The SDGs, human rights and procurement: An urgent need for policy coherence

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Supporting sustainable development
HIGH IMPACT
PROCUREMENT

UNOPS would like to acknowledge the contributions of the various authors
to this supplement to the 2016 Annual Statistical Report on United Nations
Procurement. The views expressed in this publication are those of the authors
and do not necessarily reect those of the United Nations. Furthermore, the
views expressed in this publication are not necessarily shared by each of
the authors.
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Supporting sustainable development
HIGH IMPACT
PROCUREMENT
Thematic Supplement to
the 2016 Annual Statistical Report
on United Nations Procurement

With the latest edition of the
Thematic Supplement to the
2016 Annual Statistical Report, we
look ahead to 2030.
When the world came together
and adopted the 17 Sustainable
Development Goals, it put into action
a roadmap to achieving a better world
by 2030. The world gathered behind a
universal call to action to end poverty,
protect the planet and ensure that all
people enjoy peace and prosperity.
Procurement is a vital component to
achieving these goals.
It connects goods and services to
the people who need them most. It’s
an area where improved eciency
and innovation can have a long-term
positive impact on development. And,
it can open the doors of opportunity to
traditionally disadvantaged groups –
encouraging equality and stability.
This year’s publication focuses on how
procurement can have a high impact
on sustainable development – and in
achieving the Global Goals.
To achieve the Sustainable
Development Goals, new thinking is
essential. This applies to everyone,
including UNOPS. So in the spirit of
exploring new and innovative areas,
we will close this series of publications,
and instead follow the principle
this nal edition embraces: to now
look towards new ideas, through
which we can showcase how central
procurement is to delivering on
Agenda 2030.
I would like to thank all of the
authors for their contributions to this
publication and for sharing their ideas.
I hope that these articles will serve
as inspiration for us all as we work
together towards building a better
world for all.
Grete Faremo
Executive Director, UNOPS
Foreword by UNOPS
Executive Director
©Government of Norway/
Torgeir Haugaard

Table of
contents
Five rules for powerful
partnerships 24
By Jeanne Kling and Kate Vitasek
Enabling carbon
reduction through
health procurement 20
By Jerome Baddley, Simon Briggs
and Eleni Pasdeki-Clewer
The SDGs, human rights
and procurement: An
urgent need for policy
coherence 10
By Olga Martin-Ortega
and Claire Methven O’Brien
Rethinking procurement
for a circular economy 28
By Catherine Weetman
Promoting sustainable
public procurement
through demand
aggregation 14
By Gian Luigi Albano
Health sector
public procurers
as SDG pioneers 36
By Lorea Coronado-Garcia,
Rosemary Kumwenda
and Mirjana Milic
Promoting the
participation of micro-
and small enterprises
in procurement 32
By Danielle Carvalho Ribeiro
Choosing the right
colour condom: Green! 18
By Eric Dupont Blockchain:
The missing piece? 41
By Harry John
Ecient public
procurement is necessary
for reducing poverty 7
By José Moscoso

6 High impact procurement

High impact procurement 7
Ecient public
procurement is
necessary for
reducing poverty
By José Moscoso, UNOPS
The world’s poorest and most
vulnerable populations are the
most dependent on public goods and
services. They feel the brunt of waste
and corruption in public procurement
more than anyone else. Here’s how
we can contribute to making it better.
Public procurement has evolved
from being merely a back oce
supply function to the public sector,
to now being considered a key tool
in economic policy – and arguably
the most visible beacon of the
quality of governance. Ecient
public procurement also has a direct
impact on poverty reduction. As such,
ecient public procurement is vital for
achieving Sustainable Development
Goal (SDG) 1 of ending poverty. Sound
public investment and spending is
unquestionably an important factor
in attaining the other 16 SDGs.
The rst wave of procurement reforms,
which started almost 20 years ago,
focused on improving the regulatory
framework and building skills. Later
reforms combated corruption and
waste by improving accountability,
transparency, and better integrating
public procurement across
government. But these reforms were
slow to make a tangible dierence.
Why?
Previous procurement reforms often
disrupted entire procurement systems
– and daily work. Frequently, such
reforms met with so much resistance
that they were given up on or watered
down. So how do you change not only
the systems, but also the workows,
individual conduct, tools and, most
importantly, minimize costs – all
while managing the resistance to
change inherent in nearly all public
bureaucracies?
The answer is to initiate major changes
through targeted reforms – surgically
removing outdated, inecient practices
and recognizing proper existing
practices to preventing disruption to
the whole procurement system. The
smart way of doing this is by building
blocks of competence (which includes
people, resources and workows),
targeting those areas where the biggest
improvements are possible, with the
largest combined impact. This requires
a smart methodology to diagnose
where you stand, before any changes
are considered.
The world’s most vulnerable
populations depend on goods
and services purchased
by public entities. Making
targeted reforms in public
procurement processes can
save money that could be
re-invested into key areas.
©Getty Images/MShep2

8 High impact procurement
Changes that have the
biggest impact
UNOPS considers procurement
reform to be a dynamic, iterative
process – testing and improving on
what already exists – to help the
quality and eciency of procurement
systems to leap forward.
At UNOPS, we’ve examined how we
can help governments improve their
procurement systems as well as show
the concrete advantages to doing so.
The UNOPS ‘Procurement Eciency
Assessment Tool’ (PEAT) helps
minimize disruptions to day-to-day
work and validates existing eective
practices, through a forward-looking
(instead of a retrospective audit-like)
process that is carried out jointly with
an organization’s top and middle
management.
This unique tool uses a set of
questions, data and process reviews
to help governments set the
foundation for a targeted reform
by analyzing the strengths and
weaknesses of their procurement
systems. This tailored approach
enables them to identify what needs
to be changed without throwing out
what works, minimizing the overall cost
of the reform. This helps governments
focus their eorts on those actions that
will have the biggest potential impact,
improving procurement eciency and
reducing costs.
Jalisco: An example
of realizable savings
In 2016, UNOPS supported the
Mexican State of Jalisco with
promoting eciency, transparency
and sustainability in public
procurement. The Jalisco project
showed how UNOPS helped the state
government to improve their public
procurement processes, produce
substantial savings – both in the short
and long terms – prevent corruption,
and increase accountability in the use
of public funds.
UNOPS helped the government of
Jalisco save 24% – which translated into
$13 million – on the purchase of new
light rail wagons for public trains.
UNOPS also supported the
establishment of long-term agreements
for the Instituto de la Infraestructura
Fisica Educativa del Estado de Jalisco
for the procurement of educational
supplies for 27,000 students. The
government reduced administrative
and logistics costs, as well as a received
the best value-for-money.
In addition, UNOPS used the PEAT
methodology with other public entities
to develop recommendations on how
to enhance competition, increase
eciency, and use currently available
technologies to improve procurement
planning and execution.
Seeing long-term gains, today
Often, the benets of more ecient
public procurement aren’t immediate.
And if the benets will be reaped

High impact procurement 9
José Moscoso is
the Lead for Advisory
Services in UNOPS
Procurement Group.
An economist by
education, José has
extensive formal training in public
procurement. He joined UNOPS in
2008 as the Deputy Regional Director
for Latin America and the Caribbean.
Prior to joining UNOPS, José worked
as an independent consultant for
the UN system, the World Bank, the
Global Fund and the Inter-American
Development Bank, among other
international nancial institutions.
His professional career began in 1991
with the World Bank’s Africa Region,
and later in Latin America where he
was Senior Operations Ocer.
after the current decision maker’s
administration is over, these reforms
may be less likely to be given priority.
Hence, we see a lot of patchwork
attempts at improving the performance
of public procurement systems, which
– after failure or limited results – delay
a serious and comprehensive reform
programme.
Using PEAT methodology can
concretely show a public manager
how much money could be saved
in the short, medium and long term,
simply by making a few changes.
These savings could then be re-
invested into key areas identied
by the tool to achieve sustainable
improved performance.
A more ecient procurement system
can also help governments save
money and make sure they’re buying
the right things at the best prices, as
well as attracting the best suppliers.
Ultimately, this helps them buy more
of the things that the world’s poorest
depend on
In Mexico, UNOPS helped
the State of Jalisco promote

and sustainability in public
procurement. ©Getty
Images/RonBailey

10 High impact procurement
Government purchasing comprises
a signicant share of the global
economy. Worldwide, it accounts
for €1 trillion per year, while across
Organisation for Economic Co-
operation and Development (OECD)
countries, it comprises an average
12 percent of gross domestic product
(GDP).1 As ‘mega-consumers,’
governments hence have the power
to shift markets towards sustainable
production.
For decades, governments have
sought to use procurement to advance
public policy goals, for example, by
integrating disadvantaged groups
into the labour market. Yet previously
little consideration was given to public
bodies’ impacts on human rights
via purchasing. A number of recent
developments have, however, brought
such impacts into focus.
On the one hand, the involvement
of public institutions in supply chain
abuses now attract increasing civil
society, media and public attention.
From surgical instruments and
personnel uniforms, to mega-
infrastructure, the failure of
public authorities to avert human
rights abuses by suppliers or their
subcontractors is being regularly
highlighted.
On the other hand, new standards
have signalled the human rights
consequences of public buying.
Foremost are the UN Guiding Principles
on Business and Human Rights
(UNGPs), endorsed by the UN Human
Rights Council in 2011.2 The UNGPs
clarify that governments have a duty
to protect human rights that extends
The SDGs,
human rights
and procurement:
An urgent need for
policy coherence
By Olga Martin-Ortega, University of Greenwich
and Claire Methven O’Brien, Danish Institute for
Human Rights

