When procurement is mightier than the sword

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Sustainable procurement has been thrust into the limelight again this week – a timely reminder of the power of procurement. 

The inaugural World Sustainable Procurement Day on 21 March 2022 has again demonstrated the garnering of support for sustainable change. 

That’s according to Glenn Bain, Chair of the Australasian Procurement and Construction Council (APCC), who said this year’s World Sustainable Procurement Day has piled on the pressure for Russia to end the conflict in Ukraine. 

 “Public procurement is at the forefront of addressing the global COVID epidemic and putting pressure on Russia to end the invasion of Ukraine,” he said. 

Governments worldwide are pumping billions into the fiscal response to COVID and the response to Russia’s invasion of Ukraine has been crippling economic sanctions and procurement restrictions, Glenn said. 

Government News reports some of the levers being pulled against Russia include:

  • Freezing $640 billion of the Central Bank of Russia’s foreign exchange reserves
  • Bans on access to Western Capital Markets worth up to $50 billion per year
  • Germany’s halting of the $11 billion Nord Stream 2 gas pipeline
  • Restrictions on Western exports of technology, equipment, and components
  • Global companies such as BP and Shell withdrawing from oil and gas projects
  • UK Government bans on the sale of luxury goods to Russia – estimated to be worth more than £2.4 billion.

The APCC consists of Australian and New Zealand government agencies with responsibility for the disciplines of procurement, construction, asset management and property management policy and practice

Glenn said a shift was on the horizon for sustainable procurement, with governments predicted to boost other areas of investment. 

“Globally, governments are set to pivot their COVID response from supporting private incomes to boosting investment in public infrastructure, ‘green’ investment, and industries of the future,” Glenn said. 

“There is a real opportunity to use the biggest public expenditure since the end of WWII, to deliver ‘sustainable’ and ‘socially responsible’ outcomes,” Mr Bain said. 

Procurement in Australia is worth around $400 billion per year and is split evenly between the public and private sectors.

Glenn says according to the Reserve Bank of Australia (RBA), Governments globally have responded to the COVID-19 epidemic with the largest and fastest fiscal policy response in peacetime.

The RBA says the global fiscal response can be characterised as having two phases ‘acute’ and ‘recovery.’

  • The acute phase: The response has focused on supporting private incomes, preserving employment relationships, and shoring up health systems. This has mainly been achieved through large direct transfers to households, enhanced unemployment benefits, wage subsidies and increased healthcare funding. 
  • The recovery phase: When infections have been brought under control, fiscal support will pivot toward boosting investment. This includes public infrastructure, ‘green’ investment and, to a lesser extent, incentives to support private investment and consumption. These support measures will be spread over a longer period than the acute phase.

According to the RBA, the recovery phase will increase the focus on public investment, particularly in green and digital initiatives, incentives for more consumption and private investment.  Retraining programs for workers in these sectors is expected to be in focus too. 

“The APCC views sustainable procurement as critical in addressing major government policy issues such as: global warming and other environmental issues, indigenous procurement policies, modern slavery, diversity and inclusion, human rights and health and safety,” Glenn said.

The inaugural World Sustainable Procurement Day is organised by the Sustainable Procurement Pledge, backed by more than 6000 international ambassadors in 142 countries.

The APCC has launched its Strategic Plan 2022-2025 to professionalise public sector procurement within five years. 

 

 

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