Unit 1, Huguenot Place 17a Heneage Street London E1 5LJ United Kingdom t/ f: +44 (0)20 3246 0066 e: info@isealalliance.org www.isealalliance.org Creating a world where ecological sustainability and social justice are the normal conditions of business R087 – Leveraging Public Procurement to Up Scale the Impacts of the ISEAL Alliance June 2009 Introduction The aim of this document is to provide background for a strategic discussion at the ISEAL Alliance June 2009 AGM about the benefits and pathways for a collaborative engagement in public procurement by the ISEAL Alliance. The document provides some background on current public procurement practices, and the challenges, risks and opportunities arising with the growing interest of public authorities in sustainable public procurement (SPP) practices. The paper outlines three potential degrees of engagement for collaborative work on public procurement by the ISEAL Alliance with a view to: > Agreeing on the degree of priority that work on public procurement represents for ISEAL members > Assessing the potential contributions that ISEAL members could make > Identifying priority targets for advocacy work on public procurement The objective will be to reach agreement on a recommendation to the ISEAL Board. In addition to bilateral conversations with members ahead of the AGM, feedback, additions and corrections to this document are welcome in the run-up to, as well as at, the AGM. The contact person for this process is Elizabeth Guttenstein, elizabeth@isealalliance.org. This document was prepared with research support and in collaboration with Anja Osterhaus, independent consultant. The ISEAL Alliance is a not-for-profit company, limited by guarantee. Registered in England and Wales, company number 4625800 1 of 20 Contents Introduction 1 1 Public Procurement in ISEAL’s Strategic Plan 2 2 The Strategic Opportunity 3 3 Limitations & Emerging Risks 4 4 Current Approaches to Sustainable Public Procurement (SPP) 5 5 The ISEAL Alliance’s Strategy for Public Procurement 5.1 What We Want to Achieve 5.2 How We Are Going to Achieve It 8 8 9 6 Identifying Entry Points for Engagement 12 7 Annex – Background on Selected Potential Targets 7.1 The WTO Government Procurement Agreement (GPA) 7.2 United Nations Environment Programme (UNEP) 7.3 European Union 7.4 National Administrations 14 14 15 15 18 1 Public Procurement in ISEAL’s Strategic Plan Multilateral, national and regional governmental bodies are key users and supporters of social and environmental standards systems. ISEAL research on the “Governmental Use of Voluntary Standards1” (2008) illustrated how governments worldwide use voluntary standards systems to deliver on their own public policy objectives. The benefits of this relationship were recently underscored in a communication by the European Commission, which singled out standards systems members of the ISEAL Alliance, and stated the Commission’s intention to: “stay engaged and further support such schemes2” confirming that “sustainable development can be served by schemes that prioritise environmental, social or economic elements3”. Though some governments are increasingly choosing to participate in the development of standards systems4, or otherwise support, use and facilitate voluntary standard-setting and certification, many governments still find this challenging. Some have underlying concerns about the legality of using voluntary standards systems. Others find it challenging to identify which voluntary standards systems to work with. Others still are concerned about being able to prove 1 Please refer to R079 Governmental Use of Voluntary Standards : Innovation in Sustainability Governance 2 European Commission (2009) Communication : Contributing to Sustainable Development : the Role of Fair Trade and NGO Trade-Related Sustainability Assurance Schemes COM(2009)215 Final page 10 3 Ibid. page 7 4 See for example participation by Dutch and Swiss governmental representatives in the development of the Version 1 standard of the Roundtable on Sustainable Biofuels 2 of 20 that, by using voluntary standards systems, their intended sustainability objectives are effectively being met. The ISEAL Alliance Strategic Plan 2009-20135 commits ISEAL to empower stakeholders to use credible standards systems. Multilateral and national governmental institutions are key stakeholders targeted: Output 3 – Stakeholders supported to use credible operating practices: > Increased year on year uptake of credible standards systems by governmental bodies, business and civil society 2 The Strategic Opportunity Across OECD countries, public procurement accounts for 15-25% of GDP. A 2002 estimate by the European Commission for total public procurement in the then 25 EU member states was of €1500 billion, accounting for 16.3% of the Union’s GDP6. The rate of spending on public procurement in developing countries is estimated to be substantially greater7. Governments have used their purchasing power in the market as a tool to achieve public policy objectives since at least the nineteenth century8. Today, most OECD countries have policies for green or sustainable procurement9. Amongst BRIC countries, Brazil, China and India have developed frameworks for SPP10 while in most developing countries, international and national policy efforts currently focus on curbing corruption and ensuring transparency in public procurement. As well as representing a potentially significant, largely untapped, market, there are other reasons why public procurement is strategically important for the ISEAL Alliance. With growing recognition for the importance of sustainability, many governmental institutions, both at national and multilateral level, have in recent years strengthened their resolve to “use public funds to deliver real value for money11”. To this end, ambitious targets for sustainable public procurement have been set. The UN’s Marrakech Process on Sustainable Consumption & Production aims at achieving sustainable procurement policies in 10% of countries in all 5 Please refer to E058 ISEAL Alliance Strategic Plan 2009-2013 – Scaling Up Social and Environmental Standards Systems 6 Brack, D. (2008) Social Issues in Timber Procurement Policies (third draft) page 6 “The aggregate importance of procurement in developing country public spending is obscured because procurement transactions frequently take place in a decentralised fashion across the entirety of government. When the value of these transactions are combined, procurement is often one of the top three types of spending (besides salaries and debt payments), if not the most important. Procurement is