High impact procurement 11
to procurement. At the same time, the
UNGPs underscore that all businesses,
including supplying governments,
have a responsibility to respect human
rights. This responsibility requires
that they monitor and manage human
rights risks along their supply chains.
The OECD,3 European Union (EU),4
international nancial institutions,
investors and many global companies
have committed to upholding the
UNGPs. The International Organization
for Standardization’s new 20400
Sustainable Procurement standard
aims to align with them. In addition,
the International Labour Conference5
and the Group of 7 (G7)6 now
emphasize the need for responsible
global value chains as drivers of decent
work, as well as sustainable and
inclusive growth.
Adopted in 2015, the Sustainable
Development Goals (SDGs) reinforced
the role and signicance of public
purchasing in securing a global
transition to sustainable consumption
and production. In particular, SDG
12 calls on all countries to promote
sustainable public procurement
practices and to implement sustainable
public procurement policies and
action plans.7
But governments have failed to
recognize, or take adequate steps to
address, the human rights dimension
of sustainability in public buying. As
indicated above, this is despite the fact
that human rights abuses are endemic
in the production of goods (for instance,
electronics, foodstus and apparel),
as well as the delivery of services,
from construction to cleaning,
Sustainable Development Goal 8 aims to eliminate all forms of child labour by 2025. Achieving this requires leveraging public spending to
drive respect for human rights in the private sector. ©Ananta Chowdhury

12 High impact procurement
that are routinely purchased by
public bodies.8
There is evidence that procurement
laws and practices currently do as
much to undermine business respect
for human rights as to promote it.
Legal rules requiring buyers to select
the cheapest – or best value – bid
may have a chilling eect on public
sustainability initiatives. Buying ocers
fear that tenders that include human
rights-related conditions in selection
or award criteria will be contested as
discriminatory.
It can also be questioned to what
extent it is permitted to link the
award of public contracts to bidding
companies’ eorts to implement
corporate human rights due diligence
as required by the UNGPs. Equally, it is
unclear how governments can leverage
procurement to reward corporate
eorts on supply chain transparency
or non-nancial reporting, as now
envisaged by legislation in many
countries. Even where public buyers
benet from a permissive legal and
policy environment, the vast majority
appear to lack the awareness, tools
and resources needed to eectively
exploit this.
Once human rights are acknowledged
as a dimension of sustainable
procurement, it becomes clear that
this situation obstructs the
achievement of SDG 12. SDG 8 aims
to eradicate forced labour, slavery
and tracking, to eliminate the worst
forms of child labour and to ensure
decent work for all. Given the heavy
footprint of public purchasers across
global markets, a continued failure
to leverage public spending to drive
respect for human rights in the private
sector will also exact high costs there.
If in the past sustainable procurement
eorts often focused on green
considerations, it is imperative that
public buyers now adopt a joined-up
approach, by integrating business
respect for human rights as a fully-
edged sustainability criterion when
implementing SDG 12.
In this regard, eorts by rst-mover
public buyers can provide inspiration.
Sweden’s county councils spend
€13 billion per year via collective
procurement. Since 2010, they have
used a common code of conduct for
suppliers, followed up on by supplier
questionnaires and targeted factory
audits. A 2015 study found these
measures signicantly reduced serious
labour rights abuses in workshops in
Pakistan supplying the councils with
surgical instruments, while workers
in neighbouring facilities did not
experience similar improvements.9
New rules have also been introduced
in Norway that obliges public
authorities to include clauses on
wages and decent working conditions
when purchasing construction,
facility management and cleaning
services. Buyers must follow up on
the performance of such clauses, for
instance by requiring supplier self-
declarations.10
In the United Kingdom, universities are
required to report under the Modern
Slavery Act (2015) on their eorts to
identify, prevent and mitigate modern
slavery, human tracking and forced
labour in their supply chains.11
An EU-wide collaboration of public
bodies, Electronics Watch, seeks
to address human rights abuses
in government ICT supply chains.12
Participating buyers receive template
contract clauses including a Code
of Labour Practices. These encourage
suppliers to disclose factory locations
so that labour conditions can
be monitored.
Urgent action by governments and
other stakeholders is needed to speed
up and scale up such innovations,
to remove residual legal and policy
barriers to integrating human rights
into public purchasing. Only by
achieving respect for human rights
– and policy coherence – in public
purchasing will the SDGs be realized

High impact procurement 13
1 OECD, ‘Public Procurement:’ http://www.oecd.
org/gov/ethics/public-procurement.htm.
2 ‘United Nations Guiding Principles on
Business and Human Rights: Implementing
the United Nations “Protect, Respect and
Remedy” Framework,’ U.N. Doc. A/HRC/17/31,
(June 2011) [hereinafter UNGPs]: http://
www.ohchr.org/Documents/Publications/
GuidingPrinciplesBusinessHR_EN.pdf and
‘Protect, Respect and Remedy: A Framework
for Business and Human Rights,’ UN Doc
A/HRC/8/5, (April 2008): https://business-
humanrights.org/sites/default/les/reports-and-
materials/Ruggie-report-7-Apr-2008.pdf.
3 The OECD Guidelines were updated in 2011
to align with the UNGPs: ‘OECD, Guidelines
for Multinational Enterprises’ (2011): http://
mneguidelines.oecd.org/text/.
4 European Commission, ‘Communication from
the Commission to the European Parliament,
the Council, the European Economic and Social
Committee and the Committee of the Regions:
A Renewed EU Strategy 2011-14 for Corporate
Social Responsibility,’ COM (2011) 681 nal
(25 October 2011): http://eur-lex.europa.eu/
LexUriServ/LexUriServ.do?uri=COM:2011:0681:
FIN:EN:PDF.
5 International Labour Organization, ‘Decent
Work in Global Supply Chains,’ Report prepared
for 105th Session, International Labour
Conference, 2016, p. 18: http://www.ilo.org/
ilc/ILCSessions/105/reports/reports-to-the-
conference/WCMS_468097/lang--en/index.htm.
6 The G7 Leaders’ Declaration called for tools
to support public procurers in meeting social
and environmental commitments. ‘G-7 Leaders’
Declaration,’ Schloss Elmau, Germany (June 8,
2015): https://www.whitehouse.gov/the-press-
oce/2015/06/08/g-7-leaders-declaration.
7 G.A. Res. 70/1, ‘Transforming our world: the
2030 Agenda for Sustainable Development’ (25
September 2015): http://www.un.org/en/ga/
search/view_doc.asp?symbol=A/RES/70/1.
8 International Learning Lab on Public
Procurement and Human Rights (C. Methven
O’Brien et al.), ‘Public Procurement and Human
Rights: A Survey of Twenty Jurisdictions,’
2015 Danish Institute for Human Rights
and International Corporate Accountability
Roundtable: http://www.hrprocurementlab.org/
blog/reports/public-procurement-and-human-
rights-a-survey-of-twenty-jurisdictions/.
9 SwedWatch et al., ‘Healthier procurement:
Improvements for working conditions for
surgical instruments manufacture in Pakistan
(2015)’: http://www.swedwatch.org/sites/
default/les/healthier_procurement.pdf.
10 International Learning Lab on Public
Procurement and Human Rights, supra note 8.
11 O. Martin-Ortega (2016), ‘Modern slavery
and human rights in global supply chains:
Roles and responsibilities of public buyers.
Policy and practice insights for higher
education institutions in the framework of
their obligations under the UK Modern Slavery
Act,’ BHRE Research Series, Policy Paper No.2:
https://static1.squarespace.com/static/56e9723
a40261dbb18ccd338/t/5857c23dcd0f68bab21a
76b6/1487000267236/Modern+Slavery+and
+Human+Rigths+Risks+in+Global+Supply+
Chains+Insights+for+HEIs+2016.pdf.
12 Electronics Watch: http://electronicswatch.
org/en.
Olga Martin-Ortega
(co-author) is a
Reader in Public
International Law
at the University of
Greenwich’s School
of Law (United Kingdom), where she
leads the Business, Human Rights
and the Environment Research
Group. Her research focuses on the
responsibilities of business and public
authorities concerning human rights
in global supply chain. She has also
conducted research on post-conict
reconstruction, transitional justice and
international criminal law. Olga is a
member of the Board of Trustees of
Electronics Watch, Board of Directors
of the London Universities Purchasing
Consortium, and Steering Committee
of the International Learning Lab on
Public Procurement and Human Rights.
Claire Methven
O’Brien (lead author)
is the Strategic Adviser
on Human Rights and
Business at the Danish
Institute for Human
Rights where she provides expert
support to multinational corporations,
multilaterals, governments, civil
society and human rights
organizations, including in the area
of procurement and supply chain
management. She is founder of the
International Learning Lab on Public
Procurement and Human Rights and
a Member of the Sustainable Public
Procurement Working Group of UN
Environment’s 10-Year Framework
for Programmes on Sustainable
Production and Consumption. In
2016, she was winner of Ireland’s
Procurement Leader Award.

