Government Architect in his ‘Perspective’. Simply
put, it is an agreement (including the elements of ‘offer’ and ‘acceptance’) between at least
two parties, which involves the exchange between the parties of valuable consideration and
which, objectively viewed, shows an intention to create legal relations between the parties.
However, it is also an economic instrument, a planning tool, and perhaps, at its most
effective, the embodiment of a cooperative relationship. Understood as a multifaceted
mechanism, the contract becomes a powerful sustainability device.
Governments and their public authorities are major consumers of private goods and
services. The Organisation of Economic Co-operation and Development (OECD) estimates
that contracting for public procurement accounts for on average between 10–15% of
Gross Domestic Product (GDP) across the world.5
In Europe, government spending amounts to €2 trillion each year (equivalent to 19% of the
European Union’s GDP). The European Commission notes that governments can make an
important contribution towards local, regional, national and international sustainability goals by using
their purchasing power to choose goods, services and works with a reduced environmental impact.6
The Victorian Government’s Financial Report for the State of Victoria 2010–11 shows
that the value of public sector expenditure on supplies and services and other operating
expenses was around $22 billion for the year. This equates to an estimated 7% of the
Gross State Product.7 In addition to this Victorian local governments spend more than
$2.7 billion on goods, services and works annually.8
Further refining these figures, the Victorian Government Purchasing Board reports that
department-specific procurement activity for goods and services in 2010–11 is valued
at around $6.3 billion. This includes contracts above the government’s $150,000 public
tender threshold, variations to contracts, standing offer agreements such as state purchase
contracts and strategic procurement plans for proposed major contracts.9
A ‘contract’ of some form underpins almost all government acquisitions. The contracts
that support these acquisitions can vary in value from thousands to hundreds of millions
of dollars, in duration from days to years, and in complexity from simple to very complex.
Contract law, trust and policy objectives
Government contracts can and do include criteria to further policy objectives, address market
failures (including the provision of a ‘public good’) and also address other extraneous matters.
Sometimes these policy objectives and contractual obligations are reinforced by legislative
requirements and regulatory frameworks. The multidimensional aspects of contracts have
potential to influence outcomes beyond just a project’s contracted scope.
Developing practical
approaches to aid
decision making and
achieve sustainability is
an ever evolving task that
is increasingly becoming
a core focus of many
governments, businesses
and communities.
Australian governments, as with other jurisdictions and international organisations
throughout the world, have included in contracts provisions related to anti-discrimination,
support for local companies or communities, employment practices, environmental
protection,10 and environmental sustainability criteria such as energy efficiency and
product stewardship.
In the vast body of literature on economics and law, contract law is seen as providing a
set of ‘default rules’ that serve to reduce transaction costs and overcome informational
and related barriers to optimal economic exchange. Some theorists argue that in this
‘transactional construction’ there is limited need for contracts to encourage trust as the
institutional framework provides the necessary protections.
An alternative view is that institutional environment, and the contractual processes it
supports, can, and does encourage notions of ‘good faith’. The affirmative promotion of
trust will create co-operation between parties and play a broader role in encouraging the
sharing of risk and information between parties.11
Contracting methods such as public/private partnerships and alliances, used by
governments throughout Australia, are examples of legal arrangements that operate
within well established institutional frameworks. These arrangements work best when
co-operative relationships, with high degrees of trust, exist between parties. Addressing
the complexity of sustainability objectives is arguably best served when good faith exists
between parties and risk is able to be shared in the effort to support innovation, foster
environmental outcomes and other policy objectives.
UK Government calls on contractors to help cut carbon emissions –
Energy Efficiency Code
In July 2010 the UK Minister for the Cabinet Office Francis Maude called on departments
and contractors to work together to cut central government carbon emissions by 10%
so that the government could become the greenest ever.
At a meeting on 20 July, Mr Maude and Minister for Energy and Climate Change Greg
Barker urged UK’s leading facilities management companies to work under the terms
of a new Energy Efficiency Code. The meeting followed the prime minister’s pledge on
14 May to cut central government carbon emissions by 10% in one year to help protect
the environment and save money.
The event was attended by senior representatives from major contractors that maintain
government buildings. These companies also outlined how they can share best practice
on saving energy use and what can be achieved in pursuit of this goal.
The government’s new Energy Efficiency Code states that all departments should:
> work with facilities management contractors to prepare plans to cut carbon by 10%
by May 2011
> give serious consideration to private sector ideas to cut carbon emissions
> agree to explore agreements, possibly through changes to existing contracts, which
benefit government departments and private companies in their pursuit of reducing
carbon emissions.
In response, contractors were asked to share their expertise with public bodies and
actively identify opportunities to reduce energy emissions.12
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
15
Europe: Applying the contract as an economic instrument
Europe 2020 is the European Union’s strategy for smart, sustainable and inclusive
growth. It is based on three interlocking and mutually reinforcing priorities:
> developing an economy based on knowledge and innovation
> promoting a low-carbon, resource-efficient and competitive economy
> fostering a high-employment economy delivering social and territorial cohesion.
The Europe 2020 strategy identifies public procurement as one of the market-based
instruments to be used by member states to achieve the growth objectives by improving
the conditions for business to innovate and by encouraging wider use of green
procurement supporting the shift towards a resource-efficient and low-carbon economy.
Alongside these objectives the strategy stresses that public procurement policy must
ensure the most efficient use of public funds.13
In December 2011, the European Commission released a proposal for a Directive of the
European Parliament and of the Council on public procurement. This proposal has two
complementary objectives:
> increase the efficiency of public spending to ensure the best possible procurement
outcomes in terms of value for money
> allow procurers to make better use of public procurement in support of common
societal goals such as protection of the environment, higher resource and energy
efficiency, combating climate change, promoting innovation, employment and social
inclusion and ensuring the best possible conditions for the provision of high-quality
social services.
The proposed directive provides a comprehensive exposition of the intersection of
contracting, markets and sustainability. Based on an enabling approach, the directive
provides contracting authorities with the instruments needed to contribute to the
achievement of the Europe 2020 strategic goals by using their purchasing power to procure
goods and services that foster innovation, respect the environment and combat climate
change, while improving employment, public health and social conditions. The costs to be
taken into account by contracting authorities not only include direct monetary expenses,
but also external environmental costs if they can be monetised and verified.
The directive also allows for the consideration of research and innovation in contracting
as it has a central role in the Europe 2020 strategy for smart, sustainable and inclusive
growth. It is proposed that public purchasers should be enabled to buy innovative
products and services promoting future growth and improving efficiency and quality
of public services.
Contracting process in the Victorian Government
In the Victorian Government context the main authorising agencies for the administration
of contracts include the Victorian Government Purchasing Board, Health Purchasing
Victoria, the Building Commission and Partnerships Victoria. (For further information
about the Victorian context see Appendix)
The costs to be taken
into account by
contracting authorities
not only include direct
monetary expenses, but
also external environmental
costs if they can be
monetised and verified.
Sustainability considerations are guided by the Environmental Procurement Policy set
by the Victorian Government Purchasing Board. This policy states that the Victorian
Government should seek to purchase goods and services that are aligned with the
objectives of environmental sustainability. The policy also provides guidance on how
to embed environmental considerations into contracting processes consistent with the
principles of value for money, open and fair competition, accountability, risk management,
probity and transparency. The application of the policy is left to individual departments
which are responsible for addressing environmental procurement considerations and
reporting on implementation.14
The range of services and goods purchased by departments and agencies includes,
but is not limited to the following:
> stationary energy
> medical equipment, supplies and pharmaceuticals
> residential services
> construction projects
> computer system hardware and software
> freight, transport and vehicle fleet services
> couriers and stationery supplies
> cleaning of offices
> specialist advice and consulting.
Many Victorian Government departments and agencies include environmental criteria in
standard tender and request-for-quote documentation. Some also include environmental
clauses in contracts.
Facilities management at the Department of Sustainability and
Environment
The Department of Sustainability and Environment’s facilities repairs and maintenance
program for the sites it manages is delivered through a facilities management services
contract with Five D Holdings.
As part of the facilities maintenance program companies are contracted under a general
set of terms and conditions that include the preparation of a work method statement
by the contractor outlining measures adopted to reduce environmental impacts. The
statement can address waste management and minimisation, water quality and quantity,
material selection, noise, vibration, water minimisation and greenhouse gas emissions.
The key performance indicators in the work-order terms and conditions include
undertaking environmental sustainability accreditation and demonstrating the
organisation’s participation in activities to reduce environmental impacts.
A contractor’s performance will influence where they appear on the job allocation ranking
tables. If a contractor is ISO 14001 accredited, green star ranked and/or industry accredited,
and they regularly produce written environmental and safety assessments for review by the
departmental staff before they commence work, then they are considered favourably and
remain at the top of the rankings (assuming good performance in other areas).
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
17
Contractor choice and evaluation criteria
The process to choose a contractor is influenced by a number of factors. Monetary
thresholds are a primary influence.15 State purchase contracts and supplier panels also
need to be considered; the former are contracts that are set for up to three years and
range from fuel contracts and air travel to the purchase of GreenPower.
Departments and agencies guided by their Accredited Purchasing Unit policies and
procedures, develop evaluation criteria to guide contractor selection through the quote
or open tendering processes.
Establishing the ‘weighting’ given to each of the evaluation criteria allows scope to design
and adhere to the government’s value for money objectives and to give emphasis to
the department or agency core values. It can include processes that allow for staff with
expertise in environmental sustainability to contribute on specialist procurement panels.
Co-benefits – why bother?
The literature identifies four key reasons why governments might choose to encourage
contracts that incorporate environmental sustainability.16
The first, counter-intuitively for some commentators, is cost-effectiveness. Some
‘greener’ products and services are less costly in terms of their use, maintenance and
disposal, despite in some cases higher upfront costs.
Document imaging services
State purchase contracts are standing offer agreements utilised for the supply of
common use goods and services, accessed by Victorian Government departments and
agencies. They involve arrangements with one or more suppliers for a set period, usually
three to five years.17
Document output devices products and services (multifunctional devices and printers)
are supplied to government departments and agencies under a state purchase contract.
Environmental considerations have been a feature of this contract as part of the
government’s value for money proposition.
Environmental specifications include reference to recognised environmental sustainability
standards, improved energy efficiency, double-sided copying default settings, recyclable
parts, recycled paper capability and recycled packaging and packaging take-back options.
The second reason is the impact on environmental outcomes. Given the size of the publicsector contractual arrangements and the consequent spend and actual consumption, the
sourcing of more environmentally friendly options, together with the utilisation of businesses
with stronger environmental practices, can reduce a government’s direct and indirect
environmental footprint.
The third reason, by virtue of the second, is that government can provide markets for
new environmentally preferable products by lowering the costs of clean technologies as a
function of scale economies. In doing so, government can actually assist consumers to shift
to environmentally friendly products and services.
Finally, public sector demand for goods and services produced more sustainably can also
have desirable indirect effects, such as raising consumer awareness. Governments wanting
to promote more environmentally friendly consumption patterns may find it necessary and
useful to lead by example.
Establishing the
‘weighting’ given to
each of the evaluation
criteria allows scope to
design and adhere to the
government’s value for
money objectives and
to give emphasis to the
department or agency
core values.
West Sussex County Council Street Lighting Contract
A contract to provide street lighting in the UK’s West Sussex County Council was
awarded in 2010 as a 25-year Private Finance Initiative (PFI) Contract.18 The co-benefits
intrinsic to this long-term contract include investment in the latest technology to provide
improved lighting, safer streets, improved energy efficiency and a 25 per cent reduction in
carbon emissions. A sustainability appraisal was used as part of the tender and contract
preparation; only solutions that utilised more energy-efficient technology were considered.
Alignment and integration of other council objectives were also sought through the
contract, including the development of new skills for the workforce, reducing and
recycling waste, reduction in the transportation associated with maintenance as lights
needed replacing less frequently, and support for the local economy.19
The World Bank notes
that monitoring and
evaluation needs to be
clear in the design phase;
while considerable effort
is often given to which
indicators should be used,
little time or effort may be
given to deciding how data
will be collected.23
How to leverage environmental change through contracting
The Victorian Government seeks to purchase goods and services that are aligned with
the objectives of environmental sustainability. Over recent years it has become more
common for departments and agencies to include environmental criteria in tender/
request-for-quote documentation and apply during the evaluation stage of the contracting
process. However, delivering on environmental outcomes does not easily translate into
the contract clauses or contract performance criteria.
Key performance indicators
Key performance indicators are intended to establish minimum service standards to
ensure performance expectations are satisfied. Generally applied in the context of
organisational performance, they also feature in contractual arrangements; one of the
attractions of inserting key performance indicators is the opportunity to bolster and clarify
the general obligations described in the terms and conditions section.
Contractually committing to environmental outcomes is not always straight forward.
Obtaining third-party certification, achieving stated energy savings, reducing construction
materials and waste, or creating a healthful interior environment can lead to obligations
beyond the standard of care and, as contractual obligations, may not necessarily be
covered by professional liability insurance.20 The response could be to focus on key
performance indicators concerned with the contractor’s outputs and inputs rather than
on the purpose or outcome. This, however, can impede efforts to achieve sustainability,21
as such contractors are sometimes forced to assume risks in terms of indemnity clauses
and insurance cover that can be out of proportion to the value of the project.22
An important consideration with key performance indicators not limited to environmental
indicators is their measurement. The World Bank notes that monitoring and evaluation needs
to be clear in the design phase; while considerable effort is often given to which indicators
should be used, little time or effort may be given to deciding how data will be collected.23
Increased emphasis on monitoring and evaluation at the commencement of a contracting
process can also ensure officers involved in the process are ‘knowledgeable buyers’. In
other words, if there is sufficient discussion and documentation regarding what success
looks like and how it can be measured, then the early stages of contract design and
development are more likely to be guided by an informed and realistic understanding of
what the market, through the contract, can deliver.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
19
The complexity of designing contracts
As part of this strategic audit process, the commissioner held a roundtable in May 2011,
with representatives from a number of Victorian Government departments, to discuss the
contracting process and some of the challenges it presents for achieving resource efficiency
and sustainability. Some of the key issues identified include the following:
> the need for a better, and shared, understanding of ‘value’
> the need for greater clarity and better definition of ‘co-benefit’
> improved capacity to quantify in dollar terms what can be achieved via a co-benefit
such as energy efficiency or waste minimisation
> improved capacity to measure and demonstrate achievement of higher-level objectives
not readily ‘costed’.24
The roundtable workshop also considered whether a definition of sustainability, which
included measurable targets, could assist departments in balancing environmental
sustainability against simple, point in time specific, dollar values. Carefully crafted
targets could be more effective in influencing departmental behaviour than a stand-alone
definition of sustainability because it would provide certainty around what needs
to be done to achieve it.
The complexity of ‘green procurement’ in the public sector as reflected in the
commissioner’s roundtable workshop is not unique to the Victorian Government.
In its proposed Directive on Public Procurement the European Commission attempts
to address some of the very issues raised in the roundtable workshop, but in a
manner which allows contracting authorities to exercise their discretion to achieve the
best outcomes.
The proposed directive sets out contract award criteria to balance value-for-money
with broader economic, social and environmental considerations. It provides the award
of public contracts shall be one of the following:
(a) the most economically advantageous tender
(b) the lowest cost.
The proposed directive at Article 22 provides that costs may be assessed on the basis
of the price only or using a cost-effectiveness approach, such as a life-cycle costing
approach. The most economically advantageous tender shall be identified on the basis
of criteria linked to the subject-matter of the public contract in question, in addition to
the price or costs. The other includes considerations such as:
(a) quality, including technical merit, aesthetic and functional characteristics,
accessibility, design for all users, environmental characteristics and innovative
character
(b) for service contracts and contracts involving the design of works, the
organisation, qualification and experience of the staff assigned to performing the
contract in question may be taken into consideration, with the consequence that,
following the award of the contract, such staff may only be replaced with the
consent of the contracting authority, which must verify that replacements ensure
equivalent organisation and quality
(c) after-sales service and technical assistance, delivery date and delivery period or
period of completion
The roundtable also
considered whether a
definition of sustainability,
which included
measurable targets, could
assist departments in
balancing environmental
sustainability against
simple, point in time
specific, dollar values.
(d) the specific process of production or provision of the requested works, supplies
or services or of any other stage of its life cycle as referred to in point (22) of Article
2, to the extent that those criteria are specified in accordance with paragraph 4
and they concern factors directly involved in these processes and characterise
the specific process of production or provision of the requested works, supplies
or services.
The life-cycle costing approach is a key element of the proposed directive and is explained
at Article 67 as the following:
1. Life-cycle costing shall to the extent relevant cover the following costs over the life
cycle of a product, service or works as defined in point (22) of Article 2:
(a) internal costs, including costs relating to acquisition, such as production costs,
use, such as energy consumption, maintenance costs and end of life, such as
collection and recycling costs
(b) external environmental costs directly linked to the life cycle, provided their
monetary value can be determined and verified, which may include the cost
of emissions of greenhouse gases and of other pollutant emissions and other
climate change mitigation costs.
2. Where contracting authorities assess the costs using a life-cycle costing approach,
they shall indicate in the procurement documents the methodology used for the
calculation of the life-cycle costs. The methodology used must fulfil all of the
following conditions:
(a) it has been drawn up on the basis of scientific information or is based on other
objectively verifiable and non-discriminatory criteria
(b) it has been established for repeated or continuous application
(c) it is accessible to all interested parties.25
The Cabinet Office of the UK Government has asked for public comment on the proposed
directive to inform its negotiating position. In particular it welcomes comment on whether
further clarification on sustainable procurement would be desirable in relation to Article 67.26
Organisational design
In view of the complex nature of sustainability and the multifaceted aspects of contracts,
a question that follows is how do organisations, including government departments and
authorities, implement procurement processes that generate contracts designed to deliver
economic, environment and social benefits and objectives?
