Using procurement as a lever of change
For many organisations, both public and private, buying stuff (procurement) is responsible for the majority of their emissions. This provides two opportunities: firstly to reduce waste and inefficiencies in purchasing and secondly to influence the 100s or 1000s of companies in their supply chain to decarbonise their products and services.
Berlin City Council
Local authorities spend around £100 billion annually which amounts to roughly 15% of all public spending. Being such key players in the economy gives them an opportunity to drive growth in the low carbon goods and services sector.
In 2010 Berlin passed a Public Procurement Act which applied sustainability criteria, including lifecycle costs, to the city government’s £4bn supply chains. This was tightened in 2013 to include office materials and equipment, cleaning agents and services, road vehicles, large-scale events, tenders for power supplies, the planning of office buildings, and recycling of commercial waste.
The argument was that the size of the Government, as the largest purchasing entity in the city, would make it a strong agent of change, which could spread the benefits to all stakeholders in the production chain. A study of 15 newly commissioned products and services found financial savings of £38 million, and a 47% (355,000 tonne) reduction in CO2e, compared to the former conventional procurement. On top of this 9,300 tonnes of wood and 2 million tonnes of natural stone were saved and a particulate reduction of around 12 tonnes of diesel soot achieved.
NHS England
The NHS spends £billions every year on products such as medicine, medical devices, ICT, as well as business services. 62% of its carbon footprint derives from this procurement, which it aims to reduce by 80% before 2039, via three mechanisms: more efficient use of supplies, low-carbon substitutions, and putting in compliance thresholds for suppliers to decarbonise their own processes. The details of their Supplier Engagement programme can be found below:
- From April 2023: for all contracts above £5 million pa, the NHS will require suppliers to publish a Carbon Reduction Plan for their UK Scope 1 and 2 emissions and a subset of scope 3 emissions as a minimum. The Carbon Reduction Plan (CRP) requirements for the procurement of NHS goods, services and works guidance outlines what will be required of suppliers and how it will be implemented.
- From April 2024: the NHS will extend the requirement for a Carbon Reduction Plan to cover all procurements.
- From April 2027: all suppliers will be required to publicly report targets, emissions and publish a Carbon Reduction Plan for global emissions aligned to the NHS net zero target, for all of their Scope 1, 2 and 3 emissions.
- From April 2028: new requirements will be introduced overseeing the provision of carbon foot printing for individual products supplied to the NHS. The NHS will work with suppliers and regulators to determine the scope and methodology.
- From 2030: suppliers will only be able to qualify for NHS contracts if they can demonstrate their progress through published progress reports and continued carbon emissions reporting through the Evergreen sustainable supplier assessment.
Importantly it is offering support for Small & Medium Enterprises (SMEs) and Voluntary, Community & Social Enterprises (VCSEs) suppliers at each stage of the roadmap, and a two-year grace period.
Community Wealth Building (CWB)
Most cities have a local authority, as well as an NHS trust, University, and other large employers. These organisations- called anchor institutions- spend many £millions every year on the products and services they need to run. The idea behind CWB is that this huge yearly budget can be spent with companies based in the area rather than multinationals. This helps grow regional businesses: improving sustainability by shrinking supply chains, and providing local jobs and expertise.
CWB can also involve implementing a living wage, providing support for community land trusts, credit unions / community banks and other ways of encouraging plural ownership of the economy.
The best known example of CWB is the work of Preston City Council. From 2013, Preston City Council worked with their local anchor institutions to move policies and procurement away from the emphasis on cost alone, towards considerations of social value and community benefit.
Since 2013, over £70 million has been redirected back into the Preston economy, with £200 million invested into the Lancashire economy. Spending behaviour within public bodies has been transformed and, new tools for a fairer economy have been developed. The Preston Model has received national attention from press, government and towns and cities up and down the country.