14 High impact procurement
Promoting sustainable
public procurement
through demand
aggregation
By Gian Luigi Albano, Consip S.p.A
In 2015, world leaders gathered
at the United Nations to reshape
the Millennium Development Goals
into a global vision for sustainable
development. The resulting Sustainable
Development Goals1 provide the
overarching development framework
for the world. Public organizations
are on the frontline to put that
framework into action.
Using procurement for objectives
beyond the mere acquisition of works/
products/services is a quite recent
intellectual achievement.
Thanks to a profound reformulation
of public procurement regulations
at a global level, promoted by
forward-looking policymakers, and
the emergence of a more qualied
procurement workforce, as well as of
specialized procurement organizations,
we are in the historically most
favourable conditions to use public
procurement for social objectives.
In the remainder of this short paper,
we shall emphasize how demand
aggregation – be it among separate
purchasing units belonging to a single
public organization or among distinct
bodies at the central government level
– would make the implementation of
sustainability strategies more eective.
What is sustainable public
procurement?
Sustainable public procurement (SPP)
can be dened as a: “process whereby
public organizations meet their needs
for goods, services, works and utilities
in a way that achieves value for money
on a whole life-cycle basis in terms
of generating benets not only to
the organization, but also to society
and the economy, whilst signicantly
reducing negative impacts on the
environment.”2
The fundamental ambition of SPP
is to expand the scope of public
procurement by including a potentially
wider array of externalities, be they
towards the environment or the
welfare of stakeholders, who are
not necessarily parties to the public
contract. Some of those externalities
cannot properly be taken into account
without evaluating the life-cycle costs
(LCC) of any acquisition, which includes
the purchasing price, operating costs
(for example, energy, spares and
Demand aggregation could
be an important incentive
for economic operators to
pursue innovation focused
on environmentally friendly
products and processes.
©Getty Images/lovelyday12

High impact procurement 15

16 High impact procurement
maintenance) and end-of-life costs
(for example, decommissioning
and removal).
Stretching the time horizon for
evaluating the nancial dimension(s)
of the value for money makes all
nancial components more visible
and transparent, thus allowing buyers
to trade-o, say, a higher purchasing
cost today with a lower maintenance
cost tomorrow. Expenditures at
dierent stages of the life cycle are
emphasized, allowing public buyers to
better plan – whenever admissible by
public accounting rules – budgetary
predictions over several years. These
potential advantages require, though,
the ability to evaluate intrinsically more
uncertain cost dimensions arising in
the future.
The role of demand
aggregation in promoting
sustainable public
procurement
Public procurement procedures are
often carried out by those procuring
entities that are also the nal users of
the to-be-purchased goods/services/
works. While this model is fairly
widespread, novel organizational
forms have emerged during the last
few decades, mainly consisting of a
separation between the organization(s)
in charge of preparing and running the
tender and the organization(s) making
use of the awarded contract(s).
For instance, several centralized
procurement agencies are now active
in many countries, and are entrusted
with the (almost exclusive) mission to
aggregate the needs of central and/or
local government bodies by awarding
often sizeable framework agreements
on their behalf. Less visible, albeit not
necessarily less eective, forms of
demand aggregation could take place
within a single organization whenever a
single operational centre acts on behalf
of several procuring units.
In this last case, SPP becomes
easier to implement when separate
decision centres, managing dierent
budget items, are merged into one
single procurement unit. If capital
expenditures (such as computers or
vehicles) and current expenditures
(such as electricity and fuel) are
managed by dierent organizational
units, the LCC approach may be hardly
implemented, as the unit in charge
of purchasing a computer would not
internalize the electricity consumption,
which aects another unit’s budget.
Linking these two budget items is
quintessential to the application of
the LCC approach.
Even when a single organization –
such as a small municipality – adopts
a centralized procurement structure,
it is far from being clear that it will
be able to approach and solve the
trade-o between more expensive
investments today, and lower operating
costs and/or higher benets for the
environment tomorrow. This also
requires setting the ‘optimal’ discount
rate to weight and value future benets
from sustainable strategies. To carry
out such tasks a specialized know-how
is of paramount importance, which
is not likely to be within the reach
of small public agencies.
Moreover, it seems reasonable that
a central purchasing agency would
plan its procurement strategies over
a longer time horizon, as it is less
sensitive to the political cycle than any
single public organization. This implies
that the discount rate set by a central
agency may result in a discount rate
closer to one that is socially optimal.3
Indeed, especially when the political
cycle tends to be short at the local
level, public decision makers, including
procuring organizations, tend to
overestimate the impact of decisions
in the very short term with respect
to those generating their eects in a
more distant future. As a result, the
foundations themselves of the LCC
risk being undermined.
When pursuing SPP strategies any
small public buyer – such as a local
municipality – reaps only a tiny fraction
of the overall reduction of negative
externalities (for example, carbon
dioxide), so it is likely to be aected by
a standard free-riding problem, that is,
to underestimate the value it attaches
to lower pollution. When demand of
several public bodies is aggregated
– for instance, by means of a central
purchasing body – the overall value of
lower externalities can be internalized
by a single (framework) contract
awarded on behalf of several nal
users. Demand aggregation may then
become an eective tool to (almost)
fully internalize social benets.
Finally, demand aggregation could
come into play as an important
incentive for the economic operators
to pursue innovation focused on
environmental friendly products
and processes. Most importantly, the
‘pull’ eect triggered by centralized
agencies is likely to provide more
clear and coherent signals to the supply
market on the most protable kinds
of investments. On the other hand,
low-value independent procurements
carried out by a large number of small
public organizations would run the risk
of not generating the pull eect for
making rms’ investments viable, and,
even worse, may send contradictory
signals to the supply market as to the
kind of the required investments

High impact procurement 17
1 You can see all 17 UN Sustainable
Development Goals here: https://
sustainabledevelopment.un.org/sdgs.
2 Denition adopted by the Task Force on
Sustainable Public Procurement led by
Switzerland. Membership includes: Switzerland,
United States, United Kingdom, Norway, the
Philippines, Argentina, Ghana, Mexico, China,
Czech Republic, State of Sao Paolo (Brazil),
UN Environment, International Institute for
Sustainable Development, International
Labour Organization, European Commission
(Directorate-General-Environment) and
International Council for Local Environmental
Initiatives. Adopted in the context of the
Marrakech Process on Sustainable Production
and consumption led by UNEP and UN
DESA: http://www.unep.fr/scp/marrakech/
taskforces/pdf/Procurement2.pdf. The concept
is very much linked to that of sustainable
development, which requires the present
generation to pursue its own needs without
compromising the ability of future generations
to meet their own needs.
3 Dening the socially optimal discount rate is
not an easy task. A fair amount of literature
exists dealing with the concept of social
discount rates and their relations with global
warming and climate change. See: P. Dasgupta,
‘Discounting climate change,’ Journal of risk and
uncertainty, 2008, 37, pp. 141-169.
Gian Luigi Albano is
Head of Research at
Consip, the National
Central Purchasing
Body (Italy) and
Adjunct Professor
of Economics at Libera Università
Internazionale degli Studi Sociali
(LUISS) Guido Carli (Italy). He obtained
his Ph.D. in Economics from Université
catholique de Louvain (Belgium)
and a B.A. (Hons) from Università
Bocconi (Italy).
He is the co-author of The law and
economics of framework agreements

procurement, Cambridge University
Press, 2016. He is an expert on public
procurement for the European
Commission, the Inter-American
Development Bank, the Organisation
for Economic Co-operation and
Development, the World Bank
and the United Nations.

18 High impact procurement
The Sustainable Development
Goals (SDGs) are ambitious,
and they will require enormous
eorts across countries, continents,
industries and disciplines – but they
are achievable. UNFPA, United Nations
Population Fund is working with
governments, partners and other UN
agencies to directly tackle many of
these goals – in particular SDG 3 (good
health and well-being), SDG 4 (quality
education) and SDG 5 (gender equality).
In 2016, for example, contraceptives
supplied by UNFPA reached 20.9
million people, helping prevent an
estimated 11.7 million unintended
pregnancies, nearly 3.7 million unsafe
abortions and an estimated 29,000
maternal deaths.
UNFPA is proud to have enabled
millions of women to exercise their
fundamental human right to decide,
free of coercion, discrimination and
violence, when or how often to have
children – and to have helped to nearly
double modern contraceptive use
worldwide from 36 percent in 1970
to 64 percent in 2016.
UNFPA is also committed to
contributing to the achievement
of SDG 12 (responsible consumption
and production). Since UNFPA launched
its Green Procurement Strategy in
2013, one of the rst objectives was
to collaborate with its suppliers to
reduce the environmental impact
of the UNFPA supply chain.
In 2016, UNFPA procured more than
420 million male latex condoms that
have eciently protected people
against sexually transmitted infections
and HIV/AIDS. Yet despite the profound
social benets of the work of UNFPA,
male condoms remained the least
environmentally sustainable product
due to the quantities of water,
chemicals and raw material required
for their production. Condoms also
have a large environmental footprint
due to the type and amount of
resources used for packaging
and shipping.
The high environmental impact of
condoms, which are leverage products
(high relative spend and low supply
risk) for UNFPA, led the organization
to explore the possibility of procuring
a more sustainable product via a four-
point strategy with measurable goals
to reduce:
• Carbon dioxide emissions
• Water consumption
• Hazardous chemical impacts
• Raw material consumption
In implementing the strategy,
UNFPA communicated with donors,
governments and beneciaries, and
engaged suppliers on a collaborative
basis, focusing on long-term benets
and clearly communicating the what,
why and when of the plan.
Suppliers were asked to dene
an action plan in their tenders in
response to the long- and short-term
environmental goals of UNFPA. UNFPA
then monitored the implementation of
suppliers’ action plans and suggested
improvements.
Following the implementation of the
UNFPA Green Procurement Strategy,
all long-term agreement suppliers of
male latex condoms are now ISO 14000
certied.1 As a result, UNFPA has seen a
reduction in the environmental impact
of these products, including monthly
savings of:
• 7.8 metric tonnes of carbon dioxide
• 11.8 million kilograms of
solid waste
• 587,598 cubic metres of water used
• 995,397 cubic metres of
water treated
• 1,301,554 kilowatt hours
of electricity
The success of this initiative has
demonstrated that market-shaping
activities are not only limited to
bringing prices down. Other important
considerations can be taken into
account. UNFPA continues to monitor
the results regularly
1 ISO 14000 certications refers to
environmental management
Choosing the right
colour condom: Green!
By Eric Dupont, UNFPA