particularly prominent in developing countries with active infrastructure and social programmes. In Uganda, for example, 70% of public spending goes through the public procurement system.” DAC Guidelines and Reference Series - Harmonising Donor Practices for Effective Aid Delivery Volume 3:Strengthening Procurement Capacities in Developing Countries www.oecd.org/dataoecd/12/14/34336126.pdf 7 8 Brack, D. (2008) Controlling Illegal Logging page 2 9 www.unep.fr/scp/procurement/activities.htm 10 Perera, O. et al (IISD) (2007) State of Play in Sustainable Public Procurement page 6 “The public sector needs to procure sustainably because that is the only way that we can be sure to offer real value for money over the longer term” DEFRA (2006) Procuring the Future – Sustainable Procurement National Action Plan page 10 11 3 of 20 regions of the world by 201012. The European Commission suggested a political target of 50% green public procurement (GPP) to be reached by the now 27 EU member states by the year 2010. Front runners like the Netherlands have even committed to reach 100% sustainable procurement by 201013. This trend is likely to continue, with emerging countries like Brazil, India, China, and recently also developing countries, particularly in Africa slowly catching up14. There is a growing demand for ways to identify and select environmentally and socially preferable products. A procurement task force set-up under the auspices of the UNEP Marrakech Process identified over 300 SPP tools in 2007, including reviews of standards and labels15. Japan’s policy on procurement states that: “A wide variety of information about ecofriendly goods is already available, including various environmental labels and environmental information database. Therefore, it is important to attempt to the maximum [...] impact by fully utilizing available information from environmental labels provided by third party organizations16. More recently, the governments of Switzerland and Germany have mandated a coalition of partners working with the International Trade Centre’s (ITC) “Trade for Sustainable Development” portal17 to develop an application specifically for procurement contracting authorities. The Swiss department for Economic Cooperation (SECO) has further contracted ISEAL to propose a framework for environmental procurement through the use of voluntary standards. SPP catalyses further sustainable markets. Leading by example, it can influence the private sector, e.g. by creating an incentive for companies to become certified to be able to access procurement markets, or suppliers switching over to certified products for all their customers, for the sake of supply chain simplicity18. Public procurement is particularly relevant for niche and innovative products because the increased demand can help to reach economies of scale which will ultimately help to reduce prices and make these products competitive. Finally, procurement may also leverage consumer support for sustainability standards, by inspiring those who do not otherwise choose sustainable products, to follow the lead of governments. In brief, leveraging public procurement is a key pathway to scale up the impacts of the voluntary standards systems movement. However, the potential of procurement can only truly be leveraged if its current limitations and emerging risks are fully addressed. 3 Limitations & Emerging Risks Despite increasing governmental interest in SPP, and the already well established use of voluntary standards in public procurement, there are also a number of emerging risks and limitations to current practices. Credibility, legitimacy and accountability are hardly recognised as differentiating criteria between standards systems when used for public procurement. Some countries, including 12 www.unep.fr/scp/marrakech/taskforces/procurement.htm 13 (2007) Dutch National Action Plan for Sustainable Public Procurement 14 Perera, O. et al (IISD) (2007) State of Play in Sustainable Public Procurement 15 Ibid. page 7 16 Japan Ministry of Environment (2008) Basic Policy on Promoting Green Purchasing page 5 17 Please refer to R091 Scaling Up Impacts of Social and Environmental Standards Systems section 5.3 18 Brack, D. (2008) Controlling Illegal Logging page 6 4 of 20 France, Japan and New Zealand, currently have very loose requirements for credibility. For example, Japan accepts any form of certificate, even company self-certification, as being sufficient to meet their sustainable timber procurement requirements19. This means that operators certified to ISEAL members interested in tendering for procurement contracts do not benefit from their standards complying with ISEAL membership requirements. With the rapidly growing landscape of standards systems and sustainability labels, governments who have traditionally used one or more voluntary standards system find they are increasingly challenged by stakeholders and industry groups that do not operate within those schemes. Nowhere has this been more apparent in recent years than in the Netherlands, where regionally this had led to legal challenges and court rulings20 or nationally, where efforts to find ways to meet the policy-set target of 100% sustainable procurement by 201021 have been ongoing for several years, and remains as yet unresolved. The increased engagement in public procurement by stakeholders with different interests has also led to governments developing increasingly diverse framework criteria for defining “sustainable” and selecting eligible suppliers for their contracts. With industry players often disposing of greater advocacy means than civil society actors, this can result in weak criteria. Conversely, sometimes criteria are set in such a way that they focus on issues that exclude many credible standards systems simply because they do not explicitly adopt a certain approach (e.g. organic farming) or because they cannot certify to a particular criterion (e.g. a living wage). 