Sustainable Procurement a major research focus

The relationship between steel sustainability and the importance of this in the procurement process by central and local government is a major research focus for Metals New Zealand, which in the last few months has taken over the portfolio of the Sustainable Steel Council (SSC).

“We have implemented a priority advocacy project around the implementation of government principles and rules of sourcing which provide directives and guidance to our professionals in pursuit of the ‘best value’ procurement using taxpayer funds for the benefit of all New Zealanders objectived,” says Metals New Zealand chief executive, Gary Hook.

Central government is indirectly the largest customer of steel building infrastructure materials in this country, so its tender document content is strategically important to our industry and to New Zealand.

“Unfortunately there appears to be less whole of life based sustainable criteria in procurement contracts than there should be at present.”

Gary says Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment.

“Sustainable Procurement seeks to achieve the appropriate balance between the three pillars of sustainable development, which are. economic, social and environmental.”

Economic factors include the costs of products and services over their entire life cycle, such as: acquisition, maintenance, operations and end-of-life management costs (including waste disposal) in line with good financial management.

Social factors include social justice and equity; safety and security; human rights and employment conditions, while environmental factors include emissions to air, land and water, climate change, biodiversity, natural resource use and water scarcity over the whole product life cycle.

As part of its priority advocacy project, Metals New Zealand is working closing with several different parties including MBIE, the Sustainable Business Council (part of Business New Zealand) and some agencies directly to gain an understanding of where the compliance to the Rules of Sourcing with respect to sustainability criteria is heading.

“We’re trying to understand why more progress hasn’t been made since the launch in 2013 with the sustainability ambitions of the Sustainable Steel Council lining up with government rules as well as broader environmental sustainability.”

Gary says this lag in implementation of more sustainable decision criteria in tender documents is ‘somewhat’ concerning considering, just as one example, reports that carbon emissions are not improving in New Zealand as they should be under the Paris Accord.

International research points to the fact that New Zealand is well placed in terms of Sustainable Procurement Policy in Government agency procurement. However, evidence suggests there are implementation gaps.

“We seem to be moving away from targets rather than getting closer. I would have expected to see more questions and weight given in tender documents seeking information about products and methodologies and their impact on carbon emissions, but I am not seeing that.”

Metals New Zealand is also reviewing local government procurement documents, says Gary.

“We were particularly impressed with the latest policy documents released by Auckland City Council, which have made sustainability and sustainable procurement a real priority.”

Gary says there is not a lot of work currently happening around the development of further information about product sustainability in the steel space, although there is a lot of information available internationally.

“There are people talking about steel and sustainability but there is not a lot of practical progress happening. It’s something we need to get our heads around and figure out what should be done next to line up with the needs of the market and society. I’m not sure how much New Zealanders are really embracing the whole sustainability subject. We really do need to see more in tender documentation. It could be argued the priority has fallen away over the last couple of years.”

He believes the plateau may be due to the market having sufficient product sustainability information for its needs at present, and manufacturers being more preoccupied with trade issues, steel quality and potential steel dumping from the surplus of international steel products flooding the market than driving sustainability arguments and positions.

Gary believes all members of the supply chain should start also working together to question just how sustainable procurement decision-making is in this country.

“As our capability develops at client level and takes a lead, be it government or private, the supply chain will follow and deliver on economic, social and environment objectives. Alternatively the supply chain can take the lead and assist their customers to include sustainable procurement decision criteria into their tenders.”

Metals New Zealand will continue to advocate for more strategic procurement from government agencies where whole of life costs are considered and more balanced decision criteria; economic, social and environmental objectives are used in supplier selection rather than be selected based on lowest price, he says.