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Strategic Audit

Sustainability – designed to be signed, sealed and delivered

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.

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ISBN 978-1-921147-18-0

For further information contact the Offi ce of the

Commissioner for Environmental Sustainability,

phone +61 3 8636 2197 or visit

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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 fl aw 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.

From the commissioner ________________________________________________________________ 5

Designing sustainability with contracts ______________________________________________________ 5

Key Messages ___________________________________________________________________________ 7

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-benefi ts – why bother? _______________________________________________________________ 17

How to leverage environmental change through contracting ___________________________________ 18

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 offi ce buildings________________________________________________________ 48

GreenPower ______________________________________________________________________ 49

Waste in offi ce buildings ____________________________________________________________ 50

Paper consumption ________________________________________________________________ 51

Water use in offi ce 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

Contents

1

2

3

A resource effi cient public sector will have lower impacts.

Sustainability versus effi ciency 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 effi ciency 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.

5

Designing sustainability with contractsThe preparation of a strategic audit report is a statutory function of my role as the Commissioner for Environmental Sustainability.

Specifi cally, 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 defi nes 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 effi ciency 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 fi nancial 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 effi ciencies and reduce greenhouse gas emissions.

Part 2 – Contracts: designed and applied provides case studies, including the Greener Government Building program, where the benefi t of energy and water effi ciency and fi nancial 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.

From the commissioner

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 fi nancial or

performance issue; it is

also a people issue.

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

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 offi ce, 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 verifi cation 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 fi ndings.

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

The strategic audit

process is conducted

on the basis of a ‘no

surprises’ approach.

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 fi scal 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 effi ciency and support environmental sustainability.

> The Victorian Government should use its market power to foster innovation that leads to resource effi ciency 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


Why design mattersAn 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 high-quality design, many of which are directly quantifi able.

...fi rmitas, 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: fi rmitas, utilitas, venustas – commonly translated as fi rmness, 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 effi ciency 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 quantifi able.

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 benefi cial 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 fi rst 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 fl ooded 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.

Victorian Government Architect’s perspective

Establishing the brief

for the project is a

necessary fi rst step.

And a good brief goes

considerably further

than a listing of room

areas, functions and

their relationships.

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 fi rst 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 diffi cult 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 short-listed 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 fi nal 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 confi rm 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 ...


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 suffi cient 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 signifi cant 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 benefi ts can be demonstrated from the design.

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.

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 LondonVictorian Government Architect


Contracts: designed to be a sustainabilty device

The power of state contracts __________________________________________13

Co-benefi ts – why bother? ___________________________________________17

How to leverage environmental change through contracting _______________18

C

The p

Co-be

How t

13

The power of state contractsAchieving sustainability is a complex and challenging endeavour. The Commissioner for Environmental Sustainability Act 2003 (s. 4) defi nes 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 effi ciency 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 refi ning these fi gures, the Victorian Government Purchasing Board reports that department-specifi c 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 infl uence 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 effi ciency 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 affi rmative 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 Effi ciency Code

In July 2010 the UK Minister for the Cabinet Offi ce 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 Effi ciency 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 Effi ciency 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 benefi t 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

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-effi cient and competitive economy

> fostering a high-employment economy delivering social and territorial cohesion.

The Europe 2020 strategy identifi es 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-effi cient and low-carbon economy. Alongside these objectives the strategy stresses that public procurement policy must ensure the most effi cient 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 effi ciency 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 effi ciency, 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 verifi ed.

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 effi ciency 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 verifi ed.


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 fl eet services

> couriers and stationery supplies

> cleaning of offi ces

> 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 infl uence 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).

17

Contractor choice and evaluation criteria

The process to choose a contractor is infl uenced by a number of factors. Monetary thresholds are a primary infl uence.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-benefi ts – why bother?The literature identifi es four key reasons why governments might choose to encourage contracts that incorporate environmental sustainability.16

The fi rst, 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 fi ve 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 specifi cations include reference to recognised environmental sustainability standards, improved energy effi ciency, 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 public-sector 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 fi nd 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-benefi ts intrinsic to this long-term contract include investment in the latest technology to provide improved lighting, safer streets, improved energy effi ciency 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-effi cient 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

How to leverage environmental change through contractingThe 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 satisfi ed. 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 certifi cation, 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 offi cers involved in the process are ‘knowledgeable buyers’. In other words, if there is suffi cient 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.

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

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 effi ciency and sustainability. Some of the key issues identifi ed include the following:

> the need for a better, and shared, understanding of ‘value’

> the need for greater clarity and better defi nition of ‘co-benefi t’

> improved capacity to quantify in dollar terms what can be achieved via a co-benefi t such as energy effi ciency 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 defi nition of sustainability, which included measurable targets, could assist departments in balancing environmental sustainability against simple, point in time specifi c, dollar values. Carefully crafted targets could be more effective in infl uencing departmental behaviour than a stand-alone defi nition 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 refl ected 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 identifi ed 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, qualifi cation 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

defi nition of sustainability,

which included

measurable targets, could

assist departments in

balancing environmental

sustainability against

simple, point in time

specifi c, dollar values.


(d) the specifi c 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 specifi ed in accordance with paragraph 4 and they concern factors directly involved in these processes and characterise the specifi c 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 defi ned 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 verifi ed, 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 fulfi l all of the following conditions:

(a) it has been drawn up on the basis of scientifi c information or is based on other objectively verifi able 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 Offi ce 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 clarifi cation 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 benefi ts 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 identifi es 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 fl ows, decision making and resource allocations to support the organisation’s objectives

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 fi ve 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 fi t-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 specifi ed in its tender that favours suppliers with the capability and experience to deliver a product that is signifi cantly less damaging to the environment. The use of recycled asphalt diverts waste from landfi ll, 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.


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 fi rms 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-fi nancial information. Finally, the study provides evidence that High Sustainability companies signifi cantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The fi ndings 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 fi nancial performance, a long-term approach towards maximising inter-temporal profi ts, and an active stakeholder management process.

> Societal concern about sustainability, at both the level of the fi rm 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 fi rms 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 fi rms, by contrast, correspond to the traditional model of corporate profi t maximization in which social and environmental issues are predominantly regarded as externalities created by fi rm 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.