4 Current Approaches to Sustainable Public Procurement (SPP) There are a variety of approaches that governmental authorities use in relation to SPP. Some of the main variables to these approaches are: > Which governmental body is taking action, and who they have jurisdiction over. Public procurement is addressed by multilateral institutions like the WTO and the European Union, through national governments, down to public authorities which may include city administrations, public hospitals and schools. > What action is being taken, whether a policy framework is being set-up or rather tendering and contract award requirements defined. > Whether the action taken is binding or not. Public procurement interventions span defining targets to be achieved (e.g. as percentage of spend compared to conventional procurement); setting framework criteria for either impacts that should result from procurement (e.g. reduced waste or water usage) or the products that shall be sustainably procured (e.g. timber, textiles); to simply promoting SPP (e.g. through information campaigns, workshops, guidance materials). A typology of these approaches and other variables are represented in Table 1: 19 Brack, D. (2008) Social Issues in Timber Procurement Policies (third draft) page 25 20 Please refer to E048 Governmental Use of Voluntary Standards Case Study 3 : Groningen Province (the Netherlands) and Fairtrade (FLO) Standards 21 (2007) Dutch National Action Plan for Sustainable Public Procurement page 2 5 of 20 Table 1 – A Typology of Governmental Uses of Voluntary Standards in Procurement Binding Targets for Sustainable Public Procurement (SPP) Uptake Measures by Government Aimed at Governmental Bodies Multilateral Institutions EU – binding green procurement targets under consideration22 National Institutions Contracting Authorities Netherlands – 100% SPP by 2010 n/a Various countries - Fairtrade Towns24 commitment to source certain percentage of FT products (varies) NonBinding UN Marrakech Process – 10% countries have SPP by 2010 UK – measuring progress in achieving sustainability23 Binding WTO – Agreement on Government Procurement UK – Procuring the Future sets sustainability criteria and priority products NonBinding EU – green procurement criteria for 20 product groups by 201025 Japan – timber procurement Germany – Towns commit to only procure products that are free from forced child-labour26 Tender & award criteria Binding EU – binding green requirements under consideration27 Denmark – timber procurement “legal” & “sustainable” Groningen (NL) – hot beverages tendering28 Generic Promotion NonBinding OECD – undertakes surveys between members, new research, shares good practice29 UK – sustainable consumption strategy funding certified and healthy school lunches30 Various countries - Fairtrade Towns31 Criteria for SPP n/a 22 European Commission (2008) Communication on Public Procurement for a Better Environment COM(2008)400/2 23 www.defra.gov.uk/sustainable/government/progress/policy-monitoring/consumption-production.htm 24 www.fairtrade.org.uk/get_involved/campaigns/fairtrade_towns/default.aspx 25 http://ec.europa.eu/environment/gpp/consultation_en.htm 26 www.earthlink.de 27 European Commission (2008) Communication on Public Procurement for a Better Environment COM(2008)400/2 28 Please refer to E048 Governmental Use of Voluntary Standards Case Study 3 : Groningen Province (the Netherlands) and Fairtrade (FLO) Standards 29 Ref OECD website 30 Please refer to R170 Proceedings – Private Standards and Public Policies: Making the Fit 31 www.fairtrade.org.uk/get_involved/campaigns/fairtrade_towns/default.aspx The ISEAL Alliance is a not-for-profit company, limited by guarantee. Registered in England and Wales, company number 4625800 6 of 20 Multilateral Institutions Targets for Sustainable Procurement (SP) Uptake Binding NonBinding Measures by Government Aimed at Business n/a EU – Retail Forum measures progress in sustainable procurement33 Binding Criteria for SP NonBinding Tender & award criteria Binding Generic Promotion NonBinding National Institutions US – 23 States have binding Renewables Portfolio Standards, obliging energy retailers to introduce renewable energy into their portfolio32 n/a n/a n/a Belgian social label, awarded to companies that respect ILO core labour standards36 n/a EU Sustainable Development Strategy promotes voluntary schemes37 n/a US – 4 States have non-binding Renewables Portfolio Standards34 n/a EU Parliament - CSR resolution which commends coordination through ISEAL35 Contracting Authorities n/a Belgian Fair Trade Week38 32 www.eere.energy.gov/de/renewables_portfolio_standards.html 33 http://ec.europa.eu/environment/industry/retail/index_en.htm See section 1.6.4 for more information 34 www.eere.energy.gov/de/renewables_portfolio_standards.html 35 European Parliament (2007) Resolution of 13 March 2007 on Corporate Social Responsibility: a New Partnership (2006/2133(INI)) 36 www.social-label.be 37 n/a n/a Germany - Fair coffee partnerships of towns (Städtekaffee)39 Renewed EU Sustainable Development Strategy (Council Resolution 10117/06), p.13: Member States should support information campaigns with retailers and other organisations to promote sustainable products inter alia products that stem from organic farming and fair trade as well as environmentally sound products. 38 E046 Governmental Use of Voluntary Standards Case Study 1: Belgium’s Fair Trade Centre and the Fair Trade Movement 39 www.service-eine-welt.de/finanzierungsratgeber/foerderbeispiele-neuwied.html 7 of 20 5 The ISEAL Alliance’s Strategy for Public Procurement 5.1 What We Want to Achieve While the growing interest by public authorities in sustainable public purchasing clearly represents an enormous opportunity for the ISEAL Alliance, under current circumstances this trend can convert into challenges and even risks for ISEAL and its members, as illustrated in chapter 3. Scaling up the impacts of voluntary standards systems through leveraging public procurement critically depends on achieving the following three targets: 1. Building awareness and alignment on the importance of credibility as a differentiator between standards systems It is proposed that this can be achieved by building on the recognition and use of ISEAL Credibility Tools by governmental bodies. Strengthened advocacy to key policy makers, based on a shared position paper will be the primary means to achieve this. Strengthened communications outreach aimed at mobilising potential champions and multipliers for the advocacy effort will also be critical to underscore the “ask” for credibility. 2. Supporting and enabling procurement policy makers and procuring authorities to confidently and effectively define criteria that will strengthen the access to products and services certified to credible voluntary standards systems Objective criteria pertaining to the dimensions of credibility enshrined in the ISEAL Credibility Tools (such as accountability, transparency, participation and verification) can be identified. Similarly, objective criteria for environmental, social and economic outcomes can be drawn from the draft ISEAL Impacts Code. Whilst governments today often define criteria for “sustainability” outcomes, they do not as yet include ones for credibility. Both sustainability and credibility criteria need to be developed into a framework to be promoted for uptake both in policy frameworks for SPP, as well as in the form of objective criteria for tenders. Coordination and partnership opportunities for this are likely to develop with a number of initiatives currently underway aimed at developing similar frameworks as mentioned in chapter 240. 