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.

Furthermore, I have created a free-to-download editable Sustainable Procurement Strategy template. It’s a PowerPoint file that can help you with your sustainability initiatives. I even created a video where I’ll explain how you can use this template.

Sustainable ProcurementDefined

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.

Sustainable Procurement Examples

Example 1 — Case Study: Procurement of low-carbon residential buildings using life-cycle assessment criteria in the city of Helsinki

Actual Case:

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. 

Solution:

Helsinki has implemented the Carbon Neutral Helsinki 2035 Action Plan. This action plan directly targets the areas of the city that emit more greenhouse gases. 

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 were 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.  

Example 2 — Case Study: The Environment and Resources Authority of Malta

Actual Case:

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. 

Solution:

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 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 2023 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. 

Example 3 — Case Study: Upgrading streetlights using an Energy Service Company (ESCO) model in the Municipality of Gabrovo

Actual Case:

The municipality of Gabrovo, located in central Bulgaria, upgraded 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. 

Solution:

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 that meet the regulatory requirements for the street class. 

The second recommendation was a new intelligent management system should be implemented to allow remote and centralized lighting control. 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 city’s needs. It also lays down some problems 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, it 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 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. 

Example 4 — Case Study: Socially responsible public procurement of Computer Equipment

Actual Case:

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 to allow for monitoring, mitigation, and prevention, and to work toward sustainable improvements for workers and communities affected by mining. 

Solution:

The City Council of Barcelona began to work on a tender focusing on workplace IT equipment to meet the Procurement Plan’s requirements in 2019-2020. 

Also, it has incorporated an award criteria to award points to bidders who present a long-term strategy to increase supply chain transparency. 

Additionally, the Barcelona City Council has agreed 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.