A report by the World Economic Forum and business strategy consultancy the Boston Consulting Group (BCG) claims 15% of the world’s greenhouse gas (GHG) emissions totals relate to public procurement.
Governments currently spend $11 trillion every year, producing 7.5 billion tonnes of direct or indirect GHG emissions, according to the ‘Green Public Procurement: Catalyzing the Net-Zero Economy’ report.
The report says Governments could have significant influence on industries that are heavily dependent on public spending and most of the emissions associated with public procurement – up to 75% of the total – stem from the activities of six industries: defence and security, transportation, waste management services, construction, industrial products, and utilities.
A 10-step green procurement framework guides procurement organizations through the essentials from baselining current emissions and future goals, optimizing for climate-friendly goods and services and working with suppliers, to engaging with industry ecosystems to promote decarbonization.
Ten steps to greener public procurement
Environmental, Social, and Governance (ESG) is tipped to continue as a top agenda in the coming year. As reported by Hackett earlier this month, ESG compliance objectives has become a critical element of procurement’s value proposition.
THE WEF-BCG report highlights how pursuing net-zero goals in public procurement will boost the “green economy.”
“The private investment and new jobs triggered by greener public procurement, in aggregate, will boost global GDP by around $6 trillion through 2050 – a significant proportion of the green economy’s total GDP of $70 trillion,” it said.
“Procurement today largely focuses on price and delivery schedule, where emissions are typically not part of specifications. Implementing emissions standards in procurement will require building capabilities in understanding sustainability standards, baselining emissions from current operations, setting targets and defining and implementing a green public procurement roadmap,” Peter Ong, Chairman, Enterprise Singapore told WEF and BCG.
The report says greener public procurement will likely increase costs (3% to 6%) but abating emissions by public procurement “will help considerably in reaching the goal of the Paris Agreement to slow global warming to well below 2°C.”
“Approximately 40% of all emissions related to public procurement can be abated for less than $15 per tonne of GHG emissions,” the report said.
The report says the promotion of green practices in public procurement should trigger about $4 trillion of private sector investment needed to reach net-zero emissions by 2050.
“The majority of these investments will likely be made in the next decade,” the report says.