3. Influencing policy developments to enshrine the use of credible voluntary standards systems in legislation As indicated in the first two targets, achieving a scalable impact on SPP will require identifying policy processes to influence, opportunities and means to engage in these processes, as well as champions and multiplier partners: “Dedicated legal- or policy-backing is critical to give sustainable public procurement efforts the legitimacy needed to break through and become embedded into the traditional thinking and financing that is commonplace in public sector procurement41“. Some of these are explored in this paper, for discussion and agreement at the June 2009 AGM. 40 Please refer to R091 Scaling Up Impacts of Social and Environmental Standards Systems section 5.3 41 Perera, O. et al (IISD) (2007) State of Play in Sustainable Public Procurement page 10 The ISEAL Alliance is a not-for-profit company, limited by guarantee. Registered in England and Wales, company number 4625800 8 of 20 5.2 How We Are Going to Achieve It The typology presented in Table 1 can help us to unpick which might be useful entry points for the ISEAL Alliance in wishing to leverage public procurement for scaling up the governmental use of voluntary standards. The patterns are not entirely surprising. The higher the level of government (multi-lateral > national > local contracting authority) the closer the relationship to policy-making. The lower the level of government (local contracting authority < national < multilateral) the closer the relationship to actual tender requirements. It is also important to remember that whilst relatively few governmental authorities are involved in setting the policy framework for SPP, most public authorities use public procurement in their own operations: from the WTO secretariat down to the town halls and hospitals of each city. Based on this analysis, three scenarios for engagement by the ISEAL Alliance in public procurement can be envisaged. The first two scenarios focus respectively on shaping the policy frameworks at i) multilateral level (e.g. EU and UN, ...) and ii) at the national level. The third scenario focuses on the integration of sustainability criteria in public tenders. 9 of 20 Table 2 – Engagement Strategies Level of collaboration (Low) Shaping Multilateral Policy Objective Ensure national policy and regulatory documents for public procurement are based on an ISEAL defined framework which includes: Include in efforts to shape guidance for tenders and/or specific tender policy processes which are based on an ISEAL defined framework which includes: > Use of international voluntary standards > Use of international voluntary standards > Selection criteria based on ISEAL > Selection criteria based on ISEAL > Use of international voluntary standards > Selection criteria based on ISEAL Who in ISEAL Alliance 42 credibility tools credibility tools One or more multilateral institutions (e.g. EU, UNEP, ...) One or more key countries (e.g. Netherlands, Switzerland, US, Brazil, ...) i) Multipliers who propose tendering frameworks (e.g. ICLEI42, EU) (see chapter 7) (see chapter 7) ii) Actual administrations before tendering > International advocacy groups (e.g. > ISEAL members’ national members / > EFTA Public Affairs project (Fair Trade) IISD, IIED, ICTSD, Oxfam, WWF, Potential Allies (High) Influencing Tendering Requirements Ensure multilateral guidance and regulatory documents for public procurement are based on an ISEAL defined framework which includes: credibility tools Policy Target (Intermediate) Shaping National Policy ICLEI, ECCJ43 ...) > Members of Parliament (for the EU) initiatives > National advocacy groups (e.g. Oxfam, > National advocacy groups (e.g. Oxfam, WWF, Members of ECCJ...) WWF, members of ECCJ…) > EU Retail Forum (see chapter 7) > ICLEI Regional Offices > ISEAL Secretariat > ISEAL members > ISEAL members > ISEAL Secretariat > ISEAL members (national members / initiatives where available) ICLEI - is an association of over 1000 local governments from 67 countries who are committed to sustainable development. www.iclei.org 43 European Coalition for Corporate Justice - www.corporatejustice.org, advocating for the systematic integration of sustainability criteria in public tenders at EU and, through their members, at national level. The ISEAL Alliance is a not-for-profit company, limited by guarantee. Registered in England and Wales, company number 4625800 10 of 20 Level of collaboration (Low) Shaping Multilateral Policy (Intermediate) Shaping National Policy (High) Influencing Tendering Requirements > ISEAL member stakeholders > ISEAL Secretariat (framework only) > Joint position paper > Collaborative advocacy (e.g. organising a procurement conference at the EU) > Coordinated communications > Joint position paper adapted and > Joint report on including credible voluntary standards in procurement translated for different countries > Development of training44 and toolkits members (e.g. organising a procurement conference, or series of regional workshops) How tenders and contract awards > Collaborative advocacy by affected for procurement authorities > Coordinated outreach to potential > Coordinated landscape monitoring and pooling of good practice (and up multipliers > Coordinated communications coming threats) intelligence > Development of case studies of national best practice examples > Coordinated communications This could be done, for example, as part of the “Forum for dialogue and learning between governments and multi-stakeholder standards systems”. This is referred to indirectly in the Strategic Plan 2009-2013 Output 3 (page 10) when we speak of “ISEAL is committed to lead efforts to bring together governments and voluntary standards systems. With governmental partners, ISEAL will pursue the creation of a permanent dialogue between public bodies and voluntary standards systems, to learn from each other and share best practice”. 