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 fi rms that adopted

almost none of these

policies – termed as Low

Sustainability companies.

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 verifi ed and validated by SGS. In 2009, within the Assurance Process of the Sustainability Report according to AA1000 Standard provisions, a specifi c 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 defi ned by the EIRIS classifi cation) 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 identifi ed non-conformities 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 fi rst 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

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

C

Green

Melbo

Victor

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 effi ciency and improved environmental performance. The agencies and programs that have been selected focus on contemporary environmental management initiatives to improve energy effi ciency, 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

Refl ecting 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 exemplifi ed 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 fi rmness – 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 signifi cantly improve resource effi ciency and environmental amenity for the organisation.


Designing and installing energy and water saving solutions across 16 government owned offi ce buildings including Melbourne’s treasury precinct.

Melbourne sports and aquatic centre.

>>

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studyaaaasssseeeeaaaassseecacaGreener Government Buildings: designing the energy performance contract

The role of the Department of Treasury and Finance is to provide policy advice on economic, fi nancial 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 effi ciency is recognised as an effective way to deliver both fi nancial and environmental benefi ts 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 effi ciency upgrades incurs substantial costs, as governments lose potential energy savings.34

Government investment in energy effi ciency also creates jobs and builds the capacity of the energy effi ciency 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 effi ciency projects will save $1 billion over 25 years.37

27

Figure 1. Victorian Government greenhouse gas emissions by sector

Prior to the Greener Government Buildings program, energy effi ciency 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 fi nancial barriers commonly prevailed and results were therefore mixed.

The Strategy and Policy Unit, Government Services Division, within the Department of Treasury and Finance was specifi cally established to seek out new opportunities for effi ciencies in government operations, develop strategies and business cases to implement programs. Government policy regarding energy effi ciency and the clear link between energy effi ciency (and the resultant greenhouse gas abatement) and cost-effectiveness of government property enabled the Department of Treasury and Finance to identify and develop the Greener Government Buildings program.

Greener Government Buildings program

A fl agship 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, offi ces, courts, prisons, arts facilities, sporting facilities and water infrastructure.

It followed a successful pilot project that encompassed the 16 government-owned offi ce buildings, including the nine buildings on Treasury Reserve, two buildings occupied by the Department of Justice on Lonsdale Street and fi ve regional offi ce 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.

Other 3%

Sporting 2%

Street lights/signals 2%

Arts 3%

TAFEs 3%

Justice 4%

Offices 4%

Schools 7%

Universities 11%

Rail 19%

Healthcare 20%

Water infrastructure 22%

Source: Department of Treasury and Finance


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 retrofi t 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 fi rst-hand experience delivering energy effi ciency 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 effi ciency projects could be delivered.

This initial project demonstrated the benefi ts of large-scale energy and water

effi ciency retrofi t 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 infl uence ongoing savings (compared to the baseline) over the life of longer-term contracts include signifi cant changes in:

- electrical load, such as more computers and operating equipment

- staff or weekend usage

- external infl uences 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)

> offi ce 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)

> an upgrade of traffi c lights around the state from incandescent to LED lighting technology.


Kangan TAFE Moreland.>

29

The energy performance contract

A centrepiece of the Greener Government Buildings program is the use of contracts, specifi cally an EPC that commits an energy service company to identify and install cost-effective energy and water effi ciency 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 Effi ciency (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 fi nancial and economic input assisted in the identifi cation and development of funding and delivery models. Stakeholder collaboration and ‘looking outward’ is an organisation structure identifi ed in the previous strategic audit as important to facilitate sustainability.

Contracts for outcomes

In Victoria, improving energy effi ciency 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

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 fi rm. 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 diffi cult 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 identifi ed 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 verifi cation process is a formal and integral part of the contractual arrangements.40

Tender for audit

Audit

Specification for works

Tender for contractors

Financial criteria: internal rate of return, payback period

Several responses ( 7)

Select three tenderers tocomplete a level 2 energy audit

Select one tenderer tocomplete a level 3 energy audit

Detailed facility study fee 2-5% project cost. Pay only if not implementing

Contract Energy auditor or consulting engineer

Project managerDetailed facility study agreementContract

Contract Energy performance contract

Expressions of interest

Request for proposal

Detailed facility study

Installation Installation

Annual monitoring and verification

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

verifi cation 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) defi nes 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 specifi ed 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 defi nes 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 benefi t 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 fi nance the project costs, using guaranteed project savings to repay the fi nance.


Energy performance contracts in action

Skills Victoria was quick to recognise the benefi ts of the Greener Government Buildings program, and has been involved in the tendering of fi ve 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 fi nancial benefi ts resulting from its projects, Skills Victoria has identifi ed 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 benefi t in this approach. Greener Government Buildings has increased demand for its services, which has required signifi cant 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 fi nancial benefi ts of investing in energy effi ciency given increasing energy costs as well as the environmental benefi ts 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 offi ces. 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 confi dent that these issues can be resolved and is working closely with Austin Health to develop its fi rst 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 fi nalising its fi rst 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 fi re and fl ood. Parks Victoria has also been cognisant of the need to achieve a sensible, cost-effective and effi cient approach to project monitoring and verifi cation 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 fi nancial mechanism to support the change. It has also brought many hidden benefi ts, including staff development and a reinforcement of sustainability culture within the organisation.

33

Other benefi ts 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 prequalifi ed 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

offi ces for energy services companies have opened in Melbourne to meet the

government’s needs.42

Facilitating the energy and water effi ciency project at Melbourne’s iconic Federation Square, the Government will reduce greenhouse gas emissions and generate cost savings.

>


Victoria’s fi rst public hospital, the Royal Melbourne Hospital is part of Melbourne Health’s environmental strategy.

>


studyaaaaasssseeeeaaaassseecacaMelbourne 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 identifi ed it as a priority. They recognised the environmental and economic co-benefi ts of action as well as the need to respond to government policy, including the Energy and Resource Effi ciency 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.

35

The fi rst 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 briefi ngs 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 diffi cult to implement.

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.

There is clear direction from the board and senior management, and this is refl ected 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 identifi es working with the market and developing relationships and partnerships as critical to tender success. The Contract Management Group, through supplier briefi ngs and specifi c contract clauses, is preventing a ‘tick the box’ approach and leveraging genuine and improved environmental performance.

