How Can Public Procurement Be Used to Boost Sustainability?

Making public procurement greener has the potential to unlock considerable sustainability progress.
But, according to the World Economic Forum (WEF), governments must overcome “fragmentation, high costs and outdated frameworks” to unleash its full impact.
Globally, governments spend over US$10tn annually on goods and services, contributing 15% of greenhouse gas emissions and impacting ecosystems, particularly through infrastructure and transport supply chains.
However, amid geopolitical, trade and financial pressures, governments struggle to uphold climate and environmental commitments.
WEF said chief procurement officers drive sustainable transformation across organisations and supply chains, while public procurement can combat climate change and environmental degradation but remains underutilised.
It adds that public-private partnerships and coalitions are key to helping cities and governments accelerate sustainability goals and drive market demand for greener solutions.
Bringing together experts
The WEF brought together leaders from international organisations and national and city governments at the 2024 Urban Transformation Summit and a virtual roundtable on Green Public Procurement Leadership.
In partnership with the Clean Energy Ministerial Industrial Deep Decarbonization Initiative (IDDI), World Bank, Organisation for Economic Cooperation and Development and C40 Cities, the discussions outlined how governments increasingly leverage procurement to achieve green goals and foster sustainable industries and supply chains.
The challenges
WEF has published a report from the events, setting out hurdles for governments to overcome, including:
Consolidating fragmented systems
Governments are addressing the issue of decentralised public procurement by “adopting more unified approaches to green procurement”.
Rowena Candice M Ruiz, executive director of the Procurement Policy Board Technical Support Office, Government of the Philippines, said: “Procuring entities often face… manual and fragmented processes, especially when it comes to GPP data and capacity development.”
Managing the green premium
The “green premium” – the higher cost of sustainable goods and services – remains a major barrier to green procurement.
Some governments are tackling it by pooling resources through partnerships, using phased procurement to spread costs and offering financial incentives to make green choices more appealing.
Nick Xenos, executive director for the Centre for Greening Government, Government of Canada, said: “The Government of Canada is using the total cost of product ownership to better assess the benefits of green procurement.
“We are partnering with the private sector to green federal buildings through energy performance contracts that use energy savings to pay for building upgrades.”
Modernising procurement frameworks and capabilities
With support from the World Bank and the OECD, governments are updating regulations and enhancing capabilities to integrate sustainability criteria and foster partnerships with sustainable suppliers.
“One aspect of procurement reform in Ethiopia is revising procurement rules and regulations such as proclamations, directives and standard bid documents, as well as implementing an e-procurement system to better measure and understand supplier data,” said Woldeab Demissie, director general of the Federal Public Procurement and Property Authority for the Government of Ethiopia.
Philip Mortensen, senior advisor for the Agency for Climate, City of Oslo, said: “We have a conducive framework in Oslo and Norway. There is high attention at the policy level on public procurement as a key enabler of transformation.
“For example, the City of Oslo has electrified public construction works through the strategic use of green public procurement.”
Balancing immediate gains and lasting impact
WEF said: “Political cycles and public expectations often push government leaders toward quick, visible wins.
“However, truly transformative green public procurement requires a long-term vision for transitioning to a low-carbon, environmentally friendly economy.
“The challenge lies in balancing immediate tangible benefits with laying a solid foundation for the future.”
Imran Dassu, partner at Kearney and World Economic Forum knowledge partner, asked: “What is the vision for sustainable impact that actually creates the right foundations for the longer term?”
Shining examples
WEF flagged up some early success stories among government procurement functions.
It said: “The US Federal Buy Clean Initiative and Canada’s low-carbon procurement standards demonstrate how scaling green procurement can shift the dial on sustainability.
“Targeting high-emission sectors such as construction creates market demand for cleaner materials and encourages suppliers to adopt low-emission production practices.”
Madeline Reeves, deputy federal chief sustainability officer at the White House, said: “The Federal Buy Clean Program leverages the purchasing power of the US Federal Government, as the single largest buyer on Earth, to spur demand for clean American-made construction materials – steel, concrete and beyond.
“This programme’s demand signal helps spur clean American manufacturing.”
At a global level, IDDI has played a key role in boosting ambition and demand for low-carbon industrial materials, with seven governments committing to the Green Public Procurement pledge.
Soledad Reeve, senior green procurement specialist for IDDI at the United Nations Industrial Development Organization, said, “The IDDI government signatories are sending a strong demand signal for low-emission concrete and steel, which are high-impact procurement categories in infrastructure projects.”
Future-ready cities
Cities are proving to be key testing grounds for innovative procurement.
In Sweden, Lund’s energy efficiency projects demonstrate how local governments can customise green procurement, focusing on low-grade heat sources, financing sustainable projects and deploying an electric vehicle charging network.
WEF added: “In New York City, direct supplier engagement and training programmes are fostering a sustainability culture across local supply chains, including requiring third-party environmental verification for all products.”
Sylvie Binder, policy advisor of greenhouse gas emissions at New York City’s Mayor’s Office of Climate and Environmental Justice, said: “We are making efforts to incorporate low-carbon concrete specifications for ready-mix and precast concrete on all of our city projects.”
Sylvie added: “We have six North American cities, one county and around 15 private sector and NGO partners currently participating in this coalition.
“We believe that, together, we have the power to spur significant market growth in this space as, collectively, we spend over US$10bn on construction annually.”
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