Sustainability – designed to be signed, sealed and delivered Strategic Audit Environmental management systems in the Victorian Government January 2012 Published by the Commissioner for Environmental Sustainability Melbourne, Victoria, January 2012. ©The State of Victoria, Commissioner for Environmental Sustainability 2012 This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. Printed by: Sovereign Press 6 Traminer Crt Wendouree Victoria 3355 Printed on recycled paper. Authorised by the Victorian Commissioner for Environmental Sustainability, 16/570 Bourke Street, Melbourne, Victoria 3000 ISBN 978-1-921147-18-0 For further information contact the Offi ce of the Commissioner for Environmental Sustainability, phone +61 3 8636 2197 or visit http://www.ces.vic.gov.au Disclaimer This report may be of assistance to you and every effort has been made to ensure that the information provided is correct. It is based largely on data and information provided by the Victorian Government. The Commissioner for Environmental Sustainability does not guarantee that the report is without 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. Contents From the commissioner ________________________________________________________________ 5 Designing sustainability with contracts ______________________________________________________ 5 Key Messages ___________________________________________________________________________ 7 Victorian Government Architect’s perspective ___________________________________________ 8 Why design matters ______________________________________________________________________ 8 1 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 2 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 3 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 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. From the commissioner 5 From the government architect 8 Part 1 Sustainability device 12 Part 2 Designed and applied 24 Part 3 Environmental management 42 From the commissioner 5 Designing sustainability with contracts Contractual relationships require parties to recognise The preparation of a strategic audit report is a statutory function of my role as the Commissioner for Environmental Sustainability. their mutual dependence Specifi cally, the presiding Act, the Commissioner for Environmental Sustainability Act and thus their mutual 2003 (the Act) (s. 8), stipulates that the commissioner must conduct annual strategic interest in developing a audits of, and prepare reports on, the implementation of environmental management 3 systems by Victorian Government departments and agencies. cooperative relationship. The Act (s. 3) also defi nes an environmental management system (EMS) as: ‘the Contracting is therefore organisational structure, policies, practices, processes and procedures for implementing not only a fi nancial or environmental management, including systems for designating responsibility for and performance issue; it is allocating resources to, environmental management’. also a people issue. 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. The strategic audit Strategic audit methodology process is conducted The audit is evidence-based, using information obtained from departments and agencies on the basis of a ‘no 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 surprises’ approach. evaluation of data and the analysis of trends. Information obtained from annual