High impact procurement 19
Eric Dupont joined
the United Nations in
January 1993 and has
been the Chief of the
UNFPA Procurement
Services Branch since
November 2010. He has more than 25
years of experience in procurement
and supply chain, both at UNFPA
headquarters and in the eld. Prior
to joining UNFPA, he worked with
UNOPS, UNICEF and for the European
Union in Niger as a project manager
on a water dam construction project.
He is the current Chair of the UN High
Level Commission on Management-
Procurement Network.
High quality condoms are
particularly important
for guarding against
unintended pregnancies
and life-threatening
sexually transmitted
infections. ©UNFPA

20 High impact procurement
Enabling carbon
reduction through
health procurement
By Jerome Baddley, Simon Briggs and Eleni Pasdeki-Clewer, the
Sustainable Development Unit for the National Health Service,
public health and social care system
The United Kingdom’s (UK)
Climate Change Act (2008)1 forms
the backbone of the Government’s
plan to reduce current and future
carbon emissions. The Act was the rst
national legislation worldwide to set
targets and create policy instruments
to support carbon reduction. The aim
is to reduce greenhouse gas (GHG)
emissions by at least 80 percent by
2050 (against a 1990 baseline).
The UK’s carbon footprint peaked at
nearly 1.3 million tonnes of carbon
dioxide equivalents (CO2e) in 2007.
In 2013, it was 19 percent lower than
this.2 While every sector is expected
to play their part, the public sector is
looked upon to take a leading role.
This is not only in terms of managing
its own operations, but also in its wider
reach. With a population of over 65
million,3 nearly 5.5 million4 of whom
are public sector workers,5 the public
sector’s direct inuencing potential,
and its associated ripple eect, is
quite signicant.
Why health procurement
matters
Over 1.8 million people in the UK are
employed by the National Health
Service (NHS) or other public sector
health and social care6 organizations
– more if we include private and third
sector7 sta that deliver NHS services.
The health and social care system
is a signicant consumer of goods
and services. It also faces increasing
nancial pressures due to population
growth, increasing life expectancy and
eciency targets.
The global impacts of GHG emissions
are shared by all of us. Recent analysis
into the eects of travel on the local
environment and corresponding
health impacts further connected
local travel decisions and people’s
health and health quality.8 Delivering
high-quality healthcare is incompatible
with unsustainable practices that may
result in ill health.
Establishing the policy
framework
To manage these impacts in 2008,
a publicly funded national unit – the
Sustainable Development Unit (SDU) –
was established to work on behalf of,
and in support of, the health and social
care system in England.9
In 2009, SDU published the NHS
Carbon Reduction Strategy for
England.10 This strategy articulated
a commitment by the NHS to be a
leading sustainable and low carbon
organization, fully supporting the
carbon reduction objectives set by
the Climate Change Act. The strategy
identied key areas for action,
including procurement, with specic
recommendations for improvement
and anticipated corresponding
carbon benets. Bespoke tools and
guidance were developed to support
implementation. Procuring for Carbon
Reduction11 (P4CR) provided a tailored
maturity matrix12 to drive policy
changes across organizations, as well
as tools13 to prioritize expenditures
based on carbon impacts and to track
progress with implementation.14
Developing the evidence base
In 2012, the world’s rst combined
health, public health and social care
carbon footprint for a national health
system was published. The analysis
estimated the health and social care
system carbon footprint to be 32
million tonnes15 of CO2e. Breaking
down that gure suggested that there

High impact procurement 21
NHS, Public health and social care carbon footprint breakdown of procurement 2015
Carbon emissions (MtCO2e)
Building energy
Travel
Commissioned health services
from outside system
Pharmaceuticals (excluding
Meter Dose Inhalers)
Business services
Medical instruments/equipment
Food and catering
Freight transport
Meter Dose Inhalers
Construction
Manufactured fuels,
chemicals, and gases
Anaesthetic gases
Paper products
Other manufactured products
Information and communication
technologies
Water and sanitation
Waste products and recycling
Procurement
Building energy
Travel
Commissioned health
and care services from
outside system
10 23456
57%18%
13%
11%
4.9
3.5
3.1
2.8
2.8
2.6
1.3
0.9
0.8
0.7
0.6
0.6
0.5
0.5
0.5
0.4
0.2
are three broad contributing areas:
Carbon from energy consumed in
buildings, emitted during travel and
transport, and embedded within the
goods and services sourced by the
health and social care system.
The same research suggested that
in 2012, 21 percent of the GHG
emissions for the NHS in England
were attributable to pharmaceuticals
and 11 percent to medical devices. In
parallel with the drive to reduce the
impacts of procurement decisions,
SDU began multilateral dialogue
with the pharmaceutical and medical
devices industry.16
In 2012, through the Coalition for
Sustainable Pharmaceuticals and
Medical Devices,17 internationally
recognized guidance for identifying
and reducing the impacts of
pharmaceutical products and medical
devices was published.18 In 2014,
a report into high GHG intensity
prescription items19 for the NHS
in England was made available.
Twenty items were identied as most
signicant in terms of their GHG
contribution to the health and social
care system’s overall carbon footprint.
In January 2017, SDU published a
study into prioritization of high GHG
intensity items procured by the
NHS in England.20 Using a bottom-
up approach, and more specically,
GHG material intensity factors
(kilogram CO2e per kilogram of
material) from the ‘ecoinvent’21
database, a list22 of high priority
products was developed. The list
can help the health and social care
system target specic areas in the
procurement process.
Implementing and
measuring impact
Our approach to embedding
sustainable development principles
Breaking down the carbon footprint demonstrates four key areas to focus carbon reduction activity. Please note that the pie chart above
does not add up to 100% due to rounding. ©Sustainable Development Unit

22 High impact procurement
within the health and social care
system consists of four parts:
• Planning: having board-approved
Sustainable Development
Management Plans, which include
commitments on procurement
• Measuring and reporting progress
with implementation through an
annual Sustainability Report (that
includes procurement)
• Evaluating commitment to
sustainable development (including
procurement) through the Good
Corporate Citizenship tool23
• Engaging sta, service users,
communities and the wider public24
This combination of policy instruments
and implementation tools for
procurement professionals, together
with industry engagement, has enabled
the health and social care system to
progress on the right path to reduce
its carbon impacts.
In June 2016, a report was published
on the nancial benets of sustainable
development as realized by health
organizations.25 A progress report –
Health Check26 – of the health and
social care system was also launched
in 2017.
Emerging next steps
Product and service level carbon
footprinting is a helpful but resource-
intensive process. While input-output
analysis is a useful approach for a
system-wide, bird’s-eye view of GHG
emissions, we are beginning to explore
less intensive product and service-
specic methodologies that can help
rene results and inform decision
making. An example is material-based
factors that move away from cost-
dependent calculations and establish
a causal relationship between types
and weights of primary materials and
carbon emissions.
Equally, irrespective of the undeniably
critical role of GHG emissions
reduction, there are more dimensions
to sustainable procurement. Water,
waste and the use of non-renewable
materials are part of the wider
resource eciency picture and
currently under active consideration.
Signicant work on the social impacts
of health procurement has also taken
place. The recently refreshed ‘Ethical
Procurement for Health’27 provides
policy materials and supporting tools
to facilitate the inclusion of ethical and
labour standards in procurement.
Sustainability has often seemed to be
the preserve of estates and facilities
teams, who can show quick, cashable
savings. However, the most signicant
impacts and rewards are often through
inuencing procurement decisions and
supply chains. Providing the tools for
the job that are properly calibrated
for the task – and the right support for
practitioners – is essential to progress
with embedding sustainability in
procurement. SDU will continue to
work with the health and social care
system to deliver sustainable health
1 https://www.theccc.org.uk/tackling-climate-
change/the-climate-change-act/.
2 https://www.gov.uk/government/uploads/
system/uploads/attachment_data/le/542558/
Consumption_emissions_May16_Final.pdf.
3 https://www.ons.gov.uk/
peoplepopulationandcommunity/
populationandmigration/populationestimates/
articles/overviewoftheukpopulation/mar2017.
4 https://www.ons.gov.uk/
employmentandlabourmarket/peopleinwork/
publicsectorpersonnel/bulletins/
publicsectoremployment/mar2017.
5 https://www.ons.gov.uk/
employmentandlabourmarket/people
inwork/publicsectorpersonnel.
6 https://www.ons.gov.uk/
employmentandlabourmarket/peopleinwork/
publicsectorpersonnel/bulletins/
publicsectoremployment/mar2017.
7 https://www.nao.org.uk/successful-
commissioning/introduction/what-are-civil-
society-organisations-and-their-benets-for-
commissioners/.
8 http://www.sduhealth.org.uk/delivery/
measure/health-outcomes-travel-tool.aspx.
9 http://www.sduhealth.org.uk/about-us/who-
we-are.aspx.
10 http://www.sduhealth.org.uk/documents/
publications/1237308334_qylG_saving_carbon,_
improving_health_nhs_carbon_reducti.pdf.
11 http://www.sduhealth.org.uk/documents/
resources/P4CR_workbook_rV2_SW.pdf.
12 http://www.sduhealth.org.uk/documents/
resources/P4CR_workbook_rV2_SW.pdf.
13 http://www.sduhealth.org.uk/documents/
resources/P4CR_SCO2PE_Prioritisation_Tool_
V3.xlsx.
14 http://www.sduhealth.org.uk/documents/
resources/P4CR_self_assessment_tool.xls.
15 http://www.sduhealth.org.uk/documents/
publications/2014%20strategy%20and%20
modulesNewFolder/MODULE_carbon_hotspots_
FINAL.pdf.
16 http://www.sduhealth.org.uk/areas-of-focus/

