CHAPTER 3

GREEN ECONOMY

NORDALILAH BINTI WAHAB, POLISAS

 INTRODUCTION
• A green economy is “one that results in improved human well ‐ being and
social equity, while significantly reducing environmental risks and
ecological scarcities. It is low carbon, resource efficient, and socially
inclusive. In a green economy, growth in income and employment should
be driven by public and private investments that reduce carbon
emissions and pollution, enhance energy and resource efficiency, and
prevent the loss of biodiversity and ecosystem services” (UNEP, 2011)
• A green economy as “an economy that results in improved human
well‐ being and reduced inequalities, while not exposing future
generations to significant environmental risks and ecological scarcities.
It seeks to bring long term societal benefits to short term activities aimed
at mitigating environmental risks. A green economy is an enabling
component of the overarching goal of sustainable
development.” (NCTAD, 2011)
CLUSTER OF GREEN ECONOMY
Renewable Energies

Green Building

Clean Transportation

Water Management

Waste Management and

Sustainable Land Management

 8 CLUSTER IN THE MALAYSIAN
C L US TER GR O UPS C O M PO N EN TS

Renewable Energies Solar, wind, geothermal, wave, bio-Gas and fuel cells

Green Buildings Residential and commercial building, energy and water efficiency,
green materials, green design

Clean Transportation Bio fuels and other fuels of the future, electric and hybrid cars, public transportation, ride sharing

Water Management Water recycling, minimization of water use, grey/rainwater systems

Waste Management Reuse-reduce-recycle-rethink, minimization of environmental pollutants and municipal waste, toxic and hazardous
waste, sustainable products, sustainable packaging

Land Management Organic agriculture, habitat / biodiversity conservation / restoration, forestry / parks, reforestation / aforestation, soil
stabilization

Sustainable Economy Eco-efficiency, eco-effectiveness (energy and resource efficiency), sustainable economy

Sustainable Management in Sustainable tourism, palm oil related products, financial services, wholesale and retail, information and
Industries and Service Sectors communication technology, education, electrical and electronics, business services, private healthcare, and topics
related to “sustainable cities”
 The Wellbeing Principle - The green economy
enables all people to create and enjoy prosperity

The Justice Principles - The green economy

promotes equity within and between generations
GREEN
ECONOMY The Planetary Boundaries Principle - The green
economy safeguards, restores and invests in nature
PRINCIPLES
(GEC) The Efficiency and Sufficiency Principle - The green
economy is geared to support sustainable consumption
as well as sustainable production.

The Good Governance Principle - The green economy is

guided by integrated, accountable and resilient
institutions.
SUSTAINABLE CONSUMPTION AND PRODUCTION (SCP)

• SCP is a comprehensive cross-cutting concept.

• Aims to do “more and better with less” by reducing resource
use, degradation and pollution along the life cycle of goods
and services, to enhance the quality of life and well-being for
all.
• The main concept of SCP is not to focus only on any one of
the three aspects of economic growth, environmental
protection or social inclusiveness but to be holistic and
combine all the three aspects into one integrated concept.
 DEFINITION SCP

• “the use of goods and services that respond to basic needs

and bring a better quality of life, while minimizing the use of
natural resources, toxic materials and emissions of waste and
pollutants over the life cycle, so as not to jeopardize the needs
of future generations” (Olso Symposium, 1994)
• In simple terms, SCP is a holistic approach that encompasses
the triple bottom line of sustainable development (social,
environmental (or ecological) and financial), focusing on
increasing efficiency and preventing unnecessary wastage of
resource.
The pattern that can be applied to encourage development and diffusion of
green product and services are as below:
1. Using alternative energy sources such as renewable energy. Renewable energy is an
alternative to the traditional energy that relies on fossil fuels, and it tends to be much less
harmful to the environment. Renewable energy is energy that has been derived from
earth’s natural resources that are not finite or exhaustible. The example of renewable
energy is as below:
a) solar energy
b) wind energy
c) hydropower
d) geothermal energy
e) biomass energy
2. Reducing waste through 4R practice
3. Providing environmentally related products
4. Raising consumers’ awareness through education and public awareness programme
5. Using ‘economic instrument’ such as government procurement (Perolehan hijau as per
practice in Malaysia)
 GREEN PROCUREMENT

