March 21, 2022
May 11, 2022
While private sector companies have realised the importance of looking to their supply chain to advance sustainability efforts, global government action on procurement has been generally slower. As this can often be a daunting process - and to mark the first ever World Sustainable Procurement Day - we want to share some key insights from our work helping the public sector tackle this challenge.
In recent years, we have become more aware of how our decisions as individual consumers can have an impact in the environment, as well as in our general social and economic context. Because of this, we are seeing a shift in purchasing patterns, with many of us moving away from products which are made out of plastic, questioning companies’ gender equality policies, or choosing to buy locally.
As a response, it has become crucial for private sector companies to measure, and communicate their sustainability efforts. This has included looking at their supply chain, and understanding the environmental, social, and economic impact of their own purchasing decisions.
Although there is still a lot to do, we have seen great progress from consumer and private sector efforts. However, despite great initiatives, such as net zero goals commitments, we are yet to see the same concrete actions in the public sector.
Public purchasing represents an impressive 15% of global GDP, which is equivalent to around 13 trillion USD per year. If an individual consumer has the power to minimise their environmental impact by not buying products made of single-use plastic, imagine what governments can achieve by introducing sustainable public procurement practices.
Governments have the opportunity, and the responsibility, to leverage the power that public procurement offers to drive sustainable development.
Hoping to inspire action, at PUBLIC, we have put together seven key insights that we have learnt from our work in this area:
A common misconception among public procurement officials around the world is that existing regulations make it difficult, if not impossible, to implement sustainable procurement. However, the reality is that almost all compliance frameworks will allow you to introduce sustainable procurement to some extent.
Imagine you are procurement official or category lead procuring paper, and your regulation mandates that you have to award the contract to the lowest price bid. It might seem that this will prevent you from favouring a supplier who offers recycled paper, if their price is not the lowest.
There are lots of ways around this: with two worth calling out here. First, even if you can’t control how you use price vs. quality in your evaluation criteria, you can set your requirements in the essential criteria. So, even if you have to select the lowest-price bid, you can make sure that you select a supplier with sustainability credentials (or recycled materials), you can do that by setting it in the essential requirements for the selected supplier. The second way is to look at broader costing approaches, such as life-cycle costing, to ensure that lowest-price bids can account for some of the longer-term cost benefits associated with more sustainable supply chains.
Sustainable procurement is new for everyone, including your suppliers. Having recognised this, some companies in the private sector organise events where they engage in conversations with their suppliers, discussing the best ways to align sustainability efforts.
In the public sector this approach becomes essential to ensure that enough suppliers can meet what you ask, and avoid setting criteria that can only be met by large organisations, leaving out SMEs and local companies.
Also, remember that only looking at your immediate suppliers is not enough, if you are buying a computer, you have to consider the labour rights of the people working in the manufacturing factories, not only those in the company selling you the equipment.
When it comes to sustainable procurement, it is difficult to know where to start, and you might often not have the resources to consider sustainability for all your contracts. This is why many countries choose to prioritise certain procurement categories.
For example, did you know that construction is one of the six sectors responsible for 70% of CO2 emissions associated with public procurement? This might be a good argument to prioritise construction. However, when prioritising, you should also consider the resources that are available to you. Depending on this, you might decide to start with a simpler category, where sustainability accreditations are more well-established, such as ICT and office furniture..
Good data is essential to conduct any procurement process effectively, but it becomes even more crucial when it comes to sustainable procurement. If your goal when implementing sustainable procurement is to reduce CO2 emissions, you will only know whether your approach is working if you capture the relevant data (e.g. tonnes of CO2 emissions associated with a contract).
Depending on your goals, you will need to think about what variables you need to measure on a contract-by-contract basis (e.g. number of contracts awarded to SMEs, hours spent by contractors conducting health and safety training, etc.). This is the only way to know, and communicate, whether your approach is actually delivering the impact you want it to achieve.
Even though sustainable procurement is a relatively new area, there are already a lot of helpful resources out there, so you don’t need to start from scratch. You can find a lot of useful materials created by international organisations such as UNEP; national, regional, and local governments who have championed implementation; and industry organisations in different sectors.
In fact, there is so much that it can be overwhelming. We definitely found it challenging to make sense of everything when we first started to look at it. If you are just starting, and are struggling to navigate these materials, or decide which are most relevant to you, let us know and we would love to help!
Finally, there are a lot of companies who are designing technology to make the process of procuring sustainably so much easier. This includes companies such as Responsibly, which integrates with whatever procurement software you use, and allows you to profile and compare suppliers across category-relevant sustainability impact and risk dimensions. Other companies, such as Ignite Procurement, helps you gain a data-driven picture of your category and contract spend, which also facilitates the process of collecting and reviewing relevant sustainability data.
To sum up, there are many things you can do to start procuring more sustainably, a lot of resources are already available, and with a bit of guidance, it is not as complicated as it seems!
This World Sustainable Procurement Day, organised by the Sustainable Procurement Pledge, is a great opportunity to reflect on the role that public procurement can play in driving sustainable development. The reality being that, however challenging it might be, governments can’t avoid looking at their supply chains for much longer.
If you are interested in public sustainable procurement, but don’t know where to start, let’s have a chat and see how we can help!