High impact procurement 23
Eleni Pasdeki-Clewer
(lead author) is
an experienced
sustainable
procurement
professional. She has
designed and delivered sustainable
procurement and supplier engagement
programmes across public and private
sectors in the UK. She has worked at
the Department for Environment, Food
and Rural Aairs, the Department of
Health and KPMG. Eleni is currently
a Technical Expert on Sustainable
Procurement at the Sustainable
Development Unit, a national team
that works on behalf of the health
and social care system in England,
where she leads the implementation
of sustainable procurement.
Simon Briggs
(co-author) is a
Communications
Manager at the
Sustainable
Development Unit.
His communications career has taken
him to Cambridge University, NHS
East of England and the Care Quality
Commission. He studied at Cardi
University where he earned a degree
in Journalism, Film and Broadcasting.
Simon’s experience includes corporate
communications, events, stakeholder
engagement, media relations,
social media, video and digital
communications.
Jerome Baddley (co-
author) is the Head of
the NHS’s Sustainable
Development Unit.
He has worked for 17
years in sustainable
development, with 10 of those years in
leadership roles. Most recently, he was
Chief Executive of an environmental
social enterprise and Low Carbon
Sector Chair of a local enterprise
partnership in the East Midlands (UK).
His team produced the rst full NHS
carbon management plans (2008),
the Nottingham City 2020 Energy
Strategy (2010) and the regional natural
resource footprint for the NHS in the
East Midlands (2012). He has spent
10 years supporting health and social
care organizations, businesses, third
sector organizations and communities
to implement strategic and practical
measures in sustainable development
and resource eciency.
carbon-hotspots/pharmaceuticals.aspx.
17 Now the Coalition for Sustainable Healthcare.
18 http://www.sduhealth.org.uk/documents/
publications/2015/Pharma_Full_Guidance_GHG_
Nov_2012.pdf.
19 http://www.sduhealth.org.uk/documents/
publications/2014/GHG_Prescription_Feb_
2014.pdf.
20 http://www.sduhealth.org.uk/documents/
publications/2017/Identifying_High_
Greenhouse_Gas_Intensity_Procured_Items_
for_the_NHS_in_England_FINAL.pdf.
21 http://www.google.co.uk/url?sa=t&rct=j
&q=&esrc=s&source=web&cd=1&cad=rja
&uact=8&sqi=2&ved=0ahUKEwjHy-_i9d7UAh
WPZ1AKHVvnACIQFggkMAA&url=http%3A%
2F%2Fwww.ecoinvent.org%2Fdatabase%
2Fdatabase.html&usg=AFQjCNGwFrEVc7Gta
YV0e0oQI365BB1vug.
22 http://www.sduhealth.org.uk/documents/
publications/2014/GHG_Prescription_Feb_
2014.pdf.
23 http://www.sduhealth.org.uk/delivery/
evaluate.aspx.
24 http://www.sduhealth.org.uk/delivery/plan.
aspx.
25 http://www.sduhealth.org.uk/documents/
publications/2016/Securing_Healthy_Returns_
Report_SDU_WEB.pdf.
26 http://www.sduhealth.org.uk/documents/
publications/2017/SDU_health_check_
2017_WEB.pdf.
27 http://www.sduhealth.org.uk/areas-of-
focus/commissioning-and-procurement/
procurement/ethical-procurement-for-
health-workbook.aspx.

24 High impact procurement
UN Sustainable Development Goal
6 (SDG 6) aims to ensure available
and sustainable management of water
and sanitation for all.
If money were the answer, the problem
would already be solved.1 “Twenty
years ago, we identied one billion
people without access to water,”
reports the director of an international
water supply consulting group. Since
then, billions of dollars have been
poured into the problem (on average
$3.4 billion annually) – and still about
the same number of people remain
without water.2 Countries are not
getting ahead of population growth.
Many non-governmental organizations
(NGOs) and organizations tackle the
global water/sanitation crisis using
faulty approaches. “The paradigm
that simply installs water systems as
gifts and assumes beneciaries will
have water for the foreseeable future
does not work,” shares the CEO of a
global water non-prot that is using
a dierent approach to address the
challenge. The non-prot, herein
referred to as NGO H2O,3 was the
subject of University of Tennessee
research on how to form highly
successful partnerships.
H2O is interesting not just because
of their impact model, which aligns
with SDG 6, but because of how they
work to achieve their mission. The
key to their success? Create true win-
Five rules
for powerful
partnerships
By Jeanne Kling and Kate Vitasek,
University of Tennessee

High impact procurement 25
win collaborative agreements with
partners who literally have a vested
interest in achieving the same goal.
The following is an overview of ve
key rules that H2O followed in building
and maintaining some of those
relationships.
Rule #1: Focus on outcomes,
not transactions
There are many organizations focused
on providing people access to potable
water. Many raise donations and
install wells in local communities
with volunteers from the Global North.
But, when volunteers leave, water
systems can break, sometimes from
lack of knowledge about long-term
maintenance, or due to diculty in
locating spare parts or raising funds
to maintain the water systems.
H2O doesn’t focus on short-term goals
(for example, installing a pump) and
quick wins. Rather they focus on long-
term, sustainable outcomes. This is
achieved by changing the systems in
which the services are provided – using
adaptable models, building evidence,
collaborating with partners, working
with governments and being humble.
H2O’s CEO noted that success wasn’t
just about building infrastructure – it
was also about building the institutions,
businesses and service authorities
needed to keep the systems running.
Globally, more than 800 million people lack basic drinking water service. Source: World Health Organization ©UNOPS/Atsushi Shibuya

26 High impact procurement
Rule #2: Focus on the what,
not the how
This rule means stakeholders in
the solution have input on how to
implement the solution. While H2O
and its partners agree on the what
(investing in solutions that provide
sustainable services forever), the
how is up for interpretation. Local
communities decide the details
regarding the water and sanitation
solutions they will use and how to
ensure sustainability.
And sustainability can be found
in unique ways. By providing local
community activists with training,
a bicycle and tools to repair and
maintain local water infrastructure,
the organization has seen ripple eects
worth noting. In India, one such activist
went on to organize a team of mobile
mechanics that keeps water points
running, supporting the development
of local businesses. This has also
increased the lifespan and decreased
the downtime of each water point.
Rule #3: Clearly dened
and measurable desired
outcomes
This rule means implementing a
strong performance management
process to measure success against
goals. For several years, H2O has led
eorts to transparently monitor and
provide reporting systems, including
through the use of mobile platforms
to collect data. Using surveys, pictures
and videos on devices with GPS, sta
and trained water and sanitation
professionals from the districts can
upload real-time (or close to real-time,
depending on connectivity) information
to Google Earth and internet-
based databases.
Does measuring for the long term
work? Yes. Evidence collected through
these platforms has conrmed great
progress in water service levels across
all districts – almost doubling in just
four years.
Rule #4: Pricing model
with incentives
The secret to an eective partnership
is in how donations are used in pursuit
of stated goals. University of Tennessee
researchers studying H2O found three
keys to success.
First is long-term thinking: Ensuring
solutions remain operational
and self-sustaining long after a
project is nished. It also means
developing solutions that can easily
be replicated by other NGOs or
national governments to scale water
and sanitation services across entire
countries. H2O is actively working
with national governments in Africa
and Latin America to develop national
investment plans, frameworks and
systems to meet SDG 6.
Shared risk and shared reward creates
a sense of accountability. Insisting
on this ensures that all partners
literally have a vested interest in the
success of the goal. Communities and
governments contribute funds, labour
and talent, in partnership with the NGO.
The third ingredient is the focus on a
exible economic model. This allows
local districts to create solutions that
evolve as needs change. Over time,
the goal is to shift economics so local
communities become self-funded and
aid-independent. To nd the right
model, it is important to work with
communities to set appropriate rates
for water systems that are aordable
for users, but high enough to cover
the cost of maintenance and eventual
replacement. H2O develops supply
chains for spare parts and trains local
water and sanitation professionals.
This is a double win – ensuring
sustainability of systems while also
providing local job opportunities.
Rule #5: Insight versus
oversight governance
structure
Whether it’s Washington, D.C.,
The Hague or a remote village,
politics holds a mighty grip. Senior
management should have autonomy
to make decisions and try innovations
that work best in their countries,
provided they align with the vision of
the organization for which they work. In
the case of H2O, country directors have
exibility on the types of procurement
and partnership agreements, as long as
they follow internal policies. Whatever
the form, the agreements almost
always follow the Five Rules above

High impact procurement 27
Kate Vitasek (lead
author) is one of the
world’s authorities on
highly collaborative
win-win relationships
for her award-winning
research and Vested® business
model. Author of six books and a
Graduate and Executive Education
faculty member at the University
of Tennessee’s Haslam College of
Business, she has been lauded by
World Trade Magazine as one of the
‘Fabulous 50+1’ most inuential people
impacting global commerce. Vitasek
is a contributor for Forbes magazine
and has been featured on CNN
International, Bloomberg, NPR
and Fox Business News.
Jeanne Kling (co-
author) is a Research
Associate with the
Vested® team at
the University of
Tennessee. She has
co-authored numerous Vested case
studies and two Vested books. Her
passion for education runs deep,
having been elected to public oce
three times, including serving as the
President of the Minnesota State Board
of Education and serving as the Chair
of the National Association of State
Boards of Education. The Business
and Professional Women Association
named her Minnesota Business
Woman of the Year.
1 Video, Back to the River, Editors Roger Dacier
and Wesley Thomas, Producer Lisa Newman,
Executive Producer Tessa Livingstone, a Small
Media Large production, 2010.
2 Vested: How P&G, McDonald’s, and Microsoft are
, Kate
Vitasek, Karl Manrodt, Jeanne Kling; Palgrave
MacMillan; New York, New York; 2012,
Page 156.
3 H2O is a ctional name. The real identity of
the NGO has been protected to ensure the
objectivity and neutrality of the publication.

