The purpose of a sustainable policy for public procurement is: (1) To reduce environmental demand, including environmental loading due to the consumption of energy, as a result of public production and consumption, and (2) To encourage the rest of society to use products and methods of production favourable to the environment and conservation of resources.
Public purchasers can buy green by basing their purchasing decisions and allocation of contracts not only on the price but also on the environmental, quality and health criteria of products.
Public procurement in OECD countries adds up to between 9 and 25% of the total gross national product. Governments are significant consumers, particularly in countries where the public sector plays a major role in the economy, and can have a considerable influence on both corporate decisions and public perceptions. They should therefore review the purchasing policies of their agencies and departments so that they may improve, where possible, the environmental content of government procurement policies, without prejudice to international trade principles.
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.
The implementation of an environmentally conscious procurement policy means that, apart from traditional requirements on quality, function, price, delivery conditions, stability of supply, suitability for the disabled etc., there are requirements that choice of products and production methods should be based on criteria of environmental protection and conservation of resources, particularly non-renewable energy and natural resources.
In 1994, Denmark announced its policy of environmentally-conscious public procurement. Denmark's annual state procurement amounts to about DKK 20,000 million. The counties' and local authorities' annual procurement amounts to DKK 5,000 million and 16,000 million, respectively. Public procurements for which tenders are invited in the whole of the EEC/EU amount to about DKK 3,000 billion annually. Due to the considerable magnitude of its total public procurement, the Danish government believes that the implementation of its policy will have a significant "demonstration" effect on companies and citizens within Denmark and in its supplier countries both within and outside the EU. It has highlighted eight specific target areas of procurement: (a) terminal tables, computer hardware, photocopiers and other types of office furniture and equipment; (b) local computer systems and electronic products; (c) painting of buildings and ships; (d) cleaning agents; (e) canteen cutlery and crockery; (f) passenger cars; (g) working garments and transport materials; (h) lighting. Products that have received the EEC/EU environmental mark (ecolabel) can be used immediately within the framework of an environmentally conscious policy for public procurement, and the EEC/EU energy mark will guide procurement of energy-consuming products.
Certain WTO rules prohibit different treatment of a product based on the way it is produced. This collides with governments that practice green procurement. Such governments, for example, purchase recycled paper to lower the demand for materials from native and unsustainably managed forests. Such practices could be challenged under WTO rules on the grounds that they discriminate against countries that log native forests.