• Green procurement (GP) is the purchase of

environmentally friendly products and services,
the selection of contractors and the setting of
environmental requirements in a contract.
• Environmentally products and services is refer to
products, services, equipment or systems that
minimize degradation to the environment, have
zero or low green house gas (GHG) emission,
safe for use and promote health and
improve environment for all form of life, conserve
the use of energy and natural resources, and
promote the use of renewable resources.
 GREEN PROCUREMENT PRINCIPLES
In implementing Green Procurement, the principles listed below
must be observed:
• Emphasize pollution prevention early in the procurement process
• Include environmental criteria as part of the normal procurement
process
• Examine multiple environmental attributes throughout a product’s
or service’s life cycle
• Compare relevant economic and environmental impacts when
selecting products and services
• Collect and base procurement decisions on accurate and
meaningful information about economic and environmental
performance
 BENEFIT OF GREEN PROCUREMENT
i. Brand Image: An organization that has gone green is seen as a good corporate citizen. This increases its image in
the eyes of the public
ii. Customer Satisfaction: An organization that goes green in response to customer concerns increases its levels of
customer satisfaction, a key point in customer retention.
iii. Reduced Risk: Hazardous chemicals are just accidents, and lawsuits, waiting to happen. With green
purchasing, can offset financial and environmental risk, rather than just inheriting it from your suppliers.
iv. Cost Reduction: Going green doesn’t cost more. Most of the time it actually saves money, especially when the
new products use less energy, generate less waste, and last longer. Going green can reduce the following costs,
among others:
• hazardous material management costs
• operational costs
• repair and replacement costs
• disposal costs
• health & safety costs (which often come in the form of liability insurance and expensive settlements)
v. Increased Shareholder Value: A better brand with happy customers who keep coming back and drive up sales.
 GREEN PROCUREMENT PROCESS

The major core of processes in implementing the green

procurement are as follows:
i. Conducting demand management - Prior to the purchase of products and
services, pre-consideration must be carried out such as different
product/services types and technical approaches
ii. Setting green criteria - Articulate the green requirement so that suppliers
know what is needed
iii. Preparing procurement evaluation - Request for quotation (RFQ) or tender
document
iv. Verification process - Method to identify green product and services based
on label, certification and relevant document
v. Monitoring and evaluation - Gathering data procurement and analyze the
impact
 GREEN PROCUREMENT PROCESS
Indicator Implementation Level Environmental Impact Budget Impact
Description How many green products How much reduction in How much costs
procured? carbon emission? saving/increase?
Required data • Product type • Number of products • Estimated value of the
purchased green versus
• Value
conventional product
• Product type and
• Number of procurements
carbon footprint of the • Procured value of the
• Mixed procurement product green
• Green criteria
Measurement • Overall value of Formula: • Product category
products/services
Total number of product • Average price
• Value of green products (by purchased by product type differences between
item) times with carbon estimated and actual
reduction of the product price for
• Value of products/overall
green/conventional
procurement value
product.
 GREEN PRODUCT AND SERVICES
Some criteria commonly use in describing green products and services are:
• Safe to use
• Using energy more efficiently
• Reduce Green House Gas (GHG) emission
• Reducing the use of natural resources
• Reducing the amount of hazardous and toxic
• Reduce the content of ozone depleting substances
• Reduce air and water pollution
• Using recycled material
• Use of renewable resources
• Conversation of natural forest
 ECO LABELLING
• Eco-labels are affixed to products that pass eco-friendly criteria
laid down by government, association or standards certification
bodies. The criteria utilize extensive research based on the
product's life cycle impact on the environment.
• Examples of eco-labels include the MyHIJAU Mark for
Malaysia, Japanese Eco Mark, International Energy Star, USA
Green Seal and UK BREEAM.
• Eco-labels differ from green symbols and environmental claims
in that the latter are unverified and created by the manufacture
or service provider.
• Products awarded an eco-label have been assessed and
verified by an independent third body and are guaranteed to
meet certain environmental performance requirements.
 EXAMPLES OF ECO LABELLING
• MyHIJAU Mark - The official label that recognises certified
green Products and Services verified by Green Tech Malaysia
to meet local and international environmental standards.
• Tax Incentives for Green Products and Services - The
purpose of the incentive is to strengthen the development of
green technology through Green Investment Tax Allowance
(GITA) for the purchase of green technology equipment/asset
and Green Income Tax Exemption (GITE) for green technology
service provider.
 SCOPE OF GREEN TECHNOLOGY INCENTIVE

Category Scope

Green Investment Tax Applicable for companies that acquires qualifying green
Allowance (GITA) technology asset and listed under the MyHIJAU Directory

Green Investment Tax Applicable for the companies that undertake qualifying
Allowance (GITA) Project green technology project for business or own
consumption
Green income tax Applicable for qualifying green technology service
Exemption (GITE) Services provider companies that are listed under the MyHIJAU
Directory