• Opinion
  • July 23, 2019
  • 9 minutes
  • 0

Has Peru solved the SDG funding challenge?

Opinion: A sustainable world needs smarter investments

This article was written by Carlo Angeles, city councillor in Lima, Peru and one of the European Commission’s young thought leaders 2019. For more like this, see our public-private partnerships newsfeed. 

I have been inspired by Greta Thunberg’s work, advocating for immediate urgent action on climate change crisis, which has started a massive movement of young people worldwide. 

She started advocating by herself outside the National Parliament in 2018. A few months later, millions joined her. She is the living proof that change starts with small, individual actions.

But at the same time, the need for change is enormous. 

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According to the World Bank, the sustainable development goals finance gap is about $3 trillion. The SDG’s and Agenda 2030 will not be achieved unless a massive resource mobilisation takes place. Interestingly, there is currently a $15 trillion annual global market which is operated by governments worldwide. That market is public procurement.

The Sustainable Development Goals are a set of ambitious goals set by United Nations to achieve development by 2030. This agenda was signed by all UN member states, including Peru.

Better spending for a better world

Governments are the single largest buyers of goods and services in any country. 

However, many of their suppliers, especially in developing countries, do not comply with the current legislation, especially on labor and environment, and this leads us to a situation where governments — in some cases — are financing companies that undermine the country’s own legislation.

Together we are mobilising over $600 million annually to accelerate the SDG’s through sustainable procurement

If we change the way in which governments engage with the private sector, we can positively influence the market towards a more sustainable economy. 

In my role as a city councillor in Lima, Peru, I drafted a Law Bill to foster economic development with socio-environmental impact. The bill is in the final stages of being approved with the support from 29 out of 39 City Councillors of the Government of Lima, which annually invests over $250 million USD in procurement.

This ambitious bill seeks to establish strict parameters for environmental and social positive impact for the goods and services acquired by the Government of Lima through their supply chain. 

This positive impact has been framed under the Sustainable Development Goals.

The bill also includes a plan and a timeframe for the periodic incorporation of the SDG’s in the Government of Lima supply chain. 

Mobilising millions

As an activist myself, I have been advocating at 50 public institutions to convince them to consider the SDG’s when they procure goods and services, and six other local level governments in Peru are already developing their own law bills to transition into Sustainable Public Procurement. 

These six local governments invest annually over $122 million USD in their supply chain.

The City of Bagua was the first local government to introduce a local law bill to transition towards sustainable Public Procurement.

Procurement is not only a source for financing, but also a driver of innovation

This initiative has inspired actions in the private sector too, with EGASA and Electro Oriente — two huge private energy providers in Peru, whose largest shareholder is the government, leading the charge. 

Electro Oriente effectively approved efforts to move towards sustainable procurement at their board of directors in June 13, and EGASA is currently discussing similar actions at their Board of Directors. These two companies invest over $230 million USD in their supply chain.

Together we are mobilising over $600 million USD annually to accelerate the implementation of the Sustainable Development Goals through sustainable procurement. 

The global leaders 

Sustainable Procurement is not a new concept in the world.

Several international organisations have been advocating for it and also implementing it through their own procurement processes. For instance, the European Union was among the first institutions to address this concept. In 2011, they outlined how to do it in the report Buying Social: A guide to Taking into account of social considerations in Public Procurement, which exemplified the power of government to positively influence the marketplace by promoting incentives for companies to develop socially responsible management.

Another report developed by the EU, Buying Green: A handbook on Green Public Procurement, aimed at helping public authorities successfully plan and implement green procurement, especially at local level, in which the sustainable procurement concept has been widely accepted and implemented.

At the United Nations level, The UN Environmental Programme drafted Buying for a Better World: A guide on Sustainable Procurement for the UN System. The report identifies UN practices and expertise on sustainable development through a document which facilitates the preparation of a socially and environmentally responsible procurement process which ensures value for money while achieving sustainable development strategic UN goals.

At national level, the governments of Canada and the United Kingdom have adopted policies to include environmental and social valuation in their procurement processes.

The time to act is now 

Procurement is not only a source for financing, but also a driver of innovation

When we are moving towards a more sustainable procurement policy, the first step is to rethink contractual requirements and definitions, with the aim of including environmental specifications, social specifications, performance- and functional requirements and production/process methods for any given goods or service bought by government. 

That means, that when you are sourcing, you must assess the environmental and social performance of your suppliers. When you are evaluating, you must address life-cycle costs, and different environmental- and social responsibility criteria in order to find the right product based on a weighted score. 

Finally, on the contract-level, governments must include environmental and social performance clauses in their tenders, and also work with suppliers to improve their sustainability performance.

For all these reasons, we need governments around the world to begin the conversation around sustainable procurement immediately. How are governments buying? And what kind of suppliers are the governments buying from? Those must be the guiding questions.

Politicians, activists and business leaders — It´s up to us all to advance this issue into the public agenda. 

Government’s role is to deliver welfare and it is truly effective to deliver it from its supply chain. It just makes sense. Let´s integrate this debate to transition towards sustainable public procurement and put it on the government agenda worldwide. — Carlo Angeles

(Picture credit: Ravi Sarma//Flickr)


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