Sustainable development

Whatever next? SD-scene newsletter May/June feature

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Procuring the Future
A National Action Plan for sustainable procurement.

“Making the shift to a more sustainable lifestyle is one of the most important challenges for the 21st century… I want the public sector to take a lead on doing things sustainably  - through the way we run central Government and through the way we buy goods and services. This report points the way forward, and we will look seriously at its recommendations.”
Prime Minister Tony Blair, responding to Procuring the Future.

In the main feature:

Also in this issue:

Photograph of David Milliband MP, The Prime Minister, Sir Neville Simms and Jonathon Porritt launching the Sustainable Procurement Action Plan
Unveiling the new Sustainable Procurement National Action Plan. From left to right: David Milliband, the Prime Minister, Sir Neville Simms, MPJonathon Porritt

Sign of a step-change

Procuring the Future is the National Action Plan drawn up by the independent Sustainable Procurement Task Force and presented to Government on 12 June 06. Its aim is to bring about a step-change in sustainable procurement. Led by Sir Neville Simms, the independent business-led Task Force has identified a raft of actions Government could take to meet this goal. Defra will be responding in full to the report in the autumn.Procuring the Future

To demonstrate the Government’s commitment to leading by example, David Miliband, Secretary of State for the Environment, Food and Rural Affairs, announced new sustainability targets for the Government estate on the day of the National Action Plan’s publication. These include a commitment to reduce carbon emissions from the office based estate by 30% by 2020, and to go carbon neutral by 2012. Responding to the report, David Miliband said:

“Government and the public sector have a key role to play in the new environment contract. The Task Force has suggested how we can use our purchasing power to achieve that. To show that we are serious about making the way we run Government more sustainable, we are announcing new targets for the Government estate. We need to ensure that we show that big improvements are possible and we must deliver real value for money for the public purse.”

What is sustainable public procurement?

If we have heard Government speak seriously about the urgent need to create a more sustainable society, then sustainable procurement is the Government putting its money where its mouth is. With a spend of some £150bn or 15% of GDP, the public sector is big business. This purchasing power can be used to help deliver the Government’s aim of moving to a more sustainable economy, which is both fairer and within environmental limits. To an extent, it seems, we can buy our way out of trouble.

Sustainable procurement is about embedding the principles of sustainable development into spending and investment decisions across the whole of the public sector – local authorities, the NHS, schools, prisons etc. Efficiency has always been an essential feature of public spending. But better spending decisions – that take into account environmental and social as well as economic considerations – can deliver real value for money for the public purse.

Launch of the Sustainable Procurement National Action Plan
David Milliband speaks at the the launch of the Sustainable Procurement National Action Plan, from left to right: Stephen Timms MP, Ian Pearson MP, Sir Neville Simms and David Milliband MP

The focus on sustainable procurement as a way of both delivering policy and stimulating markets and sustainable innovation is not new. Examples of best practice exist across all areas of the UK public sector. However, as the Task Force points out in its report, ‘sustainable pioneers’ and patchy best practice are not sufficient to meet the challenge. What’s needed is a much more systematic approach to sustainable procurement.

The National Action Plan

In May last year, the Sustainable Procurement Task Force was charged - by Defra and the Treasury - with drawing up a National Action Plan to bring about the necessary step-change in sustainable procurement. It was set the following ambitious goal: For the UK to be recognised as amongst the leaders in sustainable procurement across the EU by 2009. In practical terms, this means smarter spending of public funds to bring more benefit to communities, and reducing the footprint of its procurement in key environmental areas to move towards a carbon neutral, low water use, zero waste public sector.

International action


Countries around the world are using public procurement to help deliver sustainable development;
  • Japan’s green purchasing law is stimulating the market for low emissions vehicles.
  • The US Federal Government uses affirmative employment to address inequalities.
  • Canadian Government properties have been eco-retrofitted using specialist firms to provide upfront capital and expertise, with federal bodies paying them back from savings.
  • The Netherlands addresses social issues in the textile supply chains of its military uniforms.
There has been much international interest in the work of the UK Sustainable Procurement Task Force: The UN’s own task force has already shown an interest in adopting the UK approach, and dialogue on sustainable procurement has begun with China.

