Sustainable Procurement Policies

This is the final instalment in our sustainable procurement series, which has explored how sustainability can be integrated across each stage of the procurement process from market research to contract management. This week we provide a guide to understanding the Environmentally Sustainable Procurement Policy (ESP Policy).

Why Develop a Sustainable Procurement Policy?

Sustainable procurement policies play a vital role in helping organisations, including local governments, use their purchasing power to support environmental, social and economic objectives. A well structured policy provides clarity and consistency for procurement staff, sets measurable goals and signals to suppliers that sustainability outcomes matter.

At a national level, the ESP Policy, which commenced on 1 July 2024 (Phase One) and 1 July 2025 (Phase Two), demonstrates how government can use procurement to drive Australia’s transition to net zero and circular economy.

While the ESP Policy itself applies to Commonwealth entities, its structure provides a useful framework for local governments to draw from when developing their own sustainable procurement policies.

Key Takeaways from the ESP Policy

The ESP Policy is administered by the Department of Climate Change, Energy, the Environment and Water and focuses on 3 sustainability outcomes:

• Climate – reducing greenhouse gas emissions, improving energy efficiency and favouring low-emissions materials;
• Environment – optimising water use, reducing waste, using renewable and non-toxic inputs and ensuring safe disposal; and
• Circularity – designing products and buildings to be durable, adaptable and recyclable, with reuse or recovery at end of life.

The ESP currently applies to 4 high-impact categories for procurement:

Local governments can adopt similar principles in their own polices, for example by requiring tenderers to demonstrate how their products or services contribute to reduced emissions, resource efficiency and circularity outcomes.

Developing Your Own Policy

When developing a sustainable procurement policy, local governments and organisations could consider:

• Purpose and objectives – what sustainability goals are your organisation seeking to achieve through procurement?

• Scope and thresholds – which categories or types or procurement will the policy apply to?
• Principles and targets – which environmental or circular economy principles should guide decisions?
• Governance and accountability – who is responsible for implementation and reporting?
• Monitoring and reporting – how will outcomes be measured and communicated?

The Commonwealth’s approach provides a clear model that starts with measurable focus areas (climate, environment and circularity), embeds sustainability at each procurement stage and requires supplier reporting to track progress.

Example in Practice – Uniform Recycling Program

A great example of how sustainable procurement can deliver real outcomes is Services Australia’s uniform recycling initiative.

In 2022-23, the agency rolled out a program that diverted 37 tonnes of textile waste from landfill when it replaced old corporate uniforms. Partnering with an Australian recycler, the program transformed old garments into raw materials like polyester pellets and cellulose powder, which are reused in new products such as playground materials, geofabrics and mulch.

The initiative created social procurement benefits by engaging disability employers to assist with garment preparation. It is a tangible example of how embedding sustainability into procurement decisions can deliver environmental, economic and social value, the very outcomes that a robust sustainable procurement policy is designed to achieve.

Where to Next

Developing a sustainable procurement policy is not a one size fits all exercise. Each local government or organisation should tailor its approach to reflect its priorities, procurement profile and internal capacity.However, drawing on frameworks like the ESP Policy provides a solid foundation, offering practical examples of targets, reporting frameworks and supplier requirements that can easily be adapted to suit a local government or organisation context.If you would like assistance developing or updating your sustainable procurement policy, documentation or templates, our team can help.