44 11 of 20 The premise of this paper is that there is a need for collaborative and coordinated engagement between ISEAL Alliance members and the ISEAL Secretariat if we wish to meaningfully leverage the potential of public procurement to scale up the impacts of the voluntary standards movement. Collaboration is needed to reach agreement on a common position which underscores the benefits of using voluntary standards systems to implement SPP, and promotes the recognition and use of credibility as a differentiator between standards systems. Collaboration is also needed to monitor and identify opportunities for influencing public procurement frameworks, as well as collecting and sharing in examples of good practice (and evidence of bad practice). Whilst as individual organisations we may have limited geographical scopes, as a network we can cover not only a larger geography, but also experiences and intelligence from a variety of procurement sectors (e.g. energy, food, construction timber ...). Finally, coordination is needed to ensure that we can mobilise sufficient resources (e.g. people to speak at events or meetings with officials, communications materials ...) to engage in opportunities as these arise. This paper assumes that work on public procurement may be only one small activity for the majority of ISEAL members and hence that most members will have limited staff resources available for this, underscoring the benefits of coordination and collaboration. A Brief Glossary ISEAL Members – Unless otherwise stated, standards systems members of the ISEAL Alliance ISEAL Alliance – Unless otherwise stated, ISEAL Alliance refers to the ISEAL Secretariat and its members ISEAL Secretariat / ISEAL – Unless otherwise stated, ‘ISEAL’ is used as an abbreviation for the ISEAL Secretariat Standards Systems - This term captures all component functions involved in the application of a specific standard, ranging from its definition and implementation, through capacity building to certification and accreditation. 6 Identifying Entry Points for Engagement Different degrees of collaboration underpin the three scenarios presented in the previous section, with the first scenario requiring the lowest level of commitment from ISEAL members (and respectively higher commitment from the ISEAL Secretariat). The third scenario, being the most diffuse, demanding a higher level of commitment over time and in the effort needed to mobilise the ISEAL Alliance’s partners and networks. If we consider the relative size and spread of the ISEAL Alliance resources, as well as our respective strengths in influencing policy makers and business, we can start to identify which could be useful entry points for a collaborative push on public procurement: The ISEAL Alliance is a not-for-profit company, limited by guarantee. Registered in England and Wales, company number 4625800 12 of 20 Strongest Average WTO / EU / UN ISEAL Secretariat ISEAL members European Union ISEAL Secretariat Fair Trade Advocacy Office IFOAM EU office Rainforest Alliance / MSC National ISEAL members (FSC, MSC, CRS, RA, Utz ...) National initiatives (FLO, FSC, ...) Supporters (e.g. Oxfam, WWF) ISEAL Secretariat Sub-National Certified businesses (who would apply for tenders) Supporters (e.g. Oxfam) ISEAL members (Utz, RA, …) National initiatives (FLO, ...) Weak ISEAL Secretariat This table is most likely incomplete. Whilst there has been a steady growth in the information shared between members and the ISEAL Secretariat on their activities on public procurement, the practice is still relatively new. In particular, interventions at the “national” and “sub-national” levels may be diverse and simply less visible to ISEAL. Nonetheless, this analysis suggests that the ISEAL Secretariat has relative strengths at the multilateral level, having relatively established working relations with the WTO Secretariat and a number of EU Commission departments and, to a lesser extent, members of the EU Parliament. As regards the OECD and UN, ISEAL has the foundations for a working relationship, though not yet established with those engaged in SPP policy making. ISEAL members are of course quite a diverse group, and this paper only provides a general overview. In general, therefore, ISEAL members seem to have strong presences in particular countries, notably those where they are based or –for those who have national members/initiatives, where these are based. Some ISEAL members are also active in multilateral fora. At EU level some have dedicated advocacy resources (FLO, WFTO, IFOAM, RA and MSC). Others engage also with UN departments and the OECD, though whether this is also on SPP is unclear. Finally, many ISEAL members also enjoy large networks of stakeholders and constituents who often act in support of their standards systems. These can be operators certified to their standards or even supportive advocacy and pressure groups (e.g. local action groups). This analysis suggests that focussing on multilateral and key national targets is likely to offer the best outreach potential for the ISEAL Alliance. In the light of the analysis in chapter 4, this also implies that the priority focus would have to be on influencing policy-making rather than shaping individual tenders. 13 of 20 7 Annex – Background on Selected Potential Targets The following sections look into some of the potential key targets at international and national level that could be prioritised in advocacy work on procurement. 7.1 The WTO Government Procurement Agreement (GPA) Trade rules defined at the WTO represent the highest level policy framework for public procurement. Government procurement measures are subject to the WTO Government Procurement Agreement (GPA). Unlike most WTO agreements, this is a plurilateral rather than multilateral agreement. By December 2008, forty-one countries were signatories to the GPA45. In 2006, working in collaboration with the Centre for International Environmental Law (CIEL), ISEAL mandated a legal opinion regarding the ability of governments to reference existing voluntary international standards in relation to government procurement. The legal opinion concluded that: “Technical specifications laying down the processes and methods for the production of products, including social and environmental processes and methods, fall within the scope of the GPA. These should be based on international standards, where appropriate, including international social and environmental standards.46” As there has never been a WTO dispute involving the GPA and the use by governments of voluntary standards in their procurement rules, it is not possible to say for certain how any potential conflict would be resolved. However, and because of this, ISEAL has no reason to pursue engaging the WTO on clarifying or strengthening the link between voluntary standards systems and the GPA. The legal opinion undertaken by ISEAL and CIEL provides sufficient basis for the ISEAL Alliance to advocate that governments