To help make sense of, and provide a frame to consider these issues, it is useful to turn to
the previous year’s strategic audit report, Structures for Sustainability 2011, for guidance.
In that report the commissioner identifies organisational structures as important for
progressing sustainability objectives, in particular, the principles of:
> adaptability and change capacity – the new ‘normal’ driven by a continuously changing
external environment
> alignment and integration – to reinforce value, iterate the same message and integrate
information flows, decision making and resource allocations to support the organisation’s
objectives
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
21
> knowledge and learning – vital in maintaining competitive advantage, an important
asset in social and economic life and vital to achieving sustainability outcomes
> engagement and empowerment – the ability of an organisation to engage and
empower staff
> stakeholder collaboration – looking outward, engaging and collaborating to a greater
extent with stakeholders.
These principles encapsulate the issues raised at the May 2011 roundtable and provide
government departments and agencies with organisational scaffolding to foster contracts
and contracting processes that are designed to deliver environmental sustainability
outcomes. This is because the principles can be used to embed sustainability within an
organisation, maintain sustainability efforts and facilitate the ongoing organisational cultural
change that is necessary to immerse an organisation in sustainability practices.27
City of Whitehorse – contracting for sustainability
Sustainability decision making by staff at the City of Whitehorse is guided by their
Sustainability Strategy 2008–13 known as Our EcoVision. The five year strategy sets the
sustainability agenda for the city and contains some challenging aspirational targets for
reducing the council’s energy and water consumption, reducing waste and improving the
sustainability of the council and the community. Supporting the strategy are Water, Energy
and Peak Oil Action Plans and a Climate Change Adaptation Plan.
The strategy guides all council programs, outputs, services and facilities. The strategy is
based on 10 key priorities, strategic directions and targets, one of which is to increase the
council’s purchasing of green products to 30% of council’s total purchasing expenditure.28
One of the actions outlined in the strategy is to report annually to the Whitehorse community
on the council’s sustainability achievements and progress towards the targets in the strategy.
Application of strategy – Asphalt Resurfacing of Local Roads 2009–10.
Sustainability principles are included in the council’s Design and Construction Environmental
Guidelines.
The contract tendering conditions include environmental criteria including the use of
sustainable practices and materials. Incentives include a price preference of 10% compared
with an alternative product or service for recycled content and environmentally-friendly
products and services, providing they meet the council’s requirements for value-for-money,
suitable-quality and fit-for-purpose criteria.
The use of recycled asphalt is now a standard inclusion in the City of Whitehorse
contracting processes as part of its annual $1–2 million road maintenance program.
Council staff believe the environmental criteria in the tender go beyond compliance and are
driving innovation and providing a competitive point of differentiation for tenderers.29
The contract is the mechanism for enforcing environmental improvements, in this case,
a minimum of recycled material in the road maintenance program. A minimum of 20%
recycled asphalt is specified in its tender that favours suppliers with the capability and
experience to deliver a product that is significantly less damaging to the environment.
The use of recycled asphalt diverts waste from landfill, saves resources and reduces
greenhouse gas emissions. The contract also includes the trialling of asphalt with recycled
glass content and the use of warm mix asphalt which provides potential energy savings
through the manufacturing process.30
These principles encapsulate
the issues raised at the
May 2011 roundtable
and provide government
departments and agencies
with organisational scaffolding to
foster contracts and contracting
processes that are designed
to deliver environmental
sustainability outcomes.
Using a matched sample
of 180 companies it was
found that corporations
that voluntarily adopted
environmental and social
policies many years
ago – termed as High
Sustainability companies
– exhibit fundamentally
different characteristics
from a matched sample
of firms that adopted
almost none of these
policies – termed as Low
Sustainability companies.
Designed to succeed
In a Working Paper published by the Harvard Business School the effect of a corporate
culture of sustainability on behaviour and performance was analysed.31 Using a matched
sample of 180 companies it was found that corporations that voluntarily adopted
environmental and social policies many years ago – termed as High Sustainability
companies – exhibit fundamentally different characteristics from a matched sample of firms
that adopted almost none of these policies – termed as Low Sustainability companies.
In particular, it was found that the boards of directors of High Sustainability companies are
more likely to be responsible for sustainability and top executive incentives are more likely to
be a function of environmental, social, and external perception (e.g. customer satisfaction).
It was also found that the High Sustainability companies are more likely to have organised
procedures for stakeholder engagement, to be more long-term oriented, and to exhibit
better measurement and disclosure of non-financial information. Finally, the study provides
evidence that High Sustainability companies significantly outperform their counterparts over
the long-term, both in terms of stock market and accounting performance. The findings
cover an 18-year period.
Key concepts include:
> Organisations voluntarily adopting environmental and social policies represent a
fundamentally distinct type of modern corporation, characterised by a governance
structure that takes into account the environmental and social performance of the
company, in addition to financial performance, a long-term approach towards maximising
inter-temporal profits, and an active stakeholder management process.
> Societal concern about sustainability, at both the level of the firm and society as a whole,
has been growing from almost nothing in the early 1990s to rapidly increasing awareness
in the early 2000s, to being a dominant theme today.
> The High Sustainability firms in the study pay attention to their relationships with
stakeholders—such as employees, customers, and NGOs representing civil society—
through active processes of engagement.
> The Low Sustainability firms, by contrast, correspond to the traditional model of
corporate profit maximization in which social and environmental issues are predominantly
regarded as externalities created by firm actions which only need to be addressed if
required to do so by law and regulation.
The PIRELLI Group
Sustainability clause in contracts
Since 2008, sustainability clauses have been systematically included in contracts and
purchase orders for goods and/or services and/or works, both with private suppliers and
with the public administration (or entities/companies controlled by them). The clauses
envisage the implementation of Pirelli sustainability policies: Ethical Code, Code of Conduct
and the ‘Social Responsibility for Occupational Health, Safety and Rights, and Environment’
Policy. Execution of the contract gives Pirelli the right to carry out audits of its suppliers to
assess compliance with the principles and commitments agreed to by signing the clauses.
The sustainability clauses have been translated into 22 foreign languages.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
23
This guarantees the maximum clarity and transparency towards the supplier in terms of
their sustainability obligations under contract, which they assume not only in their relations
with Pirelli itself but also at their own facility and in relations with their own suppliers.
In 2010, the consolidation of large-scale distribution and acceptance of sustainability clauses
permitted structured substantial review of their application through independent audits.
Sustainability is fully integrated in the relationships between Pirelli and
its suppliers
In compliance with the Group Ethical Code and the Policy ‘Social Responsibility for
Occupational Health, Safety and Rights, and Environment’, Pirelli has developed the
necessary procedures to select and assess suppliers and subcontractors according to
their commitment to economic, social and environmental responsibility.
The Pirelli model for sustainable management of its supply chain was verified and validated
by SGS. In 2009, within the Assurance Process of the Sustainability Report according to
AA1000 Standard provisions, a specific focus on sustainable development of the supply
chain was made.
Independent audits of vendor sustainability
Independent audits of 72 suppliers of Pirelli Tyre operating in countries of concern where
Pirelli operates – Brazil, Argentina, Egypt, China, Romania, Turkey, Venezuela, Indonesia,
Malaysia, Thailand – (as defined by the EIRIS classification) were carried out between
November 2009 and January 2010. These audits reviewed compliance by these vendors
with the sustainability clauses. A number of remedial plans to rectify identified nonconformities were developed after the audit, and all of these were being completed at the
end of 2010. The commitment made by Pirelli Turkey merits special mention: it has trained
dozens of vendors on the sustainable corporate management process, in view of shared
growth. Another 58 independent audits have been performed between the end of 2010
and early 2011 in the United Kingdom, Germany, Italy, China, India, Latin America, Turkey,
Egypt and Romania.
These 58 audits cover:
> 25% of the total value of purchases from service vendors in western countries;
> 25% of the total value of purchases from raw material vendors in the “countries
of concern”.32
Communicating and consulting with stakeholders is recognised as the first and key
step in effective contracting by the World Bank.
‘Designing and implementing an effective contracting system is an iterative process
that requires close consultation with stakeholders. This process is inevitable because
contracting is about balancing the interests of various stakeholders, who often hold
competing interests.’33
The case studies that follow in Part 2 of this report exemplify the importance of
communication and the imperative of trust for well-designed contracts and successfully
implemented projects.
Contracts: designed and applied
C
Green Government Buildings – designing the energy performance contract ______ 26
Greener
Melbourne Health designs a contract clause and takes a sustainability lead _______ 34
Melbo
Victoria Police designs a holistic approach ____________________________________ 36
Victor
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
25
This part of the report presents three case studies that illustrate the way in which
Victorian Government organisations have used the contract as a mechanism to deliver
cost savings, resource efficiency and improved environmental performance. The
agencies and programs that have been selected focus on contemporary environmental
management initiatives to improve energy efficiency, reduce waste and save money.
The case studies are:
Greener Government Buildings – designing the energy performance contract
Melbourne Health designs a contract clause and takes a sustainability lead
Victoria Police designs a holistic approach
Reflecting the design ‘perspective’ provided by the Victorian Government Architect in
the beginning of this audit report, we could further stretch [the] long bow he presents
and suggest that the utility of Vitruvius is exemplified in the case studies presented in
Part 2, particularly in relation to the Greening Government Buildings program where
energy performance is key. The contract and tender process of Melbourne Health
illustrates firmness – the pursuit of a minimal ecological footprint through the selection of
sustainability materials. The holistic approach being championed by Victoria Police is the
delight in the trilogy of Vitruvius because the strategy being implemented will significantly
improve resource efficiency and environmental amenity for the organisation.
sey
cau
st d
Greener Government Buildings:
designing the energy performance contract
The role of the Department of Treasury and Finance is to provide policy advice on
economic, financial and resource management to the Victorian Government with the
aim of achieving economic growth and increasing living standards across Victoria.
The department is utilising the power of the contract in the Greener Government Buildings
program to share risk with the private sector and guarantee a return on its investment.
Energy and water use in government – clear reason to act
>
>
Energy efficiency is recognised as an effective way to deliver both financial and
environmental benefits and as a tool applicable for use across the wide variety of
buildings and infrastructure operated by Victorian Government departments and
agencies. Delaying action on energy efficiency upgrades incurs substantial costs,
as governments lose potential energy savings.34
Designing and installing energy
and water saving solutions across
16 government owned office
buildings including Melbourne’s
treasury precinct.
Melbourne sports and aquatic centre.
Government investment in energy efficiency also creates jobs and builds the capacity of
the energy efficiency sector. Governments occupy 32% of Australia’s commercial building
stock and their actions can deliver substantial greenhouse gas reductions and catalyse
change in the private sector.35
In a year, Victorian Government departments and agencies spend over $300
million on energy and water, causing the emission of around 3.7 million tonnes
of greenhouse gases. The key contributors are the health, water, rail and
education sectors.36 See Figure 1. The Victorian Government estimates that its
energy efficiency projects will save $1 billion over 25 years.37
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
27
Figure 1. Victorian Government greenhouse gas emissions by sector
Sporting 2%
Street lights/signals 2%
Other 3%
Arts 3%
Water infrastructure 22%
TAFEs 3%
Justice 4%
Offices 4%
Schools 7%
Healthcare 20%
Universities 11%
Source: Department of Treasury and Finance
Rail 19%
Prior to the Greener Government Buildings program, energy efficiency in government
was largely driven at the departmental level through environmental management systems,
but to a large extent it was an underutilised opportunity. Although energy audits were
undertaken and priorities and sometimes targets were established, the critical step of
action did not always follow; time, expertise and financial barriers commonly prevailed
and results were therefore mixed.
The Strategy and Policy Unit, Government Services Division, within the Department
of Treasury and Finance was specifically established to seek out new opportunities
for efficiencies in government operations, develop strategies and business cases to
implement programs. Government policy regarding energy efficiency and the clear link
between energy efficiency (and the resultant greenhouse gas abatement) and costeffectiveness of government property enabled the Department of Treasury and Finance
to identify and develop the Greener Government Buildings program.
Greener Government Buildings program
A flagship project of the Department of Treasury and Finance is the Victorian
Government’s Greener Government Buildings program.
The program was developed in 2009 to reduce greenhouse gas emissions, energy
costs and water use across the majority of existing public sector buildings. These include:
schools, TAFEs, hospitals, offices, courts, prisons, arts facilities, sporting facilities and
water infrastructure.
It followed a successful pilot project that encompassed the 16 government-owned office
buildings, including the nine buildings on Treasury Reserve, two buildings occupied by the
Department of Justice on Lonsdale Street and five regional office buildings.
A key feature of the ‘organisational structure’ in the Department of Treasury and Finance
was the establishment of the position of a sustainability manager with the mandate
to analyse relevant theory, establish appropriate policy, develop a business case and
implement practical action. The position was supported by the establishment of an
inter-departmental committee and a smaller working group to review and comment on
proposed funding and process options and work through options and strategies on how
to structure the Greener Government Buildings program.
Contracts: designed and applied
The pilot project delivered energy savings of 30%, equivalent to 9,000 tonnes of CO2
abatement per annum. These were largely the result of a lighting retrofit across all
buildings and the installation of a smart lighting control system to switch lights off in
vacant areas and dim lights in compensation for natural ingress light. Further savings
were delivered through various building automation solutions targeting the heating,
ventilation and air-conditioning systems and the installation of a solution to better manage
indoor air humidity.
Specialist knowledge and expertise of key individuals was an important ingredient for the
success of the pilot. The sustainability manager brought first-hand experience delivering
energy efficiency projects and knowledge of the variety of services offered by the energy
services and consulting engineering market, and an awareness of different ways in which
energy efficiency projects could be delivered.
This initial project demonstrated the benefits of large-scale energy and water
efficiency retrofit projects, the applicability of energy performance contracts (EPC)
and informed the development of the Greener Government Buildings program.
The two key requirements under the current program are:
> Projects are required to ‘pay for themselves’ within a seven-year period using energy
and water cost savings delivered by the project.
> Departments must have committed to implement EPC or equivalent processes at sites
accounting for at least 20% and 90% of their total energy consumption by 2012 and
2018 respectively.
While managing a project over the longer term does have its challenges, critical factors
that will influence ongoing savings (compared to the baseline) over the life of longer-term
contracts include significant changes in:
- electrical load, such as more computers and operating equipment
- staff or weekend usage
- external influences such as unseasonal weather
- additional buildings or rooms
- water usage such as unreported leaks.38
Over the longer term, the Greener Government Buildings program is projected to reduce
government’s greenhouse gas emissions by at least 20% by 2020 and deliver over one
billion dollars in accumulated cost savings.
In June 2011, 13 projects were at tender stage or further progressed, including:
> the Melbourne Sports and Aquatic Centre and State Netball and Hockey Centre
> Federation Square
> RMIT (entire portfolio)
> office buildings on Treasury Reserve and across the state
> Kangan and South West TAFE institutes
> 71 primary and secondary schools in the Grampians and Loddon Mallee regions
> 30 major parks managed by Parks Victoria
>
> Central Highlands Water (including all buildings and water infrastructure)
Kangan TAFE Moreland.
> an upgrade of traffic lights around the state from incandescent to LED lighting technology.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
29
The energy performance contract
A centrepiece of the Greener Government Buildings program is the use of contracts,
specifically an EPC that commits an energy service company to identify and install costeffective energy and water efficiency solutions and provide a guarantee on project savings.
EPCs have been utilised by other state governments in Australia – primarily Queensland
and New South Wales – for over 10 years. Useful guidance has been available too;
the Australasian Energy Performance Contracting Association developed in 2000 a
Best Practice Guide to Energy Performance Contracts for the Australian Department of
Industry, Science and Resources.39 EPCs have also been used extensively in the United
States through the US Government’s Federal Energy Management Program and across
Europe (e.g. Berlin Energy Agency) for over 30 years.
Additionally, state and federal governments have more recently indicated their intentions
to use EPC through the National Strategy on Energy Efficiency (NSEE), which includes
a measure (4.1.1b) requiring governments to ‘Promote the use of energy performance
contracting to upgrade government buildings’. Other state and territory governments
continue to review the potential to implement EPC projects within their jurisdictions in
order to deliver on this commitment.
In developing the Greener Government Buildings program, the Department of Treasury
and Finance analysed these existing programs and sought advice from those involved
in developing and delivering them. Both financial and economic input assisted in the
identification and development of funding and delivery models. Stakeholder collaboration
and ‘looking outward’ is an organisation structure identified in the previous strategic audit
as important to facilitate sustainability.
Contracts for outcomes
In Victoria, improving energy efficiency in the public and private sectors has historically
incorporated the services of several contracting businesses and the establishment of a
number of contracts. Figure 2 illustrates the differences between this traditional process
and the use of an EPC prescribed under the Greener Government Buildings program.
Figure 2. Use of traditional contract versus energy performance contract
Tender for audit
Financial criteria:
internal rate of return,
payback period
Contract
Energy auditor or consulting
engineer
Expressions of interest
Several responses ( 7)
Request for proposal
Select three tenderers to
complete a level 2 energy audit
Audit
Specification for works
Contract
Project manager
Tender for contractors
Contract
Installation
Detailed facility study agreement
Detailed facility study
Energy performance contract
Installation
Select one tenderer to
complete a level 3 energy audit
Detailed facility study fee
2-5% project cost.
Pay only if not implementing
Annual monitoring
and verification
The traditional process (on the left side of Figure 2) generally involves a contract to
undertake a preliminary energy or water audit, usually performed by an engineering
consultant or a specialist auditing firm. This would generally result in a report listing a
number of potential energy saving options. The next step, when taken, would involve
a contract to undertake installations or to project manage the works.
A limitation of this approach is that is difficult to use the contract to ensure there is
accountability to measure, verify and, most importantly, achieve an outcome.
