Promoting the many aspects of sustainability in public procurement
Institutional Communication Service
26 September 2022
Public procurement can be a booster of sustainability, but this requires a paradigm shift in the law that is not easy to implement. Every year, the public sector purchases goods and services worth more than 40 billion francs, equivalent to 8 per cent of GDP. This expense has traditionally been conducted according to cost-effectiveness criteria. The purpose is not only to spend little but also, from a liberal perspective, to foster competition among private companies. The new federal law on public procurement approved by the chambers in 2019 and the Intercantonal Concordat on Public Procurement, which the cantons will be asked to ratify in the coming years, provide for the possibility of allocating the market to the most advantageous offer not only from the perspective of price but also from the perspective of quality. This is a novelty that "allows sustainability to be taken into account from an environmental, social and economic point of view as well," explained Professor Federica De Rossa, director of the USI Law Institute.
Professor De Rossa addressed the topic of sustainability, specifically social sustainability, in public procurement together with PhD student Clarissa David. The issue was also the subject of a Swiss National Science Foundation research project carried out with Professor Peter Seele of USI Faculty of Communication, Culture and Society and Professor Matthias Stürmer of the University of Bern.
When people talk about sustainability, they immediately think of the environment. But the concept is broader than that.
Yes, indeed, while initially, this term referred mainly to environmental protection goals, in recent decades, a concept of sustainability built on three pillars has gradually emerged. Today it is commonly accepted that commitment to sustainable development should consider its three dimensions, namely the ecological, the social and the economic, which ideally should be balanced. A quick reading of the 17 Sustainable Development Goals that make up the 2030 Agenda (the so-called UN's Sustainable Development Goals) gives an idea of the broad scope of this key notion, which, in addition to aspects related to environmental protection, also entails, for example, goals related to the fight against poverty, ensuring decent living and working conditions, reducing inequalities, particularly gender inequalities, and countering corruption, organised crime, and illegal flows of arms and money.
Regarding the environment, being sustainable means decreasing consumption and reducing our activities' environmental impact while preserving resources for future generations. So what does the social aspect of public procurement entail instead?
In general, implementing sustainability in public procurement means using public funds to purchase according to criteria that integrate a wide range of objectives related to the three-dimensional concept evoked above. Rewarding bids that also have an eye on sustainability and quality, and not just the lowest price, provides incentives for private companies to integrate the principles of corporate social responsibility into their activities, taking into account the impact they have on society and stakeholders. The doctrine also speaks of the "strategic use" of public procurement. When it comes to sustainability in procurement, one can have an approach that I would call more "conservative" (or minimalist) and one that is more "proactive" (or positive): the first consists of simply ensuring that only firms that comply with existing environmental protection legislation, (minimum) legal requirements for worker protection, working conditions and equal pay, and a set of integrity duties (e.g., they pay taxes and social contributions, do not bribe and do not engage in dishonest behaviour) participate in tenders. The second, on the other hand, entails that, in addition to these minimum conditions of participation, the chosen company actively contributes to the sustainable development goals, going beyond what is required and thus generating a positive impact on society: this is the case, for example, if companies offer only organic products, implement environmentally friendly production methods in-house even if they are not obligated to do so, pay attention to gender representation in management positions, and offer their employees innovative work-life balance measures. It is this approach that needs to be highlighted.
How easy is it to take social sustainability into account in procurement?
Integrating the environmental aspect into procurement is easier because it is usually embodied in technical specifications linked to the product or service required. It is often also attested by widespread certifications (e.g., organic products or wood from sustainable forests) and is, therefore, more easily measured by contracting authorities. Social sustainability, on the other hand, is more about the policy of the bidding company and its internal structure. This aspect is only (but still!) indirectly reflected in the subject matter of the contract and, for a number of technical reasons, related to the nature of public procurement law and case law that in the past was rather strict concerning this issue, somewhat more challenging to integrate into procurement procedures. However, the new law has marked a change of culture in public procurement by opening a gateway to new logic: procurers are now called upon to internalise this new paradigm by introducing more and more sustainability into their purchases.
Ticino is moving forward with a pilot project.
Yes, the Ticino legislature has recently introduced "social responsibility" as one of the criteria for awarding public contracts. This means that a legal basis allows procurers to pick bidders that commit to the principles of social responsibility within their organisations and therefore encourage them to be sustainable. To facilitate the application of this criterion and reduce the risk of arbitrariness or discrimination, the Canton has developed a scorecard containing 30 indicators designed to guide contractors in assessing companies' commitment to economic, environmental and social sustainability. The approach is innovative and interesting as it also focuses on companies' policies on work-life balance, a balanced gender representation at the top, and the promotion of lifelong learning and vocational reintegration. It also rewards bidders who pay salaries above the minimum wages applicable to the sector and have codes of conduct, ethics charters, etc. Its implementation will first be tested in a pilot phase. How it will be applied in practice and accepted by the Courts is yet to be seen. It will be necessary above all to ensure that the certification of the fulfilment of the criteria contained in the Sheet is not reduced to a sterile exercise but reflects a fundamental change in corporate culture. It is, however, in my view, a welcome impetus toward the paradigm shift in public procurement law that the legislature intended.
Will introducing this sustainability assessment lead to more bureaucracy?
Indeed, all these protocols and certifications entail costs for companies, including internal organisation. The risk that high requirements for sustainability and related certifications will effectively preclude small and medium-sized enterprises from participating in specific public markets should not be underestimated. However, each criterion should always be applied according to the principle of proportionality, transparently and taking care not to restrict competition excessively. On the other hand, what we are in is probably a transitional phase: the time will come when attention to economic, social and environmental sustainability will become an integral part of the culture of companies and procurers, and bureaucratic obstacles will be reduced accordingly.