A substantial body of research underpins the National Action Plan, including examples of private sector best practice and the direct experience of members. The National Action Plan identifies priority areas of public sector spending and makes six key recommendations.

There are 10 priority spend areas:

  • Construction,
  • Health and social work,
  • Food,
  • Uniform, clothing and other textiles
  • Waste
  • Pulp, paper and printing
  • Energy
  • Consumables - Office machinery and computers
  • Furniture
  • Transport (business travel, motor vehicles)
The Taskforce's key recommendations to the UK Government are:
  1. Lead by example
  2. Set Clear Priorities
  3. Raise the Bar
  4. Build Capacity
  5. Remove Barriers
  6. Capture opportunities

Read on for a summary of the National Action Plan’s six key recommendations or to download the whole document visit the Sustainable Procurement National Action Plan page.

Lead by example

Government needs to demonstrate to the public sector and markets that it takes this agenda seriously. The Task Force sees this as key to achieving the necessary step-change. Sustainable procurement needs to move from being seen as optional to being recognised as ‘core business’ for the public sector, part of the everyday delivery of services for the public good. The Task Force recognises that Government has already shown leadership in its successful initiatives on food and timber. By acting as an exemplar sustainable procurement practitioner in all priority areas and encouraging its workforce to follow, the Task Force sees an end to the mixed messages that suppliers receive on the value placed on sustainable development by public sector procurers.

Guiding public sector procurers:  Value Wales
Value Wales (Procurement) deals with procurement across the 100+ organisations that constitute the Welsh public sector. Through measures such as guidance, tools, and websites, it aims to achieve better value for money in public sector spending. Benefits so far include the development of a sustainable procurement tool to help partner organisations identify areas of action. For example, one University partner is trialling automatically shutting down PCs at night, another NHS partner has changed the clinical bags it uses to lighter, more transparent and thus more fuel efficient ones. For more information, visit the Welsh Assembly website or Sell2Wales, which is aimed at helping small to medium sized enterprises (SMEs) win more public sector business in Wales.
Set clear priorities

Procurement is used by many Government departments to help deliver policy (there are currently 22 policies employing this route). This has resulted in a huge array of guidance documents for procurers, which in practice, the Task Force found, are rarely applied. To focus limited resources and give clear direction, the National Action Plan identifies the need for existing ‘policies through procurement’ to be rationalised into one, practical and unified sustainable procurement framework. This would cover environmental, social, ethical and economic factors, it would focus on the Government’s priorities, and would include sanctions for non-compliance.

Raising standards: Energy efficient lighting
High carbon emissions from non-domestic lighting led the Government-backed Market Transformation Programme (MTP) to seek ways of reducing its impact. MTP’s recommendations, endorsed by the Lighting Industry Federation, established targets to guide suppliers into offering energy efficient lighting and informed the Energy Saving Trust’s Lightswitch programme, which offered businesses rebates for installing more efficient lighting.  The result was a 2.7% reduction in electricity consumption, a shift from 33% to 11% in the market share of the least efficient lamps and continuing movement in the market towards more efficient products.. Download the full case study (PDF, 299KB).
Raise the bar

Mandatory minimum standards are a good way of driving sustainable innovation in markets. However, the Task Force concluded that, where standards existed, in many cases they are not being enforced or monitored and there are no sanctions for not applying them. The conclusion of the Task Force is that Government should be prepared to mandate minimum standards of performance for purchases in all priority areas. Also, for the public sector to gain credibility with its supply base, mandatory needs to mean mandatory from now on and call-off contracts should be used to phase out products and services that fall below these standards. By signalling to the market its future minimum requirements, the public sector has another opportunity to drive performance.

