Green procurement should not sound intimidating. It cultivates the market and protects the planet.
How can companies support sustainability and circular economy principles in the supply chain? And what do we need to take into account when setting green purchasing criteria? Answers to these questions were offered on the 31st of March at an educational event for companies, public institutions and non-profit organisations held by the Business Leaders Forum in cooperation with the Institute for the Circular Economy and the Circular Slovakia platform.
Saving natural resources is essential. Earth Overshoot Day, a global initiative, marks each year the date when humanity’s demand for environmental resources and services exceeds what the planet can produce. For Slovakia and the year 2022, this date is the 3rd of May. It means that if we continue to develop as we have done so far, we would need the resources of more than two planets. “We only have one planet, so it is necessary to redefine our needs and procure products and services in such a way as to save natural resources as much as possible,” says Ivana Maleš from the Institute for Circular Economy.
One of the ways in which both the public and private sectors can contribute to the protection of the planet is green public procurement or purchase. The state, which is the largest buyer, is also aware of the urgent situation. As part of its Envirostrategy, it has pledged that by 2030, 70% of orders (both in terms of number and value) will be procured in a green manner. However, if we take into account that in 2020 the share of green public procurement was less than 15% of the total number, we are undoubtedly facing a big challenge.
What is green public procurement?
It is a process by which procuring entities purchase goods and services with a reduced negative impact on the environment in its entire cycle. The European Commission also distinguishes the concept of circular procurement. The aim of such procurement of goods, services or works is to contribute to closed energy and material flows within supply chains, minimising or ideally preventing negative environmental impacts and waste generation throughout the entire life cycle.
Besides environmental and social benefits, green public procurement can also bring economic benefits to procuring entities. These may include, for instance, the reduction of total costs in the long term, the support of innovations in the market, the support of product competitiveness and the improvement of services for the public.
Environmental aspect in public procurement
At the end of March (31 March, 2022), an amendment to the Public Procurement Act entered into force which introduces and defines the environmental aspect. It is an aspect related to the subject of the contract that reduces negative impacts or prevents negative impacts of procured goods, services and construction works on the environment during any phase of their life cycle, contributes to environmental protection, supports adaptation to climate change and promotes sustainable development. “For example, such activities can include forest protection, reduction of greenhouse gas emissions, waste prevention, recycling of used materials or use of renewable energy sources,” explains Tomáš Slávik from the Department of Supervision at the Office for Public Procurement.
How can procurers take the environmental aspect into account in practice? In the case of the procurement of electronics and information technology, the most frequent request is an extended warranty period, which can also be supplemented by the extension of services. When purchasing copy paper, it is a relatively common request that the paper be bleached without using chlorine gas. “It is also a good practice to require zero-waste solutions within the procurement of catering services, e.g. banning the use of disposable tableware,” says Miroslav Rousek from the Department of Circular Economy of the Ministry of the Environment of the Slovak Republic.
It is up to the procuring entity to what extent it will be strict in determining the requirements for the competition. The entity can decide to use the so-called K.O. requirement in the sense of “If you don’t have it, you don’t compete”, which will allow only those entities that meet all the criteria to participate in procurement. Or it can open procurement to a wider range of entities favouring those that offer green solutions.
Thorough preparation is essential
The key to good and successful green procurement is thorough preparation. This should include careful planning of all processes and also identification of the needs of the contracting authority, definition of requirements for public procurement and selection of methodology. If the preparatory phase is well managed, the procurement process itself does not need to be a nightmare.
In order for green procurement to become a standard in companies, M. Rousek recommends including environmental goals in the field of green purchasing in the company’s strategy. It is important to communicate this policy internally within the company and to actively monitor its implementation. The ideal situation is if the company management directly supports green purchasing.
Bratislava significantly increased the share of green procurement
The City of Bratislava also embarked on the path of responsible purchases. While in 2018, the capital did not implement any order that could be considered socially or environmentally responsible, in 2021, there were more than 45 responsible purchases, of which almost 30 were tendered through green procurement. Michal Garaj, head of the public procurement department at the Bratislava municipality, emphasised that the market itself is naturally cultivated with green purchases. “We work to increase the demand for environmental solutions so that entrepreneurs also increase their offer.”
The city tries to take the environmental aspect into account even in the most common activities. When providing catering, they pay attention to zero-waste solutions, they buy wood from areas that are farmed sustainably, and city benches are made from recycled steel. When purchasing electronics, they require certification that indicates the most economical production technology on the market. “The price difference between a regular and a certified product is not as fundamental as many think. The market, especially in Western Europe and the USA, is ready to produce ecologically friendly and at the same time not significantly more expensive products,” added M. Garaj.
Adient developed a strategy for green purchases
Adient is one of the largest manufacturers of car seats in Slovakia and the world. The company has set itself the goal of reducing its carbon footprint. One of the solutions is the use of energy from renewable sources. While Adient used only a fifth of energy from renewable sources by 2021, in January 2022, it increased this share to 46% in some European countries.
Since the largest share of the company’s CO2 footprint is made up of direct purchases of parts for production (73%), the company has prepared an action plan in which it also defines its strategy for green purchases. “We also have strict CO2 limits set for the use of company cars,” explains Larissa Schafarenko, Senior Purchasing Manager at Adient. The company is currently developing an internal tool for assessing suppliers in terms of ESG criteria, which it should start using later this year.
VSE Holding also has experience with green procurement
VSE Holding have started with green purchases for the first time when buying a carpet for the Customer Centre in Košice. In their methodology, they followed already created uniform recommendations of the European Commission for green procurement. Before starting the selection, they conducted a market survey to find out if the suppliers could meet the set environmental criteria.
The company also implemented a requirement for a longer warranty period into the purchase. “Suppliers must present such material for which they can guarantee at least a five-year warranty. If someone offers us a warranty longer than five years, they will get extra points,” said Karolína Danková, head of the VSE Holding Property Operation and Maintenance Department.
At the same time, K. Danková encouraged other companies to start with green procurement too. It is especially important to prepare and to ensure that the person submitting the purchase request knows the procured commodities well. The company has had a positive experience with suppliers. “No one was surprised that we ask for certificates or demand products made from recycled materials. It is already common practice for many companies.”
Where to find more information
Green Public Procurement Criteria is the title of a European Commission document that includes public procurement criteria for several subcategories. Some parts of it are also available in Slovak. The European Commission’s Guide on Public Procurement for the Transition to a Circular Economy provides practical examples of how you can apply the principles of the circular economy in public procurement. The manual is available in English.
As part of the national project entitled Increasing Efficiency in the Field of Public Procurement in Slovakia, the Office for Public Procurement has published manuals to support green, social and innovative public procurement.
The publication entitled Methodology of Circular Public Procurement in Public and Private Contracts was developed by the Institute for Circular Economy. Besides information on legislation, it also provides practical examples from various fields. A special section focuses on greenwashing, i.e. how to avoid buying goods and services that are not really green. The Institute for Circular Economy plans to organise a separate event on this methodology in the fall.