Keywords

1 Introduction

Sustainable procurement is the purchasing of goods and/or services that are consistent with the values of sustainable development. The 2002 World Summit on Sustainable Development’s call-to-action promotes “public procurement policies that encourage development and diffusion of environmentally sound goods and services” (United Nations 2004). Both private and public organizations have implemented sustainable procurement policies in recent years (Carter and Rogers 2008; Coggburn and Rahm 2005; Saha and Paterson 2008), but to date the focus of analysis has mainly been on private sector procurement and supply chain strategy. “A knowledge gap exists in our understanding of government procurement strategies” (Purchase et al. 2009). Many of the policies are newly adopted and only a small amount of research on Canadian best practices for procurement practitioners has been completed, evidenced by the first Canadian local best practice procurement guide only being released in December 2010 (Reeve Consulting 2011).

The focus of this chapter is on sustainable public procurement. The size and amount of procured goods and services from the public sector should not be underestimated. “Public sector expenditure is substantial: government organizations across the world tend to spend between 8 and 25% of GDP on goods and services” (Walker and Brammer 2009). It is estimated that combined, all levels of Canadian government spend $100 billion (Canadian dollars) on goods and services (Boutin 2009). As a large procurer of goods and services, governments can potentially leverage their influence on the private sector by requiring higher social or environmental standards and by creating a market for sustainable products and services (Preuss 2007), hence encouraging a greener economy. These public sector institutions are responsible for providing a wide range of services with a direct implication on local sustainability and its social, environmental and economic spheres.

At the local level this is equally true; efforts to make municipal procurement along sustainability criteria can stimulate the local green economy by driving market demand and acting as a leader and catalyst for the development of new green products and services. This kind of influence on sustainability is widened as government procurers purchase products in a global marketplace. With the larger global supply chains, global sustainability efforts can also be enhanced.

This study focuses on the sustainable procurement efforts being undertaken by municipal lower-tier (e.g. City of Calgary) and upper-tier (e.g. Metro Vancouver Regional District) governments in Canada. Local governments in Canada have had a difficult time over the last two decades in meeting the amount of services the populace expects with the lack of fiscal resources at hand (Benner 2010). A Federation of Canadian Municipalities policy report illustrates this: “Over the past 20 years, as successive federal and provincial governments have off-loaded responsibilities to municipal governments and cut transfer payments, it is estimated that the municipal infrastructure deficit has grown to more than $123 billion” (Federation of Canadian Municipalities 2011). With the challenge of having to deliver more services in a sustainable manner with a decreased budget, local governments have turned to sustainable procurement policies to help address the challenge.

Given the current knowledge gap on municipal sustainable procurement, there is little known about the implementation of municipal sustainable procurement policies. This study therefore focuses on the implementation phase of these policies and the ‘how-to’ of overcoming challenges in implementing a new policy. Specifically, the addressed research questions are:

  1. 1.

    What are the motivations for local and regional governments to implement an eco-procurement policy?

  2. 2.

    What are the challenges to eco-procurement policy implementation, and which methods have been employed to overcome these challenges?

2 Background

Historically the role of the procurer has been to purchase goods and services based on price, quality, availability and functionality (Boutin 2009; Purchase et al. 2009). The historical role of the procurer is directly related to how the private sector has defined the role for procurement in their organization, which is one of profit maximization and efficiency (Murray 2001; Purchase et al. 2009). This procurement role ensures that private wealth is created for the organization’s stakeholders (Purchase et al. 2009).

In recent years the trend of procuring only for profit maximization has changed due to increased pressure from consumers, social groups, and government (Markley and Davis 2007; Seuring and Müller 2008). As environmental degradation concerns grew through the 1990s, purchasers of goods increasingly acknowledged that environmental costs relating to procuring goods are important factors in the procurement process (Min and Galle 1997). This was the beginning of a market change, where those procuring goods increasingly began to incorporate strategies for decreasing environmental damage through two procurement procedures: source reduction and waste elimination (Min and Galle 1997). Depending on the product or service being supplied these procurement policies can stipulate specific details or rules which the supplying company must comply with or otherwise regulate their organization in order to meet. These policies may for instance declare that their procurement only occurs within the legislation of a particular convention or code (e.g. International Labour Organization’s labour standards).

At the outset of this market change, many procurement policies contained ‘green’ procurement rules defined as “the procurement of products and services that have a lesser or reduced effect on human health and the environment when compared with competing products or services that serve the same purpose” (Chamberland 2008). More recently, sustainable procurement has emerged with greater detail and to a greater extent. It adopts a triple bottom line analysis to ensure that the procurement rules incorporate a much more holistic approach (Steurer 2007). Private organizations have employed a variety of methods to advance the social and environmental aspects of their organizations’ procurement, such as management systems (e.g. ISO 14001, SA 8000), supplier reporting and evaluations structures, and the integration of standards into larger corporate policy (Seuring and Müller 2008).

