Procurement, Innovation and Green Growth

The report argues that governments can leverage their significant purchasing power to transform industry growth into green growth by incentivizing investment in sustainable products and services. It details various frameworks for innovation—ranging from reactive to transformative—and provides global case studies from countries like Denmark, Brazil, China, India, Australia, and Vietnam to demonstrate the practical application of GPP. Key recommendations include the adoption of life cycle costing, the use of performance-based specifications, and the integration of sustainability criteria into electronic business systems to move beyond a focus on the lowest initial purchase price.

• Public procurement represents a substantial portion of government budgets, ranging from 13% to 20% of GDP in industrialized countries and reaching as high as 52% in Ghana.
• The 'Sustainable Value Creation' framework identifies four approaches to transitioning to a green economy: reactive, incremental, radical, and transformative, with the latter being the only strategy capable of creating the value necessary for true green growth.
• In the EU, the most common methods for introducing green criteria into procurement are through technical specifications (38%) and the definition of the contract's subject matter (25%).
• Despite the growth of green procurement, purchasing price remains the dominant factor in tender evaluations across central, regional, and local government levels, indicating a lack of willingness or capacity to use life cycle costing (LCC).
• The EPEAT green electronics rating system demonstrates that explicit government commitment to green specifications can create sufficient market demand to incentivize product redesign; it grew from 60 products in July 2006 to over 2,800 unique products in 42 countries by 2012.
• The State Government of Sao Paulo uses a 'Socio-Environmental Label' to signal sustainable goods and services, which contributed to a 27% increase in green jobs in the state between 2006 and 2010.
• China employs a hybrid-framework for GPP using centrally controlled lists, such as the Energy Saving Products list (covering over 30,000 products) and the Environmental Labelling Products list, to bridge capacity gaps at the local level.
• In Australia, road construction procurement lacks standardized procedures for greenhouse gas (GHGe) assessment and lacks incentives for GHGe reduction in contracts.
• Denmark is a leader in GPP within the EU, with 73% of contracts featuring at least one EU green core criterion and 44% featuring all relevant green core criteria.
• Vietnam's legal framework lacks a direct procurement angle to catalyze green industrial growth, and its bidding law does not integrate standardization, often prioritizing immediate costs over life cycle savings.
• The use of 'Forward Commitment Procurement' (FCP) in the UK, such as the HMPS 'Zero Waste Mattress and Pillow Solution', allows the public sector to describe future requirements to encourage industry innovation, resulting in estimated savings of £5 million.

APA

International Institute for Sustainable Development (2012). Procurement, Innovation and Green Growth. https://www.iisd.org/system/files/publications/procurement_innovation_green_growth_continues.pdf

Chicago

International Institute for Sustainable Development. Procurement, Innovation and Green Growth. 2012. https://www.iisd.org/system/files/publications/procurement_innovation_green_growth_continues.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Procurement, Innovation and Green Growth |date=2012 |url=https://www.iisd.org/system/files/publications/procurement_innovation_green_growth_continues.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2012procurement, author = {{International Institute for Sustainable Development}}, title = {{Procurement, Innovation and Green Growth}}, institution = {International Institute for Sustainable Development}, year = {2012}, url = {https://www.iisd.org/system/files/publications/procurement_innovation_green_growth_continues.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }