The climate crisis is a significant challenge that requires urgent attention. To address this matter, it is essential to adopt a holistic approach involving all sectors of society, including governments, businesses, and individuals. One significant area in which governments can make an impact is through environmentally sustainable public procurement. By leveraging their purchasing power, governments—with annual expenditures of several trillion dollars on goods, services, and works across the globe—can lead by example, propel the adoption of sustainable practices and technologies to move markets, and promote the transition to a net-zero and circular economy.
However, traditional public procurement regimes (including regulations, policies, and procedures) have primarily prioritized the procurement process—the “how” to buy rather than the “what” to buy. The selection of the winning bid has often focused on the initial purchasing price, which can fail to consider full life cycle costs while not leveraging the private sector’s capabilities to address some of the most pressing issues of our time—to procure more products, services, and works that cause minimal adverse environmental impact.
‘Green’ public procurement, according to international public procurement rules
Some of the seminal international texts on public procurement are the World Trade Organization Agreement on Government Procurement, the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Public Procurement, and the European Union Public Procurement Directives. These texts have influenced the procurement rules of numerous governments worldwide, including all 27 EU member states, Canada, India, the United States, and Zambia. Despite being ten years or older, the texts already, to some extent, include provisions regarding environmental sustainability, allowing procuring entities to use technical specifications such as ecolabels indicating that a product meets a specific environmental standard, and evaluation criteria that consider environmental characteristics.
From a procedural perspective, those international texts on public procurement law have been promoting open tendering (known as sealed bidding in the United States) as the default procurement method, typically based on the lowest price as the only award criterion. This procurement approach, as a general rule, does not allow for input during the tender process on the technical specifications and the way bidders and bids are evaluated.
Existing guidance and debate
In recent years, there has been a significant shift in the approach to public procurement, which is increasingly viewed as a strategic tool to drive innovation, combat climate change, and promote environmental sustainability. For instance, the United Nations (UN) 2030 Agenda for Sustainable Development, which was adopted by all UN member states, specifically addresses the need to “ensure sustainable consumption and production patterns” through 11 different targets. One of these targets aims to “promote public procurement practices that are sustainable, in accordance with national policies and priorities.” Simultaneously, there has been a global trend of refining strategies for using public procurement to reduce environmental impacts. These strategies have evolved, such as incorporating environmental considerations into acquisition planning. Other approaches include requiring products or services to have a certification or other confirmation reflecting environmental attributes, weighing environmental impacts in technical evaluations for award, and excluding bidders if there is substantiated evidence that they have failed to adhere to the minimum standards of environmental laws or have engaged in environmental misconduct. These approaches can also include assessing environmental impacts as part of life cycle costs when evaluating for contract award. In 2017, the International Organization for Standardization (ISO) issued a best-practice guideline on sustainable procurement, known as ISO 20400.
Leadership and management when buying ‘green’
To achieve sustainable public procurement, leadership and management of acquisitions are essential, distinct capabilities that are characterized by different behaviors, skills, and time horizons. With respect to environmentally sustainable public procurement, governments can be encouraged to take a proactive role in setting ambitious sustainability targets and ensuring that their procurement policies align with these goals (for example, by making life cycle costs mandatory for certain purchases).
At the same time, the public acquisition workforce could be further empowered and enabled to increasingly buy “green.” This can entail giving procurement personnel the training, guidance, and development to successfully apply “green” procurement in practice. However, this task is challenging due to the inherent complexity of public procurement. The process is highly formalistic to ensure the efficient use of taxpayer funds and to prevent bias in purchasing decisions. Therefore, careful consideration should be given to requesting specific ecolabels as minimum criteria.
Similarly, defining technical specifications that require the use of low-carbon materials presents its own challenges. Additionally, applying true life cycle costing to evaluate different bids requires a unique skill set. Finally, contracting agencies are also required to avoid any “greenwashing,” meaning they need to implement effective quality control and contract compliance measures to ensure that suppliers deliver on their promises as, for instance, suggested by the UN Environment Programme.
