Incorporating Sustainability into Your Public Procurement

With Europe’s binding commitment to net-zero emissions by 2050, public procurement is seen as a crucial element in achieving these goals. In the European Union (EU), procurement is set to account for approximately 14% of the GDP, or around €2 trillion annually. With this kind of spending power, public buyers are in a unique position to drive market transformation, set standards, and equally, demand environmentally friendly products and services. 

By integrating sustainability, procurement processes can ultimately contribute to climate neutrality. But the power of public procurement doesn’t stop there – it’s a trendsetter too. 

When governments and public institutions lead by example, it becomes difficult to ignore. Their visible commitment in prioritising sustainability, showcasing it as economically feasible and socially beneficial, can inspire the private sector to jump on the green bandwagon. This not only mainstreams sustainable practices but also enables healthy competition and pushes the entire market towards a more eco-conscious mindset. This shift supports the long-term environmental goals outlined in the European Green Deal.

While the benefits of sustainable procurement are clear, implementing these practices can pose challenges. Read on to uncover how you can lead the way to a climate-neutral Europe by turning your public procurement processes into sustainable ones.

The European Green Deal: Blueprint for Sustainability

In a circular, competitive economy, "economic growth is decoupled from resource use, while no person and no place are left behind". This core principle is the foundation of the European Green Deal, a framework for action, designed to make Europe the first climate-neutral continent by 2050. 

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Green energy, building renovation, and biodiversity are among the key areas that come to mind when discussing decarbonisation. Yet, public procurement is not to be forgotten. Accounting for around 14% of EU GDP, public procurement is a powerful instrument within the European Green Deal toolbox.

• The Corporate Sustainability Reporting Directive (CSRD)

The EU comes to mandate more detailed disclosures on environmental, social, and governance (ESG) matters with the latest Corporate Sustainability Reporting Directive (CSRD). Closely aligned with the European Green Deal and shaped for enhanced transparency and accountability, this directive holds profound implications for public procurement. 

Public buyers are now tasked to prioritise sustainability considerations when evaluating suppliers, such as carbon footprint, social responsibility, and resource efficiency.  

Country-Specific Laws for a Better Environment

Globally, the Sustainable Development Goals (SDGs) chart the path towards a sustainable and inclusive future. Within the EU, 23 member states have up-to-date plans and specific laws to advance sustainable procurement. 

Several European countries have enacted specific laws to support the EU environment-friendly goals and promote sustainable procurement. Here are some notable examples:

• Norway: Transparency Act

Effective since July 2022, Norway’s Transparency Act mandates large companies to provide detailed reports on how they address human rights and environmental issues throughout their supply chains. Seen as a major step towards ethical and sustainable business practices in the country, the law promotes transparency and accountability, impacting more than 8,000 companies. 

•  Netherlands: Sustainable Procurement Manifesto

With purchasing power exceeding €73 billion annually, the Dutch government aligns its public procurement with the social goal of "commissioning with ambition and procuring with impact". 

Their Sustainable Procurement Manifesto mandates public buyers to consider environmental and social criteria when awarding contracts. This long-term, environmentally focused approach has already brought significant changes to public tenders.  

• France: Anti-Waste Law or Loi AGEC

Every year, €630 million worth of unsold products are destroyed in France, generating significant waste per person and causing environmental damage that threatens biodiversity. 

In response, France initiated a transition towards a circular economy with the Anti-Waste Law enacted in 2020. Public procurement supports these efforts by prioritising durable, repairable, and recyclable products. Since the law's implementation, plastic waste has been reduced by 15%.     

• Germany: Federal Climate Change Act

To accelerate its path to climate neutrality, Germany adopted a crucial reform known as the Federal Climate Change Act. This law sets legally binding targets to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels. 

The Act outlines specific measures across various sectors, including transport, construction, and energy. 

How does this impact public procurement? Public Buyers now prioritise low-emission and energy-efficient products and services, thus supporting Germany's climate objectives. This shift ensures that procurement decisions align with the nation's ambitious environmental goals and contribute significantly to reducing the carbon footprint.

Incorporating Sustainability into Your Public Procurement  

With the European Green Deal and various national laws in mind, it's crucial to understand how to integrate sustainability into public procurement processes. This section will provide practical steps and strategies to help your procurement activities align with environmental goals and social responsibility. By exploring these actionable insights, you'll be equipped to make a meaningful impact on sustainability through your procurement decisions.

1. Sustainability Criteria in Tenders

Incorporating sustainability criteria into your tenders involves adjusting solicitation requirements to include environmental considerations. This implies specifying the use of eco-friendly materials, requiring energy-efficient services and products, and establishing clear weighted criteria in your evaluation metrics.

Depending on procurement objectives, criteria such as local supplier recyclability, percentage of renewable energy use, and attention to worker well-being can be included. By applying these measures, sustainability is ensured throughout the procurement process, filtering suppliers with strong environmental credentials.