can use voluntary international standards in their procurement policies. Nevertheless, since recent research has again shown that legal uncertainty is still one of the main limitations for green public procurement47, the ISEAL Alliance should maximise the outreach of the legal opinion, both in terms of making it more visible (e.g. through mailings, presentations at conferences) and more accessible (i.e. easier to understand and translate into practice). ISEAL should also not delay developing a framework for procurement, which underscores the benefits of using international standards systems that meet objective criteria for credibility and alignment to “In December, Chinese Taipei joined forty other WTO members as signatory to the WTO Government Procurement Agreement. Current members are: Canada; the European Communities, including its 27 Member States; Hong Kong, China; Iceland; Israel; Japan; Korea; Liechtenstein; the Kingdom of the Netherlands with respect to Aruba; Norway; Singapore; Switzerland; and the United States. Other WTO Members that are in the process of negotiating their accession to the Agreement on Government Procurement are Albania, China, Georgia, Jordan, the Kyrgyz Republic, Moldova, Oman and Panama. A further six WTO Members, namely Armenia, Croatia, the Former Yugoslav Republic of Macedonia, Mongolia, Saudi Arabia and the Ukraine, have provisions regarding accession to the Agreement in their respective Protocols of Accession to the WTO.” Policy Watch Vol 4 Issue 4 45 46 R052 ISEAL-CIEL Legal Opinion on GPA 47 McKinsey (2008) Potenziale der öffentlichen Beschaffung für ökologische Industriepolitik und Klimaschutz www.bmu.de/files/na/application/pdf/mckinseystudie.pdf The ISEAL Alliance is a not-for-profit company, limited by guarantee. Registered in England and Wales, company number 4625800 14 of 20 international trade law requirements, such as those defined in ISEAL Credibility Tools, including the Code of Good Practice in Setting Social and Environmental Standards. 7.2 United Nations Environment Programme (UNEP) UNEP and the United Nations Department for Economic and Social Affairs (UN-DESA) are the leading agencies of the Marrakech Process, a global multi-stakeholder process to promote Sustainable Consumption and Production which aims at developing a 10 years Global Framework of Programmes on SCP (10YFP). The 10YFP will be negotiated at the 19th session of the UN Commission on Sustainable Development in 2011. Seven Task Forces have been set-up under the Marrakech Process, one of which focuses specifically on SPP. Led by the Swiss government, this Task Force has developed a general SPP approach which includes a definition of SPP, the development of key principles, a status assessment as well as the development of country implementation plans, tools and trainings. This framework will be tested in 14 countries in all regions in order to give input into the 10YFP.48 Given that it is a UN-led process, it has the potential to become a reference on sustainable procurement, particularly for developing countries. So far, however, (voluntary) standards are only addressed as potential barriers to trade in the draft 10YFP. ISEAL should monitor the process, and engage with the lead UNEP unit, the Sustainable Consumption & Production Branch, to glean greater understanding of their aspirations and drivers behind this process. 7.3 European Union The Communication adopted by the European Commission in July 2008 on Sustainable Consumption & Production and Sustainable Industrial Policy Action Plan (SCP)49, aims at integrating and strengthening the potential of different policy instruments, such as the Ecolabel, the Energy label, Green Public Procurement and others to deliver sustainability outcomes. While proposing some areas for new or revised legislation, the SCP also initiated some new policy processes, such as the establishment of a Retail Forum. It is worth noting that, despite the title, the SCP clearly focuses on the environmental dimension of sustainability. The most relevant processes for public procurement are addressed in some detail below. 7.3.1 Communication on Public Procurement for a Better Environment50 As the title suggests, this Communication focuses specifically on the environmental dimensions of SPP, or green public procurement (GPP). The main objectives of the Communication are to set common GPP criteria for a range of products, and to develop legal and operational guidance for their use across the EU. Criteria for ten product groups have already been developed, including construction (covering raw materials, such as wood, heating and cooling equipment), food and catering services, energy 48 www.isealalliance.org/document/docWindow.cfm?fuseaction=document.viewDocument&documentid=747&documentFormatId= 1498 49 European Commission (2008) Communication on Sustainable Consumption & Production and Sustainable Industrial Policy Action Plan COM(2008) 397Final 50 European Commission (2008) Communication on Public Procurement for a Better Environment COM(2008)400/2 15 of 20 (including electricity, heating and cooling coming from renewable energy sources), clothing, uniforms and other textiles, copying and graphic paper, furniture and cleaning products and services. Criteria for other ten product groups are currently being drafted. They are divided into “core” and “comprehensive” criteria. Core criteria are designed to be used by any European contracting authority. They address the most significant environmental impacts, and are designed to be used with minimum additional verification effort or cost increases. Comprehensive criteria are intended for use by authorities who wish to purchase the best environmental products available on the market, and may require additional administrative effort or imply a slight cost increase as compared to the purchase of other products fulfilling the same function51. The criteria refer to the European Ecolabel and other national Ecolabels where these exist. Some ISEAL members’ standards are referenced as well, namely FSC (copying and graphic paper, construction, furniture), IFOAM and MSC for Food and Catering Services52.The European Commission intends for the member states to endorse the criteria developed. Formal endorsement by Member States would imply that the common GPP criteria would be included in the national action plans and guidance on GPP. The Commission proposes that by 2010 fifty percent of all tendering procedures should be green, where "green" means compliant with common “core” GPP criteria developed through this process. To monitor progress, the Commission is currently developing a method for