Navigating environmental sustainability requirements in government procurement across Australia

We are currently helping several of our clients with meeting growing pressures from their customers around sustainability. One of the clearest examples of this is government sustainability requirements when procuring goods and services.

In this post, we outline key environmental sustainability requirements in government procurement at the Commonwealth level, along with NSW and Victoria, highlighting policies that impact suppliers directly and offering actionable insights on how to align with these guidelines.

Why sustainability matters in government procurement

Sustainable procurement offers wide-reaching benefits, from reducing environmental impact to driving innovation and supporting a circular economy. By selecting suppliers who offer low-impact goods and services, governments are reducing emissions, supporting a circular economy, and contributing to their net zero goals.

For suppliers, this presents an opportunity not only to win government contracts but also to become leaders in sustainability and gain competitive advantage in other business opportunities.

National and state policies: A quick overview

Commonwealth Government: Environmentally Sustainable Procurement (ESP) policy

The Commonwealth ESP policy sets expectations for environmentally sustainable practices in the procurement process for federal government projects across key categories: construction, furniture, ICT goods, and textiles. Suppliers who provide goods or services within these categories must demonstrate environmental sustainability through specific plans and actions.

What suppliers need to know

Suppliers must submit a Supplier Environmental Sustainability Plan (SESP) as part of their tender documentation. The SESP should outline how suppliers will minimise greenhouse gas emissions, increase circularity, and improve resource efficiency. Suppliers must track and report metrics on emissions, energy use, and waste reduction biannually.

When it applies

The ESP policy took effect from 1 July 2024 for construction projects over $7.5 million (incl. GST) and takes effect from 1 July 2025 for furniture, ICT, and textiles procurements over $1 million (incl. GST). The Policy notes that where procurements are estimated to be close to the value threshold, it is recommended that the ESP Policy be applied. Existing contracts or deeds of standing offer that are in place prior to the applicable commencement date will not need to be amended.

Have a look at the table below to see what the focus areas and principles are:

Table 1: Focus areas and principles of the Commonwealth Government ESP Policy

Focus areas	Principles
Climate	• Minimise greenhouse gas emissions • Optimise energy efficiency • Use low embodied emissions materials
Environment	• Optimise water efficiency • Use safe and renewable inputs • Safely use and dispose of chemicals • Actively minimise the creation of waste and the amount that is sent to landfill
Circularity	• Buildings and fit-outs use less materials, minimise waste, can be deconstructed and reused, are designed for adaptability and flexibility • Goods are durable, repairable, reusable, and/or recyclable • Goods have been refurbished or existing goods are reused • Goods contain recycled content /recycled materials are used • Goods are recycled at the end of useful life • Goods are returned for resource recovery through a take-back or end of life scheme • Goods are available for lease, rent or product-as-a-service as an alternative to buying outright

Further information

When you respond to a Government tender around those thresholds, you will need to address and report against environmental sustainability through a Supplier Environmental Sustainability Plan (SESP), which you need to submit as part of your tender documentation. The SESP includes questions such as:

• How you will optimise environmental sustainability based on the focus areas in Table 1
• Opportunities for innovation, e.g., around design, products, materials, processes
• Your corporate sustainability performance (your commitment to improve your environmental sustainability, relevant third-party certifications, such as ISO14001, emissions reduction measures, employee engagement, supply chain opportunities, etc.)

For construction services, you may also need to achieve a Sustainability Rating for the project. You can have a look at a SESP reporting template for construction projects at this link here.

New South Wales: Decarbonising Infrastructure Delivery Policy

NSW’s Decarbonising Infrastructure Delivery Policy is focused on minimising carbon emissions in public infrastructure projects. This policy applies to projects valued over $50 million for buildings or $100 million for other infrastructure and sets out requirements for suppliers who contract with NSW government agencies to deliver these projects.

What suppliers need to know

Suppliers must support NSW government agencies in tracking and reducing upfront carbon emissions through the project’s lifecycle. A key requirement is the preparation of a Carbon Management Plan by agencies, which outlines emissions reduction targets, metrics, and reporting. Suppliers are encouraged to engage early to propose low-carbon materials, recycled content, and other sustainable solutions.

When it applies

This policy is effective within 12 months of April 2024 and applies to all projects that require investment decisions after that date.

Case studies

The Albion Park Rail Bypass project by Transport for NSW used a circular economy approach, reusing large quantities of recycled materials, including crushed glass (equivalent to 30 million bottles), coal wash, tunnel spoil, and reclaimed asphalt. Funded by the NSW EPA, this project showcases best practices in sustainable infrastructure, demonstrating how government support and early commitment to low-carbon goals can drive industry adoption of recycled materials.

The Sydney Metro City & Southwest project has reduced emissions by 27% below business-as-usual levels through renewable electricity, biodiesel, recycled materials, and waste management. Biodiesel from waste oils powers cranes at Martin Place, and all delivery partners use at least 25% renewable electricity, with some achieving 100% through solar and GreenPower.

Victoria: Social procurement framework

Victoria’s social procurement framework incorporates environmental sustainability into procurement processes to achieve positive environmental impact. Key sustainable procurement practices include:

• Maximising recyclable and recovered content
• Minimising waste and greenhouse gas emissions
• Conserving energy and water
• Reducing habitat destruction and environmental degradation
• Providing non-toxic solutions

What this means for suppliers

With sustainability becoming a core requirement in government contracts, here are steps you can take to ensure you meet these standards:

• Develop a sustainability plan: Align your sustainability plan with Commonwealth and state priorities, focusing on areas like waste minimisation, greenhouse gas reduction, and sustainable materials.
• Source responsibly: Choose local and certified sustainable materials, which are strongly aligned with government priorities.
• Track and report metrics: Establish systems to track emissions, energy use, and waste reduction. Many government policies now require regular sustainability reporting.
• Engage in early project planning: Many policies encourage early involvement. This is your chance to propose low-carbon materials, recycled content, and sustainable solutions.

Here is your opportunity to make an impact

With government procurement increasingly focused on environmental sustainability, you have a unique opportunity to make an impact. By understanding and adapting to sustainability requirements, you can not only enhance your competitive advantage but also contribute to meaningful environmental progress across Australia. Embracing these practices now will prepare you for future policies and align your operations with long-term sustainability goals.

Need support in meeting these sustainability goals? We offer a suite of services, including carbon footprinting, carbon management plans, target setting, and metrics tracking, to help you align with government expectations and demonstrate environmental responsibility in your projects. Learn more about our services here.

Reach out to  Barbara or Patrick for more information.

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