Sustainability of public procurement in Finland

In 2017

In 2017, the Finnish Environment Institute SYKE carried out a survey to map the current state of sustainable public procurement in Finnish municipalities. Information was gathered using questionnaires, interviews, document analysis (strategies, guidelines, invitations to tender published in HILMA) as well as workshops based on joint development. The aim was to find out how sustainability targets were taken into account in municipal strategies, guidelines as well as procurement policies and to map the challenges of and proposed solutions to sustainable procurement in general and by different sectors.

Based on the survey, an energy aspect and/or some other environmental aspect had been quoted at least at a general level in 66% of the invitations to tender. It had been referred to more specifically in 44% of the invitations to tender, including at least one clearly defined environmental criterion. Only 15% of the invitations to tender included an environmental aspect that had been specified for the whole life-cycle. The clearest criteria in the invitations to tender included quality control and energy efficiency as well as the Euronorm category in the invitations to tender related to transport equipment. 

The quantity and efficiency of sustainable public procurement are not systematically measured, which may be at least partially down to a lack of a measurement method. Inadequate strategic support and the resulting meagre procurement resources were seen as the biggest challenges to sustainable public procurement. A lack of a mutual “procurement language” between procurers and suppliers as well as a shortage of market expertise made sustainable procurements more difficult. Implementation challenges included the life-cycle aspect, a lack of budget planning supporting it as well as the dispersion of procurement. The backdrop to this is the conventional culture of procurement, which places an emphasis on the procurement process instead of finding a sustainable overall solution. Different sectors also have their individual characteristics and challenges with regard to implementing their sustainability targets. Increasing the understanding of municipal decision-makers and local government employees of the benefits f sustainable acquisitions throughout their life-cycles on municipal economy, the environment and business life was seen to been of paramount importance.

In 2018

Late in 2018, KEINO conducted a survey to map the current state of innovative and sustainable public procurement. A questionnaire was sent to everyone who had posted notices via the HILMA notification channel early in 2018 to find out how, for example, sustainability targets and criteria were taken into account in public procurement – especially their inclusion in procurements with identifiable innovative elements. The content overview below is based on the survey of that year.

Sustainability targets and criteria

The sustainability/accountability of public procurement can be specified, for example, by looking at how many procurements utilized sustainability targets and/or criteria. However, it should be taken into consideration that the number of sustainability criteria in the procurement documents as such is not an indication of their effectiveness or final implementation in the procurement.

According to the survey carried out by KEINO in 2018, roughly 30% of public procurements in Finland included sustainability targets and criteria. The percentage is lower than that indicated by previous surveys, which is probably due to the fact that the survey and sample emphasised innovative procurements.

In most cases, the sustainability targets are linked to improving energy efficiency (39 projects), reducing waste (31 projects) and reducing emissions (27 projects). Targets related to the ethical and social sustainability of procurement, such as promoting fair trade or improving employment opportunities, are distinctly less common.

Sustainability targets and criteria included in the procurement
FIGURE 12. What sustainability targets and criteria were included in the procurement, referring to the number (n=86 projects, the respondent may select several options).

In addition to these, other procurement-related sustainability targets and criteria include
- extended warranty period and long life
- minimum life-cycle requirements and durability
- traceability of products in the production chain
- use of the military standard (MIL)

Procurements with sustainability targets were divided by procurement type roughly like this: service procurement 40%, material procurement 31% and building contract procurement 29% (Figure 13).

Sustainable procurements by category of procurement
FIGURE 13. Percentage of sustainable procurements by procurement type.

Separate procurements make up the majority (73%) of the procurements with sustainability targets. Recurring same-content procurements make up 16%, and procurements included in a larger procurement entity make up 10%.

Verifying the sustainability of the procurement (product or solution)

With regard to procurements with sustainability targets, the most common verification method was the provider’s own statement (57%). An independent certificate provided by a third party is the least used sustainability verification method in the material (19%).

There are differences between the sustainability targets and the sustainability criteria depending on the requirements set for sustainability verification. (Figure 14).

The verification results in KEINO’s survey should be taken with a pinch of salt, taking into consideration the low number of responses with regard to some of the dimensions of sustainability (especially promoting fair trade and improving employment opportunities).

Were the providers required to verify the sustainability of their product or solution
FIGURE 14. Verifying the sustainability of a product or solution.


Sustainability targets, dialogue and cooperation

The use of early-stage dialogue is a verified method to promote the implementation of sustainable public procurement (Alhola & Kaljonen, 2017). Dialogue prior to the procurement provides the suppliers with the chance to reinforce their knowledge of the market. At the same time, dialogue provides potential providers with the opportunity to familiarise themselves with the needs of the procuring organisation as well as any potential issues that may need to be solved.

In the context of procurements that included sustainability targets or criteria in 2018, dialogue (56%) was utilised more in the preparation stage of the procurement process than in procurements that did not include sustainability targets (39%).

Sustainability criteria and market dialogue
FIGURE 15. Sustainability targets and the use of dialogue during the preparation stage (n=272).

Pre-procurement cooperation in the form of the development of a new solution or experiments occurred in 11% of the procurements including sustainability targets or criteria.

Sustainability targets and novelty

Judging by the results, sustainability targets or criteria are the likelier to be included in the procurement the newer the procured solution is. (Figures 16 and 17).

Sustainability targets and criteria included in the procurement new to the customer
FIGURE 16. Novelty to the procurer and the inclusion of sustainability targets or criteria in the procurement (n=275).
Novelty of the procured solution to market and inclusion of sustainability targets in the procurement
FIGURE 17. Novelty for the market and the inclusion of sustainability targets or criteria in the procurement (n=118).

41% of the invitations for tenders that led to the procurement of a solution that was completely new to the procurer included sustainability targets in 2018. When the solution was a material improvement on the previous, the respective percentage was 33%. In case of previously used solutions, the respective percentage was 26%.

Furthermore, from the market perspective, approximately 45% of the procurements of completely new or significantly improved solutions included sustainability targets or criteria.