calculating exact levels of GPP. This will focus on compliance with common "core" GPP criteria and will be based on an analysis of a representative sample of tendering procedures. The European Commission is also identifying indicators to assess the “environmental and financial [impact] gains delivered by GPP”. The method will be implemented in the best performing Member States from the outset, and repeated in all member states in 2010. While the European Commission Directorate General for Environment (DG Env) clearly plays a leading role in developing the product criteria, engagement with the Commission is unlikely to be sufficient if we want to influence this process. Key targets to consider addressing include the member states that are most active in the process (to be identified), as well as the nongovernmental organisation ICLEI. ICLEI, Local Governments for Sustainability, is an international association of local governments as well as national and regional local government organizations that have made a commitment to sustainable development53. ICLEI has a long-standing engagement in public procurement, with programmes on sustainble procurement implemented for over a decade in Europe, Latin America & the Caribbean and Oceania. DG Env and ICLEI worked together in the development of the criteria for the first ten product groups for GPP. Engagement in this process should start immediately and is likely to be most intense until the end of this year, given that the criteria are currently being developed and/or endorsed. Discussions are still open as to whether this process might become formalised and developed into binding EU legislation. Should this occur, the potential impacts of GPP criteria would be most significant, as it will shape GPP practices across the EU and will certainly constitute a reference for many other countries. 51 http://ec.europa.eu/environment/gpp/toolkit_en.htm 52 For sustainable aquaculture the EC background report on Food and Catering Services refers to ten different schemes, including IFOAM, MSC, but also EurepGAP, Debio, KRAV and Mileukeur, among others http://ec.europa.eu/environment/gpp/pdf/toolkit/food_GPP_background_report.pdf 53 www.iclei.org 16 of 20 7.3.2 Revised Ecolabel Regulation In the Spring, the EU adopted revisions to the Ecolabel Regulation. The Ecolabel currently applies to 26 product groups. The revised regulation plans to extend its scope to a further 40 to 50 product groups by 2015, including potentially fish and aquaculture, processed food and drink. The criteria themselves are not determined by the regulation, but by subsequent individual decisions for each product group. It is expected that the process of setting criteria under the Ecolabel will inform the analytical work carried out in other policy areas for the setting of minimum requirements and benchmarks of environmental performance, and vice-versa. For example, following a request from the European Parliament, the Commission will now have to assess whether the Ecolabel for food and drink should be awarded exclusively to organic products54. Alternatively, it could include references to further voluntary standards systems55 or even be dropped. A strategic assessment of the pros and cons of an extension of the Ecolabel into processed food and drink, fish and aquaculture and its relationship with ISEAL member standards systems is critical. The Ecolabelling unit in DG Environment is leading in the definition of the product groups and how the Ecolabel would apply to those products. 7.3.3 Retail Forum According to the European Commission, “retailers are in a strong position to influence more sustainable consumption through their own operations, supply chains, and consumer behaviour“56. Therefore, a Retail Forum was identified in the SCP Action Plan as a strategic means to influence sustainable consumption and supply chains. The objective is that individual large retailers commit to a series of ambitious and concrete actions towards sustainable purchasing practices, with clear objectives, timelines, deliverables, and monitoring indicators. To this end, DG Env commissioned research from BIO Intelligence Service57, published in February 2009, which gathered information on the status quo and identified a methodology to measure progress. It references a number of ISEAL member standards systems, such as FSC, MSC, RA and “a Fair Trade label” (not FLO specifically), but it does not refer to ISEAL credibility tools as a distinctive criterion. At the same time,, in February 2009, major stakeholders in the European food and drink value chains set-up the “European Food SCP Roundtable”58. Supported by UNEP and the European Environment Agency, the roundtable’s intention is to: “...facilitate agreement on uniform and scientifically reliable environmental assessment methodologies for food products.” The SCP Plan has thus started to put pressure on private actors to foster sustainable procurement practices. Retailers and food processors will need to respond and implement the ambitious Commission plans. This constitutes a potential for further uptake of voluntary standards systems, and, even more importantly from a policy-perspective, retailers and processors can be key multipliers and allies in promoting ISEAL credibility tools in procurement policies. See, for example, IFOAM EU Group Press Release of 3 March 2009 Ecolabeling for food products – added value for European consumers? www.ifoam-eu.org 54 55 Personal communication DG MARE 56 ibid 57 http://ec.europa.eu/environment/eussd/pdf/report_green_retail.pdf 58 Joint Press Release of 26 February 2009 Key Food Chain Partners to Launch Sustainability Roundtable www.ciaa.eu/documents/press_releases/PR_EFSCPRT_final_260209.pdf 17 of 20 7.4 National Administrations The review of potential national targets is far from being complete. Particularly the omission of European national governments is notable, given that important processes are happening in this region, for example Switzerland (new procurement legislation draft expected in summer 2009), the Netherlands (ongoing discussions on criteria for 100% sustainable procurement by 2010) and Germany, which the ISEAL Alliance will undoubtedly more strongly positioned to address once the lowest level of engagement (as proposed above) is agreed upon. The choice to limit this paper to the national processes identified is based on the impossibility to cover all within this background document, and an interest in exploring the geographical spread and interest of the ISEAL members. 