28 High impact procurement
Rethinking
procurement for a
circular economy
By Catherine Weetman, Re-think Solutions
The circular economy opens up
value opportunities in every
sector, worldwide. Circular approaches
reduce risk while increasing agility and
exibility. Business and society become
resilient, sustainable and t for the
future. Procurement teams can
lead the way, both internally and
through suppliers.
Most industrial processes take some
materials, make something, sell it and
at end-of-use, throw it away; this is a
linear economy. Resources embedded
along the process – such as energy,
labour, water and materials – are
also wasted. Our increasing pressure
on earth systems is pushing them
beyond safe limits. Increasing pressure
on society is creating hardships,
unrest and conict, and demand is
outstripping supply. How can we
redesign the negative feedback loop of
destruction and depletion of resources
and living systems, so that we can
regenerate what we need, to have
enough, for all and forever?
From leaky to loopy
Use
Recycle
Make
Remake
Reuse
Take
Pollute
Dispose
Make
Use
Transforming linear processes
to a circular economy.
©Catherine Weetman

High impact procurement 29
Transparency
Procurement
challenges
Value vs. cost
Globalization
Collaboration
Sustainability
Product innovation
Agility
Big data opportunities
Talent and people
Financial acumen
Organization
integration
Risk
Typical challenges for procurement teams
Opportunities and challenges
Globalization has increased choices
and reduced costs, but involves
extended supply chain tiers, which
obscures the risks and challenges
at each stage. Three billion new
consumers are set to join the global
market between 2010 and 2030 – a
fantastic business opportunity, but
with complex challenges. How do we
meet all our needs in a world of nite
resources, land and water?
A useful open-source tool is the
Future Fit Business Benchmark,1 based
on Natural Step system conditions
aiming to: cycle nite materials; use
safe, renewable or recycled materials;
regenerate living systems to secure
abundant natural resources and
ecosystems; and create meaningful
jobs and support local communities.
The circular economy supports these
criteria. It is an intelligently designed,
whole system approach, replacing
consumption with use, with business
models that recover products and
materials.
Aiming for a 100 percent yield from
each resource, it creates more from
less and converts waste to inputs.
Take, for example, the process of
making orange juice. Bio-rening
creates valuable by-products. Pectin,
pulp and zest can be used in food
manufacturing. Orange essential oils
are valuable for pharmaceuticals and
cosmetics. Citrus peels can create a
silk-like textile for fashion garments.
Inputs are more sustainable as they
can be renewable or recycled from
supply chain waste or other end-of-
life products. Circular products last
longer, are used more intensively
and reused, with ecient disassembly
and separation of each material for
recovery. The tightest loops create
the most value: reuse, reselling, and
then repair and remanufacture –
while recycling remains the last choice.
The circular economy decouples
products and services from resource
consumption, going much further
than resource eciency and recycling.
It reduces externalities, including
pollution and deforestation, and
transfers jobs from extraction and
mass production to service, repair,
remaking and resource recovery.
How does the circular
economy support the
Sustainable Development
Goals (SDGs)?
There are many ways that the circular
economy can support the SDGs:
• Cycling nite materials and using
sustainable renewable materials,
including water and renewable
energy, helps both people and planet
• Local ows and business models
designed to encourage durability,
repair-ability and reuse all help
reduce waste and improve
productivity
The circular economy can
support the challenges
highlighted in the green boxes
below. ©Catherine Weetman

30 High impact procurement
• Resource eciency, recovery of
process inputs and converting
waste into new inputs and by-
products reduces cost, creating new
revenue streams and employment
• Remanufacturing and repair creates
markets for more aordable, high-
quality products and equipment
The framework below2 highlights
key intervention points along the
value chain.
Circular inputs materials should
be safe and have secure supplies:
either recycled or renewable. Exciting
innovations use abundant, natural
materials, such as algae for bres
and leather from sh skin. For
example, a company grows mycelium
from waste straw to use in packaging,
home and construction materials.
Another company collects and sorts
textile waste from all over the world,
creating high quality yarns for a wide
range of apparel, home, and industrial
products that can be recycled into
new yarn, for a closed loop solution.
Product designs use less, are durable
and can be reused. For example,
modular houses can create jobs
where they are needed, and smart
ideas enable rapid construction above
existing car parks. Manufacturing is
more ecient than site construction,
with higher production standards
and reduced waste. A start-up
mobile phone business is improving
the end-to-end lifespan of mobile
phones, including use, reuse and
safe recycling. The smartphone has a
modular, durable and rugged design
– and should it need repairing, you
can simply order the parts online and
swap them out with a screwdriver.
The organization is building a fair-
trade supply chain, sourcing materials
that support local communities, and
sourcing conict-free minerals.
Process design aims to use less, use
renewables and convert waste into
resources. You can now procure
solvents as a service, reusing your
recovered resources and by-products,
or selling them to others. Bio-rening
is developing, extracting valuable
nutrients and chemicals from
waste streams.
Circular ows include reuse,
remanufacture or recycling – improving
the economics and eectiveness
of recovery. A new design of textile
thread dissolves when subjected to
low-level microwaves, enabling easy
separation of textiles, buttons, zips for
recycling and reuse. Other electronics’
circular projects include post-consumer
recycled plastics in personal computers
and packaging made from waste wheat
straw. Remanufactured products can
be high quality, durable and come with
the same warranty as new versions,
but cost less. For major engineering
and industrial equipment producers in
America and China, it is an extremely
protable part of their business, and
now Europe is seeing its potential.
Reuse and sharing platforms are
gaining traction, enabling exchange
of resources within and between
organizations.
Business models for ‘servitization’,3
collaborative consumption and
performance contracts are evolving,
with established examples including
photocopiers, tyres-by-the-mile and
aircraft engines. Airlines buy power
by the hour and both parties share
objectives for ecient performance
and no breakdowns!
Business models
Circular economy framework
Enablers and accelerators
Circular
inputs
Product
design
Process
design
Circular
flows
The value chain: circular
economy intervention points.
©Catherine Weetman

High impact procurement 31
Procurement opportunities
How can the circular economy help
with those procurement challenges?
Consider the following questions:
• Are your suppliers facing risks, such
as water scarcity, soil degradation
and climate disruption? Could they
swap something toxic, scarce or
expensive for recycled or
renewable resources? Can you
support smaller suppliers with
tools and training, help them
diversify with new by-products
and co-products, and become more
resilient? Could precision farming
or other regenerative practices help
them – and help secure your long-
term supplies?
• How can you develop relationships
and shared value opportunities
with your suppliers? Can you re-
specify materials or equipment to
improve agility, perhaps by creating
the exibility to use virgin or
recycled materials?
• Could you create new value (and
build reputation) through more
sustainable sources, longer term
win-win supplier partnerships, or
by generating revenue from waste?
• How can you work with suppliers –
and across your business – to drive
product and service innovation, and
develop future-t solutions?
• Circulating products, components
and materials supports local ows,
reducing reliance on those opaque
global sources.
• Could you collaborate with
suppliers or exchange by-products
with local organizations?
• Circular, sustainable approaches
full the Future-Fit system
conditions, transforming business,
supporting the SDGs and creating
enough, for all, forever.
Getting started
Wherever you are on the sustainability
journey, there are opportunities for
procurement.
Risk assessing key services and
materials in back oce categories
could produce some quick wins and
get buy-in from other stakeholders.
Subsequent phases might include
packaging, new products or services,
then core business items.
Could you encourage suppliers
to develop circular approaches,
creating a win-win solution? Are they
supplying something problematic,
perhaps non-recyclable packaging?
Could you negotiate a discount for
returning end-of-use items when
purchasing replacements?
Future-t: Enough, for
all, forever
The circular economy – using
and sharing safe, secure and
renewable materials, instead of
consuming resources – is gaining
traction with business leaders,
governments and cities. Procurement
teams can lead the way by taking a
systems perspective, and working
with a wider group of stakeholders,
to create new value opportunities,
all along the supply chain
Catherine Weetman
helps develop
future-t, resilient
strategies, examining
sustainability
risks and value
opportunities. Her book, A Circular
Economy Handbook for Business
and Supply Chains, was published
by Kogan Page in 2016. She is a
Visiting Fellow at the University of
Hudderseld (UK) and is Vice-Chair
of the Environment and Sustainability
Forum (Chartered Institute of Logistics
and Transportation). She received
her MSc in Logistics from Craneld
University (UK).
Catherine qualied as an industrial
engineer in manufacturing, moving
onto logistics solution design, project
management, business intelligence
and supply chain consulting. Her career
spans food, fashion and logistics.
1 Future Fit Business Benchmark: http://
futuretbusiness.org/.
2 Weetman C (2016), A Circular Economy
Handbook for Business and Supply Chains: Repair,
Remake, Redesign, Rethink, Kogan Page, ISBN
978-0-7494-7675-5.
3 http://reports.weforum.org/toward-the-
circular-economy-accelerating-the-scale-
up-across-global-supply-chains/favourable-
alignment-of-enablers/?doing_wp_cron=150108
3615.0163989067077636718750.

