Innovation, Procurement and Sustainability
Today is the first day of the Global Climate Strike which Greta Thunberg has inspired. Our society is being faced by the threat of environmental peril. Whether it is reduced biodiversity, persistent plastic waste, or our climate crisis, there are more reasons than ever for us to be concerned. But what do these have to do with procurement or innovation?
Governments in Canada are the biggest purchasers of goods and services in our country. Public attention has been focused on what consumers can do to “shop for a better tomorrow”. Clearly this matters, but organizations and our governments have much bigger purchasing power than the average Canadian.
This is a global problem. If Canada is able to incentivize business development to be cleaner and greener, not only will we be doing more to address these problems, but our businesses will have expertise that they can export to other regions that will be struggling to address these same problems. By providing a market incentive governments can fuel innovation in sustainability.
There have been many efforts to address procurement. The Policy on Green Procurement was first introduced in 2006 and updated in 2018. It is worth noting that the bulk of the documentation around the Government of Canada’s Green Procurement still looks like it was written in 2006, or is simply unavailable, with a surprising number of broken links. It clearly hasn’t been fully updated.
The Canadian International Trade Tribunal: Green Procurement Targets from 2014 is so out of touch that it focuses on reduction of paper usage. It’s not that this isn’t an important issue, but there are more pressing concerns, particularly for a Trade Tribunal. The focus needs to be moved from office supplies to supply chains. Yes, the government should be seeking out carbon neutral office supplies, but we can’t be focusing on niche side-industries like we did in the 90s.
Pan‑Canadian Framework on Clean Growth and Climate Change called on governments to move on a number of fronts, including procurement:
“Governments are also major purchasers and providers of goods and services, and they can help to build demand for low-carbon goods and services through procurement policies.”
Government must be involved in the process of giving advantages to companies that are embracing the sustainability needs that align with Canada’s environmental commitments internationally. If we want the bulk of our economy to have a low carbon footprint, carbon neutral businesses need to be given a clear advantage in all public procurement.
Even something as simple as requiring all companies with over a million dollars in revenue to submit an accounting of their CO2 emissions would be a great start. Likewise, you could ask every company to submit their B Impact Assessment score in their responses to requests for proposals (RFPs).
It’s clear that there are a lot of competing issues. Government procurement needs to ensure that the product/service being purchased is done properly and for a fair price. These two alone are a challenge, particularly with projects involving technology.
We can’t be fooled into thinking that grants for “Green Energy” projects or some form of carbon tax will be sufficient to transition to a sustainable economy. Yes, they help encourage some very focused innovation, particularly in the energy sector. If procurement decisions are still driven by who promises to deliver the flashiest product for the cheapest price, we’re not going to build a sustainable economy.
The challenges we are facing are more complex than what these coarse-grained approaches of taxation and subsidies can provide. We need the majority of organizations to be incentivized to look for what they can do to adjust their supply-chains, and to see that over-consumption is no longer the norm.
Governments could support an extension of existing Corporate Social Responsibility (CSR) efforts by simply asking companies to detail some of the work that they do to support the government’s environmental priorities. At worst, this would encourage the development of useless, glossy annexes highlighting a business’s recycling efforts. At best, we would see it become easier for advocates in these businesses to push towards finally becoming carbon neutral, or eliminate plastic from their manufacturing processes.
There are efforts to do this type of thing in government, but they just aren’t moving fast enough. In 2018, the The Intergovernmental Panel on Climate Change (IPCC) gave the world 12 years to act on limiting global warming to 1.5°C. There simply isn’t time to wait for policies to evolve at their usual snail’s pace. It will take a long time to shift the Canadian economy so that we are emitting what we committed to in the Paris Agreement. After failing to meet the goals set in the 1997 Kyoto Protocol, Canada has recently pledged to cut its emissions by 30 per cent from 2005 levels. Now we have until 2030 to meet this commitment, but this isn’t fast enough if we are going to limit global warming by 1.5°C.
The UN’s Sustainable Development Goals (SDGs) are still relatively unknown in Canada, but this is changing quickly. The 17 goals defined here are very broad, but touch on many aspects of all businesses. Climate Action is just one of the goals, but governments will be under increasing pressure to identify how they are living up to these goals. Awareness of the importance of these goals could be highlighted by asking respondents to RFPs to outline how they are looking to implement aspects of these global goals.
Richard Gauder, of CMS Web Solutions, found the following when talking to other green business owners about the catalysts that moved them to begin investing in green solutions:
“The pattern that emerged was that there was a green requirement during the bidding on a project. They would do whatever it was and discovered it saved them money. The smart businesses then asked, what other “green” things can we do to save money? And they did. Pretty soon they were labelled as a green company. Green was a side benefit! One company even received a contract from Amazon because of their money saving green initiatives. But here’s the thing…it wasn’t about altruism…it was about saving money.”
This is just anecdotal evidence, but it is pretty compelling. Many businesses that have invested in green solutions have found that they are also becoming more efficient and saving more money.
If you can see ways that procurement can lead to a more sustainable economy, please help us encourage a deeper discussion. Are other jurisdictions doing a good job and who could stand to be more widely-promoted? Please post them here.
We want to know what you think about this series. If you liked this, watch this space to links to upcoming articles.
- Government Procurement is Stagnating Canadian Innovation
- Proprietary Procurement is Stopping Open Innovation in Canada
- Micro Procurement and Incremental Innovations
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