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maltatoday, WEDNESDAY, 20 AUGUST 2014 12 Business Today W hen one analyses the price volatil- ity factor and the subject of emis- sions generated due to the procurement of commodi- ties such as crude oil, natural gas, gas etc. it is not difficult to realise why almost everyone is canonising greener approaches. With the recent price hike in commodities which cli- maxed in July, the efforts and moti- vation to be able to produce the same or more – with fewer resources – is an ongoing issue that becomes more and more crucial. In light of this, in 2011, Malta had already started implementing the Green Public Pro- curement – at first on a voluntary basis – henceforth referred to as GPP. But what does GPP entail? The concept is a rather noble one whereby (public) authorities consider means of how services can be provided, and goods purchased, utilising taxpayers' money while keeping to a minimum the negative environmental impacts. Thus it goes without saying that through GPP any unnecessary purchases are avoided by actually reviewing the service or the product prior to implementing any decisions. But as we all know, the pathway to heaven is a narrow and winding road and therefore it is not always possible to establish such decisions at the flick of the fingers. Hence in the case when no other options are available, the public purchasers go for greener services or products without of course compromising on the functionality or quality. It has been said so many times since the start of the global recession in 2007/8 that procurement and sustainable supply chains are becoming increasingly important. The EU is advising member states that unbridled consumption of resources is causing environmental damage at a rate that cannot be sustained. If the world as a whole followed the EU's current pattern of consumption, global resource use could quadruple within 20 years. If this trend continues, official reports indicate increasing environmental and health problems and the EU warns that, unabated, it could threaten economic growth due to the rapid decrease in natural resources and the additional cost of addressing this. It may come as a surprise to learn that, at EU level, public authorities spend approximately €2,000 billion, which amounts to 16 per cent of GDP, on services and goods each year. The sectors that are considered to entail high environmental impact include building, transport and furnishings. You could ask why governments find it so difficult to follow GPP rules, notwithstanding the fact that they have the potential to persuade private sector companies and the public to change their consumption habits. It was a not a moment too soon when, in 2004, the European Commission produced a handbook on environmental public procurement that explained how best to integrate environmental considerations into public procurement directives. An EU study in 2006 revealed that only seven states were practising GPP to a significant extent, and all the remaining 20 were lagging a long way behind. Here in Malta, the application of GPP criteria started on a voluntary basis. Implementing such measures on a voluntary basis was certainly akin to putting the cat among the pigeons and what is needed is a bold resolve to carry out a root and branch reform of national procurement policy. Without any doubt, there are various criteria that must be adhered to when setting up GPP. Of course, these criteria depend on various factors. Starting off perhaps with the most obvious one, environmental improvement, is imperative, then one finds public expenditure as well as the potential impact on suppliers. It is notable how through these factors there is also social responsibility, whereby one of the factors is to be exemplary to the private or corporate consumers. Political sensitivity is also a priority within the basis of scopes of the GPP as well as the market availability and economic efficiency. Lastly, one needs to establish the level of relevance as well as practicability. Thus in a nutshell, the concept of GPP simply means that, as the state is a major buyer in the economy, it can and must play a major role in leading by example in setting procurement requirements which encourage a pivotal change towards sustainable consumption and production patterns. Then, keeping in mind the factor mentioned above, the sectors that were deemed to be of high priority are the construction sector, food and catering services, transport, energy, computers and office machinery, paper and printing services, furniture, clothing, cleaning products and services as well as any equipment used in the health sector. This GPP phenomenon is being induced in Malta, albeit rather slowly as some may argue. In fact, as asserted by the Department of Contracts under the remit of Ministry of Finance, taking into consideration past performance, there was a low take up of GPP. But why did this happen, one may ask. Why is the ball not rolling fast enough? Various reasons could explain this lack in momentum. Lack of information on the cost of the products when taking into consideration their life cycle and any other costs that greener products and services entail can be considered as one of the major drawbacks. Marketing goes a long way, and perhaps another potential reason is that there is a low level of awareness and publicity about the prosperity of using green products and services. Moreover, as stated by the department itself, a lack of political support, which of course results in limited resources to promote and implement GPP, also played a major role. Legally, there is also a sense of uncertainty when including environmental criteria in procurement documents. But why should history repeat itself? It is a must to acknowledge the past and plan the future, a greener one indeed. Recognising the low take up not only in Malta but among most EU States, as the urgency of GPP increases, the criteria adopted by these states should be one that avoids confusion and distortion of the single market. Without any doubt, if a single set of criteria is adopted, simplification would reign, thus reducing the administrative burden for operators implementing GPP. In light of this, the Commission proposed a series of new actions to address obstacles when carrying out GPP. Such actions include setting up common GPP criteria and providing information with regard to the costs of a product over its life cycle. It also provides operational and legal guidance as well as political support. The road to achieving full compliance with GPP procurement rules is paved with many good intentions but the facts show that the achievement of such a noble cause is still elusive. Malta is an exporter country without natural resources (apart from manpower, the sun and the sea) and consequently has to import a larger quantity of raw materials, industrial supplies and consumer goods. Thus keeping in mind the situation mentioned above, it is useless doing the talk without being able to walk the walk! Lynsey Schembri is Senior Statistician with PKF Malta lschembri@pkfmalta.com Lynsey Schembri Green Public Procurement – have we missed the bus? It may come as a surprise to learn that, at EU level, public authorities spend approximately 2,000 billion euros, which amounts to 16 per cent of GDP, on services and goods each year. The sectors that are considered to entail high environmental impact include building, transport and furnishings Download the MaltaToday App now