Summary
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Details
Deep dive
Background
The Environmentally Sustainable Procurement (ESP) Policy is a whole-of-government initiative aimed at embedding climate and environmental considerations into Australian Government purchasing decisions. Led by the Department of Climate Change, Energy, the Environment and Water (DCCEEW) in partnership with the Department of Finance, the policy is a key part of the Commonwealth’s Net Zero in Government Operations strategy, supporting the transition to a circular economy and a net zero future. While environmental factors have long been encouraged under the Commonwealth Procurement Rules (CPRs), the ESP Policy represents the first time emissions reporting and sustainability outcomes are formally and progressively integrated into mandatory procurement practices.
Reporting Requirements
The ESP Policy introduces a structured reporting framework to track and evaluate the environmental outcomes of certain Commonwealth procurements. As outlined in the ESP Policy Reporting Framework, suppliers involved in covered procurement categories may be required to provide data on the greenhouse gas emissions, recycled content, product durability, and end-of-life outcomes of their goods or services. These environmental performance indicators must be documented using templates and guidance provided by DCCEEW, and submitted as part of the contract reporting or post-contract evaluation process. This reporting enables the government to establish a baseline of environmental impacts across key sectors and helps inform future policy decisions, including more ambitious targets for low-emission procurement.
Who It Applies To: Phased Implementation Across Sectors
The ESP Policy is being introduced in phases, starting with selected high-impact procurement categories. From 1 July 2024, it applies to construction services procurements valued at $7.5 million or more (including Goods and Services Tax). From 1 July 2025, the scope expands to cover procurements of furniture, ICT goods, textiles, and clothing valued at $1 million or more. Commonwealth entities undertaking procurements in these categories must apply ESP policy principles and reporting requirements as part of the tendering and evaluation process. Suppliers bidding for eligible contracts are expected to align their offers with the environmental expectations and reporting obligations set out in the policy guidance.
Compliance and Accountability
While the ESP Policy is not backed by legal penalties, it is implemented through updates to the Commonwealth Procurement Framework and enforced through internal compliance monitoring and reporting. Commonwealth entities are expected to demonstrate that they have applied the ESP Policy in eligible procurements, with oversight from the Department of Finance and DCCEEW. Inconsistent application or failure to consider environmental criteria may be identified through procurement audits or internal performance reviews. As public scrutiny and stakeholder expectations around climate action grow, the policy plays a vital role in ensuring government purchasing power is used to drive decarbonization, reduce waste, and promote sustainable market transformation.
