Best Practices in Sustainable Public Procurement of IT Hardware in Europe

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Best practices in

sustainable public procurementof IT hardware in Europe

Report of the Procure IT Fair European Roundtable Meeting

Amsterdam, 31 March 2010


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The approach of Procure IT Fair

Procure IT Fair is a consortium of European civilsociety organisations that promotes sustainablepublic procurement of IT hardware as a tool toimprove working conditions, human rights andenvironmental protection in the global electronicssupply chain. Procure IT Fair has developed anambitious approach that incorporates social criteriathroughout the procurement process of IT hardware.This approach is elaborated in the Buy IT Fairbuyersguide. Well-prepared tenders, the inclusion ofmanagement system requirements as award criteria,

and the incorporation of process agreements in thecontract performance clauses are essential in theview of Procure IT Fair.

Procure IT Fair is aware of the challenges facing theimplementation of this approach. Such challengesrange from the lack of transparency in the globalelectronics supply chain to the lack of properlyfunctioning trade unions and mature socialdialogue, to the legal complexities regarding theinclusion of social criteria in award criteria. Other

obstacles are posed by the absence of a propermulti-stakeholder initiative in the electronics sector.If it did exist, it could play a role in the monitoringand verification of adherence to labour andenvironmental standards. Procure IT Fair makes sureto address all these points in the buyers guide aswell in its further activities, always aiming to strike abalance between ambition and feasibility.

Currently, Procure IT Fair is collecting examples ofbest practices in the sustainable procurement of IT

hardware by public and private institutions alikethroughout Europe. These cases are analysed andassessed on the basis of the Procure IT Fairapproach. Moreover, Procure IT Fair is working toincrease the general understanding of the roles andspheres of influence of the different players in thepublic procurement processes, including IThardware resellers and service providers that take anintermediate position between the purchasinginstitutions and IT hardware brands.

The roundtable meeting Bestpractices in sustainable public

procurement of IT hardwarein Europeis the fifth in a

series of six meetings thatare organised by Procure IT

Fair. The idea of thesemeetings is to provide

involved IT industrystakeholders with a platform

to discuss sustainableprocurement of IT hardware.The 31 March roundtable in

Amsterdam focusedspecifically on sharing best

practices and the role ofresellers and service

providers in the sustainableprocurement of IT hardware.The meeting also offered an

opportunity to critically focuson the ambitious approach

that is currently beingadvocated by Procure IT Fair.


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Best practices presentation

At the Amsterdam meeting, representatives of local governments, IT hard-ware brand companies, IT service providers, trade unions, civil society organi-sations and other interested parties shared their experiences and viewsconcerning sustainable tendering for the purchase of IT hardware. In theirpresentations, speakers were asked to focus on the implementation of socialcriteria in tenders. The presentations highlighted a number of the key issuesthat need to be addressed to render the procurement of computers trulysustainable.

The city of Amsterdam takesthe view that sustainableprocurement can be realisedthrough learning-by-doing.For the city, sustainable pro-curement is an importantinstrument in realising policygoals with regard to sustaina-bility and climate change.

Amsterdam takes a pragmat-ic approach: when criteria areavailable, they are applied.The criteria for sustainableprocurement that have beendeveloped by the Dutchgovernment agencyAgentschapNL, however, areconsidered to be a minimumthreshold. The municipalityhas, together with a group of

its purchasers who are welldisposed towards sustainableprocurement, developed aguidebook to inform the dif-ferent departments aboutthe citys overarching sus-tainable procurement policy.

The most recent frameworkagreement for computersconcluded by the city ofAmsterdam contains anumber of interesting exclu-sion criteria such as: theEnergy Star 5-label; the directsuppliers ability to provideits customer with environ-

mental advice regarding thesupplied products and theiruse; and respect for ILOnorms. Monitoring or verifi-cation mechanisms to guar-antee adherence to the ILOconventions have, however,not yet been put in place.Environmental and socialcriteria add up to 30% of thedetermining criteria in the

selection phase of the tender-ing procedure. Although thecurrent framework agree-ment for computers isreasonably well phrased,several issues remain thatwill need to be tackled infuture tenders.