32 High impact procurement
Promoting the
participation of micro-
and small enterprises
in procurement
By Danielle Carvalho Ribeiro, Minas Gerais State Government

High impact procurement 33
Supporting the participation of micro- and small enterprises in public procurement processes can help promote inclusive and sustained

In view of the 17 Sustainable
Development Goals (SDGs) and
the 2030 Agenda for Sustainable
Development, this case study highlights
the experience of the Minas Gerais
State Government in promoting the
participation of micro- and small
enterprises in public procurement.
In Brazil, the money spent by
governments in procurement
processes represents, on average,
15 percent to 20 percent of the
country’s gross domestic product
(GDP) and mobilizes important
sectors of the economy.
In this scenario, supporting the
participation of micro- and small
enterprises in these processes is
strategic. Micro- and small enterprises
are great inuencers of Brazilian social
and economic development. They
represent most of the country’s formal
business sector and generate more
than 52 percent of formal employment
opportunities.
Prioritization through
legislation
In 2006, through Complementary
Law 123, Brazil established the
National Statute of Micro- and Small
Enterprises. Among other provisions,
this statute regulated the participation
of micro- and small enterprises in
public contracting. Since then, Brazilian
states and municipalities have been
granted the ability to dierentiate
and simplify the treatment of micro-
and small enterprises in their
procurement processes.
In 2007, through State Decree 44.630,
the Minas Gerais State Government
created a new and simplied process
for these enterprises. In 2011, State
Decree 45.749 mandated that the

34 High impact procurement
acquisition of goods and services
valued at less than or equal to
80,000 Brazilian real (approximately
$25,000), be reserved for micro- and
small enterprises. From 2013, this
rule became mandatory for public
procurement processes carried
out by the executive branch of the
Government, and for those carried out
by the legislative and judicial branches
of Minas Gerais.
In 2014, the Government of Brazil’s
Complementary Law 147 further
expanded the benets to micro-
and small enterprises throughout the
national territory. These included:
• An extension of the period for
micro- and small enterprises to
demonstrate scal regularity
from two to ve business days.
After being selected as a winning
bidder, proving scal regularity is
a condition of doing business with
the government in Brazil.
• The mandatory reservation of
contracts valued at or equal to
$25,000 for micro- and small
enterprises. The Minas Gerais
State Government, and some other
state and municipal governments,
had followed this rule since 2011.
This change, however, made it
compulsory throughout Brazil
from 2014 onwards.
• The possible reservation of
contracts for micro- and small
enterprises based in the same
city or region as the contracting
authority. Currently, state and
municipal governments are
allowed to prioritize micro- and
small enterprises headquartered
locally or regionally, providing that
the price of their oers does not
exceed 10 percent of the lowest
priced, technically compliant
oer. This condition requires that
authorization has been included
in the bidding notice and is duly
justied. The application of this
practice is based on the premise
that investing additional resources
in the same regions helps to drive
economic and social sustainability.
• Shortly after its adoption, the Minas
Gerais State Government altered
and updated its own legislation
to adapt and align with the
innovations brought by the latter.
Results
According to data from Welson
Kleiton Antônio De Souza and
Leonardo Lacerda Bittencourt Maciel,1
the number of micro- and small
enterprises registered in the General
Suppliers Registry of Minas Gerais
increased by approximately 40 percent
between 2012 and 2015. In 2015,
22,339 enterprises of this kind were
registered, accounting for almost 70
percent of all suppliers in the state
database that year.
While changes in registration are
important, according to Célio Cabral
De Sousa Júnior,2 full success requires
that public procurers place greater
emphasis on regional considerations
when dening their public
procurement criteria. For example,
78.5 percent of the total value of goods
and services purchased by Minas
Gerais in 2005 (i.e. more than $186
million), came from suppliers located
in the Metropolitan Region of Belo
Horizonte (a micro-region of Minas
Gerais). More work is needed to ensure
that public procurement opportunities,
and the economic and social benets
stemming from them, are equally
distributed across regions.
In conclusion, the strategies
adopted by Minas Gerais are helping
Brazil to reach SDG 8, promoting
sustained, inclusive and sustainable
economic growth, full and productive
employment, and decent work for all

and small enterprises
are a major source of
private sector employment
opportunities. ©Getty


High impact procurement 35
1 Welson Kleiton Antônio De Souza and
Leonardo Lacerda Bittencourt Maciel.
‘Fomento à participação de micro e pequenas
empresas nas compras públicas: impactos
da regulamentação da lei complementar,’ nº
147/2014 em minas gerais. In: IX Congresso
Consad de Gestão Pública, Brasília, 2016.
2 Célio Cabral De Sousa Júnior. ‘Utilização do
poder de compra do estado de Minas Gerais
como instrumento de desenvolvimento regional
e para a promoção de políticas públicas locais
redistributivas.’ In: Anais do XIII Seminário sobre
a Economia Mineira. Universidade Federal de
Minas Gerais, 2008.
Danielle Carvalho
Ribeiro works as
Public Administrator
in the State
Government of Minas
Gerais, Brazil. She
works on structuring public-private
partnership projects for investments
in infrastructure. She holds a Bachelor’s
degree in Public Administration from
the João Pinheiro Foundation (2014)
– with a period at the economics
faculty of the Université Picardie Jules
Vernes (2012) – and a Master’s degree
in Business Administration (with an
emphasis in nance) from the Federal
University of Minas Gerais (2017).
She is interested in themes related
to infrastructure, public budget and
public nance.

36 High impact procurement
While healthcare saves lives
immediately, it can also harm
the environment and threaten our
ability to guarantee good health for
future generations. That is one of the
reasons sustainability is so important.
Public procurement, which traditionally
connects the private and public sectors,
is increasingly seen as a way to help
advance the Sustainable Development
Goals (SDGs). In 2012, recognizing the
potential to accelerate development
through procurement, UN agencies
joined forces under the Sustainable
Procurement in the Health Sector
(SPHS)1 initiative to use their $5 billion
in collective spending on healthcare
related goods and services to review
and change internal legislative and
operational frameworks. The tools,
guidance and network developed
through these eorts focus on
sustainable health (SDG 3), sustainable
production and consumption (SDG 12),
and mobilizing partners around the
SDGs (SDG 17).
Health sector spending is an important
portion of a country’s national gross
domestic product (GDP). On average,
total expenditure on health products
and services is one of the highest line
items in national budgets. In 2014, the
World Health Organization (WHO)2
estimated this number to be 10
percent of GDP on average. Thus by
integrating sustainability considerations
into health procurement, countries
can support the development of more
environmentally sustainable health
systems,3 enabling governments and
international organizations to progress
towards achieving SDG 3 national
targets. Advances in climate-smart
healthcare4 can also strengthen the
health sector, boosting access to clean
and independent energy,5 safe water,
clean transport6 and cleaner
waste disposal. 7
To support UN Member States in
this process, the SPHS task team
also delivered the ocial UN
sustainable procurement training
course – developed in partnership
with UN Environment, UNOPS and the
International Training Centre of the
International Labour Organization – to
a group of public procurement ocials
in 2016. Several modications were
made to the case studies and course
materials to tailor it to the health
sector context. During the training
sessions, participants discovered
methods for developing sustainable
procurement policies, strategies,
integrating sustainable practices into
healthcare procurement processes
and monitoring the implementation
of their work.
Health sector
public procurers
as SDG pioneers
By Lorea Coronado-Garcia, Rosemary Kumwenda and Mirjana Milic, UNDP
A 6-month-old child
receives a vaccine at an
Anganwadi centre, which
provides basic health
care in Indian villages.
©UNDP India/Prashanth
Vishwanathan

High impact procurement 37

38 High impact procurement
1 UNDP (2017), ‘The SPHS Annual Report 2016,’
Istanbul, Turkey.
2 World Health Organization (2014), ‘Global
Health Expenditure Database’: http://apps.who.
int/nha/database/Select/Indicators/en.
3 World Health Organization (2017),
‘Environmentally sustainable health systems:
a strategic document,’ Copenhagen, Denmark:
http://www.euro.who.int/__data/assets/
pdf_le/0004/341239/ESHS_Revised_WHO_web.
pdf?ua=1.
4 International Bank for Reconstruction and
Development/The World Bank (2017), ‘Climate-
smart healthcare: Low-carbon and resilience
strategies for the health sector,’ Washington,
D.C., USA: http://documents.worldbank.org/
curated/en/322251495434571418/Climate-
smart-healthcare-low-carbon-and-resilience-
strategies-for-the-health-sector.
5 UNDP (2015), Solar for Health initiative: http://
www.undp-globalfund-capacitydevelopment.
org/en/about-us/solar-for-health/.
6 UNDP (2015), ‘Carbon footprint of UNDP
Global Fund health initiatives in Montenegro
and Tajikistan,’ Istanbul, Turkey: http://www.
eurasia.undp.org/content/rbec/en/home/
library/hiv_aids/Carbon_footprint_UNDP_
Global_Fund_health_initiatives_Montenegro_
Tajikistan/.
7 UNDP (2015), ‘Environmental safeguarding and
healthcare waste management of Global Fund
HIV, TB and malaria projects,’ Istanbul, Turkey:
http://www.eurasia.undp.org/content/rbec/
en/home/library/hiv_aids/rapid-assessment-
healthcare-waste-global-fund/.
8 www.savinglivesustainably.org
9 UNDP (2016), ‘A UNDP guide for procurement
practitioners: Healthcare procurement and the
compliance with international environmental
conventions on chemicals,’ Istanbul, Turkey:
https://issuu.com/informal_int_task_team_sphs/
docs/compliance_with_int_conventions_on_.
10 WHO, UNICEF, UNDP, the Global
Fund, UNOPS, UNFPA, UN Environment,
Gavi, UNITAID (2016), ‘Joint Inter-Agency
statement on engaging with suppliers and
manufacturers to promote environmentally
and socially responsible procurement on health
commodities,’ Geneva, Switzerland.
11 UNDP (2016), ‘The SPHS engagement strategy
with suppliers and manufacturers on green
procurement in the health sector,’ Istanbul:
https://issuu.com/informal_int_task_team_sphs/
docs/sphs_engagement_strategy.
12 ‘Declaration of the Sixth Ministerial
Conference on Environment and Health’ (2017),
Ostrava, Czech Republic: http://www.euro.
who.int/__data/assets/pdf_le/0007/341944/
OstravaDeclaration_SIGNED.pdf?ua=1.
To enable this game-changing process,
SPHS has invested in its collaboration
with UN Member States, organizations
and businesses. It has developed a
global platform comprised of more
than 3,800 experts who are leading
the agenda. In support of SDG 17,
the network is encouraging members
to learn from one another and to
draw lessons on what works – or
what doesn’t – so they can be
adapted locally.
We have a mechanism for doing
this: the Saving Lives Sustainably
website.8 The website oers hundreds
of examples of good practice on
sustainable health procurement.
Through this network, new sustainable
procurement criteria and tools have
also been developed. In partnership
with other non-governmental
organizations, the focus has been
on developing practical guides for
procurement ocers to monitor
their partners against International
Environmental Conventions.9 The aim
is to remove priority toxic chemicals
from procurement of health sector
related goods while also supporting the
development of a priority ban list of
200 chemicals that are known to have
harmful impacts on human health
and the environment.
SPHS members recognize how
important it is to lead by example.
They have pledged to work
collaboratively with suppliers and
manufacturers of health products.10
Successful responses hinge upon
procurers’ relationships with suppliers
and manufacturers and how these
are managed, measured and grown.11
Growing interest in this area also
contributed to the development of the
recently adopted Ostrava Declaration
on Environment and Health.12
Creating partnerships in many
countries, at both the local and
international levels, is enabling
health sector procurers to pioneer
new models of consumption,
production and environmentally
sustainable health

