How governments can leverage public procurement for a greener future

Amid geopolitical, trade and financial pressures, governments struggle to uphold climate and environmental commitments. In corporate terms, chief procurement officers drive sustainable transformation across organizations and supply chains. Similarly, public procurement can combat climate change and environmental degradation but remains underutilized.

Globally, governments spend over $10 trillion annually on goods and services, contributing 15% of greenhouse gas emissions and impacting ecosystems, particularly through infrastructure and transport supply chains.

Acknowledging the importance of green public procurement, the World Economic Forum convened leaders from international organizations and national and city governments at the 2024 Urban Transformation Summit and a virtual roundtable on Green Public Procurement Leadership.

In partnership with the Clean Energy Ministerial Industrial Deep Decarbonization Initiative (IDDI), World Bank, Organization for Economic Cooperation and Development and C40 Cities, these discussions showcased how governments increasingly leverage procurement to achieve green goals and foster sustainable industries and supply chains.

Critical hurdles for governments to overcome include:

Public procurement is often decentralized, with differing objectives, processes and resources across departments, regions and agencies, creating bureaucratic challenges for mainstreaming sustainable practices.

To address this, governments are adopting more unified approaches to green procurement. By aligning standards and sharing data across agencies, they are enhancing collaboration and enabling holistic change.

“Procuring entities often face… manual and fragmented processes, especially when it comes to GPP data and capacity development,” said Ms. Rowena Candice M. Ruiz, executive director of the Procurement Policy Board Technical Support Office, Government of the Philippines.

The “green premium” – the higher cost of sustainable goods and services – remains a major barrier to green procurement.

Some governments, however, are pooling resources through partnerships, using phased procurement to spread costs and offering financial incentives to make green choices more practical and appealing.

Nick Xenos, executive director for the Centre for Greening Government, Government of Canada, said, “The Government of Canada is using the total cost of product ownership to better assess the benefits of green procurement.

“We are partnering with the private sector to green federal buildings through energy performance contracts that use energy savings to pay for building upgrades.”

Outdated procurement regulations often limit flexibility and innovation. Green procurement demands adaptable policies that support long-term supplier relationships, creative sourcing and evolving market dynamics.

With support from the World Bank and the Organization for Economic Cooperation and Development, many governments are updating regulations and enhancing capabilities to integrate sustainability criteria and foster partnerships with sustainable suppliers.

“One aspect of procurement reform in Ethiopia is revising procurement rules and regulations such as proclamations, directives and standard bid documents, as well as implementing an e-procurement system to better measure and understand supplier data,” said Woldeab Demissie, director general of the Federal Public Procurement and Property Authority for the Government of Ethiopia.

Philip Mortensen, senior advisor for the Agency for Climate, City of Oslo, also added, “We have a conducive framework in Oslo and Norway. There is high attention at the policy level on public procurement as a key enabler of transformation.

“For example, the City of Oslo has electrified public construction works through the strategic use of green public procurement.”

Political cycles and public expectations often push government leaders toward quick, visible wins. However, truly transformative green public procurement requires a long-term vision for transitioning to a low-carbon, environmentally friendly economy.

The challenge lies in balancing immediate tangible benefits with laying a solid foundation for the future.

As Imran Dassu, partner at Kearney and World Economic Forum knowledge partner, asked, “What is the vision for sustainable impact that actually creates the right foundations for the longer term?”

As governments refine their green procurement practices, success stories are emerging.

The US Federal Buy Clean Initiative and Canada’s low-carbon procurement standards demonstrate how scaling green procurement can shift the dial on sustainability.

Targeting high-emission sectors such as construction creates market demand for cleaner materials and encourages suppliers to adopt low-emission production practices.

At the global level, IDDI has played a key role in boosting ambition and demand for low-carbon industrial materials, with seven governments committing to the Green Public Procurement pledge.

“The Federal Buy Clean Program leverages the purchasing power of the US Federal Government, as the single largest buyer on Earth, to spur demand for clean American-made construction materials – steel, concrete and beyond. This programme’s demand signal helps spur clean American manufacturing,” said Madeline Reeves, deputy federal chief sustainability officer at the White House.

Soledad Reeve, senior green procurement specialist for IDDI at the United Nations Industrial Development Organization, said, “The IDDI government signatories are sending a strong demand signal for low-emission concrete and steel, which are high-impact procurement categories in infrastructure projects.

“We are working internationally with industry experts to harmonize definitions for green construction products.”

Cities are proving to be key testing grounds for innovative procurement. In Sweden, Lund’s energy efficiency projects demonstrate how local governments can customize green procurement to their needs, focusing on low-grade heat sources, financing sustainable projects and deploying an electric vehicle charging network.

In New York City, direct supplier engagement and training programmes are fostering a sustainability culture across local supply chains, including requiring third-party environmental verification for all products.

“We are making efforts to incorporate low-carbon concrete specifications for ready-mix and precast concrete on all of our city projects,” said Sylvie Binder, policy advisor of greenhouse gas emissions at New York City’s Mayor’s Office of Climate and Environmental Justice.

To leverage new approaches and technologies for greener products and services, government entities are increasingly turning to public-private partnerships, amplifying their impact through the private sector’s reach and market influence.

Locally, governments are also forming coalitions to strengthen their green procurement efforts. The recently launched North American Electric Construction Coalition, supported by C40 Cities, includes six cities committed to advancing the Paris Climate Agreement goals through increased use of electric construction equipment.

Binder added, “We have six North American cities, one county and around 15 private sector and NGO partners currently participating in this coalition. We believe that, together, we have the power to spur significant market growth in this space as, collectively, we spend over $10 billion on construction annually.”

Recognizing the potential of green public procurement is just the first step in a long journey, requiring ongoing government efforts to strengthen frameworks, promote innovation and foster cooperation.

The main challenge is mainstreaming sustainability while ensuring value for money, transparency and fairness in procurement.

Though obstacles remain, success stories are emerging globally. Green procurement is no longer just an aspiration – governments and businesses are working together to unlock its full potential.