The utilisation of an EPC (on the right side of Figure 2), seeks to address these weaknesses.
The Department of Treasury and Finance provides direct support to the department or
agency managing the project, including the development, procurement, implementation
and contract management stages of the engagement. Furthermore, in order to provide
consistency across projects, the department has developed a set of standard templates
for planning, tendering and contracting, which are updated on a regular basis.
As a part of the tendering process, three energy services companies perform an energy
audit, attempting to maximise energy and water savings opportunities identified in an
effort to win the project. On award of the tender, the successful energy services company
is contracted to both design and install the works.
For EPC projects, the measurement and verification process is a formal and integral part
of the contractual arrangements.40
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
31
The clauses of an EPC deal with a range of issues, including design and installation of
energy conservation measures, commissioning procedures, equipment maintenance,
performance guarantee, baseline adjustments, intellectual property rights and insurance
and dispute resolution.41
The contract not only ensures a smooth transition between the design and
construction phases but guarantees the outcomes. This is because a clause in
the contract requires the energy services company to reimburse the customer
any savings shortfall, if determined by a formal and agreed monitoring and
verification process.
Clause 7.3 of the energy performance contract template commits the energy services
company (ESCO) to an outcome:
The ESCO guarantees that the Customer will realise energy savings and energy
cost savings at the premises in each guarantee year of not less than the guaranteed
energy savings and the guaranteed energy cost savings.
Clause 7.5(a) defines what happens if the outcome is not achieved, in that:
... if the guaranteed energy savings or the guaranteed energy cost savings are not
achieved in any guarantee year, the ESCO shall pay to the Customer the amount of
the shortfall within fourteen (14) days of the date of acceptance of the audit report by
the Customer for that year ...
Clause 7.5(b) crystallises the legal agreement as follows:
Without in any way limiting the Customer’s other rights under this Agreement, the
payment obligation specified in Clause 7.5(a) shall be the ESCO’s sole liability to the
Customer for any shortfall in guaranteed energy savings or the guaranteed energy
cost savings ...
Another key difference between traditional contracts and an energy performance contract
is that although the latter defines the equipment and the energy conservation measures
to be installed, the energy services company’s primary focus is delivering energy savings,
with equipment and energy conservation measures a means to achieve that end. Certain
clauses in the contract, therefore, with due agreement, allow variation to equipment or
procedure without a reduction in guaranteed savings.
This is covered by Clause 3.1:
At any time during the term of this Agreement, the ESCO may, with the prior
written approval of the Customer, change (where used in this clause, ‘change’ also
includes, but is not limited to, replace, remove, alter or add to) the equipment or the
procedures, provided that: (a) the guaranteed energy savings are not diminished as
a result of the change; and (b) the change is explained in writing to the Customer.
This provides an energy services company ability to rectify the shortfall, but it also
provides incentive, where a performance bonus is included in the contract, to exceed
the guaranteed savings through continuous improvement.
In summary, a key benefit of using an EPC process is the presence of a savings guarantee
provided by the energy services company, which not only assists to measure and manage
project outcomes, but can provide customers with the ability to finance the project costs,
using guaranteed project savings to repay the finance.
Energy performance contracts in action
Skills Victoria was quick to recognise the benefits of the Greener Government Buildings
program, and has been involved in the tendering of five large EPCs since the program
was established in 2009. Projects at South West TAFE, Kangan TAFE, RMIT, and Box Hill
TAFE combined are forecast to deliver greenhouse gas savings of approximately 35,000
tonnes per annum, and several more projects are currently being planned.
Aside from the environmental and financial benefits resulting from its projects, Skills Victoria
has identified the opportunity to improve core teaching objectives by using its projects as
a learning tool. As projects are designed and installed, institutes engage their students and
teaching staff in the project both at a technical and theoretical level, providing real-world
experience to support their course curriculum. As solutions are installed, they are made
accessible to staff and students, turning the campus into a living laboratory.
This energy services market has also seen benefit in this approach. Greener Government
Buildings has increased demand for its services, which has required significant growth,
recruitment and on-the-job training. The initiative of Skills Victoria will enable institutes to
better prepare students for work in the energy services market, supporting the growth of
the industry.
The Department of Health recognises the financial benefits of investing in energy
efficiency given increasing energy costs as well as the environmental benefits of reducing
the carbon footprint of the healthcare system.
The department has indicated its commitment to implementing the Greener Government
Buildings and EPCs across the Victorian public healthcare system.
Implementing EPCs within public hospitals is more complex than some other government
facilities, such as offices. The delivery of health services needs to be maintained
throughout the program. Essential services such as emergency surgery, and in some
cases state-wide services, are provided from only one location. In addition, given the
potential scale of the investment, the department needs to ensure that the contractual
arrangements between the energy services company and the health services do not
expose the healthcare system to any undue commercial risk.
The department is confident that these issues can be resolved and is working closely with
Austin Health to develop its first EPC at the Heidelberg Repatriation Hospital and Royal
Talbot Rehabilitation Centre. It is hoped that this EPC will commence by mid-2012.
Parks Victoria is finalising its first energy performance contract, which will cover 42
sites that use approximately 75% of the organisation’s total building-related energy use.
A regionally-based organisation, the challenge for Parks Victoria has been to develop a
package that incorporates a diverse range of sites, many non-traditional in nature and
quite remote, such as the Buchan Caves, Wilsons Promontory Lighthouse, Gabo Island,
Twelve Apostles Visitor Centre and Tidal River, with its kiosks, lodges and cabins. Another
complexity with regional sites is the potential variance in their use (increase or decrease),
which can change rapidly as a result of factors including weather extremes and response
to fire and flood. Parks Victoria has also been cognisant of the need to achieve a sensible,
cost-effective and efficient approach to project monitoring and verification requirements.
Despite the challenges, Parks Victoria is very positive about the program and its collective
potential. With the setting of targets, Greener Government Buildings has provided a clear
mandate for the agency to review and identify energy savings across its entire portfolio and
a financial mechanism to support the change. It has also brought many hidden benefits,
including staff development and a reinforcement of sustainability culture within the organisation.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
33
Other benefits of energy performance contracting
The energy services sector in Australia prior to the Greener Government Buildings
program was relatively small, with only three key players offering EPC services broadly
to the market.
As a result of the Victorian Greener Government Buildings program, 12 organisations
are now prequalified to deliver EPC projects to Victorian departments and agencies.
>
It is estimated that 40 new jobs have been created as a result of the demand
provided by the Greener Government Buildings program, and two new
offices for energy services companies have opened in Melbourne to meet the
government’s needs.42
Facilitating the energy and water efficiency
project at Melbourne’s iconic Federation Square,
the Government will reduce greenhouse gas
emissions and generate cost savings.
>
sey
cau
st d
Victoria’s first public hospital,
the Royal Melbourne Hospital
is part of Melbourne Health’s
environmental strategy.
Melbourne Health designs a contract clause and takes
a sustainability lead
Melbourne Health is a major public health provider in Victoria. Armed with its
recent and comprehensive ‘Think Green’ Strategy (2011–15), it has its sights set on
continuing to reduce its environmental impacts and take a lead in using contracts
to leverage better environmental performance.
Melbourne Health provides acute, sub-acute and community-based healthcare programs
to about one-third of metropolitan Melbourne’s population, as well as general and
specialist services to regional and rural Victorians and state-wide services.
The management of waste has always been of importance to Melbourne Health
both from an economic and environmental perspective, particularly clinical
waste, which costs 10 times per kilogram more to dispose of compared to
general waste.
In 2008, the organisation moved to a broader sustainability agenda after the board and
executive team identified it as a priority. They recognised the environmental and economic cobenefits of action as well as the need to respond to government policy, including the Energy
and Resource Efficiency Plans program.43 They also acknowledged that staff and prospective
employees, particularly in the younger demographics, are concerned about sustainability, and
therefore a meaningful emphasis is important for staff attraction and retention.
Melbourne Health has now stepped beyond the traditional areas of water, waste and
energy and placed serious emphasis on purchasing – given the large expenditure of the
organisation – and the contracting processes that underpin it.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
35
The first insertion point of environmental considerations is the request-for-tender
documents, which include questions regarding the environmental impact/performance
of the service/product and provider. This is reinforced by staff in briefings to potential
tenderers. In a competitive market, where price disparity is often minimal, these
credentials and the response can be a critical point of difference at the evaluation stage.
Melbourne Health has found that a high-quality response to an environmental question is
standard for many tenderers. Not surprisingly, those providers that are innovative in their
product/service are often innovative in the way they approach their environmental impact.
The second insertion point is in the contract itself, and this is where Melbourne
Health is leading by example. The Contract Management Group has worked
closely with Legal Services to develop a clause that creates the right to require
reporting from its contractors and/or consultants regarding the environmental
impact of the provision of a service or product.
8.16 Melbourne Health may request on a [insert period eg quarterly] basis from the
Contractor a report detailing the environmental impact of providing the Services and
the Contractor shall provide such a report no later than 15 days from the date of the
request. The report should include a [period] comparison, the project impact for the
following [period], relevant benchmarking, and a narrative detailing any past and/or
future initiatives relating to the environmental impact results.
By deliberating, designing and inserting this clause, the organisation intends to hold
tenderers accountable for their environmental claims.
The next step is to determine what happens in situations of non-compliance. This is
something that Melbourne Health intends to address in the future, potentially linking
environmental performance to the payment schedule. Melbourne Health is also reviewing
the inclusion of key performance indicators in standard contracts, but recognises a
uniform approach can be difficult to implement.
There is clear direction from the board and senior management, and this is reflected
in the mandate provided by policy. There is a culture where ideas and innovation are
supported, despite the challenges of balancing clinical imperatives (and misconceptions)
with environmental considerations.
Staff members across the organisation are engaged – a committed
environmental coordinator to lead change and green champions to drive it.
Finally, the message is reaching an external audience. Melbourne Health identifies
working with the market and developing relationships and partnerships as critical to
tender success. The Contract Management Group, through supplier briefings and
specific contract clauses, is preventing a ‘tick the box’ approach and leveraging genuine
and improved environmental performance.
>
It is no surprise that Melbourne Health embodies many of the organisational structures
and attributes that can be expected of an organisation that is succeeding in its efforts
to engender environmental sustainability.
Melbourne Health’s
Kevin Finnigan, Environmental
Sustainability coordinator
and Michael McCambridge,
Director, Facilities Management,
members of Melbourne Health
‘Think Green’ committee.
Contracts: designed and applied
>
sey
cau
st d
The installation of three 55,000 litre
water tanks and altering the filtering
systems for the pool at the Victoria
Police Academy has contributed to
annual water savings in excess of
500,000 litres.
Victoria Police designs a holistic approach
Victoria Police with its 15,000-strong workforce provides a 24/7 emergency
response to the citizens of Victoria from a state-wide network of almost 350
stations and other installations. These buildings range in size from small stations,
with only one staff member, to the World Trade Centre Complex in Docklands,
which caters for around 3,000 personnel. Apart from police stations, employees are
also located in a range of non-operational locations, including the forensic science
laboratory in Macleod, the Transport Branch in Brunswick and the dog, horse and
driver training facilities at Attwood.
A commitment to environmental sustainability
Environmental initiatives have progressively been incorporated into Victoria
Police operations for almost a decade.
Early initiatives included appointing an energy manager, which proved pivotal in enabling
progress against government energy efficiency targets established in 2000. In 2010–11,
Victoria Police had achieved a 23% reduction in energy intensity per square metre
of office compared to 1999–2000 levels and contracted 25.6% of its electricity from
renewable sources (GreenPower).44
This marked a shift towards an organisation more concerned about ‘doing something
about waste’ and improving resource use efficiency more broadly. It led to the
establishing of an Environmental Sustainability Branch and with the direct support of
the chief financial officer, a range of environmental initiatives ensued.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
37
Victoria Police reduces energy costs
>
Two new natural gas-fired steam generators servicing the kitchen at the Police Academy
have replaced old electric units, resulting in reduced energy costs, of $35,000 p.a., and
annual CO2 emissions of 240 tonnes. The payback for this project was 2.8 years.
In order to progress environmental sustainability outcomes and reduce the adverse
environmental impacts of Victoria Police operations, the Environmental Sustainability
Branch has adopted an ‘output-outcomes focus’ and ‘attention to careful design and
research’ early in the development and implementation of programs and projects.
Environmental outcomes are subject to core business processes such as preparing
the business case and becoming part of normal contracting arrangements.
As a result of this focus, this branch has helped reduce the organisation’s
environmental footprint in a range of areas. Moreover, these outcomes have
been achieved during a period of significant growth in the organisation, which
has seen the overall full-time equivalent numbers increase by around 17% and
floor area by more than 19%. Figure 3 depicts the linkages and major programs
of the Environmental Sustainability Branch.
Figure 3. Major programs of the Environmental Sustainability Branch
Environmental
sustainability branch
outputs
Programs include:
Environmental
sustainability outcomes
To reduce:
Energy management
Federal/State government
policy and guidelines
Sustainable buildings
Management of water
Waste management
Sustainable procurement
Cultural change
Sustainable information
technology and
telecommunications
Sustainable transport
Data management
and reporting
Imperatives
Greenhouse gas
emissions
Water consumption
Waste to landfill
Use of resources
Victoria Police
environmental sustainability
policy (and environmental
management system)
Non-government
organisation policy/
Guidelines
Staff/Community
expectations
Victoria Police Academy, Glen Waverley.
>
The Victoria Police reduce greenhouse
gas emissions with solar panel installations
at ‘8 hour stations’ across the state.
Investment versus return
The high cost of implementing some environmental sustainability initiatives
is often cited as a reason for not taking action. However, at Victoria Police a
longer-term perspective is adopted and this takes into account the co-benefits
that can be achieved. For example, investing in energy efficiency results in
improved environmental performance and considerable cost savings.
Victoria Police is also taking a more holistic approach in planning investment in retrofits
and upgrades. The Environmental Sustainability Branch has invested significant funds in
environmental sustainability projects around the state, with some initiatives, such as the
upgrade of the cooling towers at the World Trade Centre site, having a payback of less
than one year as opposed to many of our water projects where the recovery of costs is
generally measured in decades.
Savings generated from the Energy and Waste Management programs, which amount
to millions of dollars per annum, more than offset the costs of other programs, where
the payback may be up to 30 years or more.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
39
Police buildings are more energy-efficient
Each year, around a dozen new police facilities are built at locations across the state.
The Environmental Sustainability Branch has found that incorporating environmental
criteria such as energy and water use into project contract specifications can improve the
efficiency and performance of these facilities during their lifetime. Generally this is more
cost-effective than retrofitting improvements once the building has been completed.
Cooperation and alignment between the work of the energy manager,
combined with the efforts of the organisation’s Properties Branch, and
subsequent contracting processes has resulted in new police buildings being
20–25% more energy-efficient than they were 10 years ago.
Tenders and contracts
The Environmental Sustainability Branch is developing a series of standards that will
underpin the Victoria Police Environmental Sustainability Policy. Key to this endeavour
is the tenders, contracts and the broader procurement function.
Sustainable procurement offers significant opportunities for improving the green
credentials of Victoria Police, and the contract can embed environmental criteria that may
otherwise be considered extraneous to project outcomes.
In this regard, ongoing dialogue is occurring with procurement staff to garner their
support for specific sustainability requirements in tenders and contracts. The organisation
understands that properly worded and structured tenders and contracts can greatly
assist in improving environmental sustainability outcomes.
Procurement standards
It is during the request-for-tender stage that Victoria Police is able to clearly state its
environmental sustainability expectations of potential providers. The organisation is
aiming to influence, through the procurement function, in the following ways:
> raising the environmental performance of industry by requiring potential tenderers
to meet particular standards, such as ISO 14001
> requiring tenderers to specify their environmental credentials and commitment
> requiring tenderers to state how they will meet particular customer requirements such
as National Australian Built Environment Rating System (NABERS) and/or GreenStar
ratings for new buildings
> seeking tenderers to demonstrate their commitment to developing ‘Cradle to Cradle’
solutions involving their supply chain, packaging and waste management commitments
> requiring tenderers to explain how their products compare with industry best practice
for energy efficiency, ease of recycling, reliability, etc.
Information Technology (IT) standards
Through organisational standards in relation to IT resources, the Environmental
Sustainability Branch is developing minimum requirements for new IT tenders, including:
> mandatory weighting of the tender evaluation addressing environmental sustainability
requirements
> successful tenderers required to have a current, certified environmental management
system, which must be maintained for the life of the contract (documentation to include
details of whole-of-life management of supply chain processes)
> an independently auditable process for end-of-life strategies and management of
redundant equipment – their own and the equipment they are replacing
> new equipment to meet the top EnergyStar performance rating
> desktop and laptop computers to possess unit, network and user-initiated sleep mode
capability
> network update of software and security patches to be managed to facilitate user
compliance with equipment shut-down requirements.
Ongoing dialogue with suppliers and joining forces with other public sector organisations
enables the Environmental Sustainability Branch to continue to review the opportunities
to utilise contract clauses and performance criteria as part of its ‘ethos’ on delivering cost
efficiencies and environmental sustainability outcomes.
London policing embeds the environment
The Metropolitan Police Service has an annual procurement spend of £850 million
(24% of the total annual spend of £3.6 billion), and more than 900 supplier contracts
and 13,000 current suppliers.
Social, environmental and economic principles have been embedded in all tender
processes and are now standard features in most new contracts. The Metropolitan Police
Service in turn encourages its suppliers to adopt the same principles in contracts with
their suppliers, extending the reach and impacts of its responsible procurement.45
Its template contract for purchase of services includes environmental requirements,
including:
D5.1 The contractor shall perform its obligations under the contract in accordance
with the spirit and objectives of the Authority’s environmental policy which is to
conserve energy, water, wood, paper and other resources, reduce waste and phase
out the use of ozone depleting substances and minimise the release of greenhouse
gases, volatile organic compounds and other substances damaging to health and
the environment.46
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
41
Getting results
During the past seven years, actual energy consumption per floor area has reduced by
11.8%. Projecting a ‘business as usual’ scenario, energy use and the associated greenhouse
gas emissions and costs, would be up by 33% compared to the 2010–11 results.