High impact procurement 39
Mirjana Milic
(co-author) is a
SPHS Associate
Coordinator for
UNDP Istanbul
Regional Hub, where
she provides management support
to SPHS. She is an international
development professional, with
public and private sector experience
in resource mobilization, partnership
and capacity building, as well as
advocacy and lobbying for policy
change, innovative management
approaches and sustainable
development in the healthcare
industry. She holds Master’s degrees
in Management and Economics of
Innovation and Technology from
Università Commerciale Luigi
Bocconi (Italy) and Management of
Innovation and Business Development
from Copenhagen Business School
(Denmark).
Rosemary
Kumwenda (lead
author) is HIV, Health,
and Development
Team Leader for
Eastern Europe
and Central Asia region and the
SPHS Coordinator for UNDP Istanbul
Regional Hub. She has more than
15 years of health and HIV work
experience in UNDP at country and
regional levels, previously serving as
Assistant Resident Representative
in Zambia, UNDP Malawi Policy
Advisor and Senior Policy Advisor
for Sustainable Responses for UNDP
Regional Service Centre for Africa.
Rosemary has a Master’s degree in
Public Health from the London School
of Hygiene and Tropical Medicine
(United Kingdom). She is also a medical
doctor, with ten years of experience in
clinical care and as Lusaka Director of
Health (Zambia) before joining UNDP.
Lorea Coronado-
Garcia (co-author)
is a Sustainable
Procurement
Specialist for UNDP
Istanbul Regional
Hub’s HIV, Health, and Development
Team, where she supports SPHS.
She has led the development of
sustainable procurement tools,
guidelines and collaborations across
the private and public sector, and
with experts from academic, scientic
and civil society communities. Lorea
holds a Master’s degree in Forest
and Nature Management from the
University of Copenhagen (Denmark)
and Bachelor’s degrees from the
University of Michigan (United States)
in Material Science & Engineering and
Organizational Studies.

40 High impact procurement
Blockchain technology could be used to encourage sustainable development. ©Getty Images/monsitj

High impact procurement 41
Blockchain:
The missing piece?
By Harry John, Procurement Leaders
Procurement connects suppliers,
buyers, people, donors and
recipient governments. It is a vital
link to achieving the Sustainable
Development Goals. But, for
procurement to meaningfully
contribute to sustainable development
it has to be both transparent and
ecient. With the multitude of
stakeholders involved, how do we
ensure this? The answer could lie
in blockchain technology.
As goods move through supply
chains, they are subject to thousands
of lines of communication between
governments, organizations and
individuals. Records of contracts,
invoices, orders and many other
transactions create an imponderable
number of data points.
For years, attempts to harness this
data have seen companies experiment
with sophisticated software and novel
governance structures. But now, a
fundamental change is on the horizon.
One that challenges the essential way
in which information is administered,
not just between companies, but
potentially right across societies.
That change comes in the form
of blockchain, the distributed
ledger technology behind virtual
currency bitcoin.
What is blockchain?
A blockchain is similar to a database,
shared by a group. Like Wikipedia,
this database allows all members
of the group to view and make
entries to it, each one representing
a ‘block’ of data. Unlike Wikipedia,
though, there is no central mediator.
Governance is distributed among the
participants who vote on which entries
to verify as accurate. Once added
to the system, each block of data is
tied by cryptography to all previous
ones, forming an unalterable, chain-
like structure of records. In theory,
anybody with access to a blockchain
is able see the entire history of
transactions recorded on it.
Although originally conceived as
a means of allowing individuals to
transact in bitcoin, blockchain can be
used to record and transfer ownership
of anything that can be represented
in computer code.
In 2015, the European Commission
announced it was investing €5 million
in distributed ledger technology for
decentralized management of data on
European citizens. Greece, Honduras
and Sweden are all reportedly using
this technology for management of
land registries.
Supply chains’ best hope?
Blockchain also presents an
alternative to the way transaction
data is currently managed in supply
chains. The technology is expected to
cut through complexity and improve
tracking of goods on the move,
although blockchain is not without
its limitations.
“Data exists [in supply chains] in
paper form or in siloed systems, often
within individual organizations, which
might not agree with suppliers’ and
customers’ systems,” says a researcher
familiar with the technology.
Because of these ineciencies,
the cost of processing bills of lading,
export declarations and other trade
documents is estimated to be one-
fth of the cost of physically moving
goods around the world, according to
a joint statement released by two large
multinationals who are partnering
to develop blockchain for use in
commercial supply chains.
By creating digital versions of trade
documents and uploading them to
a blockchain, companies in the supply
chain with access to the ledger could
view the status of goods in transit on-
demand – from the beginning of the
supply chain to the end.

42 High impact procurement
Harry John is a
features writer
at Procurement
Leaders. He draws
on more than four
years’ of experience
researching and writing about
procurement, and has written
extensively about purchasing in the
nancial services sector, as well as
indirect categories of spend, including
travel, IT, and maintenance, repair
and overhaul . His most recent articles
have covered future trends that are
shaping the procurement function,
such as blockchain technology and
supply chain digitalization. He has
interviewed some of the world’s
leading procurement chiefs and has
been part of a team that has won
awards for its coverage of issues
aecting procurement professionals.
“We envisage a situation where, say,
a farmer in Mombasa can upload
documents or sign o on a shipment
using a simple mobile application that
connects to our blockchain,” says a vice
president at one company developing
the technology for commercial use.
Stumbling blocks
Yet there are reasons to be sceptical.
The willingness of the imaginary farmer
in Mombasa, who the researcher
notes has probably never heard the
word ‘blockchain,’ to buy the hardware
and software required to connect
to a blockchain cannot be taken for
granted. What is the use of a database
that promises full visibility of a supply
chain, if all parties in that supply chain
don’t contribute to it? The answer:
Not much.
Then there is the question of reliability.
By creating databases with no single
governing authority, such as an
organization or a government agency,
legal questions relating to ownership
and accountability of the information
contained within those databases arise.
Who, for instance, is to stop somebody
with access to a blockchain feeding
it bogus information? This question
makes lawyers nervous.
In an interview, one lawyer points out
that the “practical side” of recording
the physical world on a blockchain
“remains uncertain.” If human
intervention is required in that process,
there will always be a risk of error or
malpractice.
No technology can be expected to
eradicate crooked behaviour. But the
hope is that ‘permissioned’ blockchains
– the kind the corporate world is
currently most attracted to – assuage
such concerns by making the identities
of individuals who can access the
system known to all others.
It is the ‘permissionless’ blockchains
“where [in the eyes of regulators] the
risk lies,” says a senior policy advisor at
one law rm. That is because anybody
can theoretically access and make
entries to these blockchains.
From a technical and a security
perspective, the permissioned
alternative is fundamentally dierent –
but not infallible. As the policy advisor
points out, these systems oer greater
privacy than their permissionless
counterparts. But because all
participants to a permissioned
blockchain must be known, those
participants’ identities must be
managed centrally by somebody.
The European Network and Information
Security Agency (ENISA) believes that
may undermine blockchains’ safety.
As authors of a 2016 ENISA report
write: “All problems that had required
hijacking of the majority consensus, a
task that was potentially signicant in
undertaking, are now replaced by the
hijacking of a single entity.”
As blockchain becomes more widely
adopted, enthusiasts say it will become
more powerful, while critics reckon
its aws will be exposed. “I always tell
people that blockchain is here and now;
the technology is ready,” argues the
vice president. That may be so, but the
people, organizations and lawmakers
who will ultimately oversee use of the
technology are not

High impact procurement 43
A blockchain is a
decentralized digital ledger
of transactions that can
be programmed to record
almost anything of value
with no intermediaries.
Once information is
entered, it’s locked in – it
can’t be changed. ©Getty
Images/Bannosuk

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