Sustainability in Procurement Article Series – Approach to Market

This is the fourth article in our Sustainable in Procurement Article Series, focusing on the critical step of approaching the market. In this article we provide guidance on the preparation of tender documents, including evaluation criteria, conditions of tender and contract clauses that require tenderers to address and report on sustainability.

At Muscat Tanzer Lawyers, we regularly assist clients in structuring their procurement process to ensure compliance with the Environmentally Sustainable Procurement Policy (ESP Policy). Whether or not compliance with the ESP Policy is a requirement for your agency, delivering projects that are socially and environmentally responsible is now an expectation and sustainable procurement considerations are now a fundamental part of how projects and services are designed, delivered, and ultimately judged.

The ESP Policy provides a well-considered approach to sustainability in procurement. In particular, the ESP Policy embeds climate, environmental, and circularity principles into four high-impact procurement categories. It applies to construction services valued at $7.5 million or more, as well as product procurements valued at $1 million or more in the categories of furniture, fittings and equipment, information and communication technology goods, and textiles.

The ESP Policy requirements commence at the Approach to Market (ATM) stage. Where the ESP Policy applies, procuring officials must require tenderers to submit a Supplier Environmentally Sustainability Plan (SESP). This plan sets out how the tenderer will meet environmental standards and manage sustainability risks.

What is an Approach to Market

Under the Commonwealth Procurement Rules (CPRs), ATM is any notice inviting potential suppliers to participate in a procurement process. This may take the form of a request for tender, request for quote, request for expression of interest, request for information, or request for proposal.

Where environmentally sustainable requirements have been identified, these should be introduced to potential suppliers through ATM documentation and at a supplier briefing. They should also be supported by relevant Key Performance Indicators (KPIs) and evaluation criteria.

In the sections that follow, we discuss how to present ATM documentation in a way that clearly communicates sustainability requirements to suppliers. This includes aligning documentation with procurement objectives, embedding sustainability KPIs and evaluation criteria, and providing practical guidance to help suppliers demonstrate how they will meet and comply with these obligations throughout the procurement process.

Specifying Sustainability Requirements

It is important for tender documents to be clear and unambiguous. Asking for “lower environmental impact” or “eco-friendly solutions” is too vague and open to greenwashing. Sustainability requirements should be specific, measurable and enforceable.

Here are 4 examples you can use when drafting requirements:

• Physical requirements: tangible characteristics of goods or services.

Example: Packaging must contain at least 50% recycled content.

• Functional requirements: the role the goods or services needs to fulfil.

Example: Catering packaging must be durable and compostable.

• Performance requirements: measurable sustainability standards.

Example: 90% of waste generated must be diverted from landfill.

• Management requirements: supplier processes for managing sustainability risks.

Example: Supplier must monitor and report on sourcing of recyclable materials.

By setting minimum standards and desirable outcomes, and linking requirements to established benchmarks (such as the Australian Packaging Covenant targets or ISO certifications), you not only strengthen your tender but also make it easier for suppliers to understand and respond to the requirements.

Using Certifications, Ecolabels and Stewardship Schemes

Tender documentation should make use of certifications, standards and product stewardship schemes:

• certifications and standards like ISO 14001 (environmental management) or NABERS (built environment rating) provide tested, verifiable benchmarks;

• ecolabels (like Green Tag, Fairtrade, EPEAT) or equivalent are useful; and

• product stewardship schemes (like Mobile Muster or Tyre Stewardship Australia) show suppliers are practicing whole-of-life responsibility, not just production.

Setting KPIs and Evaluation Criteria

KPIs should be clear, measurable, and tied into your contract management. For example:

• recycled content: chairs supplied must contain a minimum of 60% recycled content;
• circularity: products must be designed for dismantling and repair, with parts returned to supplier for recycling; and
• emissions: suppliers must report CO₂ reductions achieved each year under contract.

Evaluation criteria should be weighted and transparent, so tenderers know sustainability isn’t an afterthought. Criteria can be:

• qualifying (must-haves): e.g. Australian Packaging Covenant Origination compliance;
• rated (weighted for comparison): e.g. % recycled content;
• quantifiable: e.g. emissions per tonne of product manufactured; and/or
• fit for purpose: ensuring the goods or services aren’t wasteful or inefficient.

Case Study: Building Green from the Ground Up

Picture this: A local government is going to market for the construction of a new community hub. Traditionally, the focus might have been on low-cost concrete, steel, and finishes, with little thought given to the project’s environmental footprint.

This time, the procurement team embedded sustainability directly into the ATM:

• physical requirement: concrete mix must include a minimum of 20% supplementary cementitious material (such as fly ash or slag) to reduce embodied carbon;
• performance requirement: at least 80% of construction and demolition waste must be recycled or diverted from landfill;
• certification requirement: timber used must carry Forest Stewardship Council Certification, or equivalent, to verify responsible sourcing; and
• KPI: achieve a minimum 5-Star Green Star rating for the completed building.

One contractor’s submission stood out. They proposed low-carbon concrete, recycled steel reinforcement, and modular prefabricated components that cut down on site waste. They also offered a detailed waste management plan with monthly reporting against landfill diversion targets.

The outcome? The government agency and supplier were able to demonstrate leadership in sustainable construction in accordance with the ESP Policy.

Checklist for Procurement Officers

Ask yourself:

• have you clearly defined sustainability requirements (physical, functional, performance, management);
• have you avoided vague, non-measurable terms;
• have you included KPIs and reporting requirements in contract clauses;
• have you embedded qualifying, rated, and quantifiable evaluation criteria;
• have you accounted for whole-of-life costs, not just upfront price;
• have you considered accredited ecolabels, certifications, or product stewardship schemes; and/or
• have you drafted clauses to prevent greenwashing.

Conclusion – Why This Matters

Approaching the market with a clear sustainability lens is still a relatively new exercise and drafting these strategic requirements and embedding them into legally sound, and enforceable tender and contract documents isn’t simple.

If you would like to explore more opportunities and methods for incorporating sustainable procurement practices into your procurements, or require assistance with the preparation of tender documents, including evaluation criteria, conditions of tender and contract clauses that require tenderers to address and report on sustainability, please be in contact with Paul Muscat or one of his team.

Over the coming weeks we will cover the remaining topics in this Sustainability in Procurement Article Serries, including Evaluating Sustainability Criteria, requirements and outcomes; Contract Management; and the development of a Sustainable Procurement Policy.