Megajoules per square metre
Figure 4. Energy consumption by floor area
Business as usual scenario
Actual consumption
2003–04 2004–05
2005–06 2006–07 2007–08 2008–09 2009–10 2010–11
Water consumption
Since its inception some five years ago, the Management of Water program has
consistently reduced overall water consumption, with the latest figures indicating a
reduction of 19% or 45 million litres compared with 2006–07. However, had no work
been undertaken in implementing more water-efficient buildings, equipment and practices
the ‘business as usual’ results could have been up to 36% higher than the results
achieved in 2010–11.
Kilolitres
Figure 5. Total water consumption
300,000
Business as usual scenario
250,000
200,000
Actual consumption
150,000
100,000
50,000
2006–07
2007–08
2008–09
2009–10
2010–11
E
Environmental
Management and Performance
2
2010–11
Environmental management ________________________________________________
Reporting schemes _______________________________________________________
Whole-of-government environmental performance 2010–11 _____________________
Greenhouse gas emissions ___________________________________________
Energy use in office buildings__________________________________________
GreenPower ________________________________________________________
Waste in office buildings ______________________________________________
Paper consumption __________________________________________________
Water use in office buildings __________________________________________
Transport __________________________________________________________
Procurement________________________________________________________
43
43
46
47
48
49
50
51
51
52
54
Department and agency environmental management __________________________ 55
The approach _______________________________________________________ 55
Department of Business and Innovation ________________________________ 56
Department of Education and Early Childhood Development _______________ 58
Department of Health ________________________________________________ 60
Department of Human Services _______________________________________ 62
Department of Justice________________________________________________ 64
Department of Planning and Community Development____________________ 66
Department of Premier and Cabinet ____________________________________ 68
Department of Primary Industries ______________________________________ 70
Department of Sustainability and Environment ___________________________ 72
Department of Transport ______________________________________________74
Department of Treasury and Finance ___________________________________ 76
Environment Protection Authority ______________________________________ 78
Sustainability Victoria ________________________________________________ 80
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
43
Environmental management
Using resources more efficiently can only result in cost savings, and building
new sources of capacity can only help create resilience.47
Since 2003, it has been mandatory for all Victorian Government departments,
the Environment Protection Authority and Sustainability Victoria to implement
environmental management systems. This requirement was introduced with an
office-based focus and was modelled on the ISO 14001 standard.48
The Commissioner for Environmental Sustainability Act 2003 stipulates that the
Commissioner for Environmental Sustainability must conduct annual strategic audits of,
and prepare reports on, the implementation of environmental management systems by
Victorian Government departments and agencies (s. 8).49
This part of the strategic audit presents analysis of departments’ and agencies’
environmental management systems implementation and performance.
The first section, ‘Whole-of-government environmental performance 2010–11’, is collated
from data in the annual reports of Victorian Government departments, Environment
Protection Authority and Sustainability Victoria.
The second section, ‘Departmental and agency environmental management’, takes an
individual look at environmental management and performance of each department, the
Environment Protection Authority and Sustainability Victoria.
Victorian departments and agencies are progressively expanding what they manage and
report beyond office-based operations, improving understanding of the environmental
impact of government operations.
This takes places among a backdrop of other national and state environmental
sustainability and reporting agendas such as greenhouse gas emissions reporting and
resource efficiency programs.
Some key examples in relation to Victorian Government departments and agencies are
described below.
Reporting schemes
National Greenhouse and Energy Reporting System
Public agencies that meet or exceed disclosure thresholds may be required to report
under the Australian Government’s National Greenhouse and Energy Reporting System
– a national system for reporting greenhouse gas emissions, energy consumption and
production by corporations.
This reporting system was established under the National Greenhouse and Energy
Reporting Act 2007, and will underpin measurement and reporting processes in relation to
the Australian Government’s carbon pricing mechanism effective from 1 July 2012.50, 51, 52
In 2011, 23 public corporations in Victoria were registered to report under the National
Greenhouse and Energy Reporting System, predominantly those in the health, university,
water and local government sectors.53
Health services
Alfred Health
Austin Health
Barwon Health
Melbourne Health
Peninsula Health
Royal Children’s Hospital
Southern Health
Western Health
Universities
La Trobe University
Monash University
RMIT University
University of Melbourne
Water authorities
Central Gippsland Region Water Corporation
Central Highlands Region Water Corporation
Coliban Region Water Corporation
Melbourne Water Corporation
South East Water Limited
Yarra Valley Water Limited
Local government
Eastern Metropolitan Regional Council
City of Greater Geelong
Melbourne City Council
Moira Shire Council
Other agencies
V/Line Passenger Corporation
Building ratings
Green building rating tools can be an effective means of promoting energy efficiency and
reducing emissions in the building sector. In Australia, two rating tools in common use are
the design rating tool Green Star and the performance rating tool National Australian Built
Environment Rating System (NABERS).54, 55
To keep up with best practice, these tools and the use of these tools continues to evolve.
From 2011, the Australian Government’s Commercial Building Disclosure program
requires most sellers or lessors of office space of 2,000 square metres or more to obtain
and disclose a current building energy efficiency certificate (which includes obtaining a
NABERS energy rating).56, 57
Environmental rating targets also apply to Victorian Government office accommodation.58
These measures complement the environmental objectives of the government’s
environmental management systems program and the contractual arrangements under
the Greener Government Buildings program discussed in Part 2.
Victoria’s Environment and Resource Efficiency Plan and Water
Management Action Plan
A number of public agencies, in addition to the National Greenhouse and Energy Reporting
System, participate in the Environment and Resource Efficiency Plan administered by
the Environment Protection Authority and the Water Management Action Plan program
administered by the water authorities and Department of Sustainability and Environment.
The Environment and Resource Efficiency Plan is designed to assess and improve
energy, water and waste efficiency of Victorian business and government. The cobenefits include improved environmental outcomes and cost savings.59, 60, 61
The larger public sector sites exceeding either the energy and/or water triggers include
Alfred Health, Austin Hospital, Barwon Health, Melbourne Health, Southern Health,
St Vincent’s Hospital, The Royal Children’s Hospital, Western Health, Melbourne
Water Corporation, Museum Victoria, Royal Botanic Gardens Board, RMIT, Southern
Metropolitan Cemeteries Trust and the Zoological Parks and Gardens Board.62
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
45
The Water Management Action Plan initiative is designed to help businesses and nonresidential organisations that use at a site 10 million litres or more of water per annum
to reduce their water consumption.63
Other Australian programs
Energy efficiency or greenhouse targets by Australian and state and territory governments
include:
> the Australian Government’s Energy Efficiency in Government Operations policy, which
sets targets to reduce tenant light and power to 7,500 MJ per person per annum, and
to reduce central office energy use to 400 MJ per square metre per annum
> the New South Wales Government’s target to ‘reduce emissions from energy use in
government-owned or tenanted buildings to 2000 levels by 2019–20’
> South Australia’s strategic plan, which has set a target to ‘improve the energy efficiency
of government buildings by 25% from 2000–01 levels by 2014’
> the Strategic Energy Efficiency Policy for Queensland Government Buildings, which
requires individual government departments to ‘reduce their energy consumption by
5% below 2005–06 levels by 2010 and 20% by 2015’64
> in Tasmania, the Climate Change (State Action) Act 2008 sets a state-wide greenhouse
gas emissions reduction target of 60 percent below 1990 levels by 205065
> the Northern Territory’s Climate Change Policy sets a target of carbon neutral for the
Northern Territory Government by 2018. Sub-targets for government operations include
fleet, air travel, procurement, buildings and energy.66
Other jurisdictions
Australian jurisdictions are not alone in promoting the implementation of environmental
management systems. Governments around the globe recognise the vital role in leading
by example in environmental, energy, and economic performance.67
Sustainability goals for US federal agencies
In 2009, the United States Government endorsed an executive order that set
sustainability goals for US federal agencies and focuses on making improvements in their
environmental, energy and economic performance.
Setting targets is a priority of the order, requiring agencies to meet a number of energy,
water, and waste reduction targets, including:
> 30% reduction in vehicle fleet petroleum use by 2020
> 26% improvement in water efficiency by 2020
> 50% recycling and waste diversion by 2015
> 95% of all applicable contracts will meet sustainability requirements
> Implementation of the 2030 net-zero-energy building requirement
> Setting a 2020 greenhouse gas emissions reduction target.
These targets are supported by strategic sustainability performance plans available
publicly and sustainability and energy scorecards.68
Meeting federal agency GHG pollution reduction targets is estimated to result in a
cumulative $8 billion to $11 billion in avoided energy costs through 2020.69
Whole-of-government environmental performance 2010–11
All Victorian Government departments, the Environment Protection Authority and
Sustainability Victoria are required to report annually on their environmental performance in
compliance with the Department of Treasury and Finance’s Financial Reporting Direction 24C.
Financial Reporting Direction 24C sets minimum reporting requirements for office-based
activities and includes the following:
> energy use – stationary energy: building consumption such as electricity (including
GreenPower), natural gas, LPG, heating oil, diesel and solid fuel
> waste production – includes waste to landfill, waste sent for recycling and composted
waste
> paper use – paper used for printing, photocopying and similar processes
> water consumption – includes domestic water use, rainwater and reused water
> transportation – vehicle fleet energy use, air travel and staff commuting
> greenhouse gas emissions – associated with building energy use, vehicle fleet use,
air travel and waste production (any offsets purchased are also reported)
> procurement – discuss whether and how procurement activities are environmentally
responsible.
The reporting direction requires the measurement and reporting of total resource use
– ‘absolute’ consumption such as total energy use or total greenhouse gas emissions.
It also requires reporting against ‘intensity’ indicators (often referred to as efficiency
indicators or business activity indicators) such as energy consumption per floor area
or per number of full-time equivalent employees or greenhouse gas emissions per
kilometres travelled. Intensity indicators are useful to help track performance over time
and are independent of growth or organisational changes.70
The reporting direction allows for departments and agencies to report on a broader set
of criteria and for other public sector agencies to also adopt a reporting process – which
a number of agencies now do. Departments and agencies may include a statement on
intentions and principles in relation to environmental performance and the use of any
relevant Global Reporting Initiative (GRI) indicators.
The Department of Sustainability and Environment and the Department of Treasury and
Finance are investigating the opportunities to streamline the environmental reporting
and broadening the scope of the office-based FRD24C reporting and applicability to
agencies, and materiality of what is reported.71
Data management
The sourcing of data about energy use, water consumption and waste production is
coordinated centrally for accommodation and facilities managed through the Department
of Treasury and Finance’s Shared Service Provider Group. For other sites, departments
and agencies source data directly from their service providers.72
In an effort to achieve more robust reporting and identify opportunities to improve
environmental performance, the Department of Sustainability and Environment is
overseeing the implementation of the electronic data management system proposed for
take-up across the whole of government. To date, the Department of Justice, Department
of Education and Early Childhood Development and Victoria Police have assisted the
Department of Sustainability and Environment to develop and test the system.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
47
When fully implemented, it is expected the electronic data management system
will deliver an improved whole-of-government understanding of consumption,
consistent calculation methodologies and timely monitoring and benchmarking.73
Greenhouse gas emissions
Energy use is the largest source of greenhouse gas emissions from the office-based
activities of Victorian Government departments, the Environment Protection Authority
and Sustainability Victoria, as evident in Figure 6.
Figure 6. Distribution of office-based greenhouse gas emissions in 2010–11
(tonnes CO2-e)
Waste disposal
344
Highlights
99.7% is the contribution
Air travel
18,761
of energy use, vehicle fleet
and air travel to office-based
greenhouse gas emissions.
Note: This figure excludes
emissions associated with paper
and water usage, which some
departments report optionally.
If a complete data set were
available, it is estimated the
figure would be around 98%.
Energy use
59,197
Vehicle fleet
24,313
Since 2008–09 there has been a decrease in reported greenhouse gas emissions
associated with the departments, the Environment Protection Authority and Sustainability
Victoria office-based energy use, vehicle travel, air travel and waste to landfill.
Figure 7. Whole-of-government office-based greenhouse gas emissions
6.5% decrease in total
Tonnes
CO2 emissions
109,742
106,135
102,614
2009–10
2010–11
2008–09
Note: The data excludes emissions associated with water use and paper use not reported by all organisations.
office-based greenhouse gas
emissions since 2008–09.
Notable reductions in both energy and vehicle-related emissions have contributed to
an overall reduction in emissions in 2010–11 despite an increase in reported emissions
associated with air travel. These are discussed further below.
Energy use in office buildings
The Victorian Government is a major user of energy and can both set an
example and reduce costs through responsible use of energy.
Figure 8 illustrates total energy use and the average energy use per square metre of
floor space from 2008–09 to 2010–11. It illustrates a decrease in both.
Highlights
Figure 8. Whole-of-government office-based energy consumption
3.1% decrease in average
energy use per square metre
since 2008–09.
Intensity
295
285
278
426
419
413
2008–09
2009–10
Megajoules per square metre
energy use since 2008–09.
Megajoules (million)
Total
5.5% decrease in total
2010–11
Note: 2008–09 energy use per square metre excludes Department of Education and Early Childhood Development
data, as it is not comparable with 2009–10 and 2010–11.
The collection and reporting of energy data can vary making direct comparisons between
departments and agencies difficult.
These variations include:
> whether only building tenant light and power is reported (i.e. the component of electricity
that organisations control and pay for directly, excluding base building energy use)
> whether reporting of the organisation’s share of base building electricity load is included
> new sites included as part of improving data representation
> co-location data at some sites being estimates only extrapolated on square metre basis.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
49
GreenPower
A portion of electricity purchased by departments, the Environment Protection Authority
and Sustainability Victoria includes renewable energy.
Figure 9 indicates the amount of electricity sourced as GreenPower for offices for
2010–11. The data drawn from annual reports would suggest that not all departments
were successful meeting the 25% GreenPower target (referred to above) but from a
whole-of-government perspective the target was achieved for offices.
It is worth noting that for the first time in 2010–11 the Victorian Auditor-General’s Office
purchased 100% GreenPower for its tenancy electricity as part of its wider strategy of
improving operational effectiveness while at the same time reducing its carbon footprint
and increasing the environmental sustainability of the office.74
Highlights
Department / agency
Figure 9. Office-based electricity usage, including GreenPower, 2010–11
DBI
27.7% office-based
75% / 25%
76% / 24%
DOH
DOJ
DPC
19–100% range of
76% / 24%
DHS
DPCD
electricity purchased as
GreenPower.
81% / 19%
DEECD
GreenPower purchased.
74% / 26%
66% / 34%
81% / 19%
DBI
69% / 31%
DPI
69% / 31%
DSE
DOT
DTF
EPA
SV
75% / 25%
DOH
Department of Health
GreenPower
DHS
Department of Human Services
Non-GreenPower
DOJ
Department of Justice
DPCD
Department of Planning and Community
Development
DPC
Department of Premier and Cabinet
80% / 20%
39% / 61%
0% / 100%
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Electricity usage (gigajoules)
Note: The Department of Primary Industries includes significant non-office-based data such as laboratories,
glasshouses, research facilities, farming and plant breeding that cannot be readily separated from its other data.
Hence its usage appears high in this graph relative to other departments and agencies.
Sustainable energy targets
Government departments and agencies have been working towards targets to
improve energy efficiency and the purchase of electricity as GreenPower.
The targets were adopted throughout Victorian hospitals, schools and TAFEs, police
stations, major public buildings and offices.75
The initial 2006 targets (increasing energy efficiency by 15% of 1999–2000 levels by July
2006 and the purchase of 10% of electricity as GreenPower by July 2006) were achieved.
The government subsequently revised the targets to cut energy use by a further 5% to
20% and to increase use of GreenPower to 25% by 2010–11.
This process was overseen by the Department of Sustainability and Environment and
Sustainability Victoria using the Commonwealth Government’s Online System for
Comprehensive Activity Reporting (OSCAR) for measuring progress.
A progress report is expected in early 2012.
Department of Business and Innovation
DEECD Department of Education and Early Childhood
Development
DPI
Department of Primary Industries
DSE
Department of Sustainability and Environment
DOT
Department of Transport
DTF
Department of Treasury and Finance
EPA
Environment Protection Authority Victoria
SV
Sustainability Victoria
Waste in office buildings
Waste is separated into different waste streams in departments’ and agencies’ offices to
maximise the composting and recycling of materials. The ‘waste production’ data covers
waste to landfill, waste (including paper) sent for recycling and composted (organic) waste.
Highlights
Figure 10. Whole-of-government office-based waste production
Per FTE
waste produced since
2008–09.
1,953
1,856
1,566
17% decrease in waste
kilograms per FTE since
2008–09.
94.5
89.7
Kilograms
16% decrease in total
Tonnes
Total
74.0
2008–09
2010–11
2009–10
The majority of Victorian Government departments and agencies calculate office-based
waste production by extrapolating the results of a number of waste audits undertaken
during the year.
Since the introduction of the environmental management system program in 2003,
departments and agencies have established waste separation systems across
metropolitan offices and extended into regional offices.
This has seen a significant shift in the amount of waste being recycled (including
composting) where previously much of the waste went straight to landfill. For a number
of years around 80% of office-based waste has been diverted away from landfill.76
The reduction in average recycling rates compared to 2007–08 reflects in part
departmental efforts to improve waste audit methodology and the inclusion of
new sites within the audits to help drive improvements at additional sites. This
can result in variations in data comparisons over time.