Melbourne Health’s Kevin Finnigan, Environmental Sustainability coordinator and Michael McCambridge, Director, Facilities Management, members of Melbourne Health ‘Think Green’ committee.

>


The installation of three 55,000 litre water tanks and altering the fi ltering systems for the pool at the Victoria Police Academy has contributed to annual water savings in excess of 500,000 litres.

>


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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 effi ciency targets established in 2000. In 2010–11, Victoria Police had achieved a 23% reduction in energy intensity per square metre of offi ce 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 effi ciency more broadly. It led to the establishing of an Environmental Sustainability Branch and with the direct support of the chief fi nancial offi cer, a range of environmental initiatives ensued.

37

Victoria Police Academy, Glen Waverley.>


Victoria Police reduces energy costs

Two new natural gas-fi red 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 signifi cant growth in the organisation, which

has seen the overall full-time equivalent numbers increase by around 17% and

fl oor 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 branchoutputsPrograms include:

Energy management

Sustainable buildings

Management of water

Waste management

Sustainable procurement

Cultural change

Sustainable informationtechnology and telecommunications

Sustainable transport

Data management and reporting

Greenhouse gas emissions

Water consumption

Waste to landfill

Use of resources

Federal/State government policy and guidelines

Victoria Police environmental sustainability policy (and environmental management system)

Non-government organisation policy/Guidelines

Staff/Community expectations

Environmental sustainability outcomesTo reduce:

Imperatives

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-benefi ts

that can be achieved. For example, investing in energy effi ciency results in

improved environmental performance and considerable cost savings.

Victoria Police is also taking a more holistic approach in planning investment in retrofi ts and upgrades. The Environmental Sustainability Branch has invested signifi cant 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.

The Victoria Police reduce greenhouse gas emissions with solar panel installations at ‘8 hour stations’ across the state.

>

39

Police buildings are more energy-effi cient

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 specifi cations can improve the effi ciency and performance of these facilities during their lifetime. Generally this is more cost-effective than retrofi tting 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-effi cient 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 signifi cant 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 specifi c 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 infl uence, 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 effi ciency, 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, certifi ed 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 effi ciencies 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

41

Getting results

During the past seven years, actual energy consumption per fl oor 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.

Figure 4. Energy consumption by fl oor area

Water consumption

Since its inception some fi ve years ago, the Management of Water program has consistently reduced overall water consumption, with the latest fi gures indicating a reduction of 19% or 45 million litres compared with 2006–07. However, had no work been undertaken in implementing more water-effi cient buildings, equipment and practices the ‘business as usual’ results could have been up to 36% higher than the results achieved in 2010–11.

Figure 5. Total water consumption

M

egaj

oule

s p

er s

qu

are

met

re

2008–09 2009–102007–082006–07 2010–112005–062004–052003–04

Actual consumption

Business as usual scenario

K

ilolit

res

2008–09 2009–102007–082006–07 2010–11

Actual consumption

Business as usual scenario

50,000

100,000

150,000

200,000

250,000

300,000


Environmental Management and Performance 2010–11E2

Environmental management ________________________________________________ 43

Reporting schemes _______________________________________________________ 43

Whole-of-government environmental performance 2010–11 _____________________ 46

Greenhouse gas emissions ___________________________________________ 47

Energy use in offi ce buildings__________________________________________ 48

GreenPower ________________________________________________________ 49

Waste in offi ce buildings ______________________________________________ 50

Paper consumption __________________________________________________ 51

Water use in offi ce 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

43

Environmental management

Using resources more effi ciently 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 offi ce-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 fi rst 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 offi ce-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 effi ciency 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 Water authoritiesAlfred Health Central Gippsland Region Water CorporationAustin Health Central Highlands Region Water CorporationBarwon Health Coliban Region Water CorporationMelbourne Health Melbourne Water CorporationPeninsula Health South East Water LimitedRoyal Children’s Hospital Yarra Valley Water LimitedSouthern HealthWestern Health Local government Eastern Metropolitan Regional Council Universities City of Greater Geelong La Trobe University Melbourne City CouncilMonash University Moira Shire Council RMIT University University of Melbourne Other agenciesV/Line Passenger Corporation

Building ratings

Green building rating tools can be an effective means of promoting energy effi ciency 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 offi ce space of 2,000 square metres or more to obtain and disclose a current building energy effi ciency certifi cate (which includes obtaining a NABERS energy rating).56, 57

Environmental rating targets also apply to Victorian Government offi ce 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 Effi ciency 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 Effi ciency 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 Effi ciency Plan is designed to assess and improve energy, water and waste effi ciency of Victorian business and government. The co-benefi ts 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

45


The Water Management Action Plan initiative is designed to help businesses and non-residential 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 effi ciency or greenhouse targets by Australian and state and territory governments include:

> the Australian Government’s Energy Effi ciency 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 offi ce 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 effi ciency of government buildings by 25% from 2000–01 levels by 2014’

> the Strategic Energy Effi ciency 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 fl eet, 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 fl eet petroleum use by 2020

> 26% improvement in water effi ciency 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 2010–11All 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 offi ce-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 landfi ll, 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 fl eet energy use, air travel and staff commuting

> greenhouse gas emissions – associated with building energy use, vehicle fl eet 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 effi ciency indicators or business activity indicators) such as energy consumption per fl oor 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 offi ce-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.

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 offi ce-based activities of Victorian Government departments, the Environment Protection Authority and Sustainability Victoria, as evident in Figure 6.

Figure 6. Distribution of offi ce-based greenhouse gas emissions in 2010–11 (tonnes CO2-e)

Since 2008–09 there has been a decrease in reported greenhouse gas emissions associated with the departments, the Environment Protection Authority and Sustainability Victoria offi ce-based energy use, vehicle travel, air travel and waste to landfi ll.

Figure 7. Whole-of-government offi ce-based greenhouse gas emissions

Note: The data excludes emissions associated with water use and paper use not reported by all organisations.

Waste disposal

344

Air travel

18,761

Vehicle fleet

24,313

Energy use

59,197

Ton

nes

2008–09 2009–10

106,135109,742

2010–11

102,614

CO2 emissions

Highlights

99.7% is the contribution of energy use, vehicle fl eet and air travel to offi ce-based greenhouse gas emissions.

