Sustainable Procurement: Legislative Requirements And Practical Challenges

Sustainability is one of the key objectives of public procurement. The Public Procurement Act is currently undergoing reform, and the proposal for the new Act will soon be submitted to Parliament. One of the goals is to further emphasise sustainability by specifying that the regulation aims to achieve ecologically, socially and economically sustainable procurement. In addition, certain serious environmental offences will be added as mandatory exclusion criteria for tenderers.

But what are the legal sustainability requirements for procurement? What needs to be taken into account when planning and implementing sustainable procurements?

If we only look at procurement legislation, it is up to the contracting entity to set the sustainability criteria. This is something that the current Procurement Directives have received criticism for – discretion is not deemed to steer procurements in a more sustainable direction sufficiently enough. At the same time, there are also dozens of product and sector-specific EU regulations setting sustainability and environmental requirements for public procurement.

The fragmented nature of regulation poses challenges for contracting entities. For example, pursuant to the Battery Regulation (EU) 2023/1542, contracting entities must take account of the environmental impacts of batteries over their life cycle with a view to ensuring that such impacts are kept to a minimum. The Net-Zero Industry Act (Regulation (EU) 2024/1735) requires contracting entities, among other things, to apply minimum mandatory requirements regarding environmental sustainability in public procurement. The precise content of these requirements will be specified in due course through the Commission's implementing regulations.

In addition, the Deforestation Regulation (EU) 2023/2011, in its current form, requires those who breach the Regulation to be excluded from public procurement for up to 12 months. The government proposal HE 77/2025 currently before Parliament designates the Finnish Food Authority as the Finnish authority to decide on this sanction. Once the Act enters into force, contracting entities will be able to include in the call for tenders a requirement for tenderers to explicitly state whether they are subject to such an exclusion decision.

As the vast majority of substantive regulation comes from the EU, keeping track of regulatory requirements, such as those outlined in the examples above, can feel particularly arduous. Knowledge of procurement law and the market is not enough when it comes to sustainable procurement; contracting entities need to be increasingly aware of requirements that vary according to the subject of the procurement. Research shows that competition in public procurement in Finland is weak, and legal requirements may further reduce supply.

The reform of the Public Procurement Act encourages market consultation as a means to increase competition. In sustainability work, thorough procurement planning is particularly important. The contracting entity needs to identify the applicable sector-specific regulation and the associated sustainability requirements in advance. A thorough market dialogue should be conducted to assess whether the market can meet these requirements – whether as mandatory minimum requirements, comparison criteria or perhaps as a condition to be fulfilled during the contract period. Entities can also divide the procurement into lots or establish a dynamic procurement system to account for suppliers' different capabilities to meet sustainability requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.