The ESP Policy is set to impact procurement practices in targeted industry sectors. Starting with the construction industry in July 2024, the industry will be required to achieve and demonstrate climate, environmental and circularity outcomes for Australian Government construction projects.
The Australian Government has a large estate and directly funds billions of dollars in construction services across Australia each year. The ESP Policy will put the focus on Australian Government construction projects but leads the way for state and local government procurement to follow suit with their own policies.
The focus of the ESP Policy is increasing climate, environmental and circular economy outcomes. It targets the construction, furniture and equipment, ICT and textile industries through Australian Government procurement practices.
Commonwealth entities and suppliers will be required to achieve and demonstrate outcomes through a range of focus areas such as minimising greenhouse gas, minimising waste to landfill, and mandating recycled content in materials and products.
Commonwealth entities will identify appropriate focus areas in their tender request documentation. Tenderers will be required to submit a supplier environmental sustainability plan (SESP) with their tenders for evaluation for value for money. Successful tenderers will then be required to implement and comply with the SESP and report on the outcomes.
Finally, individual Commonwealth entities will report to the Department of Climate Change Energy, the Environment and Water. The department will aggregate the reports and report on a whole of government basis.
The department has released a Sustainable Procurement Guide to support implementation of the ESP Policy. The guide includes practical guidance for approaching the market, tendering, evaluating tenders and managing contracts, including model clauses. The guide is a good practical tool for procurement professionals. It provides a useful survey of the existing industry standards and certification services, labelling practices, product stewardship schemes and other initiatives that are practical tools for embedding policy objectives in procurement documentation.
The ESP Policy applies to non-corporate Commonwealth entities, such as government departments and certain corporate Commonwealth entities. Those Commonwealth entities will be required to implement the ESP Policy in their procurement practices. The ESP Policy does not apply to Commonwealth grants to the states or local governments. However, over time, state and local governments may seek to adjust existing sustainable procurement policies to focus more on the Australian Government priorities of climate, environment and circularity.
What industries does it apply to?
The ESP Policy applies to the procurement categories of construction services valued over $7.5 million; furniture; fittings and equipment; ICT goods; and textiles valued over $1 million.
Construction services have a high embedded carbon footprint and approximately 30 million tonnes of construction and demolition waste is generated each year. E-waste from ICT goods is one of the fastest growing and problematic waste streams. The environmental practices of these industries will be the focus for both their own operations but also the supply chains that support those industries.
The ESP Policy is being introduced in two phases starting with construction services from 1 July 2024. The second phase will commence on 1 July 2025 and will apply to furniture, fittings and equipment, ICT goods, and textiles. The construction industry should expect to see these requirements appear in request documentation for new procurements from 1 July 2024, with the remaining sectors to follow suit in July 2025.
Join Principal, Kyle Gillan for a free online seminar to explore recent developments in environmentally sustainable construction policies and initiatives that are changing the construction industry as we know it.
How green is your construction project?
When: Tuesday 25 June 2024, 10.30am – 11.30am
Where: Online, via Zoom
Click here to learn more and RSVP
If you have questions or require assistance in relation to your construction project, please contact Kyle Gillan from our Construction team.
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