Public–private collaboration
The acquisition workforce at a government entity is responsible for procuring a diverse range of products, services, and construction projects. This can include anything from food, vehicles, and furniture to IT equipment, electricity, cleaning services, maintenance services, and even large-scale infrastructure projects such as roads, bridges, and airports. To this end, a comprehensive understanding of the procurement process and the environmental impact of the items or services being purchased is necessary to ensure that environmental sustainability is appropriately considered. This involves defining appropriate technical specifications, evaluating bidders (often even subcontractors and suppliers), and assessing submitted bids.
By working together, governments and businesses can identify opportunities for innovation and cocreate sustainable solutions that meet the needs of both parties. For instance, ISO 20400 encourages organizations to engage with suppliers and collaborate to achieve sustainable procurement goals. It emphasizes the importance of building long-term relationships with suppliers based on trust, transparency, and shared sustainability objectives.
This collaboration can take various forms, such as joint research and development or public–private partnerships (PPPs) that leverage the expertise and resources of the private sector. Other approaches that have the potential to add value include the following:
- Participating in legislative public procurement consultation. Public procurement frameworks are frequently under reform. By involving private companies—including technical and legal stakeholders—in the consultation process, governments can benefit from their knowledge and experience, ensuring that the resulting legislation is well-informed and practical. For instance, the United Kingdom is currently conducting its Transforming Public Procurement program, which is an initiative to enhance how goods, services, and works are procured for the public sector.
- Sharing best practices. It has been proven to be effective to provide learning opportunities in real-life scenarios, tool kits, guidance notes, et cetera that highlight concrete technical specifications and evaluation criteria. These resources offer practical examples and guidance for how to apply theoretical concepts in real-world situations. By showcasing real-life scenarios, organizations may be able to better understand how to navigate complex situations and make informed decisions depending on the individual case.
- Getting outside support from experts. When defining technical specifications and award criteria, it might be an option for organizations to seek outside support from technical and legal experts. This could apply to total costs of ownership, which evaluate the cost of the product or service being procured over its entire life cycle. Seeking outside support can help to ensure that all costs are properly taken into account, including maintenance, repair, and disposal costs.
- Conducting premarket consultations. Premarket consultations with companies that are likely to bid for a contract opportunity can offer several benefits, including improved market understanding, enhanced competition, risk mitigation, innovation, and collaboration. Engaging with vendors early on, followed by measures to level the playing field, could allow the organization to gain insights into the market landscape, attract a wider pool of potential vendors, identify and address potential risks, and explore innovative solutions.
- Using procurement methods that promote innovation. These methods, such as the competitive dialogue under EU public procurement law, can be useful when the procuring entity’s needs are complex or not fully defined. The competitive dialogue procedure allows the procuring entity to engage in a discussion with prequalified bidders to develop the most suitable solution for their needs, including the specification and use of environmentally sustainable materials.
- Using PPPs. A PPP is a collaborative arrangement between the public and private sectors to jointly undertake a project or provide a service, with effective risk allocation at its core. This means that risks should be allocated to the party that is best able or most incentivized to bear them. In PPPs, capital and operating costs can be paid by the public sector, which takes the risk of cost overruns and late delivery. However, the increased risk transfer in PPPs provides a greater incentive for private sector contractors to adopt a whole-life-costing approach to design, which considers life cycle costs such as operation and maintenance.
Conclusion
Environmentally sustainable public procurement is a significant component in addressing the climate challenge and promoting a circular economy. Although international texts on public procurement already allow for the consideration of environmental sustainability criteria, many governments have not pulled every lever available to promote sustainability in their procurement processes. However, in recent years, there has been a significant shift in governments recognizing the potential of public procurement as a strategic tool to drive innovation and combat climate change. To fully realize the potential of environmentally sustainable public procurement, strong leadership and management are widely considered to be essential, along with enhanced public–private collaboration.