In contrast to private organizations, the public sector has a greater responsibility to ensure that the wider public interest is served (Purchase et al. 2009). In addition, large spending budgets allow the government to drive and influence the market for greater environmental and social quality by demanding higher standards. This can lead to the creation of new markets and show government as a leader by setting an example for the local citizenry and businesses (Boutin 2009; Purchase et al. 2009).

This has spurred on the growth of sustainable purchasing, which has been eloquently defined by one author as looking at “what products are made of and packaged in (and how services are delivered), where they have come from, who has made them, how they will be ultimately disposed of, and whether the purchase needs to be made at all” (Boutin 2009). In essence, such policies consider the entire life cycle of the product from extraction of the materials to manufacturing, distribution, use and disposal (Barber 2007).

In the public sector sustainable procurement policies can be very formal and include larger corporate social responsibility, or be of a smaller scale and incorporated into planning or operational documents. These policies can involve both products and services purchased by the government including: waste management services, energy/electricity, apparel, custodial services, food and catering services, green buildings, chemicals, transportation services and maintenance, and office products (paper, electronics) (Barber 2007).

3 Methodology

The study was conducted in the summer of 2011. Municipal governments that serve larger populations have significant budgets to procure goods. Therefore this study considered municipal and regional governments that serve a population above 50,000. To further frame the context of the study, the two Canadian provinces of Alberta and British Columbia (B.C.) were selected for this research. In this part of Canada several municipalities have acted as early adopters of sustainable procurement policies. These criteria resulted in ten qualifying municipal and regional governments, of which five chose to participate.

Data was collected from seven interviewees through semi-structured telephone interviews of about 30 min in length (Flick 2006). The interviews were audio recorded and hand-written notes were taken. The audio recordings were transcribed and codes were inductively applied (Flick 2006). The grounded theory process was considered complete when no new codes were emerging from the analysis (Glaser 1978). These codes were further compared with the literature to build the theory about motivating factors and barriers for the implementation of municipal sustainable procurement policies (Flick 2006).

4 Results and Discussion

The governments that were interviewed vary in geographic location and size and represent both lower-tier and upper-tier governments. The table below provides more detail including the overarching sustainability policies that are in place in these communities (Table 1).

Table 1 Participating governments and their related procurement policies
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The table below shows the studied literature on motivations for implementing sustainable procurement in comparison with the results of the interviews. Four of the themes found in the literature were also found in the selected cities, while one of the literature categories was not found. Two new themes were identified, thus making a contribution from this study to the literature (Table 2).

Table 2 Motivations identified in the literature and by interviewees
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Organizations that have overarching corporate or government policies related to sustainable development have greater success implementing sustainable procurement policies. For example Japan has successfully incorporated green purchasing into macro-level policy. This has translated into successful purchasing policy implementation at the lower government levels, because of the larger amount of support that has been provided by the national government (eco-labeling, purchasing guidelines, product lists, economic instruments, a mandatory reporting system, lifecycle analysis information and a public awareness program) (Thomson and Jackson 2007). Throughout the interviews the cities that had historical and organizational commitment to sustainability have more robust sustainable procurement plans. Calgary and Metro Vancouver, the two largest interviewed communities, had the most formalized policies and these were spurred on by the development of longer-term sustainability plans, of which the sustainable procurement policies were one sub-set of organizational policies.

A second motivating factor, which is also discussed as a barrier later in this chapter, is leadership and management support. The literature and the interviewees acknowledged that having management support drives policy implementation; whereas if the local leadership does not support or understand the concept of sustainable procurement then this is a barrier. Several authors as well as each of the interviewed cities identified this as a motivating factor, but the precise motivating factors or leaders identified were not always similar. Richmond, British Columbia (a suburb of greater Vancouver) identified the recent winter Olympics as a driver for public and staff support towards the implementation of sustainable procurement. Kamloops and Metro Vancouver both acknowledged that the public itself and the internal staff were motivators to drive sustainable thinking and change in their communities.

Two authors and the City of Calgary identified cost savings or cost competitiveness as a motivating factor for policy implementation. Shannon Guterson, Environmental Health and Safety Team Lead from the City of Calgary states,

People were not as endearing to the idea of the SEEP [Sustainable Ethical and Environmental Procurement Policy] when asked to cut their budgets, because when there’s a preconceived notion that if it’s environmentally preferred or ethically preferred, then it’s got to be more expensive. Don’t get me wrong. There are certainly products like that. But our role … is that we’ve got to ensure that we justify any type of price premium. And to date, I don’t think we’ve accepted a single contract where we see something in the 10 percent range for price premium …

Local economic development is a motivating factor, as employing local businesses and suppliers to provide goods can increase local employment and recycling of spending within the local economy. Although identified in the literature (Murray 2001; Preuss 2007), none of those interviewed indicated that this was a policy driver.

