Public procurement can represent up 20-30 percent of gross domestic product (GDP) of less developed economies. Sustainable public procurement (SPP) can provide a powerful tool to drive demand for goods and services that benefit BOP.
SPP considers value for money as set by public authorities along economic, environmental, and social dimensions. It can generate growth, reduce costs over a product’s life cycle, support the transfer of skills and technology, and encourage innovation. From the social perspective, SPP can create employment, improve equity and diversity, respect core labor standards and human rights, as well as contribute to poverty alleviation and inclusion of disadvantaged communities. Thus, SPP can be a driver of inclusive business strategies for companies that aim to sell to government.
In the past decade, multilateral development institutions such as the World Bank, the United Nations, and the Asian Development Bank have revised their procurement policies committing to purchasing products that promote social and environmental sustainability. The World Food Program, for example, procures agricultural products from smallholders under its “Purchase for Progress” program thereby enhancing their access to markets and strengthening value chains.