Sustainable Public Procurement: Towards a lowâcarbon economy

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8 Sustainable Public Procurement: Towards a low carbon economy Chapter I: Introduction Procurement is an integral part of governance and the financial management system in a country. It is particularly important in developing countries with active infrastructure and social programmes. Public procurement spending accounts for about 15 percent of world’s GDP (OECD, 2005) and is often much higher as a proportion of GDP in developing countries. The government is often the largest purchaser of goods and services, especially in the poorer countries. The procurement system of a country can determine the competitiveness of the markets, the national investment rates, and the long term growth rate. Increasingly it can be, and is becoming, a key instrument of sustainable development through creating markets for more sustainable products. The Energy and Resources Institute (TERI) with the International Institute for Sustainable Development (IISD) had conducted a scoping study on the State of Play in Sustainable Public Procurement (SPP) in May 2007. This was the Phase I of the study wherein we reviewed international and national sustainable public procurement (SPP) initiatives, legal and policy frameworks and conditions for implementation at national and international level. The rationale to conduct a Phase II of the study essentially lay in the information gaps that were identified in the scoping study in Phase I. The scoping study essentially focussed on an overview of the SPP practices in South Asia, South and Central America, the US and Europe and also in understanding the forces driving and impacting on SPP. The information thus gained was taken primarily from secondary sources and helped in understanding the international and regional institutional framework implementing the SPP agenda worldwide. The information being from secondary sources was also to a large extent anecdotal in nature and therefore despite contributing to the understanding, in itself it is of limited value if not supported by a more sustained and focussed research by way of a case study and also to interact systematically with the practitioners and stakeholders within a geographical territory. T E R I Report No. 2007GL01
9 Sustainable Public Procurement: Towards a low carbon economy Given the wide variety of nuances, which the definition of sustainability incorporates, it was decided to have a working definition of sustainability pegged to any one variable, which would find immediate resonance with the Indian procurement establishment. While undertaking Phase I of the study, interaction with public agencies in few countries in South America and Asia had revealed that energy efficiency was widely viewed as an important measure of sustainability in procurement. The preliminary survey also revealed that energy efficiency was accepted as a measure of sustainability within the procurement process. 1 Thus procurement of energy efficient products were also written about and referred to as sustainable procurement. There was also a more pragmatic rationale to use energy efficiency as a measure of sustainable public procurement and that was to provide stakeholders it was important to provide them with a concrete and relatable dimension of sustainable procurement. In that sense energy efficiency is a widely known and adopted criteria which most public sector companies and government departments are striving to achieve. Another lesson learnt from Phase I was that in many cases inter departmental dynamics within ministries and Public Sector Undertakings prevented them from establishing a logical connection between the energy efficiency practices undertaken by the entity and their procurement processes. In this context it was felt that a stakeholder survey would be an important part of Phase II and would help provide insights into the functioning dynamics of the procurement processes and its role in promoting energy efficiency within the entity’s larger goal of environmental sustainability. Phase I also highlighted that the nature and dimensions of the climate change problem globally has pushed public sector entities to rethink their functioning strategies and had pushed energy efficiency high on the internal agenda. In this context, it was felt that receptiveness of the idea of achieving energy efficiency through procurement would be high amongst the stakeholders. Thus it emerged that there was a need to enable SPP in emerging and developing economies especially with a view to achieve a low carbon economy. For all these reasons, in the Phase II of the project, we have approached the issue of sustainability through the lens of energy efficiency. 1 Such practices were seen in UK, Austria, Mexico and many other member states. See Perera et al, State of Play in Sustainable Public Procurement, IISD-TERI, 2007, 6-9. T E R I Report No. 2007GL01
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