Figure 11. Whole-of-government office-based waste diverted from landfill
2.4% decrease in recycling
8 out of 13 departments
and agencies had a decrease
in recycling rates over past
12 months.
Diversion
Percentage
rate since 2007–08 across
the whole of government.
84.4
86.6
2007–08
2008–09
82.7
82.4
2009–10
2010–11
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
51
Paper consumption
Paper purchased data continues to be regarded as reliable, with suppliers providing
robust data to departments and agencies. Actions undertaken by departments and
agencies to reduce paper use include: printers set to default to duplex printing, increase
practice of document scanning, shift to energy-efficient multi-function devices and
reduction in the number of printers to staff, along with visual reminders about paper
usage to staff.
Over the last three years, paper use has declined.
Highlights
Figure 12. Whole-of-government office-based paper consumption
Per FTE
401,298
391,506
385,807
3.9% decrease in total
Reams
Reams
Total
paper used since 2008–09.
193 million sheets of
paper used in 2010–11.
28 sheets of paper used
per FTE per day.
14.68
2008–09
14.24
2009–10
14.23
2010–11
Water use in office buildings
Office-based water data includes domestic water consumption for drinking, washing, cleaning
and toilet flushing, and base building requirements such as heating and cooling systems.
Since 2008–09, reported whole-of-government water consumption has
increased slightly. It appears during this period some additional office sites are
included in the reported data sets. During this period, the amount of water used
per full-time equivalent staff (FTE) has decreased.
Figure 13. Whole-of-government office-based water consumption
Per FTE
196,879
204,118
198,473
Litres
Kilolitres
Total
0.8% increase in total
water use since 2008–09.
5.4% decrease in water
use per FTE since 2008–09.
10,354
9,997
9,797
2008–09
2009–10
2010–11
Note: 2008–09 water use per full-time equivalent staff excludes reported Department of Education and Early
Childhood Development data, as it is not comparable with 2009–10 and 2010–11.
The collection and reporting of water data can vary making direct comparisons between
departments and agencies difficult. These include:
> whether the reported data includes base building (central services) water usage
or tenancy only water use
> whether new sites have been picked up as part of improving data representation
> improvement in water metering, which can change the accuracy and volume of water
that is measured.
Transport
Vehicle environmental performance
Total greenhouse gas emissions decreased by 3% compared to 2008–09, while for the
same period a relatively small increase in the vehicle kilometres travelled was reported.
Figure 14. Whole-of-government passenger vehicle travel
Highlights
Greenhouse intensity
405,000 kilometres
travelled per working day
in 2010-11.
100.1
103.0
101.3
0.25
0.24
0.24
GHG per 1,000 km (CO2-e)
1.2% increase in
kilometres travelled in
vehicles since 2008–09.
Kilometres (million)
Distance
2008–09
2009–10
2010–11
Managing the environmental performance of the vehicle fleet includes reducing
greenhouse gas emissions associated with department and agency travel requirements
and improving the efficiency of fleet operations. Alternatives to vehicle travel, such as
video and teleconferencing, and sustainable transport are encouraged.
As at 30 June 2011, the vehicle fleet (operational and passenger) contained 1,215
low-emission hybrid vehicles, a 22% increase on 2009–10. Most of the medium-size
passenger vehicles in the government’s state vehicle pool are now hybrid vehicles.
In 2010–11, the vehicle fleet also included 14 electric vehicles as part of the Victorian
Government’s electric vehicle trial, which will run until mid-2014.77
The move to ‘greener’ vehicles in the government fleet helped reduce the average
passenger vehicle emissions, based on manufacturer specifications, from 253 g
CO2/km in 2007–08 to 202 g CO2/km in 2010–11.78, 79 With the progressive introduction
of more Toyota hybrid Camry vehicles into the fleet (emissions of 142 g CO2/km) further
opportunities for significant emissions reduction exist.80 This transition, however, is not
reflected in the actual average, which is closer to 240 g CO2/km, as presented above.
This could be explained by the recent introduction of the low-emission fleet and/or the
selection of vehicles from the vehicle pool with higher greenhouse intensity.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
53
Victorian Government vehicle fleet mix
The size of the operational passenger vehicle fleet has not changed significantly in the last
seven years. However, the profile continues to move to a low-intensity fleet consisting of
more hybrid vehicles and fewer four-and six-cylinder petrol vehicles.
Number of vehicles
Figure 15. Size and composition of operational passenger fleet, 2004–05 to
2010–11
3,000
2,500
Hybrid
2,000
LPG dual fuel
1,500
LPG
1,000
4-cylinder (unleaded)
500
6-cylinder (unleaded)
2004–05 2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
The executive vehicle fleet, around 24% of the Victorian Government passenger
vehicle fleet, continues to be dominated by six-cylinder petrol vehicles that have higher
greenhouse emissions.
Number of vehicles
Figure 16. Size and composition of executive vehicle fleet, 2004–05 to 2010–11
900
800
700
Hybrid
600
500
LPG dual fuel
400
LPG
300
4-cylinder (unleaded)
200
100
6-cylinder (unleaded)
2004–05 2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
Eco-driving
Eco-driving refers to driving practices that improve fuel efficiency and safety, reducing
greenhouse gas and air pollution emissions. Eco-driving can also reduce the cost of fuel
bills.81 The co-benefits of environmental driving and fuel economy (along with seeking
alternatives to vehicle use) are covered under the Victorian Government’s vehicle policy.82
Eco-driving can complement emissions reduction strategies. Linfox logistics, for example,
estimates around a 6% reduction in greenhouse gas emissions can be achieved through
eco-driving as part of its 50% carbon reduction by 2015 target.83
Air travel environmental performance
Air travel information is obtained from the whole-of-government travel services contract,
and covers domestic and international flights. In the last three years, the total kilometres
travelled have decreased.
Highlights
Figure 17. Whole-of-government air travel
6% decrease in total air
travel kilometres.
118,703 kilometres
travelled per working day.
Kilometres (million)
Distance
31.5
32.2
29.7
2008–09
2009–10
2010–11
While the reliability of kilometres travelled data is improving, representative greenhouse
gas emissions comparisons at the whole-of-government level is more difficult and
complex. This is due to a change in the methodology used by departments and agencies
in 2010–11, including variations in the radiative forcing index multiplier used.84 As a result,
the reported greenhouse gas emissions associated with air travel has paradoxically
increased since 2008–09.
Because the calculation of emissions from air travel is complex and continually
evolving, departments and agencies need to review and ensure reliable systems
are in place to collect air travel data, and that consistent methodologies are adopted
for calculating greenhouse gas emissions. The introduction of the electronic data
management system discussed earlier will be important to achieve this.
Procurement
The Financial Reporting Direction 24C requires all departments, the Environment
Protection Authority and Sustainability Victoria to report progress in incorporating
environmental considerations into purchasing decisions.
A range of actions were reported for 2010–11, ranging from promoting recycled content
in paper to developing green purchasing policies such as those in the Department of
Justice and Department of Education and Early Childhood Development. The Department
of Primary Industries Contract Resource Unit has included environmental aspects in its
training and has developed a Good Practice Guideline for Environmental Procurement.
Only half the departments and agencies reported environmental procurement targets
for office-related procurement and it is not possible to readily identify progress or
compare performance.85
The reporting direction does allow for departments and agencies to include reference
to tenders, contracts, or products for which the organisation is developing sustainability
clauses or specifications.
Over half the departments and agencies reported inclusion of environmental criteria in
their tender processes. With the government’s significant buying power and supply chain
reach, further disclosure about the proportion of procurement activities and contractual
arrangements that incorporate environmental considerations should be given priority.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
55
Department and Agency Environmental Management
The approach
The following section reports on the performance of 11 departments, the Environment
Protection Authority and Sustainability Victoria in 2010–11. It also highlights key
achievements over the last three years including expansion beyond office-based activities.
Included are a series of graphs illustrating progress in relation to office-based energy use,
vehicle travel, associated greenhouse gas intensity and air travel (energy use, vehicle fleet
and air travel selected here being the primary contributor to office-based greenhouse gas
emissions). See also Figure 6 on page 47.
The information presented in this section was sourced directly from each department
and agency. Each was asked to explain the evolution of its environmental management
system (EMS) over the last three years. The following questions were provided as a guide:
> How has the breadth of your EMS changed in terms of geography (sites included) and
scope (out-of-office and in-office)?
> How has the EMS been further integrated into your organisation? You
might, for example, wish to discuss changes to resources, establishment
of organisational committees, executive support and linkage to decision-making
processes.
> What have been some of the key achievements and challenges of the EMS?
The departments’ and agencies’ independent environmental management system audit
reports were also reviewed (undertaken on a biennial basis) along with data in annual reports.
Department of Business and Innovation
Environmental management system scope
The Department of Business and Innovation’s EMS is an office-based system that covers
six main leased sites.
Structures and initiatives that go beyond the scope of the EMS include:
> establishment of a Sustainability Projects Network with representation across the
department to coordinate activities in ecological sustainable development
> convening whole-of-government action in the development of sustainability investment
guidelines for public capital works (led by Major Projects Victoria) due in 2012.
Alignment and integration
The department’s EMS is a relatively mature system, having seen a number of iterations
since implementation in 2003. To assist integration into the department’s operations, the
following have been put in place:
> incorporating environmental management as part of all executive officer performance
contracts in 2010
> an Environment Steering Committee consisting of executive and senior non-executive staff
> a mandatory requirement for all new staff to complete the EMS awareness e-learning
module, an innovative tool that engages staff with the department’s environmental
programs
> all staff invited to attend a quarterly, half-day environmental sustainability workshop,
to encourage more sustainable practices at work and also at home
> stationery swap areas available for staff at 121 Exhibition Street to leave or collect
unwanted stationery still in good working order, instead of purchasing new stationery,
bringing environmental and financial benefits
> regular staff information sessions held to promote environmental sustainability, for
example events such as World Environment Day and Ride to Work Day are very
popular events and well attended.
Relative impact – Department of Business and Innovation
Annual tonnes CO 2
2,673 (2.6% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
57
Key office-based indicators
Key achievements
Energy consumption – total / intensity
3.32
3.53
Intensity
203
210
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Vehicle
eet – –total
travel
/ greenhouse
intensity
Vehicleflfleet
total
travel
/ greenhouse
intensity
Greenhouse intensity
1.27
1.26
1.24
0.230
0.230
0.220
2008–09
2009–10
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
Comprehensive and
informative environment
training provided to staff
through the online induction
program and through halfday workshops.
Regular feedback
through quarterly
reporting and trend
analysis of environment data
to the Environment Steering
Committee and the Senior
Management Team (deputy
secretaries).
Developing the internal
environmental reporting
scorecard to include
individual site data in
2011–12.
Streamlining the
department’s reporting
model to report on sites
that have 10 or more fulltime equivalent staff.
2010–11
Challenges
Air
kilometres
Airtravel
travel– –total
total
kilometres
Improving the timeliness
and reliability of
departmental data obtained
from external sources,
particularly for water usage.
Kilometres (million)
Distance
3.45
2.06
2008–09
2009–10
2010–11
Explanatory notes
To make data comparable, 2009–10 data has been adjusted in the Department of Business and Innovation’s
annual report to reflect the machinery-of-government changes. 2008–09 data has been excluded where it is
not comparable.
2009–10 air travel data cannot be compared to 2010–11. 2009–10 data is unable to be recalculated, and
includes Skills Victoria air travel.
Reduced ability to
control environmental
outcomes within leased
facilities.
Retaining momentum
following major machineryof-government change.
Department of Education and Early Childhood Development
Environmental management system scope
The Department of Education and Early Childhood Development has continuously improved its
environmental reporting coverage and expanded its scope from 13 corporate office sites in 2008
to 23 sites in 2011. The additional 10 sites include sub-regional and district corporate offices.
The department is addressing the beyond-office scope of its EMS through the following:
> Early Childhood – There are a number of environmental sustainability programs specific for
the Early Childhood sector, including a pilot program with local government.
> Schools – ResourceSmart AuSSI Vic is a voluntary framework for schools to address
environmental sustainability.
> TAFEs – ResourceSmart is available to TAFEs, although many TAFEs already apply a more
rigorous approach to reducing and reporting their environmental impacts. Many TAFEs are
involved in the Greener Government Building program.
Alignment and integration
The EMS is a mandatory component of the department’s divisional and regional business plans
and is available for inclusion in staff performance plans.
Executive support for environmental management is demonstrated by the increase in resources
of the Environmental Sustainability Branch, which has seen an increase in its staffing resources
from two full-time equivalent to six full-time equivalent staff.
The Environmental Sustainability Branch has shifted focus from executives complying with
environmental requirements to empowering staff with environmental knowledge and skills directly.
The EMS is embedded in the department’s risk register.
In addition, communication and behavioural change initiatives include:
> holding regular staff information sessions with the aim of embedding sustainability concepts
both in staff work and home activities
> utilising internal communication channels to update staff about environmental initiatives and
opportunities for their involvement, including the department’s intranet home page
> incorporating an interactive EMS presentation into departmental corporate inductions.
The department continues to work closely with Sustainability Victoria to ensure opportunities
are available for schools to utilise the ResourceSmart AuSSI Vic framework.
Relative impact – Department of Education and Early Childhood Development
Annual tonnes CO 2
12,012 (11.7% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
59
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Total
Intensity
Megajoules (million)
29.85
30.07
22.02
722
686
2008–09
2009–10
2010–11
Vehicle fleet – total travel / greenhouse intensity
8.73
8.98
6.97
Greenhouse
intensity
0.254
0.215
0.244
2008–09
2009–10
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
Megajoules per square metre
2010–11
Air
Air travel
travel––total
totalkilometres
kilometres
Kilometres (million)
Distance
4.31
Inclusion of an
environmental category
in the department’s 2011
Secretary Awards that
recognise excellence in the
department’s VPS workforce.
Staff survey undertaken
in March 2011 to measure
staff awareness, attitudes
and behaviours towards
environmental sustainability
initiatives.
In January 2011, the
department’s Infrastructure
Division implemented a
mandatory Procurement
Plan template. The
procurement process includes a
mandatory 10% ‘environmental
management’ criterion.
The department’s requestfor-tender documentation
includes Schedule
18 ‘Environmental
Management Systems’.
It requests comprehensive
and specific information from
tenderers in relation to their
own, manufacturers’, suppliers’
and subcontractors’ EMSs,
including certification details.
4.46
3.79
Challenges
Managing data collection
and shifting baseline information
as a result of machinery-ofgovernment changes.
2008–09
2009–10
2010–11
Explanatory notes
The 2008–09 megajoules per square metre data has been excluded as is not comparable with 2009–10 and 2010–11.
The 2010–11 data includes an additional 10 office sites (22% increase in square metres), including sites previously
incorporated in school buildings.
As a result of the machinery-of-government changes in 2010–11, Skills Victoria and Adult, Community and Further
Education sites have also been added for 2010–11.
Greater flexibility to focus
the EMS on ‘materiality’
issues and reduce rigid
documentation and
requirements that come
with modelling the EMS on
ISO 14001.
Ongoing commitment and
resourcing in regional offices.
Department of Health
Environmental management system scope
The Department of Health has had an EMS covering its office-based facilities since 2004.
After the machinery-of-government changes in 2009–10, the monitoring, reporting and
communication of environmental sustainability for Department of Health corporate facilities
has been delivered by the Department of Human Services as part of a shared services
agreement (see Department of Human Services for information about the office-based EMS).
In 2003, the department considered the most relevant impacts on the environmental
sustainability of its portfolio, and instigated a state-wide approach to improving the
environmental performance of public health services.
The department, in conjunction
with Sustainability Victoria, has
sponsored a project that seeks to
embed environmental sustainability
into the procurement processes
of Health Purchasing Victoria.
Health Purchasing Victoria is an
independent statutory authority
and exists to improve the
collective purchasing power of
Victorian public hospitals and
health services. A range of actions
have been identified and are being
progressed. For example, Health
Purchasing Victoria is undertaking
a specific project to look at
the application of sustainability
principles within the state-wide
hospital catering supplies contract.
Victorian public healthcare
facilities cover around 2.5
million square metres of floor
space, ranging from large
hospitals in Melbourne to small
rural health facilities.
This activity initially focused on reducing energy and water used by public health services,
as well as embedding environmental issues into healthcare capital works.
Over the last three years the department has significantly expanded the geography and
scope of its approach to include:
> environmental management planning in health services, Class 1 Cemetery Trusts,
departmental statutory agencies and community health services (through the
ResourceSmart Healthcare program)
> waste management in public health services
> sustainability in healthcare capital works
> sustainability in healthcare procurement
> responding to the effects of a changing climate on health and wellbeing.
Alignment and integration
The department’s 2010–11 annual report includes total energy and water use by the public
health services for the first time. It is hoped that in future years the department will be able
to expand its reporting capability to include other environmental metrics.
A key mechanism to integrate environmental management across the portfolio was through
the ResourceSmart Healthcare program, which provided training and coaching to more
than 90 public-health-related organisations, including health services, statutory agencies,
cemetery trusts and community health services. As of December 2011, 65 of these
organisations had prepared environmental management plans as a result of participation
in the program.
Relative impact – Department of Health
Annual tonnes CO 2
6,120 (6.0% of total office)
6,120
Approximately 700,000
Public hospital stationary energy use (2010-11)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
The greenhouse gas emissions associated with public hospitals energy use are over one
hundred and ten times that of the department’s office-based activities and around seven
times that of whole-of-government office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
61
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
15.39
13.57
496
463
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Vehicle fleet – total travel / greenhouse intensity
Greenhouse intensity
5.54
5.43
0.239
0.238
2008–09
2009–10
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
2010–11
Air
Airtravel
travel––total
totalkilometres
kilometres
Kilometres (million)
Distance
A reduction in energy
intensity across Victoria’s
public hospitals from 2006–
07 to 2010–11 of 4.2 per cent
per metre squared and 10.8 per
cent per separation (a measure
of hospital activity).
