Transitioning to Green Government Procurement Practices Could Cut 15% of Global Greenhouse Gas Emissions
New Research by the World Economic Forum and BCG Shows That Global Government Procurement Activities Emit Seven Times as Much Carbon as the Entire Aviation Industry
BOSTON—Public sector procurement activities are directly or indirectly responsible for 15% of global greenhouse gas (GHG) emissions, seven times the amount emitted by the entire aviation industry, according to a new report from the World Economic Forum and Boston Consulting Group (BCG). Around the world, the study finds, governments currently spend $11 trillion—or 15% of global GDP—on procurement every year, making the transition to green public procurement crucial for reaching net zero. The report, titled “Green Public Procurement: Catalyzing the Net-Zero Economy,” is being released today.
As of November 2021, 92 countries, which collectively account for about 85% of global greenhouse gas emissions, have pledged to meet net-zero emissions targets. The new analysis indicates that greener public procurement practices can significantly reduce CO2 emissions across government supply chains and operations. Most of the emissions associated with public procurement—up to 75% of the total—stem from the activities of six industries: defense and security, transportation, waste management services, construction, industrial products, and utilities.
Joerg Hildebrandt, a BCG managing director and senior partner, and a coauthor of the report, said: "Government spending power is often overlooked in discussions of paths to net zero. But public procurement's sheer scale and spending power can exert considerable influence in combating global warming. There is a short-term green premium for governments when transitioning to more sustainable products and services. The increased cost will decline over time, however, as new technologies are scaled up, making the production of net-zero products more efficient.”
The private investment and new jobs triggered by greener public procurement, in aggregate, will boost global GDP by around $6 trillion through 2050—a significant proportion of the green economy's total GDP of $70 trillion.
Public Procurement Emissions Can Be Abated at Low Cost
The study finds that approximately 40% of all emissions related to public procurement can be abated for less than $15 per ton of CO2 emissions, although this amount varies by industry. And greener public procurement should increase costs to governments by no more than 3% to 6%.
The added cost of green procurement could spur governments to work cooperatively to encourage suppliers to invest in the technological innovation needed to make the transition to net zero. This, in turn, would help suppliers decarbonize the goods and services they sell to governments.
Borge Brende, President of the World Economic Forum, concluded: "Achieving net zero will require collaboration between governments and companies. Importantly, this report shows that the transition to green public procurement benefits all stakeholders. The transition to green procurement practices shouldn't be perceived as a cost burden for industries and the public sector, but rather as something that creates long-term sustainable economic growth.”
A copy of the report can be downloaded here.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.
About Boston Consulting Group
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.
Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.