Sustainability has become a key differentiator for companies looking to win contracts and will soon become even more critical.
While a qualitative description of a company's sustainability efforts was once enough to impress potential clients, new regulations now require concrete numbers and facts to support sustainability claims.
In Norway, public procurement now requires environmental factors to be weighted at 30% in the tender criteria, meaning companies must demonstrate their commitment to sustainability to be successful. However, people have yet to learn how to win tenders in the future based on sustainability commitment.
Therein lies a massive possibility for companies willing to pioneer. While you cannot predict the future, you can prepare for it. Establish an infrastructure to map, track and manage your CO2 emissions now, and you’ll be ready to compete regardless of what the public or private tenders are asking later.
The output of prioritizing sustainability in tenders now is valuable short-term and invaluable long-term. Winners respond to new regulations with proactivity and hands-on initiatives. That way, you can maximize your chances of meeting regulations and build a foundation for your tenders to stand out.
The Uncertainty of Forecasted CO2 Regulations
Some companies may be hesitant to invest in sustainability before it becomes mandatory. The Norwegian government's proposed regulation, currently under public hearing, has received positive feedback but still needs to provide clear criteria on which factors to consider or how to document sustainability performance.
Remember that these regulations are new to all, including the government. And because these are uncharted territories, many companies will prefer observing what others do. They leave others to discover the key to success within these new regulations. But in patience lies a significant risk of losing current customers and new business opportunities.
As a result, the practical use of the criteria will be determined by both purchasers and potential suppliers, ultimately deciding who wins the contracts. The companies that stand out early on will have a considerable impact. Engagement and willingness to innovate are usually highly appreciated virtues by procurers.
The key to winning their favor is to start early and establish a strong foundation. The companies setting the golden standard for sustainable tenders will gain major competitive advantages down the road.
From Compliance to Competitive Advantage
Even before the regulations kick in, the experience of experimenting with sustainability strategies as a differentiator could be invaluable. If done correctly, there is enormous business potential in preparing for the new procurement standard. Companies that look ahead and seek to define the future of best practices in government tender contracts will have an advantage over those who sit around and wait for others to come up with it.
The future of sustainability in procurement is determined by a 'best in breed' approach, with companies that demonstrate superior sustainable practices winning contracts over those that do not. As each agreement sets a new minimum requirement, companies not prioritizing sustainability from the start may need to catch up to their competitors.
The importance of sustainability in procurement is reflected in the Norwegian government's proposed regulations, which require companies to demonstrate their commitment to environmental factors to win contracts. While the new rules do not provide clear guidance on how to do so, companies that invest in sustainability and prioritize establishing their benchmarks and can provide reporting and clear documentation will be well-positioned to succeed in this evolving landscape.
Win Customer Contracts by Leveraging CO2 Reduction
In addition to prioritizing sustainability within their operations, companies must consider the sustainability of their entire supply chain. Customers and governments increasingly demand transparency and accountability from their suppliers, and regulations will hit every aspect of the procurement process.
The proposed regulations in Norway reflect the growing significance of sustainability in the supply chain, a trend we expect to spread globally. Failing to prioritize sustainability in the supply chain may put companies at a competitive disadvantage, as more customers seek eco-friendly and socially responsible products and services as part of their ESG strategy.
Moreover, regulations that require concrete numbers and facts to back up sustainability claims will affect every aspect of the procurement process. Companies that can demonstrate their sustainability performance with precise and reliable data on CO2 reduction will have a significant advantage in winning contracts and building customer trust.