The framework agreement isconcluded between the cityand the direct supplier, areseller, not with a brandcompany. However, themunicipality mentions that itis not clear what can beexpected from direct suppli-ers such as resellers and

service providers in terms oftheir responsibility and influ-ence over the supply chain.Amsterdam realises that adirect dialogue with the IThardware brand companywill be needed to increasesustainability throughout thesupply chain. Another ques-tion relates to the relevanceof asking suppliers for refer-

ences or declarations of goodconduct. What, after all, isthe value of such declarationsif they can not be checked orverified? Another point fordebate concerns the useful-ness of applying sanctions tosuppliers for non-compliancewith labour or environmentalstandards.

Learning-by-doing in Amsterdam


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The Spanish city of Manresa aims to be a pio-neer with regard to sustainable development.In its 2008-2011 Municipal Action PlanManresa has laid down its goals to promoteand enable fair trade, responsible consump-tion, social and economic international soli-darity, and corporate social responsibility(CSR) on the part of local and regional compa-nies. Sustainable procurement is an impor-tant element within this broader politicalframework. A committee for sustainable pro-

curement has been established, as well as des-ignated purchasing and contracting offices toguide the practical implementation ofManresas sustainable procurement policies.

With regard to sustainable IT, the city is pro-moting the extension of the life of computersby donating used equipment, the properclean-up of e-waste, and the use of recycledpaper. Manresa encourages its civil service toprint less and to minimise electricity andpaper usage. ILO norms are referred to in ten-dering contracts, but not (yet) taken up asexclusion or award criteria. For future tendersfor IT hardware Manresa intends to imple-ment the social and environmental criteria

that are proposed in the Procure IT Fairbuyers guide.

Procurement embedded in a political framework for sustainabledevelopment in Manresa

Centralised public procurement for sustainability in Bremen

By law the German city ofBremen includes environ-mental as well as socialcriteria in its public tenders.Reference to ILO norms isincluded. Bidders arerequired to provide evidenceto support their claimsregarding corporatesocial responsibility andsustainability. While current

budgetary limitations mayrestrict expenditure for pub-lic procurement, the citynevertheless intends tomaintain its focus on sustain-able procurement. It isexpected that through

centralised purchasing theapplication of environmentaland social criteria can beupheld or even increased.

Bremen, along with severalother German cities andprovinces, has outsourcedthe purchasing of IT hard-ware to a specialised inter-mediary body, Dataport. In

December 2008, Dataportput out a call for a tender forcomputers for Bremen.Although centralised profes-sional purchasing has theadvantage of realising econo-mies of scale, the downside

is possibly diminishing theinfluence of the end-customer. It turns out thatDataport is not necessarily asinterested in including farreaching sustainability crite-ria as Bremen would like.In this recent tender, areference to the ILO stand-ards was included, and therequirement for the comput-

ers to answer to the highestEnergy Star-label, as well asother environmental criteriasuch as the stated objectiveto reduce IT products.Compliance to ILO standardswas not, however, verified.


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A road map towards sustainability the role of IT service providers

Computer brand company Hewlett Packard

(HP) pointed out that a transition from greento sustainable procurement is unmistakablytaking place. Public procurement bodies in anumber of European countries, includingSweden, Denmark and Austria, are stronglydriving this process. EU procurement direc-tives and environmental labels are contribut-ing to this trend. Throughout the meeting HPemphasised that dialogue with the end-usersof its products is essential for the company.Any product-related problem is of interest to

the company, including social issues in thesupply chain.

