The latest joint webinar held by ADEPT and CIPFA on sustainable procurement for places asked the question: how can we harness the power of public procurement to meet the climate change challenge? ADEPT’s COO, Hannah Bartram, examines how each speaker addressed the question to find common answers.
The webinar began with Mohamed Hans, Advisor to the CIPFA Procurement and Commissioning Network. We all know that addressing climate change is a massive challenge, and as Mohamed set out, the nature and magnitude of the problem we face will need a huge amount of collective effort, skill and resource to solve. The annual procurement spend for the public sector is approximately £285bn, which gives local authorities a huge amount of power to drive the climate change agenda through their buying power. What was once seen as a block to innovation is now the key to unlocking low carbon supplies, goods and services and putting corporate objectives and targets into action.
As Mohamed said, it is a truism that If you don’t measure, you can’t manage. Apply that to organisations’ carbon emissions, he advised, by breaking this down to more meaningful local data as a starting point. By establishing your organisation’s carbon footprint, linking it with procurement spend and then undertaking detailed market research, you can develop tailored plans. The next step is to undertake early market engagement to signal intent and test the market by seeking approaches from potential suppliers. Explore piloting and collaboration with other public sector organisations, as well as the private and third sectors, to exert greater market influence to achieve key outcomes, particularly when trying to address the indirect emissions targeted by Scope 3.
Sustainable procurement is not just about reducing carbon: climate change also involves inequalities and health and wellbeing - a theme that was picked up throughout the session. Procurement can be used for social benefit, to create better working environments and protect the rights of workers and communities through contracting with suppliers in a socially responsible manner. It’s about taking a wider, long-term view.
The Government’s Green Paper, Transforming Public Procurement, proposes specific outcomes on climate change and reducing waste, but actions to mitigate and deliver positive outcomes through procurement are already permitted. Procurement Policy Note 0620 – taking into account social value contains useful metrics which can be adapted for climate change. The Public Contracts Regulation - Reg 67-2 already provides for environment and social value consideration that can be used in award criteria and there is also the Public Services (Social Value) Act.
The next speaker was our own Carolyn McKenzie, Chair of ADEPT’s Energy and Clean Growth Working Group. For Carolyn, public sector spend can be used to prevent harm, drive change and secure positive outcomes. As Mohamed set out, that’s the size of the prize. In effect, we are looking at sustainable development, a term that has gone out of favour but can provide a valuable framework.
Surrey County Council has been working with its district councils, Orbis, the LGA and the Design Council to examine how to embed green procurement within their processes. To work effectively, organisational strategies and policies have to link together - economic policy has to deliver on environmental opportunity, the environmental policy has to deliver on social and health outcomes, and this should all be linked with procurement to provide a really strong framework.
To achieve this, one of the biggest challenges is to change culture and behaviour right across an organisation. It requires a massive shift to see procurement as delivering outcomes and not just about buying things, to use procurement strategically to drive the market and drive wholesale change. Our suppliers are going to change – they might be a community group, a team you are co-commissioning with, a joint venture or setting up a community interest company. The private sector and communities have to be embraced if we are going to deliver on climate change, biodiversity and other environmental challenges because there is no one silver bullet. There is no one pot of gold and no one organisation to count on, so we’re going to have to share resources and look at how we bring budgets together from across organisations. Who has money elsewhere, whether that’s community, residents, business or government? And we are going to have to see how we bring that all together – it might be through crowdfunding or green bonds.
Bringing all these factors together is complicated, but equally it creates huge opportunity. Take a new road as an example. We would like a free flowing, intelligent highway with no congestion that does not flood or melt, and is in good condition. We also want it to do more than one job, with streetlights that monitor air quality or deliver broadband. That’s the ideal, but a highways budget is unlikely to cover it all so what else could link in? A new road or a smart highway are good opportunities for R&D, so could money come from universities, enabling us to test new markets that in turn create new jobs? The road has an economic growth impact and we can look at apprenticeships and higher level apprenticeships to help address youth unemployment, indeed all aspects of employment, bringing in other department budgets. Including active travel opens up an environment director’s budget through delivering on low carbon and improved air quality. Health and wellbeing are another impetus. If we can include rain gardens and natural flood risk management, trees that meet the carbon agenda and biodiversity net gain through creating a new habitat down the side of the road, we can corral new money and really do this differently.
Surrey will also be testing the boundaries with procurement through the £500m River Thames Scheme, Green Jump Surrey and their Green Prescribing Project. We’ll bring you more about these schemes in a future blog.
Neil Gibson, former ADEPT president and co-architect of the ADEPT / Amey Excellence in Place Leadership (EiPL) programme, discussed the session on a place based approach to procurement. Describing how they looked at procurement in terms of finding a better business model, Neil echoed other speakers’ emphasis on the importance of building strong, practical and meaningful commercial relationships. He talked through the three models that emerged from the session and brought together their common themes.
All EiPL members agreed on the need for a clear evidence base across place from which to produce a plan for commissioning, coproduced with local stakeholders and business, and varying with each locality. We might have an evidence base for transport or the economy, environment or waste, but how does all this combine to develop a plan for place that delivers outcomes for our localities? The commissioning plan must drive the wider outcomes - environmental, social and economic – that support the communities and businesses within our areas. Once a plan is established, organisations can scope and procure individual services that contribute to achieving each of these outcomes. The group also saw the pressing need for making clear links with the commissioning plans of others, eg economic plans through local enterprise partnerships, street commissioning through health and social care, all of which require a massive step change in collaboration and skills.
Amey Business Director, David Ogden, brought a private sector perspective and again emphasised how no single authority or business can tackle this huge challenge alone - collaboration is key. For David, procurement has an essential role in creating a partnership set-up that enables effective delivery and transparency. Get it right - and he cited Staffordshire’s 2014 outcome-based highways contract – and you create a fantastic environment to work in, where pride in the service runs deep and a collaborative, innovative and transparent culture becomes ingrained. Not only that, the switch to outcome-based procurement also challenges the market to think differently, and to drive thinking outside the individual service being procured. It makes you consider outcomes across the whole of place and fostering relationships and approaches across a directorate. This goes even further as you think about how you are a piece in the puzzle to deliver a broader outcome, creating the mindset of saying yes and moving things forward. It challenges you to look at the service you are potentially responsible for and examine how you get things done and how you have always done them. It’s a huge cultural shift, as others have said, to look at outcomes rather than outputs.
It goes much further than ‘achieving an output means we’re doing a good job’: it’s about driving service to change lives for the better. David considers there to be an alignment now between central government policy and local authority ambition, that also includes customer and public expectation and public/private service providers’ desire to deliver in a different way. The question David left us with was, as the time is right for this approach, why isn’t it being more commonly adopted?
Take a look at the whole webinar on the CIPFA website, here.