A reduction in total water
use across Victoria’s public
hospitals from 2006–07 to
2010–11 of 15.7 per cent, an
amount greater than the water
used by all government offices
over the period 2008–09 to
2010–11.
Two new Class A recycled
water schemes endorsed
to provide over 5 billion litres of
recycled water per annum for
commercial and industrial uses.
4.12
Challenges
2.26
Integrating environmental
sustainability objectives in
healthcare facilities within
the parameters required to
maintain the health and wellbeing
of staff, patients and visitors.
2008–09
2009–10
2010–11
Energy intensity of public hospitals
Per separation
Per m2
1.85
1.84
1.84
1.79
1.78
3.26
3.22
3.16
3.04
2.91
2006–07
2007–08
Source: Department of Health
2008–09
2009–10
2010–11
Gigajoules
Gigajoules
The graphs reveal a positive trend
for the department’s corporate
effort. However, many of its
greatest achievements are found
in the broader portfolio:
Delivering on environmental
sustainability and climate
adaptation expectations
within the context of
competing priorities on the
health system budget.
Meeting the targets of
the Greener Government
Buildings program due
to issues surrounding
the application of energy
performance contracts within
the healthcare setting.
Department of Human Services
Environmental management system scope
The Department of Human Services is committed to minimising its environmental impacts by
integrating considerations of environmental sustainability in its business operations.
Since 2008, the department has significantly expanded the focus of its environmental activities
to include non-office facilities, including Public Housing, Disability Services and Juvenile Justice
custodial premises. Representatives from Disability Services and Juvenile Justice have also gone
through the ResourceSmart program to further progress the incorporation of environmental
sustainability into their everyday business.
In addition, communication and
behavioural change initiatives
include:
> inclusion of sustainability criteria
in the annual Making a Difference
Staff Awards
Implementing initiatives through the expansion of the EMS to non-office facilities, the department
understands the co-benefits of reducing resource use, supporting the provision of more sustainable
housing and delivering financial savings for its clients.
The department delivers office-based environmental management services to the Department of
Health as part of a shared services agreement.
Alignment and integration
> regular staff information sessions
with the aim of embedding
sustainability concepts both in
staff work and home activities
The EMS has been further integrated into the department through a range of business reporting,
monitoring and planning activities.
> regular use of internal
communication channels to
update staff about environmental
initiatives and opportunities for
involvement.
> broadening the department’s environmental policy
> a new intranet site dedicated to
environmental sustainability.
> incorporation of environmental outputs into the position descriptions of regional directors
The Department of Human
Services has aligned its EMS
to include 12 non-office
facilities and 47 high-rise
housing locations. These
facilities account for 87% of
the department’s 400 million
megajoules of energy used in
building facilities in 2010–11.
> inclusion of carbon emission reporting into the quarterly executive performance reporting process
These include:
> development of a three-year Environmental Sustainability strategy approved by the
department’s board
> sustainability reporting included in the body of the annual report, as opposed to being in the
appendix of the report
> incorporation of climate change and environmental management into the department’s risk register
> embedding environmental sustainability considerations into the Corporate Services Strategic
Framework Priority
> inclusion of environmental projects in the Strategic and Executive Reporting System
> incorporation of environmental sustainability criteria into procurement contracts
> adoption of regional environmental action plans by all regional offices
> scoping of climate change adaptation programs in the human services
> commitment to implementation of energy performance contracting projects under the Greener
Government Buildings program.
Relative impact – Department of Human Services
Annual tonnes CO 2
21,660 (21.1% of total office)
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
The greenhouse gas emissions associated with public housing are over one and half
times that of the department’s office-based activities.
21,660
35,210
Public housing high-rise and non-office energy
Visual presentation not to scale.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
63
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
52.0
50.3
496
463
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Vehicleflfleet
totaltravel
travel/ /greenhouse
greenhouseintensity
intensity
Vehicle
eet ––total
Greenhouse intensity
33.6
35.3
36.2
0.252
0.239
0.238
2008–09
2009–10
2010–11
Distance
Kilometres (million)
Developing and incorporating
a low-carbon, low-cost fleet
strategy modelled on parameters
including safety, operational fit,
whole-of-life cost and whole-of-life
greenhouse gas emissions.
Regularly monitoring of the
greenhouse emissions from its
1,700 fleet vehicles and providing
this information to the executive
via a regular and formal reporting
system.
Expanding the waste
management system so that it is
available to a greater proportion of
staff and includes electronic waste,
batteries, mobile phones, seven
plus plastics, polystyrene and
fluorescent lights.
Substantive investments
in water tanks in the Youth
Justice facilities, extensive water
retrofit initiatives throughout the
Public Housing portfolio and
the installation of water-effective
showers in a group of Disability
Services facilities.
A range of purchasing and
procurement action includes:
Air
Airtravel
travel– –total
totalkilometres
kilometres
2.96
2.26
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
Ongoing efforts to embed the
EMS into the structure of business
planning and output reporting.
- incorporating sustainability
criteria into quotation and
tender policy and processes
- establishing a panel of preferred
caterers with commitments
to social and sustainable
outcomes.
Challenges
2008–09
2009–10
2010–11
Explanatory notes
2008–09 energy and air travel data cannot be compared to 2010–11. 2009–10 data reflects the machinery-ofgovernment changes which created the Department of Health in August 2009.
Air travel data collection system refined further for 2010–11.
To further develop a systematic
management approach to
enable efficient streamlined
data reporting for our internal
stakeholders’ management
and response and to continue
the process of embedding
environmental sustainability into
formal business processes.
Department of Justice
Environmental management system scope
Since 2007–08, the Department of Justice has expanded its EMS and Environmental
Management Plan to include its regional operations,
the courts and correctional facilities. The correctional facilities are the main contribution to
the department’s overall environmental footprint, accounting for around 75% of energy and
water consumption.
During 2010–11, in recognition of the department’s progress in managing its environmental
impacts, the department was recognised as a finalist in two national awards, the
saveWater! and United Nations World Environment Day Awards.
Alignment and integration
The department is continuing to take a leadership role in embedding environmental
management throughout the organisation. It has in place:
> strong commitment within senior management, including an executive-level
environmental committee
> a Built Environment and Business Sustainability Environment Team, which has the
mandate to drive change across the department
> an Environmental Initiatives fund, which encourages staff ideas and initiatives by providing
a means of incorporating environmental considerations to building and facility projects
and refurbishments (initiatives have included energy efficient lighting, solar panels, tanks
for rainwater harvesting and waste minimisation education programs).
The development of the regional environmental action plans, involving staff from each of the
department’s eight regions, is undertaken in a consultative process between regional staff,
the environment team and the regional directors. The development of tailored court actions
are undertaken with nominated staff members, ensuring that environmental initiatives are
appropriate for the operational facilities, infrastructure, procedures and staff within specific
business units.
Relative impact – Department of Justice
Annual tonnes CO 2
12,903 (12.6% of total office)
12,903
54,000
Correctional centres, courts
and complexes energy
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
The greenhouse gas emissions associated with correctional centres, courts and
complexes are over four times that of the department’s office-based activities.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
65
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
26.27
23.47
21.31
336
333
335
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Vehicle flfleet
total travel
travel // greenhouse
greenhouse intensity
intensity
Vehicle
eet –– total
Greenhouse intensity
19.95
20.19
20.22
0.258
0.255
0.252
2008–09
2009–10
2010–11
Air travel
travel –– total
total kilometres
kilometres
Air
Kilometres (million)
Distance
4.99
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
The Department of Justice, with
its expanded EMS, has had
significant success in courts and
correctional facilities.
There has been a 23%
reduction in energy use
at the Supreme Court of
Victoria since 2009 through
retrofitting six previously
inefficient boilers.
There has been a 17.5%
reduction in energy use at
the Neighbourhood Justice
Centre in Collingwood since
2010 through more efficient use
of heating and cooling settings
and increasing the use of
natural light.
There has been a 42%
reduction in potable water
use at the Tarrengower
Prison between 2007 and
2009 by installing water tanks
with a capacity of 600,000
litres.
It is estimated, based on annual
rainfall figures, that there will
be a 25% reduction in water
use at the Beechworth
Correctional Centre by
recycling water for irrigation
and for use in the prison laundry.
4.70
3.57
Challenges
2008–09
2009–10
2010–11
Explanatory notes
The vehicle fleet data includes judiciary vehicles, which accounts for the increase in kilometres travelled since
2008–09. Note: the department’s secretary does not have management control of the judiciary vehicles.
2010–11 air travel data excludes the Office of Public Prosecutions included in prior years.
Integration of environmental
principles into major
capital works and minor
refurbishment projects
has presented ongoing
difficulties, particularly in leased
facilities where the ability to
control environmental outcomes
is reduced.
Department of Planning and Community Development
Environmental management system scope
Since the implementation of the EMS in 2003, the Department of Planning and Community
Development has focused on improving its office-based environmental performance.
Approximately 80% of staff are based at three central Melbourne sites with the majority of
the remaining 20% based at seven regional locations.
Alignment and integration
The department’s EMS focuses on both infrastructure and behaviour change programs
to be effective in the delivery of environmental outcomes.
The department’s environment policy and specific environmental targets are endorsed
by the secretary and the executive management team and promoted to all staff through
the intranet, noticeboards and environment representatives.
The environment manager is responsible for:
> leading and coordinating an internal team of around 50 volunteers
> providing quarterly performance reporting to the executive team.
Through the establishment of improved record keeping systems, engagement of staff
and a focus upon performance audit and reporting, the department has made significant
improvements in reducing its office-based environmental impacts.
Improving data collection and reporting methods is also seen as important in monitoring
environmental performance and providing the information flows that seek to align
environmental actions with the EMS objectives and targets.
Regular campaigns are held with staff throughout the year. For example, looking at the
alignment between staff behaviour and the paper reduction targets has helped reduce
the department’s paper use by 10%.
The inclusion of formal environmental responsibilities within position descriptions and
development of local environmental action plans will assist in the expansion of the EMS
beyond the office environment.
Relative impact – Department of Planning and Community Development
Annual tonnes CO 2
1,776 (1.7% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
67
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
5.36
5.23
4.65
270
264
252
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Vehicle flfleet
eet – total travel / greenhouse intensity
Greenhouse intensity
3.17
2.60
2.17
0.212
0.223
0.174
2008–09
2009–10
2010–11
Air travel
travel –– total
total kilometres
kilometres
Air
Distance
Kilometres (million)
1.74
1.34
0.89
2008–09
2009–10
15% reduction in energy use
for the period 2008–09 to 2010–11.
This has been supported by
lighting upgrades and greener
office fit-outs. A relatively simple
yet effective measure has been to
‘delamp’ (removing unnecessary
light tubes), and upgrades to the
fluorescent lighting to reduce
energy use and running costs.
Environmental considerations
are part of office fit-outs and
reuse of existing office furniture
has financial co-benefits, along
with a ‘stationery freecycle area’
established to reduce waste.
A new document management
system and staff behaviour
change campaigns have
contributed to a steady reduction
in the average reams of paper
per employee.
The One-IT-Desktop upgrade
project will better utilise computer
power management settings
across the whole organisation.
A fleet policy to reduce the
number of six-cylinder vehicles
and increase the number of hybrid
vehicles in the fleet reducing the
total energy consumed by the
vehicle fleet.
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
Over the last three years the
department has undertaken a number
of infrastructure changes to improve
environmental performance in its officebased operations. These include:
2010–11
Challenges
Integration of environmental
management programs
beyond office-based
operations that the department
can control or influence, such as
tracking, managing and reporting
greenhouse gas emissions
beyond the office.
Managing the EMS with
significant organisational
changes following machineryof-government changes.
Department of Premier and Cabinet
Environmental management system scope
The Department of Premier and Cabinet’s EMS has remained stable over the past few
years in relation to its Melbourne offices.
In 2011, the department established the Office of Multicultural Affairs and Citizenship
at 3 Treasury Place and two regional offices in Bendigo and Ballarat. It is envisaged that
Office of Multicultural Affairs and Citizenship and the two regional offices will be included
in the Department of Premier and Cabinet’s EMS from 2011–12 onwards.
Alignment and integration
The importance of the department’s environmental footprint is recognised in its Corporate
Plan 2011–2014. Under Strategy 4.3, ‘Reduce DPC’s carbon footprint’, the department
commits to reducing its carbon footprint and promoting environmental sustainability.
Other examples of integration of the EMS include the following:
> Governance has been strengthened with the establishment of a new Department of
Premier and Cabinet/Department of Treasury and Finance environmental steering
committee with director-level membership.
> Regular reporting is conducted through the People Committee and to the Executive
Leadership Team.
> The environmental coordinator for Department of Premier and Cabinet and Department
of Treasury and Finance is a shared resource and sits in the Corporate Development
Branch within the former.
> The Department of Premier and Cabinet branch-planning templates include a
mandatory section on environmental improvement activities being undertaken.
> A presentation on the EMS is incorporated into departmental corporate inductions.
Relative impact – Premier and Cabinet
Annual tonnes CO 2
1,330 (1.3% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
69
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
3.17
2.95
2.64
392
334
299
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
Consistency and reliability
of environmental data.
Kilometres (million)
Greenhouse intensity
0.039
0.028
0.232
0.221
0.188
0.015
2008–09
2009–10
2010–11
Air travel – total kilometres
Kilometres (million)
Distance
2.28
1.05
0.85
2008–09
2009–10
2010–11
Explanatory notes
In order to compare the 2010–11 energy consumption data with 2009–10, the department recalculated 2009–10
data using historical billing data that differs from that reported in the 2009–10 annual report.
The reduction in vehicle kilometres from 2008–09 to 2009–10 is mostly attributable to the availability of more
accurate data. The reduction in kilometres travelled from 2009–10 to 2010–11 is mostly attributable to decreased
travel associated with 2010 being an election year.
The significant variation in reported staff air travel kilometres between 2008–09 and 2009–10 is in part due to more
reliable reporting for 2009–10 and 2010–11 through the service contract.
GHG per 1,000 km (tonnes CO2-e)
Endorsement of a threeyear environmental
improvement plan by the
executive leadership team.
Challenges
2010–11
fleet
Vehicle fl
eet – total travel / greenhouse intensity
Distance
The development of an
environmental strategy to
reflect the implementation of
the corporate plan.
Staff engagement and
driving behavioural change
across the department.
Department of Primary Industries
Environmental management system scope
The implementation of the Department of Primary Industries’ EMS has been underpinned
to date by its Environmental Roadmap (2007–2012). It incorporated a range of programs
to address whole-of-government environmental targets and to improve the department’s
performance against Financial Reporting Direction 24C indicators.
The roadmap has improved the understanding of energy and water consumption and
driven a suite of energy and water efficiency initiatives, incorporating actions to reduce
the impact of research and facilities management operations as well as to support
environmental office-based practices.
The next step is to better integrate environmental management across the department
operations, and this will be supported by an environmental manager appointed in early 2011.
Alignment and integration
The department’s Infrastructure and Facilities Management Division is currently developing
an integrated EMS to manage the environmental aspects relevant to its activities and within
its scope. The system is underpinned by a risk-based approach to identifying significant
impacts and is being embedded within the policies, procedures, processes, strategies and
action plans of the division. Environmental programs, incorporating targets, specific actions
and responsibilities are currently under development to support implementation.
Specific alignment and integration initiatives include:
> incorporation of environmental management into the Business Plan (2011–12) of the
Infrastructure and Facilities Management Division
> incorporation of environmental sustainability principles within the Asset Strategy (2011)
> development of an Infrastructure and Facilities Management Environmental Action Plan that
summarises what each area of the division will do to help achieve environmental objectives
> environmental compliance integrated into the division’s compliance program
> inclusion of carbon emission reporting into quarterly executive reports
> monthly environmental updates to the divisional leadership team and executive director
> progressing opportunities to reflect environmental objectives in leases and occupancy
agreements
> ensuring that environmental projects and programs align with best practice guidelines that
the department expects of industry.
Relative impact – Department of Primary Industries
Annual tonnes CO 2 (Includes non-office energy)
25,911 (25.3% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government officebased greenhouse gas emissions (includes significant non-office based energy data such as
laboratories and research facilities that cannot be readily separated from its other data).
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
71
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Total
Megajoules (million)
91.4
90.5
89.8
512
495
490
2008–09
2009–10
Megajoules per square metre
Intensity
2010–11
Vehicle flfleet
total travel
travel // greenhouse
greenhouse intensity
intensity
Vehicle
eet –– total
Greenhouse intensity
19.52
19.00
17.70
0.258
0.261
0.262
2008–09
2009–10
2010–11
Air travel
travel –– total
total kilometres
kilometres
Air
Kilometres (million)
Distance
6.98
4.62
4.73
2008–09
2009–10
2010–11
Explanatory notes
The department’s energy data includes significant non-office-based data, such as laboratories and research facilities
that cannot be readily separated from its other data.
Some of the change evident in air travel kilometres can be attributed to an increase in compliance with the
government’s travel provider booking system. This means, however, that previous years have been under-reported
and that 2010–11 provides a realistic base for future years.
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
A reduction in greenhouse
gas emissions from energy
use and vehicle fleet over
the last three years.
Challenges
The complex nature of the
department’s activities
means separating officebased from other activities
is problematic (it manages
70 individual sites owned,
leased or shared with other
organisations) across the
state, ranging from research
laboratories and farms to small
monitoring installations.
Regaining momentum
following an unfilled vacancy
in the coordinating role for the
Environmental Management
System for a period.
Many of the department’s
beyond-office activities are
water and energy intensive
for example research
laboratories, glasshouses
and farms.
Ensuring environmental
management is part of
normal operations, capturing
non-utility data and monitoring
the results of improvement
initiatives from geographically
dispersed sites.
