European industry plays a significant role in ensuring economic prosperity and maintaining social cohesion across EU Member States.
The second term of the Von der Leyen Commission is reaffirming the political and developmental goals established by the Green Deal, with a renewed strategy to boost competitiveness outlined in the Clean Industrial Deal.
What incentives exist to support businesses in their decarbonisation efforts, and what measures can go beyond traditional approaches? Among these is the development of so-called lead markets, markets for ‘green’ products, which are a key element in policies aimed at building a business case for the most innovative and sustainable products.
In this regard, selection criteria for public procurement based on environmental and social criteria can act as a catalyst for creating domestic demand for environmentally friendly production. Innovative and sustainable production would therefore benefit from greater certainty regarding return on investments.
Every year, more than 250,000 public authorities in Europe spend around 2 trillion euros – equivalent to over 14% of the EU’s GDP – on the procurement of goods, services and works. In this context, the transformative potential of Green Public Procurement (GPP) is immense. In the construction materials sector alone, it is estimated that over 13 billion euros are spent annually. In Italy, in 2023, the total value of public procurement worth 40,000 euros or more reached 283,4 billion euros.
Although the current Directive allows contracts to be awarded based on the best value for money, thus including environmental and social criteria, more than 55% of tenders in Europe continue to be awarded solely based on the lowest price. This approach hinders the adoption of innovative and environmentally friendly solutions, limiting the integration of social criteria and the promotion of European production. Italy, however, has already taken an ambitious step by mandating Minimum Environmental Criteria (MEC) in many sectors through the Public Procurement Code (Legislative Decree 50/2016 and amendments). This puts Italy at the forefront in Europe but also reveals practical challenges that limit its effectiveness, including a lack of training for contracting authorities, high administrative burdens, and limited availability of operational tools and monitoring data.
The purchasing decisions of public administrations can encourage innovation in clean technologies by providing access to economies of scale even for small enterprises and start-ups, and by acting as a driver for growing demand for products compatible with climate objectives, including in private markets.
The forthcoming revision of the EU Public Procurement Directive (2014/24/EU), expected by 2026 and highlighted in the Clean Industrial Deal, represents an important opportunity. Through this revision, the Commission aims to strengthen the sustainability, resilience and strategic autonomy of European public procurement, positioning it as a key tool for achieving the EU’s industrial and climate objectives. A first step was taken with the public consultation launched at the end of 2024, in which ECCO participated, aimed at gathering evidence and feedback on the performance of the current regulatory framework, and highlighting the need to:
- define incremental GPP criteria based on existing legislation and requirements that are coherent at the European level (for example by adopting VSME standards), in line with the principle of effectiveness in achieving the set objectives;
- facilitate access to tenders for all entities, including Small and Medium-sized Enterprises (SMEs), by standardising and digitalising procedures, in line with the principle of proportionality between the effectiveness and relevance of the measures;
- ensure monitoring and reporting of GPP implementation to enable the assessment of benefits for businesses and regions;
- support public authorities, particularly in the most geographically disadvantaged areas, in effectively implementing GPP.
Incremental GPP criteria – simplification and interoperability
Public procurement criteria should be aligned with existing European regulatory frameworks, including the EU Taxonomy, the Energy Performance of Buildings Directive (EPBD) and the new Ecodesign for Sustainable Products Regulation (ESPR). This requires adopting interoperable methods for calculating CO₂ emissions. Tools such as Environmental Product Declarations (EPDs) – based on Life Cycle Assessments (LCA) and required in some tenders – are complex and not always comparable with standard reporting frameworks. As a result, implementation across Member States is often fragmented and inconsistent, potentially placing an additional administrative burden on businesses.
Conversely, starting by identifying the most emission-intensive phases of the production cycle and the impact of those emissions on the final product would allow for the setting of incremental carbon footprint standards that are both relevant and effective.
In the case of construction materials – a sector in which the national public sector spent around 48 billion euros in 2019 – the most emission-intensive phase is production, which mainly generates scope 1 emissions. For cement, for example, this phase accounts for about 80% of total emissions (Figure 1). These emissions are already subject to annual monitoring and reporting under existing European obligations, such as the EU ETS. Therefore, setting standards based on these reporting frameworks would not create additional administrative burdens for businesses, which could trace suppliers within their value chains and identify the corresponding carbon footprint levels for reference.
If public procurement were systematically based on clear and well-enforced environmental criteria, the most sustainable European products would be prioritised in tenders, helping to strengthen the competitiveness of EU industries. The adoption of harmonised criteria at the European level – even if initially applied to only a portion of emissions, for example 80% – would represent a decisive step in the right direction.
Figure 1 – 76% of cement emissions are already monitored, verified by accredited auditors and publicly reported (scope 1 – EU ETS). Scope 1 refers to direct emissions from production processes and fuel use on site. Scope 2 covers indirect emissions related to the consumption of purchased electricity. Scope 3 includes all other indirect emissions along the value chain, such as those associated with suppliers, transport or the end use of products.
It is also essential to promote the digitalisation of procedures and ensure that benchmarks are based on interoperable systems and standards. This would allow businesses to submit the required documentation only once within a common European system, simplifying access especially for SMEs and easing the evaluation process for authorities, particularly those with fewer resources.
SMEs and GPP: inclusion, transparency and sustainability
SMEs are a vital component of Europe’s productive fabric; in Italy alone, they represent 99% of all businesses. Although EU directives aim to facilitate their access to public procurement, their participation continues to be hindered by numerous barriers. In many Member States, including Italy, the main challenges relate to the size of the tenders and the limited application of the principle of dividing contracts into lots, as well as a general lack of transparency in evaluation criteria. Moreover, the absence of a digital system allowing tender participation across Europe under the same criteria makes it particularly difficult for small producers, often without dedicated staff, to take part.
A concrete opportunity in this regard is the introduction of the VSME standards (Voluntary Sustainability Reporting Standards for SMEs), published by EFRAG in December 2024. These are voluntary reporting standards designed for SMEs not subject to the CSRD, offering a simplified yet consistent framework aligned with European sustainability regulations. The VSME standards provide two levels of reporting (basic and comprehensive), avoiding the need for complex analyses such as double materiality, while still enabling companies to communicate their ESG performance in a transparent and standardised way.
The adoption of these standards as a reference in tender procedures could enable greater SME participation in sustainable procurement, without compromising accessibility. Furthermore, integrating measurable environmental criteria, such as emission thresholds aligned with those set out in the Taxonomy, would make the inclusion or exclusion of economic operators more objective and transparent.
To strengthen the role of SMEs in public procurement, it is necessary both to revise how tenders are structured and ensure the effective application of principles established by the directives; and to promote a system of environmental and social criteria that is coherent, measurable and accessible even for smaller businesses. Only in this way will it be possible to combine inclusion, innovation and sustainability within Europe’s transition strategy.
Monitoring, transparency and support for public authorities
It is essential to adopt a strategy that combines monitoring, transparency and operational support for public administrations.
Currently, only three EU Member States – Malta, Finland and Germany – systematically monitor GPP implementation, making it difficult to accurately assess the environmental impact of public tenders and their economic impact on businesses. In this context, introducing a standardised and mandatory reporting system at the European level would improve data quality, making it comparable across countries and accessible to all stakeholders involved. A centralised digital platform to record environmental criteria applied in public procurement could increase transparency and facilitate monitoring, helping to make the tender process more reliable, harmonised and effective.
Alongside transparency, it is essential to support public administrations in adopting environmental criteria. Establishing common criteria would help to reduce regulatory fragmentation, facilitating the work of contracting authorities and improving access for businesses, especially SMEs. However, operational tools, training and dedicated resources are also necessary. European funds, such as the Cohesion Fund and the European Regional Development Fund, can play a decisive role in this process by supporting public authorities in adopting sustainable procurement practices and building internal expertise. Finally, to ensure an effective and credible transition, investment is needed in training procurement authorities, equipping them with appropriate tools, and establishing a transparent and systematic monitoring system. Only then can GPP become a concrete lever for industrial decarbonisation and the revival of a clean, innovative and competitive European manufacturing sector.
Buy Better Build Better Coalition
Evidence that applying environmental criteria to public spending through GPP can drive positive change among European companies is exemplified by initiatives such as the Buy Better Build Better coalition. Launched at the European Parliament on 21 May, this coalition brings together 35 industrial and civil society stakeholders calling for a revision of public procurement directives to make GPP the default approach in Europe’s construction sector.
Through its manifesto, BBBB highlights how European producers of decarbonised cement and steel are already advocating for the implementation of an ambitious and harmonised GPP across Europe. Their key recommendations include:
- simpler procurement with harmonised, sector-specific GPP criteria to boost demand for low-carbon and circular construction solutions;
- a stronger internal market through coherent and horizontal procurement rules beyond lowest price;
- simpler and standardised EU-wide tracking of GPP;
- continued support for public authorities in implementing GPP effectively.
Photo by CHUTTERSNAP