6.4.1 United States Environmentally Preferable Purchasing (EPP) is a federal-wide programme of the U.S. Environment Protection Agency (EPA) that encourages and assists executive agencies in the purchasing of environmentally-preferable products and services. Established through Presidential Executive Order (EO13101) in 1998, it requires the EPA to develop guidance to “address environmentally-preferable purchasing”. Together with section 23 of the Federal Acquisition Regulation (FAR 207), it requires executive agencies to identify and purchase environmentallypreferable products and services. The EPP programme serves as a clearinghouse for information and practice, both for executive federal government agencies, as well as state, local governments as well as the private sector59. Sustainability claims towards consumers are regulated by the “Guides for the Use of Environmental Marketing Claims,” commonly known as the Green Guides. The Green Guides outline general principles that apply to all environmental marketing claims and then provide guidance on specific green claims, such as biodegradable, compostable, recyclable, recycled content, and ozone safe. Over the past eighteen months the Federal Trade Commission (FTC) has been consulting on the regulatory review of the Guides and conducted three public meetings, addressing “Carbon Offsets and Renewable Energy Certificates”, “Packaging” and “Green Building and Textiles”60. Legal proposals are expected in 2009. Another sustainable purchasing programme is the Renewables Portfolio Standard (RPS)61. The RPS obligates electricity retailers to include in their resource portfolio a certain amount of electricity from renewable energy resources. RPS policies are implemented at the state level, and vary considerably in their requirements with respect to which requirements they set, and what targets are set for each requirement, amongst others. With the recent change in Administration, the U.S. will undoubtedly step up its efforts, particularly in combating climate change. Apart from the ongoing processes mentioned above, new opportunities and challenges will arise which should be monitored by the ISEAL Alliance in order to identify strategic entry points. 59 www.epa.gov/oppt/epp/pubs/about/about.htm 60 www.ftc.gov/opa/reporter/greengds.shtm 61 www.eere.energy.gov/de/renewables_portfolio_standards.html 18 of 20 7.4.1 Brazil International environmental obligations and domestic resource issues have been the two primary drivers of sustainable procurement in Brazil. For example, as a response to eliminating the illegal mining of wood from the Amazon, the government implemented a certification system to track and regulate mining. In order to market the system, the government made it mandatory to buy only certified wood in government procurement schemes. Several cities have or are in the process of adopting legislation to regulate the illegal timber trade and also adopt procurement practices for buying timber from legally- and well-managed forests (FSC-certified). Public procurement in Brazil is estimated at about 10% of GDP62. There have also been significant developments at the city and state levels. In August 2008, for example, the states of Minas Gerais and of São Paulo created state programmes for sustainable public purchasing and contracting. São Paulo represents about 43% of Brazil’s GDP, and its public procurement amounts to approximately US$1 billion a year. Minas Gerais contributes approximately 9% of Brazil’s GDP63. Both states worked with ICLEI64 to develop their SPP policies. These policies include both green purchasing guidelines and specific purchasing criteria. In São Paulo, the State Secretariat of Public Management is responsible for emitting the legal directives, norms and procedures to ensure that these criteria are adopted in public contracts. The Environment Secretariat is in charge of the technical studies for characterizing goods and services and determining which can be awarded the state’s “socio-environmental seal” indicating that they meet the criteria. 7.4.2 China China does not have legislation specifically for SPP. However, its 9th Law of Public Purchasing stipulates that public procurement should promote, inter alia, social development and the protection of the environment65. Article 9 of the procurement law states that “Environmental friendly products should be preferred to purchase during governmental procurement process to promote environmental protection and economic sustainable development66”. To enable its enforcement, the State Environment Protection Agency (SEPA) and the Ministry of Finance published at the end of 2006 ““Implementation Guidance on Government Procurement on Environmental Labelling Products”. Applicable across the whole country since 2008, the Guidance requires that priority should be given to purchasing products that carry an environmental label67. To facilitate this, the government has defined environmental criteria listings for 14 product groups, including office equipment, furniture, building materials and interiordecorating materials68. 62 www.temasactuales.com/temasblog/environmental-protection/green-purchasing-environmental-protection/minas-sao-pauloadopt-a-green-purchasing-program/ 63 www.temasactuales.com/temasblog/environmental-protection/green-purchasing-environmental-protection/minas-sao-pauloadopt-a-green-purchasing-program/ 64 ICLEI - is an association of over 1000 local governments from 67 countries who are committed to sustainable development. www.iclei.org 65 www.igpn.org/guideline/guideline_in_china.html 66 www.grip.no/Hamar2006/presentations/P1%20-%20Zhang%20Xiaodan.pdf 67 www.grip.no/Hamar2006/presentations/P1%20-%20Zhang%20Xiaodan.pdf 68 The full list is available at www.sepa.gov.cn 19 of 20 The Chinese government has also developed an environmental label, which covers 56 product categories and is used as reference for green procurement. Through its “Project of Constructing an Environmentally-Friendly Society”, it has established a series of policy documents to promote green purchasing, as well as a series of green purchasing networks at the provincial and district levels, aimed at building the capacity of finance and environment protection local administrations69. Given the strategic geopolitical importance of China, the sheer size of its market, as well as the stated interest of the government to step up its efforts to promote the implementation of these practices by further developing and extending the criteria for environmental labelling and SPP; procurement may offer one pathway to identify engagement opportunities for the ISEAL Alliance in China. 69 Perera, O. et al (IISD) (2007) State of Play in Sustainable Public Procurement pages 63-64 20 of 20