Harnessing Public Procurement for the Green Transition

Australia

Framework, scope, action-plans

The Commonwealth Procurement Rules require that, when conducting a procurement on behalf of the Australian Government (i.e. the central-level government), an official must consider the relevant financial and non-financial costs and benefits of each submission, including the environmental sustainability of the goods and services (e.g. energy efficiency, environmental and climate change impact, and the use of recycled products). Moreover, the Sustainable Procurement Guide provides a step-by-step guidance for officials on how to consider sustainability across the different stages of the procurement process - from the identification of business needs to the ending phase of the contract, including review and reporting. The Guide is designed to be sufficiently flexible for entities to apply the guidance within their own departmental frameworks.

The Australian Government is committed to reducing the Australian Public Service (APS) emissions to Net Zero by 2030. Public procurement is mentioned in national commitments on climate change, however, the policy to support such a commitment was still under development at the time of the Survey.

The Department of Climate Change, Energy, the Environment and Water is responsible for environmental policies. As part of this role, the Department issues the Sustainable Procurement Guide, runs a whole-of-government education and advocacy programme and is consulted on the environmental sustainability aspects of the Commonwealth Procurement Rules.

The Australian State and Territories are advancing their own individual sustainable procurement practices, with varying stages of development. Further information on procurement practices can be found on each State and Territory website1. These jurisdictions were not included in the Survey response.

Implementation

Australia has adopted mandatory requirements to use GPP for central government only. Under the Commonwealth Procurement Rules, officials must consider the relevant financial and non-financial costs and benefits, including the environmental sustainability of the proposed goods or services. Considerations may include energy efficiency, environmental and climate change impacts, and the use of recycled products for the proposed procurement.

Under the Sustainable Procurement Guide officials can incorporate sustainability requirements into their evaluation criteria to achieve the desired environmental sustainability of the proposed goods or services. The evaluation criteria are outlined in each entity’s approach to market and will detail the set requirements that will be used to select potential suppliers. As the Sustainable Procurement Guide is designed for flexibility, it is up to each entity to apply the guidance within their own departmental frameworks.

Measurement and impact

Commonwealth entities are required to publish procurement contract notices on the AusTender Website (the Australian government’s centralised portal providing publication of Australian Government business opportunities, annual procurement plans and contracts awarded). Entities may provide information regarding environmental sustainability aspects of their procurements through other avenues, such as their Annual Reports.

Most recent developments

Australia committed the Australian Public Service (APS) to achieving the APS Net Zero 2030 target in late 2022. The APS Net Zero 2030 is the Government’s policy for the APS to reduce its greenhouse gas emissions to net zero by 2030, and transparently report on its emissions from the latter half of 2023. APS will achieve net zero by actively reducing emissions from government operations, and through the use of offsets. The approach for achieving net zero by 2030 is outlined in the Net Zero in Government Operations Strategy and Roadmap2, published in November 2023.

This policy is being delivered consistent with Australia’s international commitments and will contribute to achievement of Australia’s Paris Agreement targets. All non-corporate and corporate Commonwealth entities will be required to publicly report on the emissions from their operations (there are no exclusions from reporting). This commenced with public reporting of 2022-23 emissions in late 2023 in entity annual reports. The Department of Finance will publish a consolidated whole-of-APS report before the end of 2023.

Furthermore, as of May 2024, the Australian Government has introduced the Environmentally Sustainable Procurement (ESP) Policy as a procurement-connected policy, commencing 1 July 2024. The ESP Policy supports the Government’s commitment to a net zero and circular economy. It also promotes the important role that design and innovation play in advancing this endeavour.

As of 1 July 2024, central government will be required to apply the ESP Policy. The ESP Policy applies climate, environment and circularity principles to four high-impact procurement categories. These categories will be introduced in two stages:

• From 1 July 2024: procurement of construction services at or above AUD 7.5 million in value

• From 1 July 2025: procurement of furniture, fittings and equipment, ICT goods and textiles at or above AUD 1 million in value.

It requires relevant entities and suppliers to undertake activities to optimise environmental sustainability in procurement, in line with the Policy’s objectives.

Progress reporting will begin in August 2024 and it is expected that annual data will be publicly available from August 2025.

Finally, in 2023, the Commonwealth Procurement and Contract Management Awards for Excellence (the Awards), which promotes the important role procurement plays in delivering services and outcomes for government, citizens, and the business community, introduced the Environmental Sustainability through Procurement category, which recognises leadership in using recycled content and embedding environmental sustainability into procurement design and delivery, including the management of the ongoing arrangement. The Awards are hosted annually by the Department of Finance.