Price will no longer be the key driving factor in determining what public purchasers buy in the EU, following the passing of new directives this week in the European Parliament. Municipalities and agencies throughout the region will now be able to freely add environmental and social requirements to their specifications in public procurement.

The new directives dictate that purchasing decisions be based upon the most “economically preferable bid”, rather than lowest price alone. Buyers will now have the opportunity to request products that meet additional sustainability demands such as environmental and social responsibility.

“This is very positive news”, comments Soren Enholm, CEO of TCO Development. Now the European public sector has a new mechanism for influencing industries like IT in a more sustainable direction. This directive will also allow buyers to openly specify Type 1, third party eco-labels and certifications like TCO Certified in public procurement.”

Savings on many fronts
Including sustainability factors in public procurement can lead directly to many positive outcomes, including improved working conditions in manufacturing, reduced environmental impact and direct cost savings. A German study by the audit firm KPMG found that in Germany alone, the public sector is missing out on savings estimated in billions of Euros as a result of not sufficiently using sustainability requirements in their purchasing practices.

The study shows that three and a half percent of Germany’s annual purchasing costs of 480 billion Euro could be saved through the implementation of more sustainable purchasing. The fixation on lowest price of goods and services, instead of considering the life cycle costs, has been shown as a fundamental cause of unnecessary spending.