Public procurement alone represents 15-20% of global GDP, while procurement commitments under the World Trade Organization’s Agreement on Public Procurement (GPA) have been estimated at around EUR 1.3 trillion. This is enormous purchasing power that can drive investment and innovation towards more sustainable production and consumption patterns, to address for instance, challenges linked to air, soil and water pollution, or occupational health and safety.
To help companies embrace more responsible business practices, while avoiding additional administrative burdens for Micro, Small and Medium-sized Enterprises (MSMEs) trading across borders, UN/CEFACT has developed UNECE Policy Recommendation on Sustainable Procurement. The Recommendation provides a minimum set of common criteria to select sustainable suppliers, and meet increasing government and consumer demand for products and services that achieve value for money, while complying with fundamental environmental, social and health standards.
According to the Recommendation, a sustainable vendor rating model should contain a minimal set of commonly accepted social and environmental performance indicators that measure the suppliers’ sustainability performances. Defining a set of minimal sustainability criteria is a crucial goal for simplifying the compliance procedures at a global level, where global supply chains operate, and market forces maximize their synergies by simultaneously engaging Multi-National Corporations and MSMEs.
Furthermore, although the procurement process is only one aspect of selecting more responsible suppliers, it can only be effective when collaboration exists between different stakeholders along the supply chain. Material requesters (e.g. users, owners), specifiers (e.g. designers, engineers), purchasers and suppliers (e.g. manufacturers, distributors) all need to dialogue to develop viable and meaningful performance indicators.
The adoption of a minimal set of common sustainability criteria to select MSME suppliers will bring benefits such as: simplified exchange of information and data once compliance is ensured; fast transfer of certificates; smooth electronic tendering; support for the legal validity of the documents exchanged; streamlined procedures between the contracting entity and the tenderer; and qualification and assurance that the end-to-end quality of the selection process is a consumer/citizen right
From a policymaking point of view, there is an important challenge to address: the lack of an independent agency that controls the whole supply chain. Indeed, while some environmental measures are linked to clear governmental regulations, many economic and social indicators are not - resulting in weak enforcement and, consequently, a lack of compliance throughout the supply chain. This may reduce the motivation for firms to embark on projects to create sustainable-vendor-rating systems - especially considering global tendencies to commodify products or services that are not sustainable, and rapidly changing consumer behaviour (as loyalty or fidelity are not easy to stabilize in the long run).
At the same time, it is crucial that sustainable procurement practices not be used as tools to limit free trade and competition dynamics. Sustainability must be a driver for more efficient processes along the supply chain and not an obstacle to trade, in line with the 2030 Agenda for Sustainable Development and its Sustainable Development Goals.
UNECE Recommendation N°43 on Sustainable Procurement, which was adopted at the 25th UN/CEFACT Plenary, is available at: https://www.unece.org/DAM/cefact/cf_plenary/2019_plenary/ECE_TRADE_C_CEFACT_2019_07E.pdf