Efficient and sustainable: Better roads
Improvements to the Newport southern distributor road in South Wales, funded under a 40 year PFI contract, looked to maximise the use of more sustainable products derived from excavated materials and locally available recycled materials. Far from costing more, this resulted in direct cost savings of just over £2m, from reduced construction costs and carbon emissions and by avoiding landfill costs and the Aggregates Tax. Savings amounted to £219,609 per kilometre of road constructed. Read more about the scheme on Sustainable Aggregates Information Service website. 

Build capacity

While a lot of work has been done over the last few years to raise the status of procurement within Government, especially with the creation of the Office of Government Commerce, the Task Force found that the capacity does not yet exist in most public sector organisations to deliver sustainable procurement, despite broad support for it. A major step-change in sustainable procurement practice is needed, according to the Task Force, which will take dedicated professional resource. Among other things, the National Action Plan recommends the development of toolkits for procurers, and for all public sector organisations with an annual procurement spend of over £1bn to appoint a commercial director to the board.

Working with suppliers: Environmental standards at B&QB&Q works with its suppliers to identify the environmental issues associated with each product’s life-cycle. The company defines environmental performance standards for suppliers and then assess performance against them. To help them in this, B&Q provides training for commercial teams and suppliers on environmental issues.  It also ensures that product labelling is verifiable and that the development or refurbishment of suppliers’ premises is consistent with B&Q’s standards. For more information on greener supply chains, visit the B&Q website.

Remove barriers

Despite the Treasury rule that value for money should be determined on a 'whole life' basis, evidence shows that sustainability considerations are routinely being drowned out by efficiency savings. The Task Force reminds us that the efficiency agenda and sustainability are complementary rather than competing and recommends the enforcement of whole life costing with non-monetary benefits properly valued. Action to create the right budgetary framework - where practices, such as the end-of-year rush to spend budgets, don't undermine long-term planning - will also help deliver better value for money for the public purse.

Good business: Ethical Trading programme at Allied Domecq
In 2004, Allied Domecq plc began a programme to embed its ethical trading policy into its supply chain. It achieved this by training global ‘champions’ to manage the programme locally and then by working with suppliers to identify where they may have issues in complying with the policy. It also undertook a risk assessment of its supply chain the result of which was a scoring system, which ranked suppliers risk level and enabled it to prioritise work with higher risk suppliers. The initiative benefited from senior level buy-in and credibility from independent audits, and external recognition with ‘best in class’ ratings on the two procurement sections of the Dow Jones sustainability index.

Capture opportunities

Sustainable procurement is good procurement and the public sector is missing opportunities to deliver real value for the public purse by failing to engage effectively with the market. The Task Force’s final recommendation is for smarter procurement, including forming closer relationships with suppliers over longer time frames, removing barriers to and encouraging tenders from SMEs and local companies, and transforming the tendering process to become outcome-based. Innovation will develop from better dialogue with markets, and the public sector can identify opportunities for improvement and follow through with forward commitments to purchase it.

Smarter procurement: Northumberland County Council goes local
Northumberland County Council has used its food supply contracts to improve the local economic impact of its £245m procurement budget. Initial investigations showed that if the council shifted just 10% of its current spending on non-local food suppliers to local suppliers, this would generate an extra £34m for the local economy. By increasing awareness and encouraging local SMEs, the Council saw a five-fold increase in local supplier expressions of interest. Almost half of the £3million annual contract now goes to local suppliers and will circulate amongst the local economy. Although there is more administrative work involved, the additional time investment was offset by the quantity and quality of the tenders received. The County Council has since officially set a target of shifting 10% of procurement spending to local sources within the next three years. To find out more, visit the Defra website. To find out more, visit the Defra website.

See also:

Read the views from people at the launch of the National Action Plan

On 12 June 2006, Government, business and the voluntary sector gathered at the Royal Horticultural Halls in central London to launch Procuring the Future - The Sustainable Procurement National Action Plan. We have captured some of the views of those who attended, including the chair of the Sustainable Procurement Task Force Sir Neville Simms and Secretary of State for Environment David Milliband. Follow the link below to read the transcript:

Updated: 19 June 2006

Department for Environment, Food and Rural Affairs