Note: This fi gure excludes emissions associated with paper and water usage, which some departments report optionally. If a complete data set were available, it is estimated the fi gure would be around 98%.

6.5% decrease in total offi ce-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 offi ce 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 fl oor space from 2008–09 to 2010–11. It illustrates a decrease in both.

Figure 8. Whole-of-government offi ce-based energy consumption

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 diffi cult.

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.

Highlights

5.5% decrease in total energy use since 2008–09.

3.1% decrease in average energy use per square metre since 2008–09.

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

285

419

2010–11

278

413

Total

Meg

ajoules p

er squ

are metre

426

295

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 offi ces 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 offi ces.

It is worth noting that for the fi rst time in 2010–11 the Victorian Auditor-General’s Offi ce 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 offi ce.74

Figure 9. Offi ce-based electricity usage, including GreenPower, 2010–11

Note: The Department of Primary Industries includes signifi cant non-offi ce-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 effi ciency and the purchase of electricity as GreenPower.

The targets were adopted throughout Victorian hospitals, schools and TAFEs, police stations, major public buildings and offi ces.75

The initial 2006 targets (increasing energy effi ciency 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.

Highlights

27.7% offi ce-based electricity purchased as GreenPower.

19–100% range of GreenPower purchased.

Dep

artm

ent

/ ag

ency

Electricity usage (gigajoules)

75% / 25%

81% / 19%

76% / 24%

76% / 24%

74% / 26%

75% / 25%

81% / 19%

80% / 20%

69% / 31%

69% / 31%

66% / 34%

0% / 100%

39% / 61%

10,000 20,000 30,000 40,000 50,000 60,000 70,000

GreenPower

Non-GreenPower

SV

EPA

DTF

DSE

DPI

DPCD

DPC

DOT

DOJ

DOH

DHS

DEECD

DBI

DBI Department of Business and Innovation

DEECD Department of Education and Early Childhood Development

DOH Department of Health

DHS Department of Human Services

DOJ Department of Justice

DPCD Department of Planning and Community Development

DPC Department of Premier and Cabinet

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 offi ce buildings

Waste is separated into different waste streams in departments’ and agencies’ offi ces to maximise the composting and recycling of materials. The ‘waste production’ data covers waste to landfi ll, waste (including paper) sent for recycling and composted (organic) waste.

Figure 10. Whole-of-government offi ce-based waste production

The majority of Victorian Government departments and agencies calculate offi ce-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 offi ces and extended into regional offi ces.

This has seen a signifi cant shift in the amount of waste being recycled (including composting) where previously much of the waste went straight to landfi ll. For a number of years around 80% of offi ce-based waste has been diverted away from landfi ll.76

The reduction in average recycling rates compared to 2007–08 refl ects 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 offi ce-based waste diverted from landfi ll

Highlights

16% decrease in total waste produced since 2008–09.

17% decrease in waste kilograms per FTE since 2008–09.

2.4% decrease in recycling rate since 2007–08 across the whole of government.

8 out of 13 departments and agencies had a decrease in recycling rates over past 12 months.

Ton

nes

Per FTE

2008–09 2009–10

94.5

1,953

89.7

1,856

2010–11

74.0

1,566

Kilogram

s

Total

Per

cen

tag

e

86.682.7

Diversion

84.4 82.4

2010–112009–102008–092007–08

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-effi cient 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.

Figure 12. Whole-of-government offi ce-based paper consumption

Water use in offi ce buildings

Offi ce-based water data includes domestic water consumption for drinking, washing, cleaning and toilet fl ushing, 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 offi ce 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 offi ce-based water consumption

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.

Rea

ms

Per FTE

2008–09 2009–10

14.24

391,506

2010–11

385,807

14.23

Total

Ream

s401,298

14.68

Kilo

litre

s

Per FTE

2008–09 2009–10

9,997

204,118

2010–11

198,473

9,797

Total

Litres 196,879

10,354

Highlights

3.9% decrease in total paper used since 2008–09.

193 million sheets of paper used in 2010–11.

28 sheets of paper used per FTE per day.

0.8% increase in total water use since 2008–09.

5.4% decrease in water use per FTE since 2008–09.

The collection and reporting of water data can vary making direct comparisons between departments and agencies diffi cult. 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

Managing the environmental performance of the vehicle fl eet includes reducing greenhouse gas emissions associated with department and agency travel requirements and improving the effi ciency of fl eet operations. Alternatives to vehicle travel, such as video and teleconferencing, and sustainable transport are encouraged.

As at 30 June 2011, the vehicle fl eet (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 fl eet 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 fl eet helped reduce the average passenger vehicle emissions, based on manufacturer specifi cations, 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 fl eet (emissions of 142 g CO2/km) further opportunities for signifi cant emissions reduction exist.80 This transition, however, is not refl ected 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 fl eet and/or the selection of vehicles from the vehicle pool with higher greenhouse intensity.

Highlights

1.2% increase in kilometres travelled in vehicles since 2008–09.

405,000 kilometres travelled per working day in 2010-11. K

ilom

etre

s (m

illio

n)

Greenhouse intensity

2008–09 2009–10

103.0

0.24

100.1

0.25

2010–11

101.3

0.24

GH

G per 1,000 km

(CO

2 -e)

Distance

53


Victorian Government vehicle fl eet mix

The size of the operational passenger vehicle fl eet has not changed signifi cantly in the last seven years. However, the profi le continues to move to a low-intensity fl eet consisting of more hybrid vehicles and fewer four-and six-cylinder petrol vehicles.

Figure 15. Size and composition of operational passenger fl eet, 2004–05 to 2010–11

The executive vehicle fl eet, around 24% of the Victorian Government passenger vehicle fl eet, continues to be dominated by six-cylinder petrol vehicles that have higher greenhouse emissions.

