Sustainable Procurement — 7 Real Life Examples
Sustainability in procurement may seem easy in theory. However, the actual implementation of sustainability in supply chain and procurement is difficult as you have to take a lot of things into consideration.
For this article, we will discuss some procurement examples that institutions have done to implement sustainability. Thus, this will allow you to learn their techniques on how to start implementing sustainability in your company.
Additionally, this will let you assess your company’s readiness for the implementation of sustainability in your supply chain.
Sustainable Procurement Defined
Sustainable procurement, also known as green procurement, refers to how businesses can reduce their impacts on the environment. In sustainable procurement, you acquire goods or services that have low environmental, social, and economic impact.
Sustainable procurement integrates the corporate social responsibility (CSR) principles into an organization’s procurement process. Thus, ensuring to meet the requirements of the stakeholders while helping the environment.
The commitment of companies to sustainable procurement enables them to meet their values all throughout the life cycle of their products or services.
The policies and strategies for sustainable procurement are based on the idea that companies need to future-proof themselves with market demands, especially the scarcity of supply of raw materials.
Sustainable procurement has four main aims which are:
- Reduce the impacts of goods or services across their life cycle and through the supply chain.
- Decrease the demand for non-renewable resources
- Guarantee fair contract prices and terms are respected and applied
- Promote equality and diversity throughout the supply chain
Just like any other industry, there are guidelines that companies must follow in order to make their processes effective and efficient. ISO 20400 is an international standard that provides guidelines on procurement.
The guideline monitors the most positive environmental, social, and economic impact on the whole life cycle of their products or services. Also, it provides the understanding of:
- The definition of sustainable procurement
- The sustainable impacts across the different aspects of the procurement process
- The practical implementation of sustainable procurement
This standard applies to any organization regardless of its size, industry, and location. However, you must take note that the ISO 20400 does not replace the legislation, ethical framework, and policy that regulates the procurement process of an organization.
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The Approach to Sustainability
Sustainable Procurement Examples
Helsinki, the capital city of Finland, is home to more than 1.5 million people. The local government of Helsinki is striving to reduce its carbon emissions which are due to the heating of buildings, electricity consumption, and traffic.
Due to this, Helsinki has created ways to mitigate the effects of climate change and reduce its carbon emissions through public procurement.
Helsinki has implemented the Carbon Neutral Helsinki 2035 Action Plan. This action plan directly targets the areas of the city which emit more greenhouse gas.
The procurement objectives of the local government of Helsinki are to reduce the project’s climate and environmental impacts by putting in place several minimum requirements and assessment criteria to steer the design and construction.
The specifications of the materials were scrutinized to ensure that sustainability requirements are met. Additionally, the tenders for awarding the contract were evaluated according to a scoring method based on points according to qualitative and quantitative criteria.
The end goal of improving and developing new procurement criteria is to support Helsinki’s carbon neutral actions and achieve carbon neutrality by 2035
What can we learn from it?
We can learn that sufficient emphasis must be enforced on the climate criteria. This is to ensure that the climate and environmental criteria selected for the scoring have a real impact and that bidders also see that investing in them is sensible.
Also, we can learn that market dialogue is important. It is important to know and listen to the market as the environmental and climate criteria were new to procurement.
Market dialogue ensures that tenderers are aware of the new criteria and they can adjust to your requirements. Thus, it allows you to source a much more affordable material as many bidders will submit their requirements as they already know what you want.
The Environment and Resources Authority (ERA) in Malta has been formulating ways to attain green procurement by applying a combination of social and environmental criteria.
It aims to minimize the impact of its procurement on the environment and improve the quality of life of its citizens.
The ERA has published a tender mandating tenders to follow the criteria it has to reach its GPP targets. Malta’s action plan for procurement, from 2019 to 2025, requires all contracting authorities to include green public procurement in their criteria in tenders for cleaning.
The Environment and Resources Authority (ERA) has been applying environmental and social criteria to reach sustainable procurement targets.
The ERA has required bidders to submit proof that the products used carried the EU Ecolabel or that the quantity and the list of substances for cleaning are submitted if it does not carry the EU Ecolabel.
It also required that the bidder’s employees are all healthy and they work in a safe environment where all safety measures are available.
The mandatory criteria of the ERA have helped in the implementation of sustainable procurement in Malta, especially in the market of cleaning products as the national government is the biggest procurer in the country.
What can we learn from it?
The 2nd national action plan of ERA for GPP will be put into effect from 2022 to 2027 where bidders will be audited to determine if the contracts comply with the criteria. This will help all parties to have a better understanding of how GPP is implemented at an operational level.
Another thing that you must take note of is training procurement officials on GPP. Thus, it allows for a more qualitative tender and procedures.
The municipality of Gabrovo, located in central Bulgaria, decided to upgrade its entire street lighting network from sodium-vapor street lamps to light-emitting diode (LED) lamps. However, the size of the investment is too big to modernize the street lighting network.
The municipality of Gabrovo has decided to use an Energy Service Company (ESCO) model due to the size of the investment it needs to modernize the entire street lighting network.
The energy audit has found two main energy-saving measures. First, all high-pressure sodium lamps should be changed with LED luminaries which meet the regulatory requirements for the class of street.
The second recommendation was that a new intelligent management system should be put in place to allow remote and centralized control of the lighting. Thus, this saves 150 annual lighting hours.
The bidders would need to have an environmental management system according to an ISO standard or equivalent with a scope of activities relating to the implementation of production, design, installation, and dismantling of road lighting equipment to be qualified.
Also, the municipality of Gabrovo used functional specifications that provided bidders the flexibility to propose solutions that best meet the needs of the city. It also lay down some of the problems that the street lighting system faced such as the cable network.