Department of Sustainability and Environment
Environmental management system scope
Since 2004 the Department of Sustainability and Environment’s EMS has covered officebased operations across all locations, including its depots. Environmental performance
reporting for 2010–11 includes 79 sites in metropolitan and rural and regional Victoria.
Currently the majority of operations are covered by the office-based EMS and the
department’s forest and fire EMS. At this stage there are no plans to integrate or expand
either EMS to cover operations beyond office sites.
Alignment and integration
The administration of the EMS resides within the Corporate Finance Division, with
the chief finance officer accountable for the day-to-day functions, including regular
management review.
The environmental management services manager is part of the Infrastructure and
Support Services Group, which includes fleet services, facilities management, minor and
major building works programs, and related contract management. The environmental
manager has general responsibility for planning and delivery of EMS actions.
Buildings and services activities supporting the EMS and environmentally sustainable
design requirements are managed through the annual minor and major works programs
of this group.
Environmental specifications are incorporated in minor and major capital works and
related maintenance contracts. This is becoming a ‘business-as-usual’ practice, not
an extra. The department has made available additional budget for ‘value-for-money’
environmental initiatives identified during the project planning phase.
Wider staff participation in the EMS occurs primarily through the Eco-Office Challenge,
where approximately 110 staff act as ‘champions’ to run activities and advise staff about
the EMS and sustainable behaviours. The Eco-Office Challenge is managed by the
manager environmental management services.
An annual Eco-Office Challenge Action Plan sets out six bi-monthly themes and a range
of activities for ‘champions’ to deliver to all staff; particularly focused on behaviour
change. EMS and the Eco-Office Challenge activities are supported by regular items in
the internal communications channels Inform and Bulletin Board.
All new staff are introduced to the EMS through the Working at DSE induction course,
and a statement of ‘environmental responsibilities’ is incorporated in every position
description within the department.
Relative impact – Department of Sustainability and Environment
Annual tonnes CO 2
10,071 (9.8% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
73
Key office-based indicators
Key achievements
Energy consumption – total / intensity
43.39
42.29
41.87
From 2008–09 to 2010–11 the
department has achieved:
Intensity
303
304
304
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Kilometres (million)
5.85
0.225
0.216
0.183
2008–09
2009–10
GHG per 1,000 km (tonnes CO2-e)
5.80
6.04
- 19% improvement with
passenger vehicle use
efficiency from 0.225 to
0.183 tonnes CO2-e per
1,000 km travelled.
Greenhouse intensity
- 20% reduction in paper
use from 17.2 to 13.7
reams per FTE per year
Energy-efficient lighting was
retrofitted at 18 sites in 2010–11.
Vehicle flfleet
total travel
travel // greenhouse
greenhouse intensity
intensity
Vehicle
eet –– total
Distance
- 13% reduction in
energy-related emissions
from 9,368 to 8,178 tonnes
CO2-e
Minor works program
incorporated sustainability aspects
at five sites in 2010–11, including
heating/cooling and lighting
efficiency measures, solar hot
water systems and the installation
of photovoltaic solar panels.
Information about water use
has improved with reporting
extending to cover all DSE sites
in the last two years.
2010–11
Air travel
travel –– total
total kilometres
kilometres
Air
Challenges
Kilometres (million)
Distance
3.34
3.14
2.82
2008–09
2009–10
2010–11
Improving the systems for
communicating and reporting
on sustainable procurement
actions undertaken by the
department such as the inclusion
of sustainability clauses/
specifications in tenders,
contracts and products.
Seeking opportunities for
future ‘step changes’ in
relation to major central
Melbourne offices in the
context of any major reletting and
refurbishment decisions over the
next two to three financial years.
(Existing programs are expected
to continue to improve the
performance of the department’s
new and more recently
refurbished buildings).
Department of Transport
Environmental management system scope
The Department of Transport’s EMS has been adapted to allow for changes in site
locations over the past three years. The majority of staff are located in leased premises at
two sites in central Melbourne at 80 Collins Street and 121 Exhibition Street.
While the department’s EMS does not currently extend beyond office-based activities,
it has developed a strategic policy framework and initiatives for transport resource
efficiency and environmental sustainability.
Alignment and integration
The department’s EMS is a relatively stable system in relation to its office-based activities.
To assist integration into the department’s operations the following have been put in place:
> an environmental committee led by the environmental officer and consisting of
representatives from each floor across the 80 Collins Street and 121 Exhibition Street sites
> a monthly environmental bulletin and a series of environmental events throughout the
year focusing on integrating corporate communications with environmental initiatives
> an EMS reference group, which annually evaluates performance and sets targets and
objectives for the coming year.
Relative impact – Department of Transport
Annual tonnes CO 2
3,156 (3.1% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
75
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
9.77
7.94
7.66
284
223
212
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
2010–11
Vehicle flfleet
total travel
travel // greenhouse
greenhouse intensity
intensity
Vehicle
eet –– total
2.57
Greenhouse intensity
2.31
2.03
0.245
0.250
0.237
2008–09
2009–10
2010–11
1.69
1.83
2009–10
2010–11
Airtravel
travel––total
totalkilometres
kilometres
Air
Kilometres (million)
Distance
2.60
2008–09
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
In relation to the department’s
office-based environmental
management system:
23% decrease in vehicle
fleet greenhouse gas
emissions since 2008–09 from
a reduction in vehicle kilometres
travelled and the integration of
hybrid vehicles in the fleet.
In 2010–11, the hybrid
vehicles made up 31% of the
department’s fleet compared to
4% in 2008–09.
Continuous improvement
in energy efficiency through
energy-efficient office fit-outs
and staff switch-off campaigns.
Challenges
In the office, reducing paper
use with an increase of
nearly 7% over the last three
years and above the government
department average. The
department aims to reduce
its paper use through auditing
the number of printers, multi
functional devices and trial
secure printing.
Department of Treasury and Finance
Environmental management system scope
The breadth of the EMS has remained fairly constant over the past three years for
the Department of Treasury and Finance. The office-based system covers the central
business district offices at 1 Macarthur Street,
1 Treasury Place, 120 Collins Street and 55 Collins Street.
Alignment and integration
To better align the EMS with the strategic and business planning for the department
the central coordination of the EMS (the EMS coordinator) moved from the Government
Services Division to Corporate Strategy and Services in 2010. This has provided the
opportunity for the EMS to take on a broader focus across the department.
Other examples of integration of the EMS are:
> strengthened governance with the establishment of a new Department of Premier and
Cabinet/Department of Treasury and Finance environmental steering committee with
director-level membership
> regular reporting conducted through the People and Culture Sub-Committee and to
the Department of Treasury and Finance senior executive
> a presentation on the EMS incorporated into the department’s corporate induction
program to ensure staff that are new to the department understand the environmental
management commitment.
Relative impact – Department of Treasury and Finance
Annual tonnes CO 2
2,204 (2.1% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the department’s contribution to the whole-of-government
office-based greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
77
Key office-based indicators
Key achievements
Energy consumption – total / intensity
5.89
Intensity
5.52
4.89
339
363
346
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
Kilometres (million)
Greenhouse intensity
0.068
0.053
0.058
0.273
0.221
0.185
2008–09
2009–10
2010–11
Air travel – total kilometres
Distance
Kilometres (million)
1.23
0.88
0.61
2008–09
2009–10
2010–11
GHG per 1,000 km (tonnes CO2-e)
Energy and greenhouse
gas emissions reductions
from the building retrofits
(sensors and lighting) as part
of the Greener Government
Buildings program.
Challenges
2010–11
fleet
Vehicle fl
eet – total travel / greenhouse intensity
Distance
A three-year environmental
improvement plan endorsed
by the department’s executive.
Consistency and reliability
of environmental data,
which will be improved
with the establishment of
the Environmental Data
Management System by the
Department of Sustainability
and Environment.
Staff engagement and
commitment at all levels
of the department.
Environment Protection Authority
Environmental management system scope
The EMS of the Environment Protection Authority (EPA) includes all its sites and addresses
both office and non-office environmental impacts of its operations. The office operations
across seven sites account for 83% of the floor space with laboratories covering the remainder.
The EPA has gone well beyond its physical boundaries in terms of measuring its carbon impact
by including indirect greenhouse gas emissions. It includes those emissions associated with
waste, paper, colour publications, air travel, extraction and production of electricity, natural gas
and fuel, reticulated water, couriers, catering, taxis, public transport and staff commuting.
The EPA has two goals for its EMS
over the next five years:
1. To continuously reduce its
resource use.
The strategic direction of the environmental management system is aligned to corporate and
public reporting in relation to the environmental impact of its services.
Alignment and integration
The EPA has integrated its EMS into the wider organisation through:
2. To embed sustainability in all
decision making across the EPA.
> ensuring 1 to 1.5 full-time staff are dedicated to managing and coordinating the
implementation of the EMS program
To help achieve these goals the
EPA will:
> an executive management team member who acts as a sponsor for the EMS by providing
strategic direction and leadership
> elevate the endorsement of
significant EMS projects and
the allocation of funding and
resources to a member of the
executive team
> an organisation-wide Green Team comprising the EMS coordinator, executive sponsor and
30–40 staff, including representation from every unit within the EPA (approximately 10% of
total staff)
> build on environmental standard
operating procedures and
policies with a focus on staff
> assign accountability to
units, the executive team and
individual staff to develop and
achieve EMS program outcomes
> develop and implement a fouryear sustainability strategy to
guide the EMS program and
integrate into the corporate
planning process.
> Green Team members involvement recognised in their annual performance plans and given
a 5% of total workload weighting
> all new staff are expected to undertake an EMS induction, which must be signed off by
their manager
> incorporating the EMS into the EPA position description
> quarterly reporting of environmental performance to the executive management team
> integration of environmental performance reporting into the wider EPA corporate reporting
> integration of sustainability reporting into the EPA annual report, using the Global Reporting
Initiative as a framework for the EPA 2010–11 annual report.
Relative impact – Environment Protection Authority
Annual tonnes CO 2
2,507 (2.4% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the agency’s contribution to the whole-of-government officebased greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
79
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Total
Intensity
Megajoules (million)
6.91
5.64
5.71
679
515
485
2008–09
2009–10
Megajoules per square metre
2010–11
Vehicle flfleet
eet – total travel / greenhouse intensity
Greenhouse intensity
1.40
1.28
1.31
0.255
0.220
0.240
2008–09
2009–10
2010–11
Air travel
travel –– total
total kilometres
kilometres
Air
Kilometres (million)
23% reduction in
greenhouse gas emissions
30% reduction in electricity
use through a range of
energy reduction initiatives,
including sensor lighting,
maximising the use of daylight,
energy efficiency lighting and
appliances, a switch-off policy
for computers and appliances,
and virtualisation of servers
45% reduction in water
consumption through initiatives
such as rainwater harvesting at
two EPA sites and installation of
water-efficient tap fittings and
appliances
30% reduction in paper
consumption through initiatives
such as duplex, multi-page and
PIN printing
purchase of 100% recycled
office printing and copying paper
39% reduction in fuel use
through the initiatives such as
the purchase of fuel efficient and
hybrid vehicles
achieved externally assured
carbon neutral status every
year since 2005–06.
Distance
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
Since its baseline year of 2005–06,
the EPA’s EMS has brought about
the following achievements in
resource savings:
0.54
Challenges
0.43
0.35
2008–09
2009–10
2010–11
Explanatory notes
Since November 2009, EPA’s head office has been located at 200 Victoria Street, Carlton. The 2010–11 energy
data includes the natural gas used for the head office tri-generation plant in use for the full year. Overall in 2010–11
with the tri-generation plant, the EPA has reduced greenhouse gas emissions associated with stationary energy
use by 24%.
The ebb and flow of staff
enthusiasm in participating
in the Green Team and changing
habits.
Engaging EPA staff on
sustainability issues
in a ‘crowded’ internal
communication space.
Balancing the resources to
deliver innovative, relevant and
successful programs with the
administration of the EMS.
Ensuring that staff will
behave the right way without
formal policies to support this.
Sustainability Victoria
Environmental management system scope
Alignment and integration
The daily environmental aspects of
the EMS are now managed by green
leader sub-groups. This diffusion
of environmental responsibilities
shifts sole reliance from the EMS
coordinator and helps embed
environmental sustainability across
the organisation.
EMS sponsorship rests with the
executive management team
to ensure the EMS maintains
a strategic position within the
organisation. Primary responsibility
among the executive team members
is rotated annually.
The EMS is included in staff
recruitment and induction processes
and EMS developments and
progress are incorporated in every
monthly staff meeting and regularly
discussed in organisational groups.
Staff sustainability knowledge
benefitted from a ‘Sustainability 101’
course in 2011, and is planned to
form part of staff induction.
Sustainability Victoria piloted a
FlexiLife program, which enables
staff to work from home, reducing
commuter travel. It was found to
boost productivity.
Sustainability Victoria’s EMS implementation is relatively mature and the organisation is now
expanding the scope to include influencing the supply chain and considering indirect impacts,
and increasingly sharing responsibility for environmental performance across the organisation.
Its Outreach initiative is increasing the reach of the EMS across all of the agency’s procurement
and supply chain by working with Sustainability Victoria’s suppliers.
Since 2009–10, environmental performance of suppliers of goods and services is a weighted
criterion in competitive procurement processes. From 2010–11, Sustainability Victoria has
worked with a selection of suppliers to help improve the sustainability of their operations.
Sustainability Victoria found that incorporating environmental performance criteria in its
procurement processes can drive change within the supply chain.
Sustainability Victoria’s Carbon Accountability directive seeks to increase energy efficiency and
offset any residual emissions associated with scope 1 and 2 aspects of the operations. As part
of this strategy Sustainability Victoria incorporates new scope 3 aspects each year where a
transparent and valid methodology for calculating associated emissions is available. Through
the Outreach program, Sustainability Victoria encourages its suppliers to do the same.
Through these initiatives, Sustainability Victoria measures and manages scope 3 emissions,
which include emissions associated with:
> water use
> waste going to landfill
> publications purchased
> losses from the transmission and distribution of purchased electricity
> taxi, public transport, air travel and any other form of work-related travel
> electricity for the electric vehicle trial
> building-apportioned gas and electricity.
In 2011–12, Sustainability Victoria will seek to include additional scope 3 items such as the
emissions associated with hotel accommodation or staff commuter travel.
Sustainability Victoria has maintained
accreditation of its EMS to the ISO
14001 standard and engages with
its stakeholders and clients on this.
Relative impact – Sustainability Victoria
Annual tonnes CO 2
292 (0.3% of total office)
Visual presentation not to scale.
The adjacent graphic depicts the agency’s contribution to the whole-of-government officebased greenhouse gas emissions.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
81
Key office-based indicators
Key achievements
Energy consumption – total / intensity
Intensity
0.45
0.47
0.47
230
248
245
2008–09
2009–10
Megajoules per square metre
Megajoules (million)
Total
Structures are being
put in place to embed
environmental
sustainability across every
aspect of the operations,
including stakeholder
engagement and procurement.
Formalising an approach
under the Outreach initiative
to share EMS implementation
knowledge and experiences
with the supply chain.
2010–11
Challenges
fleet
Vehicle fl
eet – total travel / greenhouse intensity
Greenhouse intensity
0.125
0.125
0.09
0.144
0.104
0.105
2008–09
2009–10
2010–11
Air travel – total kilometres
Kilometres (million)
Distance
0.58
0.44
0.22
2008–09
2009–10
Explanatory notes
The vehicle fleet and air travel graphs include data provided by Sustainability Victoria.
2010–11
GHG per 1,000 km (tonnes CO2-e)
Kilometres (million)
Distance
Continuing to find
new energy-efficient
opportunities within the
environmentally sensitive
designed fit-out, which
Sustainability Victoria has
occupied for five years.
Rotating EMS coordinator
role so as to develop the
capacity of staff. This occurs
with the EMS sponsor role at
the executive level.
Securing 5% of project
management time for staff
who have external clients
conducting contracted work
for Sustainability Victoria to
engage them in the Outreach
program.
Embedding sustainability
thinking and resource
efficient practices across the
supply chain and deploying the
Carbon Accountability strategy
accordingly.
Maintaining high
environmental management
system standards meeting
both ISO14001 accreditation
and whole-of-government
auditing and reporting
requirements. Sustainability
Victoria has sought to
streamline this process.
Appendix
Key authorising agencies in Victorian Government
> The Victorian Government Purchasing Board, established under the Financial
Management Act 1994, establishes policies that set the minimum standards for
contracting and the procurement of non-construction goods and services by Victorian
Government departments and some agencies.
> The Building Commission is a statutory authority established under the Building Act
1993 that oversees the building control system in Victoria. It operates within a national
legislative framework that is administered by the Australian Building Codes Board.
Policy on construction contracting and procurement, however, is the responsibility of the
Building Policy Branch within the Department of Planning and Community Development.
> Health Purchasing Victoria, established in 2001 under the Health Services Act
1988, has responsibility to engender a contracting ethos that improves the collective
purchasing power of Victorian public health services and hospitals and achieves best
value outcomes in the procurement of health-related goods, services and equipment.
The acquisition of goods and services constitutes the second-largest cost in the
health sector, second only to payroll.86
> The Partnerships Victoria policy, introduced in 2000, provides the framework for a
whole-of-government approach to the provision of public infrastructure and related
ancillary services through public–private partnerships. The Partnerships Victoria team
is part of the Commercial Division in the Department of Treasury and Finance.