Figure 16. Size and composition of executive vehicle fl eet, 2004–05 to 2010–11

Eco-driving

Eco-driving refers to driving practices that improve fuel effi ciency and safety, reducing greenhouse gas and air pollution emissions. Eco-driving can also reduce the cost of fuel bills.81 The co-benefi ts 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

Nu

mb

er o

f ve

hic

les

500

1,000

1,500

2,000

2,500

3,000

Hybrid

LPG dual fuel

LPG

4-cylinder (unleaded)


2010–112009–102008–092007–082006–072005–062004–05

Nu

mb

er o

f ve

hic

les

100

200

300

400

500

600

700

800

900

Hybrid

LPG dual fuel

LPG



2010–112009–102008–092007–082006–072005–062004–05

Air travel environmental performance

Air travel information is obtained from the whole-of-government travel services contract, and covers domestic and international fl ights. In the last three years, the total kilometres travelled have decreased.

Figure 17. Whole-of-government air travel

While the reliability of kilometres travelled data is improving, representative greenhouse gas emissions comparisons at the whole-of-government level is more diffi cult 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 offi ce-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 specifi cations.

Over half the departments and agencies reported inclusion of environmental criteria in their tender processes. With the government’s signifi cant 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.

Highlights

6% decrease in total air travel kilometres.

118,703 kilometres travelled per working day.

2008–09 2009–10

32.2

2010–11

29.7

Distance

31.5

Kilo

met

res

(mill

ion

)

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 offi ce-based activities.

Included are a series of graphs illustrating progress in relation to offi ce-based energy use, vehicle travel, associated greenhouse gas intensity and air travel (energy use, vehicle fl eet and air travel selected here being the primary contributor to offi ce-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-offi ce and in-offi ce)?

> 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 offi ce-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 offi cer 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 fi nancial benefi ts

> 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.

The adjacent graphic depicts the department’s contribution to the whole-of-government offi ce-based greenhouse gas emissions.

Visual presentation not to scale.

Relative impact – Department of Business and Innovation

Annual tonnes CO2

2,673 (2.6% of total office)

57


Key achievements

Comprehensive and informative environment training provided to staff through the online induction program and through half-day 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 full-time equivalent staff.

Challenges

Improving the timeliness and reliability of departmental data obtained from external sources, particularly for water usage.

Reduced ability to control environmental outcomes within leased facilities.

Retaining momentum following major machinery-of-government change.

Kilo

met

res

(mill

ion

)

2008–09 2009–10

3.45

2010–11

2.06

Distance

Air travel – total kilometres

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

3.32

203

2010–11

210

3.53Total

Meg

ajoules p

er squ

are metre

Vehicle fleet – total travel / greenhouse intensity

Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.230

1.26

0.230

1.27

2010–11

0.220

1.24

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance

Key offi ce-based indicators

Explanatory notes

To make data comparable, 2009–10 data has been adjusted in the Department of Business and Innovation’s annual report to refl ect 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.

Energy consumption – total / intensity

Vehicle fl eet – total travel / greenhouse intensity



The Department of Education and Early Childhood Development has continuously improved its environmental reporting coverage and expanded its scope from 13 corporate offi ce sites in 2008 to 23 sites in 2011. The additional 10 sites include sub-regional and district corporate offi ces.

The department is addressing the beyond-offi ce scope of its EMS through the following:

> Early Childhood – There are a number of environmental sustainability programs specifi c 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.


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 staffi ng 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 CO2


Department of Education and Early Childhood Development

59


Kilo

met

res

(mill

ion

)

2008–09 2009–10

4.464.31

2010–11

3.79

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

29.85

722

22.02

2010–11

686

30.07

Total

Meg

ajoules p

er squ

are metre

Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.215

8.73

0.254

6.97

2010–11

0.244

8.98 GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance

Key offi ce-based indicators Key achievements

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 request-for-tender documentation includes Schedule 18 ‘Environmental Management Systems’. It requests comprehensive and specifi c information from tenderers in relation to their own, manufacturers’, suppliers’ and subcontractors’ EMSs, including certifi cation details.

Challenges

Managing data collection and shifting baseline information as a result of machinery-of-government changes.

Greater fl exibility 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 offi ces.

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 offi ce 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.





The Department of Health has had an EMS covering its offi ce-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 offi ce-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.

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 signifi cantly 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.


The department’s 2010–11 annual report includes total energy and water use by the public health services for the fi rst 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.

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 identifi ed and are being progressed. For example, Health Purchasing Victoria is undertaking a specifi c 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 fl oor

space, ranging from large

hospitals in Melbourne to small

rural health facilities.


The greenhouse gas emissions associated with public hospitals energy use are over one hundred and ten times that of the department’s offi ce-based activities and around seven times that of whole-of-government offi ce-based greenhouse gas emissions.


Relative impact – Department of Health

Annual tonnes CO2


Approximately 700,000Public hospital stationary energy use (2010-11)

6,120

Department of Health

61K

ilom

etre

s (m

illio

n)

2008–09 2009–10

4.12

2010–11

2.26

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

496

2010–11

463

Total

Meg

ajoules p

er squ

are metre

15.39

13.57

Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.239

5.54

2010–11

0.238

5.43

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance

G

igaj

oule

s

Per separation

2008–09 2009–10

3.16

Per m2

Gig

ajoules

1.851.85 1.791.84 1.84

3.26 3.22

2007–082006–07

1.781.78

2.91

2010–11

Source: Department of Health

3.04

Key achievements

The graphs reveal a positive trend for the department’s corporate effort. However, many of its greatest achievements are found in the broader portfolio:

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 offi ces 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.

Challenges

Integrating environmental sustainability objectives in healthcare facilities within the parameters required to maintain the health and wellbeing of staff, patients and visitors.

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.


Energy intensity of public hospitals





Department of Human Services


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 signifi cantly expanded the focus of its environmental activities to include non-offi ce 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.

Implementing initiatives through the expansion of the EMS to non-offi ce facilities, the department understands the co-benefi ts of reducing resource use, supporting the provision of more sustainable housing and delivering fi nancial savings for its clients.

The department delivers offi ce-based environmental management services to the Department of Health as part of a shared services agreement.


The EMS has been further integrated into the department through a range of business reporting, monitoring and planning activities.

These include:

> broadening the department’s environmental policy

> 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 environmental outputs into the position descriptions of regional directors

> incorporation of climate change and environmental management into the department’s risk register

> inclusion of carbon emission reporting into the quarterly executive performance reporting process

> 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 offi ces

> scoping of climate change adaptation programs in the human services

> commitment to implementation of energy performance contracting projects under the Greener Government Buildings program.


