When governments buy buses, school meals, or hospital equipment, they shape entire markets. Across the European Union (EU), those purchases add up to more than EUR 2 trillion a year, about 14% of the EU economy. However, fewer than 15% of large contracts are green. This article explains how mandatory sustainability criteria in the EU’s procurement directive could cut emissions and deliver better value for taxpayers in Europe.
What is the EU’s procurement directive review?
Public procurement rules set the framework for how public authorities across Europe purchase goods, services, and infrastructure once contracts pass EU-wide thresholds. The current directive dates back to 2014 and was designed to ensure transparency, fair competition, and value for public money. The European Commission is now reviewing it for the first time in a decade. A central question is whether sustainability will remain optional or become a standard requirement in tenders. This decision will shape how Europe spends its EUR 2 trillion in public money and how those choices support climate action, clean innovation, and opportunities for local economic development.
What has the current directive achieved, and where has it fallen short?
The 2014 directive increased transparency and pushed member states to apply procurement rules more consistently. These steps mattered, but they did not create a truly integrated European market. Nor did they make sustainability the norm, resulting in a missed opportunity to harness the power of the public purse.
Because the directive leaves green criteria optional, most authorities still award contracts to the cheapest bid rather than to the offer that delivers long-term value. Many buyers also report that the rules feel complex and hard to navigate, which discourages them from trying greener approaches.
What would a successful reform look like?
Reform is a chance to move beyond a focus on administrative processes only and see procurement as a strategic tool. With clearer rules, public spending could be used more deliberately to accelerate climate action, signal demand for sustainable goods and services, and reward innovation. Success would mean looking not just at the lowest upfront price but at value over time, whether buildings are more durable, energy bills are lower, pollution is reduced, and communities are healthier as a result.
Isn’t green procurement already allowed under the current directive?
Yes. The current rules permit sustainability criteria, but uptake remains limited. Requirements are spread across different EU policies, which makes them confusing for buyers, and their use remains optional and inconsistently applied across member states. Embedding clear and mandatory sustainability criteria in the directive itself — the main instrument procurers follow — would set a consistent baseline and help mainstream good practice.
Public spending could be used more deliberately to accelerate climate action, signal demand for sustainable goods and services, and reward innovation.
Would mandatory sustainability criteria make it more complicated for procurers?
Not if designed well. Today, optional criteria create legal uncertainty, and some buyers avoid them because they are voluntary. Mandatory requirements would instead provide clarity and consistency. To make them work in practice, governments should invest in training and enhancing the capacities of procurement and line departments, and in user-friendly tools such as e-procurement systems with standard criteria libraries. These resources simplify application and monitoring, making sustainability easier to implement.
What can we learn from EU countries that have moved fastest on green public procurement?
When governments make sustainability the default, more buyers will use it with confidence, and the market will respond to these incentives. In Italy, for example, national rules require environmental criteria for certain product groups, such as buildings and roads. This has raised awareness and made green requirements part of everyday practice.
Lithuania set ambitious targets for green spending, which pushed the share of tenders meeting sustainability criteria from just 5% in 2020 to more than 90% in 2023. The country is now building a system to measure real outcomes, such as emissions avoided, so progress is judged by impact rather than just contract numbers. The first Irish tender using the CO₂ Performance Ladder — a best practice tool for green public procurement — delivered a 21% emissions cut compared to a conventional approach, proof that the right criteria can drive measurable results.
Clear, mandatory rules give buyers and suppliers certainty. They make it worthwhile to invest in tools like e-procurement platforms and libraries of ready-made criteria, which simplify the job of drafting and monitoring tenders. Early adopters also show that engaging with markets matters. By following price and innovation trends, procurers can set specifications that are realistic and evaluate performance with confidence.
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What are the benefits of buying greener?
Considering the full life cycle of a purchase often delivers better value than simply choosing the lowest upfront price. This means examining energy use, maintenance, durability, and avoided pollution. Procurement should capture long-term value by counting avoided costs and additional benefits together with expenditure.
IISD research compared conventional public procurement in Canada with a scenario where governments applied green criteria to buildings. It found that by 2035, greener public buildings would use 6% less energy and emit 7% less, while costing 3% less to operate over their lifetime.
Considering the full life cycle of a purchase often delivers better value than simply choosing the lowest upfront price.
For Europe, analysis by Carbone 4 finds that making sustainability the norm in procurement could reduce related emissions by about 34 million tonnes of CO₂ each year. It could also channel an estimated EUR 86 billion annually into green industries and boost sales for European firms.
How can green public procurement support EU competitiveness and clean innovation?
Public procurement can do more than buying what is cheapest. It has the transformative power to stimulate innovation and competitiveness and to leverage public spending for strategic objectives. By rewarding performance, such as energy efficiency, durability, and lower emissions, governments create a reliable demand signal that encourages firms to invest in cleaner processes and products.
This matters for competitiveness. When European companies know that greener cement, steel, or construction methods will be valued in tenders, they are more likely to scale them up. Consistent green demand can, therefore, reduce emissions and at the same time help European producers secure an advantage in global markets that are also moving toward low-carbon solutions.
What’s next?
The European Commission will consult on reform options in fall 2025, with a proposal for a revised directive expected in 2026. This process is a chance to decide how Europe uses its EUR 2 trillion in public spending each year. By making sustainability a standard requirement, the directive could help governments focus on long-term value rather than lowest-cost bids, while also supporting climate action, healthier communities, competitiveness, and more resilient economies.
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This article was originally published by the International Institute for Sustainable Development (IISD) and is republished here as part of an editorial collaboration with the IISD. It was authored by Liesbeth Casier and Sofia Strömgård.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Cover Photo Credit: Bryan Low.
