Do you know how the printer at your office was purchased? Or the materials for the road you take to drive home? Or what prompts your city or town to boast about its zero-carbon buses over its old fleet of gasoline buses?
From 2022-2023, per capita spending by federal, provincial, territorial and local governments combined was $24,225 per Canadian. Do everyday citizens understand how much of this total $950 billion was spent in line with our values – from children’s education to healthcare to roadworks and more?
The truth is, not very much. Certainly, not enough.
Our modern industrial economy has historically focused our procurement practices on the “tyranny of the lowest price,” and in Canada, this rarely includes any sustainability criteria. On the occasions when we do include sustainability, the criteria are weak, and sustainability is often not considered in the scoring of the bid or weighted very low against other considerations.
This sends a clear signal to suppliers that sustainability performance of the supplier and the services or goods provided, is unimportant. It’s time we prioritized sustainable procurement – and fast.
Canada is significantly behind on its 2030 emissions reduction targets – an international commitment. According to the Climate Change Performance Index, Canada ranks 62nd in the world on climate action and energy transition, behind Indonesia and Uzbekistan. While policies on energy transition are being debated, billions of dollars are allocated, every day, on products and services that could be helping us realize our low carbon future now.
The government is not alone — large multinational organizations have also avoided the urgent need to bring sustainability mandates into their day-to-day procurement activities. Total government and private investment on net-zero initiatives in Canada is roughly $25 billion, well short of the projected requirement of $140 billion per year.
Sustainable procurement could have a profound impact on climate change mitigation and climate adaptation and remains the simplest lever for all levels of government and blue-chip corporations to get right.
Here’s how we can get there:
1. Prioritize local communities in large-scale procurement:
Put local communities first. The focus on lower prices has led to procurement being offshored, even for commoditized products. Energy, cement, steel, plastics and often chemicals can often be produced cheaply offshore but producing them locally can help revitalize local communities and build national expertise and pride.
2. Small, immediate procurement signals are just as critical as large, long-term ones:
Starting smart, articulating clear, complete and unambiguous procurement mandates that progressively increase sustainable consumption from today to 2030 create critical market signals to kickstart the mobilization towards a circular economy, just like it did for renewables and biofuels.
2030 targets for procurement standards do not do enough, take too long to roll out, and fall into the middle management “valley of death.”
3. Meet sustainable technologies where they are:
Flexible procurement standards that allow adoption at small volumes can be instrumental in helping startups build sustainable business cases for large scale adoption.
Often procurement ships are so big that they can immediately overwhelm green product suppliers. For example, most hydrogen, fuel cell, CarbonTech, and green chemical suppliers are still extremely small in volumes they can deliver in the market. These volumes should still be absorbed quickly to encourage scale.
4. Procurement is the new Skunkworks:
World-changing tech solutions can start from anywhere be it in a garage or a remote research lab and innovators are now rightly celebrated for their resourcefulness. We need a similar view on creative and innovative procurement, championing it as an essential pathway toward sustainability.
5. Public procurement needs to see itself as a market mover vs. price taker:
Mandate procurement to consider many important factors, such as sustainable infrastructure, innovation and long-term consequences, including best value, before taking initial price into account.
Procurement has too often been a race to the bottom. Price matters but it cannot be the first (and only) thing that does.
A mandate of adopting new technologies in low-risk areas to accelerate the energy transition on five per cent of the budget would be both financially and practically feasible. One study found that even doubling the price paid for cement or concrete from a sustainable source would only impact total project costs by less than two per cent, with positive long-term sustainability outcomes.
Our values shape who we are. If we are going to realize a net zero future, we need to deeply consider what we value and what it’s worth to us.
We are faced with fundamental questions on how the world’s largest institutions view price and value, and the interplay between them. Let’s empower our procurement professionals with organizational and societal backing to make the necessary changes and get on with tackling the wicked problems of our time through the power of sustainable procurement.
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About the authors:
Frances Edmonds is the Head of Sustainable Impact at HP Canada.
Apoorv Sinha is the founder and CEO of Carbon Upcycling Technologies based in Calgary.