HP pointed out that it is one of the initiatorsof the Electronic Industry CitizenshipCoalition (EICC) and the EICC code of conductfor the global electronics industry, which hascome about despite legal objections. HPstressed the need for a code of conduct as anindispensable tool in supply chain manage-

ment. Besides using the EICC code, HP expects

its suppliers to respect the companys policiesconcerning supply chain management andsocial and environmental responsibility, andto take steps to comply with national andinternational laws and regulations. Self-assessment questionnaires and participationin audits are additional measures taken by HPto push its suppliers to comply with interna-tional standards.

Despite all measures that could possibly be

implemented, HP acknowledged that auditswill not reveal all issues that may occur at pro-duction sites. The voice of workers regardingtheir own working conditions remains key,according to HP. Civil society organisationsalso have an important role in uncoveringsuch problems. In this context, HP stressedthe importance of data collection andtransparency.

The IT industry is responsible

for 8% of carbon emissions inthe Netherlands. Besides theobvious need to reduce theselevels, the IT sector is in theperfect position to supportother industry sectors inachieving greater sustaina-bility. IT service provider AtosOrigin/Atos Consulting isoperating on this premise.Among the services provided

to its customers, AtosConsulting gives adviceregarding sustainable devel-

opment and green procure-

ment of IT. Atos Consultingpresents its customers with asustainable road map start-ing off with energy-savingsolutions and going all theway to the formulation of asustainable product life cycle.Atos Consulting stresses theneed to include potential sup-pliers in an early stage of theprocurement process and to

define the types of evidencethat bidders will need toprovide.

Recently, Atos Consulting

supported a province in theNetherlands in developing anew procurement policy. Theprovince was looking toaccomplish a higher sustain-ability target than the pro-curement criteria propagatedby AgentschapNL. At themeeting, Atos Consultingpointed out that a focus onefficiency and costs may

automatically result in moreenvironmentally friendlyprocurement.

Dont talk to direct suppliers, talk to brands HP


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Regarding the role and theinfluence of brand compa-nies, IT service providers,resellers and system integra-tors, it was pointed out thatmarket power is not dividedequally. IT service providersand resellers can put but lim-ited pressure on brand com-panies and can not afford tobe too critical towards brands

for fear of losing their con-tracts. Subsequently, thequestion was debated howbest to engage in a dialoguewith these parties abouttransparency in corporateCSR policies and sourcingpractices, as well as about

monitoring and verificationof standards compliance. Itwas argued that by demand-ing transparency in the con-tract performance clauses,identification of potentialproblems in the supply chainis enabled.

It was recommended thatpurchasing municipalities

and institutions should notonly address their direct sup-plier, but also engage withthe brands in the discussionto improve social conditionsin the supply chain of IT hard-ware. This continuousengagement needs to occur

not only when the tenderingprocedure starts or in thecontracting phase, but inbetween actual tenders aswell. The view was expressedthat walking away from badsuppliers could do moreharm than good, as factoryworkers jobs are directly atstake. Through dialogue itcan be established within

what timeframe correctiveactions should be undertak-en. Disengagement with abrand should be consideredwhen a brand repeatedlyrefuses to make improve-ments or take part indialogue.

Although the establishment of the EICC andits code of conduct was a big step forward forthe electronics industry, the NGO and tradeunion representatives present at the roundta-ble were sceptical about the value of this codeas the clauses regarding freedom of associa-tion and collective bargaining are weak.Philips, HP and several other companies

acknowledge the importance of freedom ofassociation and collective bargaining andhave drafted addendums to their respectivecodes. The EICC code should therefore not beregarded as the highest standard. Moreover,the EICC is clearly not a multi stakeholderinitiative.

Key issues to be addressed

Key issues dominating the discussions at the roundtable were: the role ofbrand companies, IT service providers and resellers; the question how best toinclude social criteria in tender procedures; the need for effective monitoringand verification of adherence to legislation and code compliance in theglobal electronics supply chain; and the quality of the EICC code of conduct.To allow for more in-depth discussion the roundtable participants split up intothree break-away groups.