The greenhouse gas emissions associated with public housing are over one and half times that of the department’s offi ce-based activities.


Relative impact – Department of Human Services

Annual tonnes CO2


35,210Public housing high-rise and non-office energy

21,660

In addition, communication and behavioural change initiatives include:

> inclusion of sustainability criteria in the annual Making a Difference Staff Awards

> regular staff information sessions with the aim of embedding sustainability concepts both in staff work and home activities

> regular use of internal communication channels to update staff about environmental initiatives and opportunities for involvement.

> a new intranet site dedicated to environmental sustainability.

The Department of Human

Services has aligned its EMS

to include 12 non-offi ce

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.

63


Kilo

met

res

(mill

ion

)

2008–09 2009–10

2.26

2010–11

2.96

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

496

52.0

2010–11

50.3

463

Total

Meg

ajoules p

er squ

are metre


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.239

35.3

0.252

33.6

2010–11

0.238

36.2

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


Ongoing efforts to embed the EMS into the structure of business planning and output reporting.

Developing and incorporating a low-carbon, low-cost fl eet strategy modelled on parameters including safety, operational fi t, whole-of-life cost and whole-of-life greenhouse gas emissions.

Regularly monitoring of the greenhouse emissions from its 1,700 fl eet 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 fl uorescent lights.

Substantive investments in water tanks in the Youth Justice facilities, extensive water retrofi t 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:

- incorporating sustainability criteria into quotation and tender policy and processes

- establishing a panel of preferred caterers with commitments to social and sustainable outcomes.

Challenges

To further develop a systematic management approach to enable effi cient streamlined data reporting for our internal stakeholders’ management and response and to continue the process of embedding environmental sustainability into formal business processes.

Explanatory notes

2008–09 energy and air travel data cannot be compared to 2010–11. 2009–10 data refl ects the machinery-of-government changes which created the Department of Health in August 2009.

Air travel data collection system refi ned further for 2010–11.




Department of Justice


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 fi nalist in two national awards, the saveWater! and United Nations World Environment Day Awards.


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 effi cient 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 specifi c business units.


The greenhouse gas emissions associated with correctional centres, courts and complexes are over four times that of the department’s offi ce-based activities.


Relative impact – Department of Justice

Annual tonnes CO2


54,000Correctional centres, courts

and complexes energy

12,903

65


Kilo

met

res

(mill

ion

)

2008–09 2009–10

4.704.99

2010–11

3.57

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

23.47

333

26.27

336

2010–11

21.31

335

Total

Meg

ajoules p

er squ

are metre


Kilo

met

res

(mill

ion

)


2008–09 2009–10

20.19

0.255

19.95

0.258

2010–11

20.22

0.252

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


The Department of Justice, with its expanded EMS, has had signifi cant success in courts and correctional facilities.

There has been a 23% reduction in energy use at the Supreme Court of Victoria since 2009 through retrofi tting six previously ineffi cient boilers.

There has been a 17.5% reduction in energy use at the Neighbourhood Justice Centre in Collingwood since 2010 through more effi cient 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 fi gures, 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.

Challenges

Integration of environmental principles into major capital works and minor refurbishment projects has presented ongoing diffi culties, particularly in leased facilities where the ability to control environmental outcomes is reduced.Explanatory notes

The vehicle fl eet 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 Offi ce of Public Prosecutions included in prior years.





Since the implementation of the EMS in 2003, the Department of Planning and Community Development has focused on improving its offi ce-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.


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 specifi c 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 signifi cant improvements in reducing its offi ce-based environmental impacts.

Improving data collection and reporting methods is also seen as important in monitoring environmental performance and providing the information fl ows 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 offi ce environment.



Relative impact – Department of Planning and Community Development

Annual tonnes CO2


Department of Planning and Community Development

67


Kilo

met

res

(mill

ion

)

2008–09 2009–10

1.34

2010–11

0.89

Distance


1.74

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

264

5.23

2010–11

252

4.65

Total

Meg

ajoules p

er squ

are metre

5.36

270


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.223

3.17

0.212

2.60

2010–11

0.174

2.17

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


Over the last three years the department has undertaken a number of infrastructure changes to improve environmental performance in its offi ce-based operations. These include:

15% reduction in energy use for the period 2008–09 to 2010–11. This has been supported by lighting upgrades and greener offi ce fi t-outs. A relatively simple yet effective measure has been to ‘delamp’ (removing unnecessary light tubes), and upgrades to the fl uorescent lighting to reduce energy use and running costs.

Environmental considerations are part of offi ce fi t-outs and reuse of existing offi ce furniture has fi nancial co-benefi ts, 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 fl eet policy to reduce the number of six-cylinder vehicles and increase the number of hybrid vehicles in the fl eet reducing the total energy consumed by the vehicle fl eet.

Challenges

Integration of environmental management programs beyond offi ce-based operations that the department can control or infl uence, such as tracking, managing and reporting greenhouse gas emissions beyond the offi ce.

Managing the EMS with signifi cant organisational changes following machinery-of-government changes.




Department of Premier and Cabinet


The Department of Premier and Cabinet’s EMS has remained stable over the past few years in relation to its Melbourne offi ces.

In 2011, the department established the Offi ce of Multicultural Affairs and Citizenship at 3 Treasury Place and two regional offi ces in Bendigo and Ballarat. It is envisaged that Offi ce of Multicultural Affairs and Citizenship and the two regional offi ces will be included in the Department of Premier and Cabinet’s EMS from 2011–12 onwards.


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 CO2


69


Kilo

met

res

(mill

ion

)

2008–09 2009–10

1.05

2.28

2010–11

0.85

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

2.95

334

3.17

2010–11

299

2.64

Total

Meg

ajoules p

er squ

are metre

392


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.221

0.028

0.232

0.039

2010–11

0.015

0.188

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


The development of an environmental strategy to refl ect the implementation of the corporate plan.

Endorsement of a three-year environmental improvement plan by the executive leadership team.

Challenges

Consistency and reliability of environmental data.

Staff engagement and driving behavioural change across the department.

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 signifi cant 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.




Department of Primary Industries


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 effi ciency initiatives, incorporating actions to reduce the impact of research and facilities management operations as well as to support environmental offi ce-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.


