10 steps to greener public procurement

18 January 2022

Public procurement across the world is responsible for 7.5bn tonnes of direct or indirect greenhouse gas (GHG) emissions – or 15% of the global total, according to a report.

The report, Green Public Procurement: Catalysing the Net-Zero Economy by Boston Consulting Group (BCG) and the World Economic Forum (WEF), said global government procurement processes emit seven times as much carbon as the aviation industry.

Three-quarters (75%) of the emissions associated with public procurement were produced by industries dependent on public spending, including defense and security, waste management services, and construction.

The report said pursuing net-zero emissions in public procurement would trigger new jobs and private investment, boosting global GDP by $6tn by 2050. Cutting emissions associated with public procurement by 40% will raise costs by 3%, according to the report.

However, decentralised procurement activities, competition for green funding, and a lack of transparent emissions data will complicate decarbonisation efforts.

The report said a 10-step framework produced by the Mission Possible Partnership, a decarbonisation alliance including the WEF, could help procurement professionals meet their goals:

1) Collect data 

Identifying heavy-emitting suppliers to create transparency in baselines and targets is the first priority of a green procurement framework.

The report states that countries should first use available data to create a baseline understanding of the challenge ahead of them. Procurement officials should map their supply chains, and identify suppliers for each focus area. 

Collecting additional data from these suppliers will allow them to use industry benchmarks to calculate each product’s environmental impact across its lifecycle, from supply of raw materials to disposal and recycling.

Successful decarbonisation also requires proper data management and information systems, which can be achieved through implementing artificial intelligence, for example.

2) Prioritise efforts 

Governments should assess suppliers based on economic value and set targets.

Governments need to agree common metrics, which should be user-friendly, using existing standards and common assessment tools.

3) Optimise products 

GHG reduction should be the ultimate goal by which products are optimised.

In order to comply with emissions-cutting legislation, procurement officials should identify which aspects of supply chains can be optimised. 

Across the lifecycle of a product, this could include designing for low-carbon materials, optimising transport routes and vehicle loading, and switching to renewable fuel sources.

4) Develop a roadmap 

Factors including cost, impact and feasibility should be taken into consideration.

With data gathered and legislation set, the report said the next step was to identify which levers can be used to potentially reduce emissions. These will include both government operations and supplier activities, which can then be assessed by balancing cost against environmental impact.

5) Define standards

Procurement officials must define clear and sustainable standards for both internal and external operations, with clearly defined consequences for suppliers who fail to meet them.

6) Prioritise suppliers 

Suppliers should be assessed and prioritised on the basis of progress in setting and reaching emissions targets.

Two factors should be considered: capacity to influence specific suppliers, and each supplier’s ability to meet its targets. All contract specifications should then relate to specific standards and targets, which should be detailed without being overly prescriptive.

7) Work with industry coalitions 

Promotion of decarbonisation and certification of companies and materials is a high priority.

Spreading best practices in decarbonisation will require collaboration and industry coalitions. These coalitions will aid in company and material certification, as well as promotion of net zero activities and goals.

8) Join buying groups 

Buying groups will help to create markets for low-carbon products. 

9) Realigning organisations

Steering models, individual responsibilities, and communications processes will require adjustment throughout any move to greener procurement processes.

This is necessary to ensure clear decision rights and accountability across complex institutions. Implementing a central green procurement hub will help overcome communication issues, as well as providing leaders with the detail necessary to manage multiple initiatives.

10) Align across agencies 

Boosting procurement capabilities and upgrading information systems is part of the longer term goals of the green procurement framework.

Improving procurement capabilities will require understanding sustainability standards and goals, setting emissions abatement targets, and defining implementation plans. The report stresses day-to-day operations should embed learning interventions. 

As public procurement activities are highly decentralised, policies, baselines and targets will need to be aligned across local and national procurement agencies.

Joerg Hildebrandt, BCG managing director and senior partner and a co-author of the report, said: "Government spending power is often overlooked in discussions of paths to net zero. But public procurement's sheer scale and spending power can exert considerable influence in combating global warming.

"There is a short-term green premium for governments when transitioning to more sustainable products and services. The increased cost will decline over time, however, as new technologies are scaled up, making the production of net-zero products more efficient.”

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