Public procurement and the CSRD

This issue about the relationship between public procurement and the Corporate Sustainability Reporting Directive (CSRD) arises regularly as the CSRD is gradually introduced from 2024. Many companies are now busy preparing for the CSRD. What will the government as a stakeholder do with this sustainability information? How can the data help measure and monitor the government’s sustainability goals?

What is the Corporate Sustainability Reporting Directive?

The CSRD is a European directive and is part of the Sustainable Finance Action Plan. This plan aims to create a financial system to support the goals of the Green Deal. The European Commission has three specific core objectives that it wants to achieve through the Sustainable Finance Action Plan (Communication from the Commission, 2018):

1. Change in capital flows: more investment in sustainable activities is needed to achieve sustainable and inclusive growth,
2. Reducing systemic risks in the European economy arising from climate change, environmental degradation and social issues,
3. Promoting transparency and long-term thinking in financial and economic activities.

In the period from 2024 to 2028, more and more companies must report on Environment, Social and Governance topics according to the CSRD (Directive 2022/2464/EU). The aim of the guideline is that through high-quality and reliable public reporting on sustainability aspects of companies, more money will go towards sustainable activities and improvements will be made in E, S and G areas. The CSRD is not (yet) legally required for governments.

Socially responsible commissioning and purchasing

Governments are of course already giving substance to sustainability, by including it in purchasing and contract management and by reporting on this in their own ways. With ‘Purchasing with Impact’, the government has set the new standard for the government’s purchasing strategy: sustainable, social and innovative purchasing is the new normal. Socially responsible commissioning and purchasing is an effective instrument to help reduce CO2 emissions, environmental impact and raw material use, to realize an inclusive labor market and to tackle abuses for people and the environment in international chains (Ministry of Infrastructure and Water Management , 2021). The underlying idea is that the Dutch governments, with their purchasing power of more than 85 billion euros per year, can focus on social goals and thus make a major impact. By purposefully using their purchasing power, governments contribute to solutions for social challenges facing the Netherlands.

To make socially responsible commissioning and purchasing less optional, government organizations can adhere to the socially responsible commissioning and purchasing manifesto. By signing this manifesto, governments promise to make a joint impact by encouraging ambitious socially responsible commissioning and purchasing. Participation is not without obligation: governments oblige themselves to draw up and publish an action plan, monitor their progress and report on this annually to the government.

CSRD, an opportunity for the (national) government

A recent study conducted by the Ministry of the Interior and Kingdom Relations into monitoring methods and instruments for CSR shows that monitoring sustainability performance is currently done in many different ways within all levels of government (Ministry of the Interior and Kingdom Relations, 2024). There is a need for direction and coordination, better CSR data (accessible, consistent and as complete as possible) and less administrative burden. This requires clear agreements on KPIs linked to the ambitions that organizations can include in their own accountability, creating clarity towards the market.

The developments in the field of information provision by companies and the wishes in the field of monitoring the sustainability ambitions of governments therefore lead to the logical question of how the CSRD can help to measure and monitor the sustainability ambitions of the government through public procurement. A very large part of the activities carried out by the government take place in the chain (via purchasing).

The transparency and standardization that the CSRD provides allows buyers and contract managers to make more informed choices and effectively assess and compare the sustainability of their suppliers. There is overlap between the themes used by the government and the themes of the CSRD, especially in International Social Conditions and Climate. However, further research is needed into the connection between these themes. CSRD often asks companies to report at organizational level, while contract managers also need information at product level.

CSRD as a standard for the government?

If CSRD information can be used to measure and monitor CSRD objectives at suppliers, why doesn’t the government itself apply the CSRD as a standard to report on its sustainability objectives in an unambiguous and transparent manner? The government does not have to report in accordance with the CSRD, but a comparable standard is desirable. In addition, as customers they will also have to report to suppliers. Speaking the same ‘language’ offers advantages for both the government and the business community because it limits the administrative burden and allows better management of sustainability ambitions.

Bibliography

• Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions (2018). Action plan: financing sustainable growth, p. 2
• Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/ EU, regarding sustainability reporting by companies (OJEU 2022, L 322)
• Ministry of Infrastructure and Water Management, 2021. Commissioning with ambition, purchasing with impact: National Social Procurement Plan 2021-2025
• Ministry of the Interior and Kingdom Relations, 2024. Inventory of monitoring methods and instruments MVOI and MVOI stakeholders. Final report.