Key procurement processes in Victorian Government
Departmental accredited purchasing units
For procurement that falls under the jurisdiction of the Victorian Government Purchasing
Board, departments and nominated agencies are required to establish an accredited
purchasing unit to oversee tendering arrangements, and to ensure that procurement
procedures comply with VGPB policies and guidelines issued by the Department of
Treasury and Finance. Specifically, accredited purchasing units are responsible for:
> assessing procurement proposals in excess of $100,000 and high-risk/complex
purchases of lesser value
> approving proposals within the department’s accreditation limit and endorsing
proposals outside that accreditation limit for consideration by the Victorian
Government Purchasing Board
> monitoring and reporting on the department’s purchasing processes and procedures
> providing purchasing-related advice to senior officers and other personnel
> facilitating increasing levels of competency in the procurement function.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
83
State purchase contracts
State purchase contracts are standing offer agreements for Victorian Government
common use goods and services, which are established when value for money can best
be achieved through aggregating demand.
Strategic Sourcing, Government Services Division, Department of Treasury and Finance
with other individual entities (with specific knowledge, market information and business
drivers) are responsible as lead entities for the establishment and contract/category
management of state purchase contracts.
State purchase contracts are either mandated or non-mandated for ‘inner’ budget
entities (departments and administrative offices bound by Victorian Government
Purchasing Board policies). State purchase contracts can be used by ‘outer’ budget
entities (statutory authorities, government Business Enterprises and other government
organisations that are only partly funded by government) who commit to the requirements
of the agreement.
Strategic Procurement Planning Policy
The Strategic Procurement Planning Policy of the Victorian Government Purchasing
Board stipulates that a strategic procurement plan must be prepared for acquisitions
of goods and services over $10 million; and/or high-risk or complex acquisitions
regardless of value.
A strategic procurement plan identifies procurement opportunities, options for achieving
outcomes, potential partnerships and alliances, market capability, performance
measures, stakeholders, internal organisational requirements, preliminary costs and risk
management issues, and may also include a business case.
Accredited purchasing units can approve a strategic procurement plan within the
department’s accreditation limit.
Victorian Health Services Policy and Funding Guidelines 2010–11
Contracting in the Victorian health sector is also guided by the Victorian Health
Services Policy and Funding Guidelines 2010–11: Conditions of funding. Established
by the Department of Health, the guidelines detail the policy, medico-legal, reporting,
operational and financial obligations of Victorian hospitals and health services.
The guidelines focus on openness and probity; section 5.10 specifies that:
> Victorian public hospitals and health services must, at a minimum, adopt the standards
of probity required under Victorian Government Purchasing Board guidelines
> public health services are required to meet the Victorian Government’s disclosure
policy, ensuring openness and probity in Victorian Government contracts
> health services review their probity controls, accounting for directions given by the
Victorian Ombudsman.87
Construction Supplier Register
The Guide to Tendering Provisions for Public Construction, which is incorporated into
Ministerial Direction No. 1: Tendering provisions for public construction issued under
the Project Development and Construction Management Act 1994, outlines ‘mandatory’
and ‘recommended’ criteria for the prequalification of contractors and consultants for
the Construction Supplier Register.
The Australasian Procurement and Construction Council has also developed a National
Prequalification System for Non-residential Building where the construction cost estimate is
$50 million and over. 88
Endnotes
1
Department for Environment, Food and Rural Affairs,
Procuring the future – Sustainable Procurement National
Action Plan: Recommendations from the Sustainable
Procurement Task Force, UK, 2006.
21
2
Commissioner Environmental Sustainability Victoria,
Structures for sustainability: Strategic audit, environmental
management systems in the Victorian Government 2011,
Victoria, 2011.
22
Seddon N (2009), op. cit, p.43.
23
World Bank (2008) Performance-based contracting for
health services in developing countries – a toolkit The World
Bank, Washington p.4.
24
Compiled from a roundtable conducted as part of the
strategic audit process held in May 2011 with a number
of Victorian government representatives across a variety
of portfolios.
25
European Commission, op.cit. Articles 22 and 67.
26
UK Government Cabinet Office, Procurement Policy
Note – Legislative Proposals for the Revised Procurement
Directives and new Directive on Concessions, 21 December
2011.
27
Commissioner for Environmental Sustainability, op. cit
28
City of Whitehorse Procurement Policy 2011.
29
City of Whitehorse Asphalt Resurfacing of Local Roads
Contract – Part A Tender Document 2009.
30
Meeting with Julie Reid and Ian Goodes City of Whitehorse
6 September 2011.
31
Eccles, R. G., Ioannou, I.’ and Serafein, G. The impact of a
corporate culture of sustainability on corporate behaviour
and performance, Working Paper 12-035, 4 November 2011,
Harvard Business School, Harvard Business Review, 2011
32
http://www.pirelli.com/corporate/en/sustainability/default.
html, accessed 6 December 2011.
33
World Bank, op. cit, p. 20.
34
Australasian Energy Performance Contracting Association,
A Best practice guide to energy performance contracts:
Reducing operating costs through guaranteed outcomes.
Department of Industry, Science and Resources, 2000.
35
National Framework for Australian Government Office
Buildings, Integrated energy efficiency retrofits and energy
performance contracting, Guidance Paper Government
Property Group/Energy Efficiency Council, Australasian
Procurement & Construction Council Inc (APCC), 2011.
36
Source: from the Victorian Department of Treasury and
Finance, 19 December 2011.
37
National Framework for Australian Government Office
Buildings, Integrated energy efficiency retrofits and energy
performance contracting, Guidance Paper, Government
Property Group/Energy Efficiency Council, Australasian
Procurement & Construction Council Inc (APCC), 2011.
38
Australasian Energy Performance Contracting Association,
op. cit.
3
Best practice guidelines for contracting out government
services, PUMA Policy Brief no. 2, Public Management
Service, February 1997.
4
http:// www.nytimes.com/2011/12/11/science/earth/climatechange-expands-far-beyond, accessed 30 December 2011.
5
OECD principles for integrity in public procurement, OECD,
Paris, 2009.
6
Buying green: A Handbook on green public procurement,
European Commission, European Union, 2011.
7
Department of Treasury and Finance, Victorian Government’s
Financial Report for the State of Victoria 2010–11,
Victoria 2011. (The figure $22 billion includes government
departments, public non-financial corporations, public
financial corporations and other government controlled
entities. The figure 7% of Gross State Product was derived
using Australian Bureau of Statistics Australian Economic
Indicators, January 2012 data, released 22 December 2011,
Victoria’s Gross State Product is $305.6 billion).
8
Victorian Auditor-General’s Office, Tendering and contracting
in local government, Victoria 2010.
9
Victorian Government Purchasing Board, Annual Report
2010–11.
10
Seddon, N., Government contracts: Federal, state and local,
4th edn, Federation Press, NSW, 2009, p. 44.
11
Deakin, S. and Wilkinson, F. Contract Law and the
Economics of Interorganizational Trust, in Trust within and
between organisations, edited Lane, C. and Bachmann, R.
Oxford University press, 1998.
12
http://www.cabinetoffice.gov.uk/news/governmentcalls-contractors-help-cut-carbon-emissions, accessed
2 January 2012.
13
European Commission Proposal for a Directive of
the european parliament and of the council on public
procurement, Brussels, 20.12.2011.
14
http://www.vgpb.vic.gov.au/CA2575BA0001417C/pages/
procurement-practitioners-stage-1---planning-step-3--develop-the-procurement-strategy-environmentalprocurement-policy, accessed 15 September 2011.
15
http://www.vgpb.vic.gov.au/CA2575BA0001417C/pages/
buyers.
16
United Nations, Sustainable development innovation
briefs, August 2008. United Nations, New York, 2008;
Department of the Environment and Heritage, Environmental
purchasing guide, Commonwealth of Australia, Canberra,
2003, p. 2; Department of Environment, Food and Rural
Affairs, Procuring the Future Sustainable Procurement
National Action Plan: Recommendations from the
Sustainable Procurement Task Force, 2006; Department
of Environment, Food and Rural Affairs, London: p. 2;
Australian Procurement and Construction Council Australian
and New Zealand Government, Framework for sustainable
procurement, Australian Procurement and Construction
Council, Canberra, 2007, p. 6.
17
Victorian Government, Victorian Government Purchasing
Board Annual Report 2010–11.
18
The Private Finance Initiative (PFI) was one of a range
of policies introduced by the UK Government in 1992
to increase the involvement of the private sector in the
provision of public services, http://www.parliament.uk/
documents/commons/lib/research/rp2003/rp03-079.pdf,
accessed 11 April 2011.
19
http://www.westsussex.gov.uk/living/waste_recycling_
and/what_is_the_council_doing_for/progress_and_
performance/case_studies.aspx#Lightingthewaywithourstre
etlightingcontract, accessed 11 April 2011.
20
Kristin Ballob, 2008, Sustainable design risk management,
Victor O. Schinnerer & Company, Inc.
Promoting practical sustainability Submitted by Australian
Agency for International Development (AusAID) Agenda item
10 33rd Meeting, 22-23 November 2000, OECD, accessed
13 April 2011.
39
ibid.
40
A best practice guide to measurement and verification of
energy savings: A companion document to ‘A best practice
guide to energy performance contracts’ Australasian Energy
Performance Contracting Association for the Innovation
Access Program of AusIndustry, Australian Department of
Industry Tourism and Resources, 2004.
41
Australasian Energy Performance Contracting Association,
op. cit.
42
Source: Victorian Department of Treasury and Finance,
9 September 2011.
43
The Energy and Resource Efficiency Plans is a regulatory
requirement run by the Environment Protection Authority
under the Environment Protection (Environment and
Resource Efficiency Plans) Regulations 2007. The EREP
program applies to large energy and water using sites –
those using more than 100 TJ of energy and/or 120 ML of
water per annum. Penalties for non-compliance may apply.
Voluntary participation is encouraged. http://www.epa.vic.
gov.au/bus/erep/default.asp, accessed 5 December 2011.
44
Victoria Police, Annual report 2010–11.
45
Metropolitan Police Service, How we police report, 2010–11.
From the commissioner 5
From the government architect 8
Part 1 Sustainability device 12
Part 2 Designed and applied 24
Part 3 Environmental management 42
85
46
Metropolitan Police Service Template Contract for Purchase
of Services and Checklist, January 2011, http://www.met.
police.uk/procurement/responsible_procurement.htm
accessed 28 November 2011.
47
SustainAbility, UNEP and UNGC, Unchaining value, 2008.
48
ISO 14001 is the recognised international voluntary standard
that sets generic requirements for the preparation of an
EMS. It requires an organisation to prepare an EMS that
identifies and controls the environmental impact of its
services products, continually improves its environmental
performance and implements a systematic approach to
setting, achieving and monitoring progress towards meeting
environmental objectives and targets.
49
The Commissioner for Environmental Sustainability Act
2003 defines an environmental management system as: ‘the
organisational structure, policies, practices, processes and
procedures for implementing environmental management,
including systems for designating responsibility for and
allocating resources to, environmental management.’
50
http://www.climatechange.gov.au/reporting, accessed
6 December 2011.
51
http://www.cleanenergyfuture.gov.au/how-do-companiesestimate-carbon-emissions and http://www.climatechange.
gov.au/en/government/clean-energy-future.aspx, accessed
16 December 2012.
52
53
For 2010–11 the disclosure threshold for the corporation
per financial year was: emitting greenhouse gases at or
above 50 kilotonnes carbon dioxide equivalent or produce
energy, or consume energy at or above 200 terajoules.
At the facility level, the threshold per financial year is:
25 kilotonnes carbon dioxide equivalent or 100 terajoules
of energy. Source: Department of Climate Change, National
Greenhouse and Energy Reporting System Calculator,
User Guide, http://www.climatechange.gov.au, accessed
3 October 2011.
Department of Climate Change and Energy Efficiency,
National Greenhouse and Energy Reporting Register,
Commonwealth of Australia, 2011.
54
Mitchell, L. M., ‘The World Bank’, in Energy efficient cities:
Assessment tools and benchmarking practices, edited by
R. K. Bose, Washington DC, 2010, pp. 93–130.
55
Property Council of Australia. http://www.propertyoz.com.
au, accessed 30 November 2011.
56
Energy Efficiency Disclosure Act 2010, http://www.cbd.gov.
au, accessed 16 December 2011.
57
NABERS (National Australian Built Environment Rating
System) is a performance-based rating system for existing
buildings. NABERS rates a building on the basis of its
measured operational impacts on the environment.
58
5 stars Green Star applies for new buildings, 4 stars
NABERS energy applies for existing base building and 4.5
stars for new buildings. 5 Stars Green Star applies to tenant
fit-out for new tenancies and 5 Stars NABERS Energy for
tenant fit-out for existing tenancies Victorian Government
Office Accommodation Guidelines 2007 and Victorian
Government Office Building Standards 2008 set energy
efficiency benchmarks (Green Star and NABERS ratings) for
new and existing office buildings.
59
EPA Victoria, EREP guidelines, Environment and Resource
Efficiency Plans, 2008.
60
EPA Victoria, Compliance and enforcement review, A review
of EPA Victoria’s approach, Victorian Government, 2011,
p. 123.
61
This scheme covers large industrial and commercial sites
that use in a financial year: 120 megalitres of water or more
and/or 100 terajoules of energy.
62
http://www.epa.vic.gov.au/bus/erep/docs/EREPregistered-sites.pdf, accessed 3 October 2011.
63
Victorian Government Department of Sustainability and
Environment, waterMAP Guide: How to build a waterMAP,
Victoria, 2010.
64
Government Property Group, National Framework for
Sustainable Government Office Buildings Guidance
Paper: Integrated Energy Efficiency Retrofits and Energy
Performance Contracting, Australasian Procurement and
Construction Council Inc (APCC), ACT, 2011.
65
http://www.austlii.edu.au/au/legis/tas/consol_act/
ccaa2008225/, accessed 5 January 2012.
66
http://www.greeningnt.nt.gov.au/climate/docs/
ClimateChangePolicy_Summary.pdf, accessed 8 December
2011.
67
http://www1.eere.energy.gov/femp/reconstructionguide/
lead_by_example.html, accessed 16 December 2011.
68
http://www.whitehouse.gov/administration/eop/ceq/
sustainability/omb-scorecards, accessed 25 November 2011.
69
http://www.whitehouse.gov/administration/eop/ceq/
sustainability, accessed 25 November 2011.
70
Commonwealth of Australia, National greenhouse and
energy reporting streamlining protocol, Canberra, 2009.
71
Victorian Government responses to the Public Accounts and
Estimates Committee’s 96th Report on the 2010–11 Budget
Estimates – Part Three, March 2011.
72
Shared Service Provider provides facilities, accommodation,
car pools and library services across 11 government
departments and four agencies (Victoria Police, VicRoads,
Environmental Protection Authority and the State Revenue
Office), http://www.dtf.vic.gov.au, accessed 16 December
2011.
73
Department of Sustainability and Environment, Annual
report 2010–11.
74
Victorian Auditor-General’s Office, Annual report 2010–11.
75
http://www.sustainability.vic.gov.au/www/html/2603government-sustainable-energy-targets-gset-reportsummary.asp.
76
The average waste diverted from landfill figure is the average
of departments, SV, EPA recycling rates as reported in
annual reports.
77
http://www.transport.vic.gov.au/projects/sustainable/evtrial, accessed 11 November 2011.
78
Data provided by VicFleet, August 2011.
79
In 2009 Australia’s average emissions for new passenger
vehicles was 210 g CO2/km, compared to the European
average of 146 g CO2/km. The Australian Government has
announced that it will introduce mandatory carbon dioxide
standards for new passenger and light commercial vehicles
by 2015 and currently assessing how these standards might
be implemented. Source: National Transport Commission,
Carbon dioxide emissions from new Australian vehicles
2010, Information Paper, 2011.
80
Australian Government Green Vehicle Guide http://www.
greenvehicleguide.gov.au, accessed 11 November 2011.
81
The Department of Transport is trialling effective eco-driving
methods, http://www.transport.vic.gov.au/projects/
sustainable/sustainable-transport-projects-and-programs,
accessed 11 November 2011.
82
Victorian Government Standard Motor Vehicle Policy, June
2011.
83
Linfox Logistics, Sustainability strategic plan 2011–13.
84
The radiative forcing index considers the impact of nonCO2 aviation emissions on the atmosphere (e.g. NOx
compounds, ozone, water, contrails and particles) and cirrus
cloud formation. Source: Commissioner Environmental
Sustainability Victoria, Structures for sustainability: Strategic
audit, environmental management systems in the Victorian
Government 2011, Victoria, 2011. In 2010–11 the multiplier
by departments ranged from 2.7 to 5.
85
Commissioner for Environmental Sustainability, Strategic
audit environmental management systems: Addressing our
future, Victoria, 2010.
86
http://www.audit.vic.gov.au/reports__publications/reports_
by_year/2005/20051005_health_procurement/1_executive_
summary.aspx, accessed 4 March 2011.
87
Department of Health, Victorian health services policy and
funding guidelines: Conditions of funding, 2010.
88
http://www.transport.vic.gov.au/doi/internet/csuppliers.nsf.
Acknowledgement
The Commissioner for Environmental Sustainability wishes to
thank the 11 Victorian government departments, Environment
Protection Authority and Sustainability Victoria for their
assistance in compiling data for this report.
Special acknowledgement is extended to the Department
of Treasury and Finance, Skills Victoria, Parks Victoria,
Melbourne Health and Victoria Police for their assistance
in the compilation of the case studies.
Design and Artwork by Lisa Minichiello
www.room44.com.au
Our paper
Text: EcoStar uncoated 115gsm Recycled
Cover: EcoStar uncoated 300gsm Recycled
EcoStar is the first of a new generation
of 100% recycled uncoated papers that
combines the whiteness, visual appeal,
printability and runability of virgin fibre
papers with environmental awareness.
100% recycled post consumer waste.
Office of the Commissioner for Environmental Sustainability
Level 16, 570 Bourke Street | Melbourne Victoria 3000
T +61 3 8636 2197 | F +61 3 8636 2099 | www.ces.vic.gov.au | info.ces@ces.vic.gov.au