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 signifi cant impacts and is being embedded within the policies, procedures, processes, strategies and action plans of the division. Environmental programs, incorporating targets, specifi c actions and responsibilities are currently under development to support implementation.

Specifi c 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 refl ect environmental objectives in leases and occupancy agreements

> ensuring that environmental projects and programs align with best practice guidelines that the department expects of industry.

The adjacent graphic depicts the department’s contribution to the whole-of-government offi ce-based greenhouse gas emissions (includes signifi cant non-offi ce based energy data such as laboratories and research facilities that cannot be readily separated from its other data).


Relative impact – Department of Primary Industries

Annual tonnes CO2 (Includes non-office energy)


71


Kilo

met

res

(mill

ion

)

2008–09 2009–10

4.73

2010–11

6.98

Distance


4.62

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

495

90.5

2010–11

89.8

490

Total

Meg

ajoules p

er squ

are metre

91.4

512


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.261

19.00

0.258

19.52

2010–11

0.262

17.70

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


A reduction in greenhouse gas emissions from energy use and vehicle fl eet over the last three years.

Challenges

The complex nature of the department’s activities means separating offi ce-based 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 unfi lled vacancy in the coordinating role for the Environmental Management System for a period.

Many of the department’s beyond-offi ce 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.

Explanatory notes

The department’s energy data includes signifi cant non-offi ce-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.




Department of Sustainability and Environment


Since 2004 the Department of Sustainability and Environment’s EMS has covered offi ce-based 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 offi ce-based EMS and the department’s forest and fi re EMS. At this stage there are no plans to integrate or expand either EMS to cover operations beyond offi ce sites.


The administration of the EMS resides within the Corporate Finance Division, with the chief fi nance offi cer 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 fl eet 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 specifi cations 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 identifi ed during the project planning phase.

Wider staff participation in the EMS occurs primarily through the Eco-Offi ce Challenge, where approximately 110 staff act as ‘champions’ to run activities and advise staff about the EMS and sustainable behaviours. The Eco-Offi ce Challenge is managed by the manager environmental management services.

An annual Eco-Offi ce 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-Offi ce 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 CO2


73


Kilo

met

res

(mill

ion

)

2008–09 2009–10

3.14

2010–11

2.82

Distance


3.34

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

42.29

304

2010–11

304

41.87

Total

Meg

ajoules p

er squ

are metre

303

43.39


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.216

6.04

0.225

5.80

2010–11

0.183

5.85

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


From 2008–09 to 2010–11 the department has achieved:

- 13% reduction in energy-related emissions from 9,368 to 8,178 tonnes CO2-e

- 20% reduction in paper use from 17.2 to 13.7 reams per FTE per year

- 19% improvement with passenger vehicle use effi ciency from 0.225 to 0.183 tonnes CO2-e per 1,000 km travelled.

Energy-effi cient lighting was retrofi tted at 18 sites in 2010–11.

Minor works program incorporated sustainability aspects at fi ve sites in 2010–11, including heating/cooling and lighting effi ciency 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.

Challenges

Improving the systems for communicating and reporting on sustainable procurement actions undertaken by the department such as the inclusion of sustainability clauses/specifi cations in tenders, contracts and products.

Seeking opportunities for future ‘step changes’ in relation to major central Melbourne offi ces in the context of any major reletting and refurbishment decisions over the next two to three fi nancial years. (Existing programs are expected to continue to improve the performance of the department’s new and more recently refurbished buildings).




Department of Transport


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 offi ce-based activities, it has developed a strategic policy framework and initiatives for transport resource effi ciency and environmental sustainability.


The department’s EMS is a relatively stable system in relation to its offi ce-based activities. To assist integration into the department’s operations the following have been put in place:

> an environmental committee led by the environmental offi cer and consisting of representatives from each fl oor 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 CO2


75


Kilo

met

res

(mill

ion

)

2008–09 2009–10

1.69

2.60

2010–11

1.83

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

7.94

223

9.77

284

2010–11

7.66

212

Total

Meg

ajoules p

er squ

are metre


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.250

2.31

0.245

2.57

2010–11

0.237

2.03

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


In relation to the department’s offi ce-based environmental management system:

23% decrease in vehicle fl eet greenhouse gas emissions since 2008–09 from a reduction in vehicle kilometres travelled and the integration of hybrid vehicles in the fl eet. In 2010–11, the hybrid vehicles made up 31% of the department’s fl eet compared to 4% in 2008–09.

Continuous improvement in energy effi ciency through energy-effi cient offi ce fi t-outs and staff switch-off campaigns.

Challenges

In the offi ce, 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


The breadth of the EMS has remained fairly constant over the past three years for the Department of Treasury and Finance. The offi ce-based system covers the central business district offi ces at 1 Macarthur Street, 1 Treasury Place, 120 Collins Street and 55 Collins Street.


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 CO2


77


Kilo

met

res

(mill

ion

)

2008–09 2009–10

0.61

1.23

2010–11

0.88

Distance


Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

5.89

363

4.89

2010–11

346

5.52

Total

Meg

ajoules p

er squ

are metre

339


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.221

0.053

0.273

0.068

2010–11

0.185

0.058

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


A three-year environmental improvement plan endorsed by the department’s executive.

Energy and greenhouse gas emissions reductions from the building retrofi ts (sensors and lighting) as part of the Greener Government Buildings program.

Challenges

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


The EMS of the Environment Protection Authority (EPA) includes all its sites and addresses both offi ce and non-offi ce environmental impacts of its operations. The offi ce operations across seven sites account for 83% of the fl oor 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 strategic direction of the environmental management system is aligned to corporate and public reporting in relation to the environmental impact of its services.


The EPA has integrated its EMS into the wider organisation through:

> ensuring 1 to 1.5 full-time staff are dedicated to managing and coordinating the implementation of the EMS program

> an executive management team member who acts as a sponsor for the EMS by providing strategic direction and leadership

> 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)

> 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.

The adjacent graphic depicts the agency’s contribution to the whole-of-government offi ce-based greenhouse gas emissions.


