How might we use the public sector’s purchasing power to slow climate change and advance the green transition of the economy in Bosnia and Herzegovina?

Author: Kemal Bajramovic,

Head of Experimentation, UNDP Accelerator Lab Bosnia and Herzegovina

The volume of public sector spending on goods, services and works in Bosnia and Herzegovina is about 1.8 billion USD annually.  Some 2,670 public institutions and companies contribute to this massive public expenditure. One of the topics the UNDP Accelerator Lab in Bosnia and Herzegovina set out to explore in 2021 is how to use this vast purchasing power as a mechanism to respond to the country's sustainable development objectives. We learned about the enablers and impediments to shifting public procurement from yet another administrative process to a strategic tool to achieve environmental policy goals.

Green public procurement is about procuring goods, services and works with a reduced environmental impact throughout their life cycle compared to the items with the same primary function that would otherwise be procured

The opportunity

As a country in the European Union accession process, Bosnia and Herzegovina has been working long towards transposing the EU legislation, including on public procurement. The Public Procurement Law, which governs the public expenditure of every single public organisation and public company in the country, was adopted in 2014, just a few months before the latest EU Directives on Public Procurement were adopted, which strongly promotes greater inclusion of common societal goals in the public procurement, including environmental considerations. Our public procurement system did achieve great success by introducing a common country-wide transparent administrative process but still doesn’t share the same EU vision of being an instrument that can drive system changes in the environment and economy, as well as in innovation ecosystem and social inclusion. With the lack of demand, the sustainable products and services market remains underdeveloped.

The analysis of the Public Procurement Law done by our team unveiled that, even in the absence of specific legal provisions concerning the greening of the procurement process, it still offers sufficient opportunities to include green criteria and specifications in a) qualifications criteria for economic operators (bidders), b) technical specifications of the goods, services and works being procured, c) contract award criteria and d) the contract itself.

The Accelerator Lab partnered with the Office for Joint Affairs of state institutions of Bosnia and Herzegovina, analysed the greening potential of products and services they procure and developed a set of recommendations for inclusion of green criteria per each product/service group with guidance on how to put green public procurement in the practice of all contracting authorities in the country. Complete findings are presented in the “Recommendations for inclusion of green requirements in public procurement in Bosnia and Herzegovina” report.

Further analysis of potential financial effects of using green criteria for selected standard products and services procured by the Office and the public sector in general (specifically, paper for printing and photocopying, electric energy, and computers, monitors, tablets, and smartphones) showed that addressing the critical environmental impacts of those products and services results in no or minor additional cost increases.

The challenges and (potential) solutions

Working with our institutional partner and a wider group of public procurement, environment and EU integration specialists uncovered many challenges and potential leverage points to advancing green procurement practice in the country. The key findings are:

Contracting authorities and economic operators’ knowledge and capacity in green public procurement need to be improved.

The online event organized for the presentation of the abovementioned report was surprisingly well attended by some 170 public procurement specialists.

Such an interest of the public sector in this voluntary procurement mechanism and results of the pool on their levels of knowledge on green procurement (0% very knowledgeable, 14% significant knowledge, all rest - some to no knowledge) indicates a strong need for capacity building. There is a need to design and deliver training programmes in green public procurement and, from our experience, expand the pool of experts who can provide such training. Procurement specialists also need support in preparing tender documentation that includes green criteria. The solution might be to enable real-time peer-to-peer interaction and knowledge exchange among public servants, including civil society organizations and economic operators in these exchanges, in line with the provisions of the public procurement legislation. An online repository of all relevant resources for green public procurement (criteria, models of standard tender documentation for the most common procurement items, examples of good practice, etc.) should be established.

That's why our institutional partner avoided piloting the use of green criteria identified during the experiment for their standardly procured products and services – as they might be perceived as “discriminatory on purpose” to prefer a specific bidder and a reason for an appeal process. Although the current law, as we have found out, does not prohibit the inclusion of green criteria, it does not provide any legal certainty around green procurement either. The experience of our neighbouring countries, where governments of Croatia and Slovenia adopted decisions on mandating green procurement in 5 and 22 categories of standard products and services, respectively, shows that creating a legal framework for sustainable procurement as a voluntary mechanism must be supported by policies that would mandate its use when appropriate. Otherwise, most contracting authorities will continue their procurement practices as usual. In the case of Bosnia and Herzegovina, such policies would have a firm ground in the recently adopted Framework for implementation of SDGs in Bosnia and Herzegovina and the endorsed Sofia Declaration on the Green Agenda for the Western Balkans.

For complex products, such as IT equipment we analysed, a comprehensive set of green criteria options are available, for which the market in Bosnia and Herzegovina is not ready. If contracting authorities in Bosnia and Herzegovina demand product lifetime extension or set energy consumption criteria, the market would respond. However, criteria that would require bidders to provide ICT equipment end-of-life management (i.e., to secure equipment collection, refurbishing or recycling with reporting on the end-destination) would require the private sector to change their business models, for which they need systemic support. We have witnessed a rising interest of companies in the possible public procurement changes towards utilising green criteria. There is a need to create more networking opportunities to foster information exchange between the public and the private sector and consult and maintain an open dialogue with suppliers so that green criteria set are not unrealistic for the current and future market conditions. In addition, as expressed by the event participants, developing standard models of tender documentation with the green criteria included for most common products and services would stimulate their use in procurement processes.

In addition to the introduction of green criteria, we have reviewed alternative approaches to greening the procurement of the Office for Joint Affairs of state institutions of Bosnia and Herzegovina, so it reflects their green ambition. The experiment identified several opportunities for internal resource reuse and waste reduction. One option is minimising food waste by using the restaurant leftovers from several government buildings’ restaurants managed by the Office to produce compost, which the Office regularly procures for plants and lawns maintenance in and out of the same government facilities. A more common example would be to reduce the need for paper procurement by maximising the use of electronic documents or procuring (or even better leasing) printing devices with an automatic duplex printing feature. Public procurement can drive the development of circular business models at the suppliers’ side. We have already mentioned “take-back agreements” for the ICT equipment, where the contracting authority returns the equipment at the end of its life for refurbishing or recycling.  Another option to explore is requiring circularity to be applied in suppliers’ systems and business processes as qualification criteria to ensure that products and services they offer meet the sustainability policies of the contracting authority or the government as a whole. Further exploration of the market in Bosnia and Herzegovina is needed to identify existing and future circular solutions, with capacity building and piloting of circular public procurement examples to share learning, build confidence and create a repository of good practices.       

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Sustainable Development Goal 12 of the UN Agenda 2030 specifically addresses the need to “Ensure sustainable consumption and production patterns” through eleven different targets, with target 12.7 specifically aiming to “Promote public procurement practices that are sustainable, in accordance with national policies and priorities.” Our experiment has focused on and identified the potential of using public procurement as a strategic mechanism to achieve environmental objectives at the country level. Beyond the environment, public procurement may have a significant impact on the society and economy as well: from creating a positive social impact by using specific procurement criteria to create job opportunities, decent work, social and professional inclusion, and better conditions for disabled and disadvantaged people; over “positive discrimination” of crafts and small businesses to counter the negative impacts of crises such as COVID-19 pandemic; to using public procurement to create a market for new, innovative solutions, helping start-ups and SMEs scale and grow their businesses. UNDP in Bosnia and Herzegovina embarks on such a journey of “strategizing“ public procurement for the benefit of the environment, economy and society at large.