Role of brand companies, IT service providers and resellers

EICC Code of conduct


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Participants exchanged ideason how social criteria couldbe included in tender proce-dures. In Belgium, social cri-teria are usually introducedin the contract phase. Otherparticipants are of the opin-ion that addressing sustaina-bility issues in the contractphase only is already too late

and will yield limited resultsas at that stage selection onthe basis of sustainability isno longer an option. Anotheroption that was discussed ishow to formulate social crite-ria as exclusion criteria. InHungary, an accreditationsystem for suppliers has beenestablished. Suppliers are

excluded from public tender-ing if they fail to deliver anannual report.

Problematic is that none ofthe electronics brands can asyet guarantee that conditionsin their supply chains complywith ILO standards. ProcureIT Fair recommends to

include compliance withsocial standards in the awardcriteria. The EU procurementregulations seem to offerroom to do this legally. Also,attaching more weight tosocial criteria will bring sus-tainable procurement closerto realisation. A possibleincentive to make suppliers

improve their CSR record isto publish the weight award-ed to social criteria in a ten-der. In the same vein,publishing which bidder getsawarded the contract is alsoexpected to have a motivat-ing effect on suppliers.

Eventually, social and envi-

ronmental criteria should beregarded as of equal impor-tance. Advocates of sustaina-bility are to play a role inbringing the issue up for dis-cussion, both at brand com-pany levels as well as amongpolicy makers and publicinstitutions.

Monitoring and verification of standard com-

pliance was a topic of heated discussion at themeeting. Civil society participants stressedthat corporate statements of compliance tocodes or standards mean little if they cannotbe checked. As yet, no adequate mechanismhas been developed for verifying and guaran-teeing adherence to ILO standards. The Dutchgovernment is suggesting multi-stakeholderinitiatives as possible mechanisms to consoli-date respect for social criteria. In the IT sector,however, a credible multi-stakeholder initia-

tive, with the participation of brands, suppli-ers, trade unions and NGOs, does not exist. Anoften-heard suggestion was to involve tradeunions and NGOs in audits and spot checks atsupplier level. At the same time, it was point-

ed out that corporate supply chain transpar-

ency does not equal independent monitoringand verification of labour conditions andcompliance with standards in factories.Respect for freedom of association andadequate trade unions are deemed essentialin this respect. This in particular holds truefor China.

At the moment, institutional customers lack asufficiently strong position to impose sanc-tions on suppliers that may not comply with

international standards. A suggestion wasmade for brand companies to facilitateend-customer visits to production sites inrisk countries.

How to include social criteria

Monitoring and verification


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Outcomes

Dialogue in this diverse group of participants resulted in some valuableinsights into how sustainable procurement of IT hardware can be implement-ed more effectively in the European context. Open minded exchangeshelped the discussion take an important step forward. Interesting insightsinto possible solutions were discovered.

>Embedding sustainable procurement thoroughly in an organisation isimportant to generate the institutional support required to makeprocurement truly sustainable.

>The suppliers ability to provide customers with advice regarding social

issues could be defined as an exclusion criterion, as is now already done inAmsterdam regarding the suppliers ability to provide environmentaladvice.

>Also, attaching more weight to social criteria will bring sustainable procure-ment closer to realisation. A possible incentive to make suppliers improvetheir CSR record is to publish the weight awarded to social criteria in a ten-der. In the same vein, publishing which bidder gets awarded the contract isalso expected to have a motivating effect on suppliers. Eventually, socialand environmental criteria should be regarded as of equal importance.

>Advocates of sustainability can play a role in bringing the issue ofsustainable procurement issue up for discussion, both at brand companylevels as well as among policy makers and public institutions.

>Increased transparency regarding the supply chain and the sourcing of rawmaterials could be included as a tender requirement. The outcomes of acurrent project on supply chain mapping initiated by EICC and the Globale-Sustainability Initiative (GeSI) could feed into this.