As a result of the municipality of Gabrovo’s commitment to energy efficiency and clean technology implementation over the past decade, the municipality has been awarded the 2021 European Green Leaf Award.
What can we learn from it?
Gabrovo has utilized a competitive dialogue in negotiating with its bidders. The dialogue lets the bidders propose the best solutions for the city.
This resulted in the creation of innovative ideas to increase the efficiency and effectiveness of the solution. The negotiation stage also helped Gabrovo to fully understand its requirements.
Also, the bidders are able to find solutions for the cable network problem to ensure its maintenance and proper operation due to the transparency of the municipality of Gabrovo.
The City Council of Barcelona wants to engage with the electronics industry to promote innovation while strengthening ecological and social standards. It wants to encourage the electronics industry to build a more transparent mining supply chain.
However, the challenges in upcoming years will be to develop transparency beyond the refineries in order to allow for monitoring, mitigation, and prevention, and to work toward sustainable improvements for workers and communities affected by mining.
The City Council of Barcelona began to work on a tender that focuses on workplace IT equipment to meet the requirements of the Procurement Plan 2019-2020.
Also, it has put in place award criteria to award points to bidders who present a long-term strategy to increase supply chain transparency.
Additionally, the Barcelona City Council has come into agreement with two reuse organizations Pangea and Ereuse to contribute to a circular and social economy that avoids premature recycling.
What can we learn from it?
The Barcelona City Council has experience regarding social and sustainable procurement. We can learn from here that political support is significant to signal the commitment of a city to an issue in the longer term to incentivize change in the market.
The Barcelona Metropolitan Area, home to over 3.2 million people, approved its Climate and Energy Plan 2030 which creates a series of actions necessary to fight climate change to achieve energy transition goals.
The action includes creating a network of metropolitan photovoltaic (PV) car-parking pergolas which are equipped with a charging spot for electric vehicles.
The local government of Barcelona wanted to put solar charging stations to provide clean energy to charge electric vehicles and supply clean energy to local public buildings when no car is around.
The Barcelona Metropolitan Area published a call for nine solar charging stations in November 2022. It was installed across the metropolitan area in various municipalities.
The solar charging stations need to guarantee that they could supply the necessary energy to fully charge an electric vehicle in six to eight hours.
The contract was divided into three lots. The first and second lots dealt with the supply installation of solar charging stations and their maintenance for the first year of operation. The last lot sought experts who could help validate the technical requirements needed as part of the complex management installation.
What can we learn from it?
Solar PV charging stations are so complex that it requires the right technical expertise in procuring and installing one. The selection criteria help the Barcelona Metropolitan Area to select suppliers who have the right knowledge and experience regarding the charging stations.
The Region Stockholm is responsible for providing health care and public transport to the entire Stockholm region. It centrally procured ICT for all of its operations. All 22 regions in Sweden work together to manage their sustainability goals.
With their collaboration, they identified eight high-risk categories in their procurement. The Region Stockholm took on the responsibility for ICT which has many human rights, labor rights, and child labor violations.
Region Stockholm has applied environmental requirements for ICT procurement since 2010 and implemented binding contract conditions to address the social criteria.
In 2018, it organized extensive market engagement activities to understand the market’s perspective on their planned use of environmental and social criteria in ICT tenders.
The engagement allowed the Region Stockholm to develop its tenders that challenged suppliers while considering their ability to respond to social criteria sustainably.
The Region Stockholm is utilizing various award criteria in their tenders, choosing the tailored criteria in a specific tender based on the type of products and readiness of the market.
Also, the award criteria of Region Stockholm is rewarded to tenderers who sourced from brands that actively work to protect workers from harmful chemicals. An award criterion can reward compliance with the International Chamber of Commerce rules to fight corruption.
What can we learn from it?
We can learn here that it is important to have binding contractual requirements that protect human rights, workers’ rights, and anti-corruption throughout the supply chain. As sustainability does not only protect the environment but also the rights of people who are part of or affected by a company’s supply chain.
The University of Cagliari (UNICA), located in Sardinia, Italy, is a public higher education institution that has 25,000 enrolled students and 3,00 staff.
The UNICA is highly committed to promoting the reduction of the usage of disposable plastic items with the goal of eliminating them completely.
It adheres to the Network of Sustainable Universities (RUS) engaging in issues of environmental sustainability and social responsibility among public and private university institutions.
Various steps have been undertaken by UNICA to eliminate the usage of disposable plastic items such as the ban on the use of plastic bottles during academic meetings, conferences, and events.
His current initiative on vending machines has a good standing in the context of the EU plastics strategy and EU Directive on single-use plastics. Thus, the wastes have been given a new form and turned into a novel product.
The subject matter of the contract for the procurement is the spaces intended for the placement of vending machines and the procurement of food and beverages. These subject matters must be in accordance with the policy of the University for the reduction of plastic and sustainable waste management.
The foods and beverages have technical specifications requiring at least 40% range of foods must come from organic production. The vending machine is also required to provide cups that are not made of plastics.
The contract is awarded based on the most economically advantageous tender which is identified on the basis of the best price-quality ratio.
What can we learn from it?
The contract is checked to ensure the correctness and compliance with the contract execution clauses. Checking the contract is based on the information given in the tender specifications and the technical report submitted by the bidders. Thus, ensuring both parties are compliant with the contract as it is binding and monitored thoroughly.
Frequently Asked Questions
1. What is sustainable procurement?
It refers to how businesses can reduce their impacts on the environment.
2. What is ISO 20400 in sustainable procurement?
ISO 20400 is an international standard that provides guidelines on procurement.
3. Is the ISO 20400 applicable to all?
The ISO 20400 standard applies to any organization regardless of its size, industry, and location. However, it does not replace the legislation, ethical framework, and policy that regulates the procurement process of an organization.
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