The Strategist

BCG: Green public procurement could reduce global greenhouse gas emissions by 15%

01/13/2022 - 06:33

Switching to green public procurement methods could cut global greenhouse gas emissions by 15 per cent, according to analysts at the World Economic Forum and consultancy firm BCG.

Janak Bhatta
Janak Bhatta
"Greenhouse gas (GHG) emissions associated with government procurement account for 15 per cent of global emissions, seven times more than those from the aviation industry... A green public procurement approach could reduce global greenhouse gas emissions by 15 per cent," the report reads. At the same time, the analysts specify that the world's governments spend $11 trillion annually on procurement, or also 15% of global GDP.

As of November, 92 countries had pledged to achieve so-called carbon neutrality, accounting for around 85% of global private sector emissions. Meanwhile, in the public sector, greener procurement practices are also reducing CO2 emissions from supply chains and their own operations. And most of the emissions associated with public procurement - up to 75% - come from six sectors: defence, transport, construction, industrial products manufacturing, utilities and waste management, the report notes.

"When switching to more 'sustainable' products and services, governments will have to pay a 'green premium' for a while. But then costs will fall as new technologies spread which make carbon neutral products more economically efficient," said Jörg Hildebrandt, managing director and senior partner at BCG and co-author of the report in this context.

The study also shows that cleaner procurement is unlikely to increase government spending by more than 3-6% and that around 40% of government procurement-related emissions could be reduced at less than $15 per tonne of CO2, although the amount varies from industry to industry.