What are Procurement Compacts?
These Compacts are a new idea, borne of the need to make more rapid progress to de-carbonise the day to day operations of business and public service, and a degree of frustration that the goods and services needed to achieve this are not available on the market, are too expensive, or unsuitable.
Their aim is two-fold, to:
- send a ‘direction of travel’ message to suppliers from some of their major public and private sector customers that there is a credible market demand for low to zero carbon goods and services; and
- initiate a dialogue with the supply chain and other stakeholders on how carbon emissions resulting from manufacture, supply and operation of the products and services we buy can be progressively reduced.
What difference do Procurement Compacts make?
These Procurement Compacts are a statement of commitment of public and private sector customers to buy progressively lower carbon goods and services providing they meet operational needs and can be delivered cost effectively, based on whole life costs.
The compacts provide a means to bring together and make visible a previously fragmented demand for lower carbon goods and services in a way that provides a strong and credible ‘direction of travel’ message to suppliers from some of their major customers, thus stimulating providers to align their supply chains to low to zero carbon objectives.
Why are these customers signing up to low to zero carbon Procurement Compacts?
The signatories of these Procurement Compacts all have a strong commitment to reducing their carbon footprint. To do so they need access to purchase ever lower carbon goods and services.
As major customers, and by acting together, the signatories of these Compacts wish to demonstrate to potential suppliers that there is a credible and organised market demand for low to zero carbon goods and services.
There is a common ‘Catch-22’ that hampers the commercialisation of low carbon technologies: mitigating climate change requires new goods and services that are not yet commercially available or only available at excessive cost; because they are not available, customers don’t ask for them; and because there is no demand, companies who try to innovate don’t have grounds for new investment.
As a result, low carbon goods and services struggle to reach the market and customers have few options available to them.
That is why The Prince of Wales’s Corporate Leaders Group and BIS have joined forces to address this stalemate by harnessing customer demand to spur investment in urgently needed new, ‘low to zero carbon’ solutions through the use of joint public–private procurement compacts.
What do Procurement Compacts mean to me as a supplier?
These Procurement Compacts are sending out a clear message to suppliers that lower carbon goods and services have a competitive advantage.
They provide a clear 'direction of travel' message so that you have the time and opportunity to align your supply chains to deliver progressively lower carbon goods and services.
They give suppliers the opportunity to differentiate their offering on the basis of environmental credentials that are valued by the buyer, and represent a forward commitment by customers for low carbon alternatives.
The market engagement process initiated by the launch of these Procurement Compacts provides an opportunity to hear from customers about their current and future needs and to help define the future for low carbon catering, transport and energy.