A report by the World Economic Forum and business strategy consultancy the Boston Consulting Group (BCG) has found that about 40% of global greenhouse-gas (GHG) emissions related to public procurement can be abated for less than $15/t of carbon dioxide (CO2) emissions.
According to the 'Green Public Procurement: Catalyzing the Net-Zero Economy' report, greener public procurement should increase costs to governments by no more than 3% to 6%.
The private investment and new jobs triggered by greener public procurement, in aggregate, will boost global gross domestic product (GDP) by about $6-trillion through 2050, which is a significant proportion of the green economy's total GDP of $70-trillion, the report states.
As of November, 92 countries, which collectively account for about 85% of global GHG emissions, have pledged to meet net-zero emissions targets. The study indicates that greener public procurement practices can significantly reduce CO2 emissions across government supply chains and operations.
Most of the emissions associated with public procurement – up to 75% of the total – stem from the activities of six industries, namely defence and security, transportation, waste management services, construction, industrial products and utilities.
The study shows that governments currently spend about $11-trillion, or 15% of global GDP, on procurement every year, making the transition to green public procurement crucial for reaching net zero.
Public sector procurement activities are directly or indirectly responsible for 15% of global GHG emissions, seven times the amount emitted by the entire aviation industry.
“Government spending power is often overlooked in discussions of paths to net zero, but public procurement's sheer scale and spending power can exert considerable influence in combating global warming. There is a short-term green premium for governments when transitioning to more sustainable products and services.
"The increased cost will decline over time, however, as new technologies are scaled up, making the production of net-zero products more efficient,” highlights BCG MD and senior partner and report co-author Joerg Hildebrandt.
The added cost of green procurement could spur governments to work cooperatively to encourage suppliers to invest in the technological innovation needed to make the transition to net zero. This, in turn, would help suppliers decarbonise the goods and services they sell to governments, the report authors say.
“Achieving net zero will require collaboration between governments and companies. Importantly, this report shows that the transition to green public procurement benefits all stakeholders. The transition to green procurement practices should not be perceived as a cost burden for industries and the public sector, but rather as something that creates long-term sustainable economic growth,” says WEF president Borge Brende.