Relative impact – Environment Protection Authority

Annual tonnes CO2


The EPA has two goals for its EMS over the next fi ve years:

1. To continuously reduce its resource use.

2. To embed sustainability in all decision making across the EPA.

To help achieve these goals the EPA will:

> elevate the endorsement of signifi cant EMS projects and the allocation of funding and resources to a member of the executive team

> 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 four-year sustainability strategy to guide the EMS program and integrate into the corporate planning process.

79


Kilo

met

res

(mill

ion

)

2008–09 2009–10

0.43

2010–11

0.35

Distance


0.54

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

485

5.71

2010–11

679

6.91

Total

Meg

ajoules p

er squ

are metre

5.64

515


Kilo

met

res

(mill

ion

)


2008–09 2009–10

1.28

0.220

1.40

0.255

2010–11

1.31

0.240

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance

Key achievements

Since its baseline year of 2005–06, the EPA’s EMS has brought about the following achievements in resource savings:

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 effi ciency 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-effi cient tap fi ttings and appliances

30% reduction in paper consumption through initiatives such as duplex, multi-page and PIN printing

purchase of 100% recycled offi ce printing and copying paper

39% reduction in fuel use through the initiatives such as the purchase of fuel effi cient and hybrid vehicles

achieved externally assured carbon neutral status every year since 2005–06.

Challenges

The ebb and fl ow 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.


Explanatory notes

Since November 2009, EPA’s head offi ce has been located at 200 Victoria Street, Carlton. The 2010–11 energy data includes the natural gas used for the head offi ce 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%.




Sustainability Victoria


Sustainability Victoria’s EMS implementation is relatively mature and the organisation is now expanding the scope to include infl uencing 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 effi ciency 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 landfi ll

> 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.

The adjacent graphic depicts the agency’s contribution to the whole-of-government offi ce-based greenhouse gas emissions.


Relative impact – Sustainability Victoria


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 benefi tted 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 has maintained accreditation of its EMS to the ISO 14001 standard and engages with its stakeholders and clients on this.

Annual tonnes CO2

292 (0.3% of total office)

81


Kilo

met

res

(mill

ion

)

2008–09 2009–10

0.22

2010–11

0.44

Distance


0.58

Meg

ajou

les

(mill

ion

)

Intensity

2008–09 2009–10

248

0.47

2010–11

245

0.47Total

Meg

ajoules p

er squ

are metre

0.45

230


Kilo

met

res

(mill

ion

)


2008–09 2009–10

0.125

0.105

0.125

0.104

2010–11

0.144

0.09

GH

G p

er 1,000 km (ton

nes C

O2 -e)

Distance


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.

Challenges

Continuing to fi nd new energy-effi cient opportunities within the environmentally sensitive designed fi t-out, which Sustainability Victoria has occupied for fi ve 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 effi cient 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.

Explanatory notes

The vehicle fl eet and air travel graphs include data provided by Sustainability Victoria.




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. Specifi cally, 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 offi cers and other personnel

> facilitating increasing levels of competency in the procurement function.

Appendix

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 specifi c 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 offi ces 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 identifi es 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 fi nancial obligations of Victorian hospitals and health services.

The guidelines focus on openness and probity; section 5.10 specifi es 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 prequalifi cation of contractors and consultants for the Construction Supplier Register.

The Australasian Procurement and Construction Council has also developed a National Prequalifi cation System for Non-residential Building where the construction cost estimate is $50 million and over. 88


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.

2 Commissioner Environmental Sustainability Victoria, Structures for sustainability: Strategic audit, environmental management systems in the Victorian Government 2011, Victoria, 2011.

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/climate-change-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 fi gure $22 billion includes government departments, public non-fi nancial corporations, public fi nancial corporations and other government controlled entities. The fi gure 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 Offi ce, 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.cabinetoffi ce.gov.uk/news/government-calls-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-environmental-procurement-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#Lightingthewaywithourstreetlightingcontract, accessed 11 April 2011.

20 Kristin Ballob, 2008, Sustainable design risk management, Victor O. Schinnerer & Company, Inc.

21 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.

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 Offi ce, 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 Offi ce Buildings, Integrated energy effi ciency retrofi ts and energy performance contracting, Guidance Paper Government Property Group/Energy Effi ciency 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 Offi ce Buildings, Integrated energy effi ciency retrofi ts and energy performance contracting, Guidance Paper, Government Property Group/Energy Effi ciency Council, Australasian Procurement & Construction Council Inc (APCC), 2011.

38 Australasian Energy Performance Contracting Association, op. cit.

39 ibid.

40 A best practice guide to measurement and verifi cation 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 Effi ciency Plans is a regulatory requirement run by the Environment Protection Authority under the Environment Protection (Environment and Resource Effi ciency 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.

Endnotes

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 identifi es 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 defi nes 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-companies-estimate-carbon-emissions and http://www.climatechange.gov.au/en/government/clean-energy-future.aspx, accessed 16 December 2012.

52 For 2010–11 the disclosure threshold for the corporation per fi nancial 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 fi nancial 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.

53 Department of Climate Change and Energy Effi ciency, National Greenhouse and Energy Reporting Register, Commonwealth of Australia, 2011.

54 Mitchell, L. M., ‘The World Bank’, in Energy effi cient 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 Effi ciency 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 fi t-out for new tenancies and 5 Stars NABERS Energy for tenant fi t-out for existing tenancies Victorian Government Offi ce Accommodation Guidelines 2007 and Victorian Government Offi ce Building Standards 2008 set energy effi ciency benchmarks (Green Star and NABERS ratings) for new and existing offi ce buildings.

59 EPA Victoria, EREP guidelines, Environment and Resource Effi ciency 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 fi nancial year: 120 megalitres of water or more and/or 100 terajoules of energy.

62 http://www.epa.vic.gov.au/bus/erep/docs/EREP-registered-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 Offi ce Buildings Guidance Paper: Integrated Energy Effi ciency Retrofi ts 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 Offi ce), 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 Offi ce, Annual report 2010–11.

75 http://www.sustainability.vic.gov.au/www/html/2603-government-sustainable-energy-targets-gset-report-summary.asp.

76 The average waste diverted from landfi ll fi gure is the average of departments, SV, EPA recycling rates as reported in annual reports.

77 http://www.transport.vic.gov.au/projects/sustainable/ev-trial, 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 non-CO2 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.

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