2. Life Cycle Costing (LCC)

Consider Life-Cycle Costing (LCC) when making procurement decisions. While the purchase price is important, it's just one part of the overall cost of owning and disposing of a product or service. LCC covers all expenses incurred throughout the product's lifetime, and the EU provides various sector-specific calculating tools to aid in this process.

Sustainable options often prove to be more cost-effective in the long-term due to lower operating and disposal costs. To implement LCC effectively, start by conducting comprehensive analyses for major procurements. Additionally, ensure your procurement officers are trained in LCC methodologies, and use these calculations to inform your procurement decisions. 

3. Eco-labels and Certifications

With so many available product options, eco-labels and certifications simplify the process of finding sustainable alternatives to conventional ones. Eco-labels serve as beacons for sustainable choices, promoting the adoption of responsible product technologies and consumer behaviour while also benefiting the environment.

Encourage your suppliers to acquire recognized eco-labels and integrate them into your selection criteria. By prioritising products with these certifications, you contribute to a greener and more sustainable procurement process. 

4. Pre-Procurement Market Consultations

Involving suppliers and stakeholders early in the procurement process can unveil innovative and sustainable solutions. Organising pre-procurement market consultations provides a platform to communicate your sustainability objectives and gather valuable feedback from potential suppliers.

By engaging with the market at this early stage, you foster collaboration and ensure alignment with your sustainability goals, ultimately leading to more effective procurement outcomes. These consultations serve as a vital step in cultivating partnerships and driving positive change within your procurement practices.

5. Monitoring Sustainability Progress

Most EU Public Procurement Units release annual sustainability reports to highlight the environmental and social effects of public contracts. Transparency in this process is vital, as it promotes accountability and allows stakeholders to observe the impact of sustainable procurement policies. This openness can drive continuous improvement and innovation, highlighting both successes and areas needing attention. Moreover, it ensures that procurement strategies are aligned with broader goals like reducing carbon emissions, minimising waste, and promoting social equity.

Access to detailed sustainability performance metrics allows procurement managers to refine their strategies based on solid evidence rather than assumptions. This data helps identify which suppliers best meet sustainability objectives, spot potential risks, and find opportunities for more sustainable practices. 

6.  Cultivating a Culture of Sustainability

Creating a culture of sustainable procurement demands dedication across all organisational levels. Integrating sustainability goals into your overarching strategy involves providing training and allocating resources for your procurement staff. By prioritising sustainability and empowering your team with the necessary tools and support, you lay the foundation for a culture that values ethical and green procurement practices. 

Encouraging open communication, fostering collaboration, and recognizing achievements in sustainable procurement further solidify this culture, ensuring lasting impact and positive change within your organisation.

Embrace Sustainable Procurement with Mercell

Transitioning to sustainable public procurement is not just an obligation under the European Green Deal; it is an opportunity to lead by example and make a significant impact on the environment. 

Embracing sustainability in procurement processes requires the right tools to ensure efficiency and compliance. A robust, unified tender platform, like Mercell, can help you embed sustainability at every stage of the procurement lifecycle.  

Procurement Planning: Embed sustainability right from the start by setting clear procurement goals aligned with your sustainability objectives. Your organisation can rank suppliers based on rigorous sustainability criteria and detailed questionnaires to ensure your procurement aligns with sustainable practices. Whether planning purchases per singular procurement or for entire categories, our platform ensures all internal purchasing needs are reported and managed according to your established sustainability goals.

Sourcing & Tendering: Drive sustainable procurement by incorporating sustainability criteria into your sourcing and tendering processes. Prompt suppliers to submit proposals that address key ESG considerations. Benefit from a comprehensive library of default sustainability criteria, enabling all buyers to maintain high sustainability standards consistently.

Contract Lifecycle Management: Ensure ongoing compliance and performance with robust contract management tools. Make sure that all contractual obligations are met with a focus on environmental and social impact, by monitoring key performance indicators (KPIs) that reflect your sustainability goals. 

Supplier Relationship Management: Build strong, sustainable partnerships with our advanced supplier relationship management tools. Set and monitor concrete sustainability goals, evaluate supplier performance, and establish KPIs to ensure transparency and accountability. Key performance indicators (KPIs) may include: 

• Percentage of contracts incorporating sustainability criteria.

• Reduction in greenhouse gas emissions from procured products.

• Volume of waste reduced or recycled through procurement efforts.

Our platform helps you maintain up-to-date supplier certificates and compliance documents, streamlines pre-qualification, and ranks suppliers based on sustainability criteria. This transparency demonstrates your commitment to sustainability and provides valuable insights to improve your procurement strategies. 

With our platform, you can confidently report and document your suppliers' sustainability efforts, ensuring compliance with the Transparency Act, the EU taxonomy, or CSDD requirements.