The City of Calgary and Metro Vancouver did acknowledge that sustainable procurement policy is an evolutionary process and that as new products have come to the market, the motivation to increase the number of products purchased with a sustainable procurement lens has inherently increased as well. Therefore the new products coming to market are motivators for policy implementation. In addition, the governments of Richmond, Metro Vancouver, and Calgary all identified that the sustainable procurement policy provided the opportunity to work with their suppliers to enhance their relationship through policy and product education. This has a duel positive effect of increasing suppliers’ knowledge of meeting the sustainability criterion in the bidding process and increasing supplier and consumer knowledge of new product development. This all helps to green the local economy. Finally, the environment and health improvements that result from greening the local economy are motivating factors unto themselves.

The table below lists the reviewed literature on barriers for implementing sustainable procurement in comparison with the results from the interviews. Two of the themes from the literature were found in the case cities, while one was not found. Two new themes were also identified. This study thus makes a new contribution to the literature (Table 3).

Table 3 Barriers identified in the literature and by interviewees
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One barrier several authors noted is the lack of municipal funds in the budget for sustainable procurement. The interviewed communities all noted the perception of (or actual) higher costs when purchasing the goods as a barrier to policy implementation. The perception is strong that the sustainable purchased product will always be more expensive. There are however several examples where the costs are only slightly higher or the same, as is noted in the quote above from the City of Calgary. There is a contradiction that exists when the perception is that it is always higher, but those that are familiar with the real costs are aware of the potential for cost savings. In addition, several interviewees also included the fact that there is lack of budget for staff time to complete or implement the policy itself. There is therefore a barrier created by the higher cost of implementing a new sustainable procurement policy over traditional purchasing processes due to increased staff time.

The lack of knowledge of the sustainable procurement process is another well-identified barrier to policy implementation. The procurement staff and their management often do not have the necessary skills or knowledge to appropriately identify the sustainable product or service. As one respondent in Leire and Mont’s article has noted, “Formulating what information is needed is very difficult, because it is a ‘moving target’ with continuously developing new products and continuous expansion of our knowledge about effects and impacts of various materials” (Leire and Mont 2010). This lack of skill set is not just an issue for the procurers but the suppliers as well, as they have to create the products to meet the most recently imposed standards. This is further elucidated by Purchasing and Risk Manager for Metro Vancouver Tracy Husoy, who stated, “Lack of knowledge may be one of the biggest initial barriers. When we introduced this [10% weighting for social and environmental factors as part of the bid process] to our suppliers … I had a few respondents, during post award de-briefings say, ‘You’re kidding. You really meant that’. So maybe there were a few suppliers that did not take us seriously.”

In Calgary and Metro Vancouver, the need for suppliers that have a higher knowledge level of sustainable products and the process of sustainable procurement policy implementation is acknowledged as a barrier. These cities have well-developed policies that are beyond the low-hanging fruits of initial policy implementation. They have expressed the need to educate suppliers on alternative procurement processes and products to ensure policy implementation of the more ambitious goals. In addition, Strathcona County indicates that the public may not be committed to sustainability and, therefore, may be a barrier to policy implementation, which was not identified in any of the literature.

Another barrier identified in the literature which has been identified as a motivation both in the literature and by several of the interviewees is the lack of political will and administrative support from senior levels to implement and maintain these policies. This is due to a variety of issues including the lack of education senior leaders have on the concept of sustainable procurement and how it can change the business-as-usual for their government (Leire and Mont 2010). None of the case cities identified this as a barrier.

5 Conclusion

The analysis of the cities and literature indicate that there are several best practice lessons for municipalities and suppliers:

  • The policy must be a ‘living document’ that continues to evolve, as standards and specifications change.

  • A set of standardized sustainability-related supplier information is useful as an educational tool to overcome the staff knowledge gap (Preuss 2007).

  • Staff and senior leadership education is a key driver to ensuring effective uptake and implementation. Educating senior staff and politicians on the advantages of sustainable purchasing is important. Advantages include: greening local economic development through local sourcing initiatives, environmental improvements in the supply chain, political advocacy, and better product quality through supplier development (increased standards equate to better quality of product) (Murray 2001).

  • Briefing the suppliers, by educating them on the sustainable procurement policy standards and the scoring systems, will enhance the quality of bids received. Pre-bid meetings allow the suppliers to ask any questions at the same time and staff can highlight the importance of the sustainable procurement policy in terms of the bid scoring.

  • Extended producer responsibility should be a future focus of procurement officers. Working with suppliers to increase cradle-to-grave or cradle-to-cradle production processes will help establish the parameters of what is part of the sustainable procurement policy.

In conclusion, this chapter has provided an extensive overview of the literature on sustainable procurement policies, and the motivations and barriers to their implementation in local communities. This study has identified two motivations (new product to market, and strengthening relationship with suppliers) and two barriers (lack of manufacturer or supplier knowledge of sustainability concepts, and lack of public support for the perceived higher cost option) that have not been identified in the literature, further contributing to the subject matter on sustainable procurement policies.