Our lead researcher, Associate Professor, Marta Andhov (from the University of Copenhagen) and Professor Christopher R. Yukins from our partner organization George Washington University Law School published an article in Government Contractor that discusses green public procurement strategies in the European Union and the United States. The article is made available open-access on the Social Science Research Network. 

Introduction

The scale and influence of public procurement is immense. The EU’s public procurement expenditures exceed €2 trillion, representing about 14 per cent of its gross domestic product (GDP). In the United States, federal procurement policies directly influence over 7 per cent of the nation’s GDP, accounting for roughly $700 billion in annual procurement and $1.2 trillion in federal assistance annually. These figures underscore the significant role governments play as some of the world’s principal buyers, with the power to shape markets and address pressing environmental challenges.

Due to the urgent need to tackle climate change and other environmental issues, governments on both sides of the Atlantic are increasingly using public procurement to drive sustainability initiatives. This includes integrating environmental sustainability considerations into procurement decisions, commonly referred to as “green procurement.” 

In their article, Andhov & Yukins showcase developments in green public procurement within the U.S. and the EU. They question whether the EU and U.S. are converging towards similar strategies or if they continue to deploy divergent strategies in leveraging procurement for broader environmental objectives. 

The Shift in Public Procurement Paradigms and Key Findings

Andhov and Yukins note that, historically, public procurement focused on achieving value for money and fostering competition. Still, over the past two decades, a paradigm shift occurred. Governments started recognizing the power of procurement as a tool for advancing certain social and environmental goals. 

The article highlights several critical developments and comparisons between the EU and U.S. approaches:

Regulation and policy: The EU’s 2014 Public Procurement Directives have been pivotal in promoting Green Public Procurement (GPP). These directives incorporate provisions encouraging sustainability at all procurement stages, from product specifications to final contractual obligations. Additionally, the EU also issued other – supporting – policy instruments, such as voluntary GPP criteria that aim to enhance the uptake of green criteria for a set of products and services among contracting authorities. Conversely, the U.S. attempts at bettering GPP are still in proposal stages and are primarily policy ones with recent initiatives under the Biden Administration aiming to achieve net-zero emissions from federal procurement by 2050. These initiatives are as follows: 1) Proposal to Require Major Federal Contractors to Disclose Emissions and Set Targets, 2) ‘Buy Clean’ Initiative to Promote Low-Carbon Materials, 3) Procurement Planning to Minimize Climate Change and to Assess GHGs’ Societal Costs, 4) Leveraging ‘Eco-Labels’ to Maximize Procurement of Sustainable Goods and Services, 5) Reinforcing Agency Leadership in Environmentally Sustainable Procurement”

Life-Cycle Costing: Both the EU and U.S. emphasize life-cycle costing methodologies. This approach considers the total cost of ownership, i.e., it accounts for environmental impacts and thereby encourages the procurement of sustainable products and services. In the EU this is articulated in Article 67 of the Directive 2014/24/EU and in the US life cycle costing methodologies are advocated in, for instance, Federal Buy Clean Initiative and Proposal and Procurement Planning to Minimize Climate Change and to Assess GHGs’ Societal Costs.

Eco-Labels and Standards: The use of eco-labels and environmental standards is a common strategy in both regions. These labels help public entities identify and purchase products with lower environmental impacts. In the EU this is evident in Article 43 of the Directive 2014/24/EU while in the U.S. Biden’s initiative Leveraging “Eco-Labels” to Maximize Procurement of Sustainable Goods and Services aims to promote them. 

Sector-Specific Initiatives: Both the EU and U.S. have launched sector-specific initiatives to promote sustainability. For example, the EU’s Clean Vehicles Directive sets standards for low-emission vehicles, while the U.S. Federal Buy Clean Initiative focuses on reducing the carbon footprint of construction materials. 

Challenges and Opportunities: Despite significant progress, some challenges remain. Ensuring compliance with sustainability criteria, avoiding greenwashing, and balancing economic and environmental goals are prove to be ongoing issues in both regions. However, the paper underscores the potential for governments to serve as catalysts for broader environmental reforms through strategic procurement.

Conclusion

As governments worldwide fight with the urgent need to combat pressing environmental issues, the role of public procurement cannot be underestimated. The transatlantic analysis by Andhov and Yukins showcases similarities and differences in how the EU and the U.S. are leading the way in green procurement. By adopting, expanding, and mutually learning from these strategies, governments can make significant progress toward a greener future.

Abstract 

As governments the world over move to reduce global warming, public procurement has become an increasingly important means of leveraging governments’ vast purchasing power to reduce greenhouse gas (GHG) emissions through “green” or environmentally sustainable procurement. This article reviews emerging strategies in green procurement in the European Union and the United States. The article notes that those green procurement strategies are remarkably consistent on both sides of the Atlantic, from sector-specific preferences for low-carbon products to eco-labels to life-cycle cost analyses which take into account broader environmental impacts. On both sides of the Atlantic, however, parallel problems have emerged as well. While initial efforts have been made to force firms to chronicle their products’ and services’ GHG emissions so that those emissions can be assessed (including in awarding contracts), those efforts have faltered politically in both the United States and the European Union because of the high costs of implementation. These initial results from both continents suggest that while green procurement can evolve in parallel around the world, using common strategies and devices, the costs of implementation — until now, a largely overlooked variable — may play a critical role in deciding which environmentally sustainable strategies are likeliest to succeed, at least in the short run.

The full article is now available on the SSRN.