Five ways to implement sustainable procurement

The government in March last year notified a task force on sustainable public procurement (SPP) to transform its procurement policies in the light of climate change and sustainable development goals. A year on, the SPP’s stakeholders are waiting for a public announcement.

The UK started a similar SPP journey in 2005. In 2006, its task force report — Procuring the Future — paved the way for the country’s SPP execution, with the aim of making the country an SPP leader in the EU by 2010. The UK is now one of the leading countries in this field, not only in Europe but globally.

In 2002, Japan enacted a law on promoting procurement of eco-friendly goods and services by public agencies. Since 2006 the Republic of Korea has had an SPP policy, with clear targets in its Third Action Plan for the Promotion of Purchase of Green Products (2016-20). Brazil too has an SPP policy embedded in its Action Plan for Sustainable Consumption and Production: Guidelines for its Implementation (2016-20). 

Closer home, China, Malaysia, Thailand, Indonesia and Sri Lanka have similar policies and action plans. 

Having a policy is only the beginning. A national action plan (NAP) is required with a mandate, resources, delegated roles and responsibility, clear-cut timelines and monitoring mechanisms to implement the policy. The United Nations Environment Programme Guidelines on SPP Implementation, published in 2012, also advocate the critical role of an action plan in SPP implementation.

India took its first serious step in this direction in 2017 through the executive route, and came up with new General Financial Rules 2017 and Manual for Procurement of Goods 2017. While these directives facilitate procuring sustainable products by public authorities, there is no significant progress. Therefore, setting up a task force to develop an NAP on SPP implementation shows the government’s commitment to the issue.

The task force has created a buzz in the region, with countries keenly observing what shape India’s NAP will take. Considering India’s stake in the region, this plan has the potential to transform business rules and usher in an era of regional collaboration to meet sustainable development goals (SDGs). Regional countries having an SPP policy stand to gain through sustainable supply chain linkages with a regional power; those yet to formulate a policy can take guidance on best practices.

International experience on action plans shows that countries have taken different routes. However, what is common is that all action plans reflect the ground realities of the respective countries. India’s NAP must address her context-specific needs and provide a clear direction on five elements for successful SPP implementation.

Definition of ‘sustainable’: Understanding the impacts of a product on the environment, society and human health, besides its economic effect, and taking responsibility for these impacts is fundamental in beginning the SPP journey. How does one say that a product is sustainable? Individual responses would vary, depending on their interpretation of balancing organisational and national priorities with larger objectives of climate change and sustainable development. The NAP must come up clearly on these priorities so that sustainability conveys the same meaning to all stakeholders involved in the procurement process.

SPP policy framework: An SPP policy framework legitimises the procurement of sustainable goods by public procurers without fear of punishment from oversight bodies. The NAP should specify national and international obligations that apply to public bodies in the context of public procurement and internalise them in SPP policy.

List of prioritised products: In order to maximise outcomes, it is important to prioritise product categories based on the national context, spend analysis, risk-mitigation opportunities, market readiness, and the degree of market influence. Having prioritised them, the NAP should specify product criteria for sending unambiguous signals to the market and channelising investment in the design, development and manufacture of those products. Such a top-down approach will ensure that resources are aligned to those initiatives that are most likely to generate the maximum sustainability outcome. 

Institutional governance mechanism: Creating an institute/cell, with powers and resources, financial and human, and the mandate to assign, govern and review would go a long way in fast-tracking the implementation of SPPs. This cell would drive SPP implementation, coordinate with ministries for identifying, developing and reviewing product criteria, and design training modules for different stakeholders. It would adopt a communication strategy for disseminating guidance on the SPP to market and other stakeholders. 

Training and capacity building: Most procurers do not know how to turn policy into practice. Identifying training needs for stakeholders, designing training modules and delivering them in a time-bound manner are the prerequisites for launching SPPs. Without this, there would be slow progress. Designating training institutes, possibly as a joint operation with the proposed cell, as centres of excellence on SPPs would be useful in the long run. 

The plan would need revision and updating as India gains experience on SPP implementation. The NAP thus must provide for feedback from stakeholders so that the latest developments and solutions can be incorporated. This would ensure that the NAP remains relevant in emerging scenarios and continues to spearhead India’s SPP movement.    

The writer is General Manager, Dedicated Freight Corridor Corporation

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel