Why governments need to adopt standards for procurement

Leveraging international standards in government procurement for sustainable development

In today's interconnected world, governments play a crucial role in shaping regulations and the economic, social, and environmental landscapes of their countries. As the largest consumers of goods and services within their economies, governments have the power to influence market dynamics and set standards for ethical, sustainable, and quality procurement practices. By adopting international standards, such as those set by the International Organization for Standardization (ISO), of which there are 172 country signatories representing national standards bodies, governments can align their procurement processes with global best practices and lead the way in promoting responsible business conduct by embedding the principles of global standards and interconnected landscape of supply chains.

This article explores the reasons why governments should integrate international standards into their procurement strategies, leveraging standards across various sectors to promote ethical sourcing, sustainability, and efficiency.

Supporting global and national Sustainable Development Goals

The United Nations Sustainable Development Goals (UNSDGs) provide a framework for addressing global challenges such as poverty, inequality, life on land and below water, and responsible consumption. By adhering to international standards in procurement, governments can contribute to the achievement of these goals by promoting sustainable practices, environmental responsibility, ethical business conduct, social responsibility and community engagement within their supply chains. For example, implementing ISO 14000 Environmental Management can cover twelve UNSGD [1,2,3,4,6,7,8,9,12,13,14,15], ISO 45001 for OHS can give you seven UNSDG [3,5,8,9,10,11,16], ISO9001 Quality Management can give you four UNSDG [1,9,12,14]. These three standards represent three of the most used business standards in the world. Companies with certifications to these three standards will achieve 16 out of 17 UNSDGs.

Other examples of mapping UNSDGs against standards are listed below.

1. No Poverty – IS0 20400 Sustainable Procurement, ISO 37001 Antibribery

7. Affordable and Clean Energy – 200 Standards cover this topic, ISO50001 Energy Management, ISO52000 Energy Performance, ISO9806 Solar Energy

12. Responsible Consumption and Production – ISO 204000 Sustainable Procurement, ISO52000 Environmental labelling, ISO15392 Sustainable Construction, PAS 7000 Supply Chain Pre-qualification

13. Climate Action – ISO14000 Environmental Management, ISO14064 GHG Emissions, ISO14067 Carbon Footprint, ISO14080 Climate Change, ISO32210 Sustainable Finance, BSI Flex 701 Natural Capital Specification

These are a few examples of using standards to map your UNSDGs and put your business on autopilot by adopting these principles into your company’s policy, guidelines, work instructions, and procurement practices.¹

Encouraging best practices and regulatory support

Rather than imposing complex regulations, governments can use international standards to foster best practices across specific industries, and sectors and enable regulations. Standards set clear expectations for quality, safety, and sustainability, encouraging innovation and efficiency without stifling business growth. This approach supports regulatory compliance and promotes a level playing field among suppliers, ensuring that goods and services procured meet high standards of integrity and reliability.

Mitigating risks and ensuring long-term sustainability

The pursuit of the lowest cost in procurement can lead to unintended consequences such as poor product quality, labor exploitation, and environmental degradation. International standards mitigate these risks by promoting transparency, accountability, and responsible sourcing practices throughout supply chains. Governments that prioritize standards-based procurement reduce reputational risks and build resilient economies capable of withstanding global challenges. It also fosters a culture of continuous improvement and innovation within the industry and ensures that societal values are fully costed into supply chains.

Benefits of adopting international standards

The adoption of international standards in government procurement offers a host of benefits for society, businesses, and the environment. By prioritizing quality, sustainability, and ethical practices in their procurement processes, governments can:

• Ensure the well-being of workers and communities involved in workforce.
• Minimize environmental impact and promote responsible resource management.
• Enhance the quality and safety of products and services acquired by the government.
• Promote innovation and competitiveness within the industry.
• Build trust and credibility with stakeholders and the public.

The ISO story

In London, in 1946, 65 delegates from 25 countries met to discuss the future of international standardization. In 1947, ISO officially came into existence with 67 technical committees focusing on a specific expertise. Today there are 172 countries, 840 technical committees, and 25,495 international standards in the ISO.²

Soft power of standards and global integration

In today's globalized economy, standardization serves as a catalyst for seamless integration across borders. Leading industrial powers, exemplified historically by the British Empire and presently by initiatives like China's Belt and Road, demonstrate the strategic advantage of setting international standards. By aligning with ISO frameworks and collaborating with 172 member countries, governments can facilitate global connectivity and sustainable development of roads, ports, pipelines, transport, manufacturing, services, and trade. However, these ISO memberships have no value if government procurement and policy do not engage locally and nationally with ISO standards.

In a more interconnected world, standardization becomes increasingly important for fostering cooperation, innovation, reducing cost, rework, emission, carbon footprint, and resilience in the face of global challenges. Critical global issues need global solutions and this is where ISO and its 172 members can play a crucial role in harmonization.

Unintended consequences of incorrect standardization

In the global economy, the absence of international standards can create challenges in trade, hindering efficiency, transparency, and sustainability. Incorrect standardization can lead to unintended consequences that impact various sectors, such as:

1. Quality issues:
   1. Food safety: Without harmonized standards, food safety associated with chemical, biological and physical hazards can be compromised, leading to health hazards.
   2. Pharmaceutical industry: Varying quality assurance processes can affect medication reliability, treatment outcomes, and patient safety.
   3. Automotive sector: Differing quality and safety standards can create problems with auto parts, supply chains assemblies, trade barriers, and consumer trust.
2. Technical barriers to trade:
   1. Electronics industry: Divergent technical standards can impede market access due to incompatible technologies and standards.
   2. Medical devices: Varied regulations and standards will hinder global distribution of healthcare products, regulatory approvals, and market access.
   3. Renewable energy sector: Lack of standards requirements for renewable energy technologies, such as solar panels or wind turbines, energy efficiency, grid compatibility, and installation practices can hinder the deployment of renewable energy solutions.
3. Supply chain complexity:
   1. Textile industry: Lack of standardized practices and guidelines for raw materials, dyes, environment, ethical sourcing, production processes, and supply chain transparency will compromise supply chain integrity.
   2. Electronics manufacturing: Absence of standard processes and guidelines for component sourcing, product specification, and supply chain management, will affect product quality, reliability, and compliance with regulations.
   3. Agricultural sector: Absence of standards will impact sustainable farming practices, product labelling, chemical residues, biodiversity, deforestation, soil degradation, unethical labor practices, and traceability.
4. Lack of interoperability:
   1. Information technology: Without interoperability standards, data formats and communication protocols, collaboration, innovation, and scalability of the digital economy and IT solutions will be impacted.
   2. Logistics and transportation: Lack of standardized protocols for customs procedures, freight documentation, and transport infrastructure, will result in challenges in streamlining logistics operations and supply chain management.
   3. Healthcare services: Interoperability standards, data formats, and security protocols can secure data exchange.
5. Environmental and social impacts:
   1. Deforestation and supply chains: Failure to incorporate environmental considerations can lead to ecosystem destruction.
   2. Water pollution: Inadequate standards can result in harmful pollutants affecting water bodies.
   3. Labor rights violations: Insufficient social considerations can lead to labor rights abuses in supply chains.
   4. Sovereign wealth funds: Not considering environmental and social impacts can lead to unethical investments harming the environment and society.

These examples highlight how non-standardization impedes connectivity, sustainable and ethical economic development, and cross-border trade. Standardization is crucial to promote sustainable infrastructure development globally.

Standardization in daily life: Successes and failures

Standardization plays a crucial role in modern society, promoting interoperability, efficiency, and innovation. By establishing common frameworks and protocols, it fosters collaboration, reduces complexity, and enhances user experiences. Here are examples of how standardization aligns understanding of regulation across different contexts:

1. Traffic signs and signals: Standardized traffic signs and signals ensure consistency in traffic management and enhance road safety.
2. Food labels and packaging: Standardized food labelling provides nutritional information, consumer choice and promotes food safety.
3. Time zones and coordinated universal time (UTC): Standardized time zones facilitate global coordination and scheduling.
4. Medical terminology and codes: Standardized medical terminology enhances communication among healthcare professionals and improves patient care.
5. Public transportation systems: Standardized systems streamline travel for passengers and enhance the commuter experience.
6. Internet protocols (IP): Standardized IP protocols enable seamless data exchange across the internet.
7. Metric system: Widely adopted, the metric system simplifies measurements worldwide.
8. Shipping containers: The adoption of ISO standards for shipping containers, such as the ubiquitous TEU (Twenty-foot equivalent unit), has enabled seamless intramodality by providing a common framework for container sizes, shapes, and handling procedures.
9. Credit cards: The standardization of credit card formats, security protocols, and payment networks has paved the way for financial transactions across borders. Consumers can now use their credit cards with confidence in virtually any country, thanks to standardized processes that ensure security, interoperability, and ease of use.

Failures in standardization:

1. Plugs, sockets and power adaptors: The lack of a universal standard for plugs, sockets, phone charges, and electronic appliances complicates trade, supply chains, and electrical engineering, leading to inconvenience, added manufacturing cost, and complexities for users.
2. Keyboard layouts: Lack of a universal standard for keyboard layouts causes inefficiencies for users.
3. Clothing sizes: Inconsistent sizing standards in the fashion industry lead to challenges for consumers in finding the right fit.
4. Paper sizes: Variations in paper dimensions persist, causing compatibility issues in printing and document handling.
5. Video cassettes: Incompatible formats like VHS and Betamax led to consumer confusion and fragmented markets.
6. Carbon markets: The failure of international standards in carbon markets undermines their effectiveness and credibility, hindering real and sustainable emissions reductions. Addressing these challenges requires the establishment of clear and stringent international standards that ensure transparency, accuracy, and environmental integrity in emissions trading, aligning with global climate goals while promoting sustainable development. The Integrity Council for the Voluntary Carbon Market’s (ICVCM) Core Carbon Principles represent a step in the right direction.
7. Railway gauges: Inconsistent railway gauges hamper cross-border transportation and trade, leading to delays, increased costs, and inefficiencies.
8. Energy infrastructure in Europe: Diverse energy standards hinder the integration of renewable energy markets, limiting cross-border cooperation and trade.
9. Ports in Southeast Asia: Varied port infrastructure and processes cause bottlenecks, delays, and environmental harm, impacting trade competitiveness.
10. Air traffic management in North America: Inconsistent air traffic systems result in congestion, flight delays, increased costs, emissions, and safety concerns.

Governments can leverage their significant purchasing power to drive positive outcomes for their economies, society, and the environment by adopting international standards in procurement and supply chain practices. Here are some key advantages:

1. Promotes fair competition:
   1. Establishes a level playing field for suppliers based on quality and compliance.
   2. Increases transparency in procurement processes to reduce bias.
2. Improves quality and performance:
   1. Sets benchmarks for quality, safety, and reliability.
   2. Mitigates risks associated with substandard products or services.
3. Enhances efficiency and effectiveness:
   1. Simplifies procurement processes and promotes interoperability.
   2. Saves time and resources for government agencies and suppliers.
4. Drives innovation and sustainability:
   1. Encourages suppliers to innovate and supports sustainability goals.
   2. Promotes technological advancements and competitiveness.
5. Reduces costs and ensures value for money:
   1. Benefits from economies of scale and bulk purchasing discounts.
   2. Ensures quality assurance and reduces additional costs.
6. Facilitates market access and trade:
   1. Helps governments comply with trade agreements and international obligations.
7. Environmental sustainability:
   1. Prioritizes eco-friendly products and services in procurement decisions.
   2. Contributes to resource conservation and mitigates climate change.
8. Human rights and social responsibility:
   1. Guides ethical sourcing and promotes transparency in the supply chain.
   2. Upholds fair labor standards and social responsibility.
9. Innovation and competitiveness:
   1. Drives innovation and enhances operational efficiency.
   2. Facilitates market access for domestic suppliers.
10. Risk management and compliance:
    1. Helps governments mitigate risks related to non-compliance with regulations.
    2. Enhances supply chain resilience and enables implementation of regulations.
11. Public trust and accountability:
    1. Fosters transparency, accountability, and good governance.
    2. Demonstrates commitment to social responsibility and stakeholder engagement.

In summary, the adoption of international standards in government procurement and supply chain practices can yield significant economic, social, and environmental benefits by promoting quality assurance, environmental sustainability, human rights protection, innovation, and responsible business practices. By embracing these standards as guiding principles in their operations, governments can lead by example, achieve broader policy objectives that benefit society, drive positive change, and contribute to a more sustainable and ethical global economy. Government can achieve this by ensuring expert advice and engaging their national standards bodies for support and bridging the gaps where needed.

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[1] More information can be found on ISO’s UN SDG webpages and https://www.iso.org/publication/PUB100429.html
[2] https://www.iso.org/about

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