The public sector has a significant market power. In Norway, public authorities purchase for 16 per cent of GDP. Public procurement accounts for a significant proportion of Norway's domestic climate footprint. Therefore, it is often seen as a necessary tool to achieve Norway’s climate and other environmental obligations to set sustainability as requirement for procurement bid and the award itself. A precondition for this to happen, however, is that contracting authorities know what they are committed to.
From ‘may´ to ´shall´
One purpose of the EU's procurement directives is to strengthen the use of public procurement as a strategic tool for ´smart, sustainable and inclusive growth´. In the implementation of the directives, selected sustainability considerations, such as environmental considerations, are therefore given a prominent role. This is notably the case in the Norwegian Procurement Act of 2016. Before that, environmental requirements were only of motivating nature and could not be enforced by the courts in Norway.
Today, the Norwegian Procurement Act sets up a legal obligation regarding environmental requirements in public procurements. Contracting authorities ‘shall’ include environmental requirements in their public procurements when it is considered relevant.
It is, therefore, both surprising and disappointing that, according to a survey presented in February 2022 by the Office of the Auditor General that monitors the public sector in Norway (‘Riksrevisjonen‘), it is still the case that public authorities often do not include environmental requirements in public procurements.
The legal scope
Contracting authorities have, according to the Norwegian Procurement Act, essentially three obligations when it comes to including environmental requirements.
- To prepare a procurement strategy taking account environmental considerations. The Norwegian provision, and related preparatory works, do not provide a clear framework for the form of the strategy, but it must be assumed that it at least should be in writing.
- To include environmental requirements in procurements where the requirements are considered ´relevant´. The procurement strategy shall specify suitable environmental requirements for these procurements.
- To abide by the procurement strategy. If a specific procurement does not reflect the strategy, there may be a breach of the Norwegian Procurement Act.
A key question is therefore when it is ´relevant´ to include environmental requirements.
When is it relevant to include environmental requirements?
The preparatory work of the Norwegian Procurement Act indicate that environmental requirements are relevant for public procurements which entail a significant environmental impact.
The use of the term ´significant´ indicates that the threshold to include environmental requirements is relatively high. Conversely, it means that there is no absolute obligation to include environmental requirements. Procurements that have no (significant) environmental impact are therefore not subject to this obligation.
The words ´significant environmental impact´ point to a legal standard that is expected to evolve in line with environmental developments. Besides, the principle of proportionality plays an important role in decisions to include environmental requirements. Some requirements can be deemed proportionate even in small procurements. For example, requiring the purchase of eco-labelled products could be proportionate also in a procurement of low value.
Consequently, a general objective standard for when a public procurement entails a significant environmental impact cannot be established. With good reasons, some will say, considering that environmental issues are in a constant development. At the same time, this dynamic legal standard can be challenging for contracting authorities to navigate when deciding whether or not to include environmental requirements in public procurements.
Contracting authorities can, however, find guidance for content in the dynamic legal standard in the Norwegian Environmental Information Act.
Duty to know about environmental impact
According to the Norwegian Environmental Information Act, contracting authorities have a duty to know about the environmental impacts of public procurements that ´may´ cause a ‘not insignificant’ impact on the environment.
Public procurements that cause a ´significant environmental impact´ will always be public procurements that may cause a not insignificant impact on the environment. In this way, the Environmental Information Act lays down guidance for the contracting authorities discretion in identifying which public procurements that cause an environmental impact of significance and thereby which procurements that are considered relevant to include environmental requirements.
This also entails the importance of the different departments in public authority to cooperate and share information regarding its work for preparing the procurement strategy - to prevent the job from being done twice.
Challenges ahead
For the contracting authority to assess whether and how environmental requirements are to be included in the procurement, the contracting authorities must be given tools to consider the environmental impacts of their procurements. The need for such tools was already pointed out at in a White paper back in 2018-2019, but they are still missing today.
Today, contracting authorities are largely left to themselves to make these rather complex assessments. That can lead to uncertainty with regards to which environmental requirements are to be included. An unfortunate consequence of that is that contracting authorities are not including environmental requirements - in fear of making mistakes.
The Ministry of Trade, Industry and Fisheries and the Ministry of Climate and Environment do both have a responsibility for this issue, and it is important to be aware of this overlap. A mandate to develop guidance has been given to the Norwegian Agency for Public and Financial Management (DFØ) and it is today a real focus on raising competence.
The guidance, however, currently revolves mainly around how environmental requirements can be included, and not so much in which procurements there are a legal obligation to include them. That can lead to a wrongful belief that environmental requirements in public procurements are purely voluntarily.
It is therefore urgent to establish legal certainty regarding minimum environmental requirements in public procurements so that it is clear to contracting authorities that their responsibility in the matter does not stem from a motivating ´may´ principle, but a ´shall´ obligation.
Tonje Platou wrote her master thesis within the SMART Project at the University of Oslo. The thesis analysed the legal scope of the environmental requirements in Article 5 of the Norwegian Public Procurement Act. The thesis was ranked by the Procurement Academy as one of the best master theses in public procurement in 2021. Based on the thesis Platou published a Norwegian article in Lov og Rett, November 2021: https://www.idunn.no/doi/10.18261/issn.1504-3061-2021-09-04. Today, Platou works as an associate in the law firm CMS Kluge where she deals with public procurements.