>Taking the Hungarian situation as an example, end-customers could requiresuppliers to provide solid reports on predetermined social criteria.

>Reinforce the watchdog role that trade unions, research and campaigningorganisations play. Public institutions could contractually oblige theirsuppliers to engage in a dialogue with civil society organisations and toelaborate and implement a corrective action plan whenever problems inthe supply chain are reported.

>Dialogue with suppliers as well as brand companies is essential. This shouldbe a tri-partite process between brands, resellers/service providers andcustomers that takes place in-between, as well as during tenders.


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About Procure IT Fair

Procure IT Fair is a coalition of European civil society organisations that intends to raiseawareness on the working conditions and environmental pollution present in the production ofcomputers. It would like to ask politicians and public purchasers to use their (buying) power todemand compliance with international labour rights and ecological standards in the globalsupply chain of computers. www.procureitfair.org

SOMO, the Centre for Research on Multinational Corporations, is a Dutch not-for-profit researchand advisory bureau. SOMO investigates the consequences of Multinational Enterprises (MNEs)policies and the internationalisation of business worldwide.

>IT service providers can make a positive contribution to increasing the sus-tainability of the procurement of IT hardware by guiding their customers

in formulating social and environmental criteria.

>There are lessons to be learnt from green IT procurement, wheredemanding Energy Star label as a minimum requirement has becomecommon practice.

>EU legislation regarding food security and the phasing out of hazardoussubstances in electronic products could serve as a blueprint for policiesfocused on the phasing out of substandard working conditions in the glo-bal supply chain of IT products available on the EU market.

In all, there seems to be commitment to sustainable procurement, as well asagreement among different stakeholder groups on the need for moreambitious criteria in tenders, transparency in the supply chain, and on theimportance of dialogue among brands, resellers/service providers and end-customers. The general feeling is that EU legislation does offer room for theinclusion of social criteria. Procure IT Fair will incorporate these points in itsapproach, together with further insights gained during the roundtable.Procure IT Fair recommends organisations to be ambitious and explorepossibilities to the fullest.

Procure IT Fair partners

>Center for Environmental Studies CES, Hungary>Ecumenical Academy Prague EAP, Czech Republic>SETEM Barcelona, Spain>SETEM Madrid, Spain>SOMO, the Netherlands>Sdwind, Austria>WEED, Germany


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Participating organisations

>Aim for human rights, the Netherlands

>Atos Consulting>City of Amsterdam, the Netherlands>City of Bremen, Germany>City of Manresa, Spain>Delft University of Technology, the Netherlands>DURABILIT, the Netherlands>FNV-Confederation of Dutch Trade Unions, the Netherlands>Groen ICT diensten, the Netherlands>Hewlett-Packard>ICT Milieu, the Netherlands>MVO Nederland, the Netherlands

>Oesterreichische Kontrollbank AG (OeKB), Austria>Philips>UPF University Barcelona, Spain

This publication has been made possible with the assistance of the European Commissionand the Dutch ministry of Housing, Spatial Planning and the Environment (VROM).

May 2010

Authors:Pauline Overeem and Virginia Sandjojo

Text editing:Elise Reynolds, http://www.idest.nl/Graphic design:Justine van Heusden, JUSTAR.NL

Publication:Stichting Onderzoek Multinationale Ondernemingen (SOMO)

ISBN: 978-90-71284-58-8

License:This document is licensed under the Creative Commons

Attribution-NonCommercial-NoDerivateWorks 2.5 License.

Colophon

SOMO

Centre for Research on Multinational Corporations

Sarphatistraat 30

1018 GL AmsterdamThe Netherlands

T+ 31 (20) 6391291

F+ 31 (20) 6391321

The authors are grateful to all participants to the roundtable meeting for sharing their views andcomments. However, the content of this publication is the sole responsibility of SOMO.

[email protected]

www.somo.nl/www.procureitfair.org


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Best Practices in Sustainable Public Procurement of IT Hardware in Europe

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