Buying with Impact: The Oslo Way to Ethical City Procurement

0:03 Hello and welcome to Local Voices for Sustainability, the ECLA Europe Podcast. I'm your host, Laura Schubert. This month we'll be focusing on what sounds like a niche topic, but is responsible for 15% of the E US GDP public procurement. It may sound complicated at first, but we all make similar decisions as public buyers throughout our life.

0:25 Imagine you're buying eggs. Would you buy the cheapest ones, or some that are slightly more expensive that guarantee that the animals have been treated well? These are the kind of decisions people working in sustainable public procurement have to make. 15% of the E US GDP is a lot of money, giving public buyers a lot of potential to have an impact on wider policy goals. Public procurement can promote job opportunities for people with a distance to the labor market. Dr. companies to reduce the CO2 emissions of their products and services, promote gender equality, or make supply chains more ethical and transparent.

1:02 So finally, in our episode of this podcast, we are going to dive head first into the topic of public procurement. But because we're all about urban sustainability here, we'll be looking specifically at sustainable and socially responsible public procurement. As always, though, we want to hear about this topic from the perspective of one of our member cities. So I'm delighted to welcome our guests from the City of Oslo, Kirstie Cofeld, Senior Sustainability Advisor, and Espa Nikolaison, Head of Section for Sustainable Procurement. Kirstie Espen, welcome to the show. Thank you.

1:39 Thanks a lot to. Start things off. I'd like to keep things basic. Christie, tell us what is sustainable and socially responsible public procurement. That's a very good question, but I think it's important to remember that sustainable development is really at the heart of it, meaning that we are meeting the needs of the present without compromising the ability of future generations to meet their own needs. So when we talk about socially responsible public procurement, it's about public buyers, meaning us that we're looking beyond the price of products and services and that we also consider how they are produced, sourced and delivered. That means that we, as a public buyer can strategically deliver positive social outcomes such as

2:23 promoting employment opportunities, decent work, social inclusion, accessibility and compliance with both social and labor rights in Norway and worldwide, while at the same time delivering high quality social services and facilitating the access of social businesses to public tenders. So at the city level, how do you actually put sustainable and socially responsible public procurement into practice and what kind of benefits have you seen in Oslo because of it as been let's hear from you on this one.

2:56 Yeah, thanks a lot. So in the city of Oslo, we have been working with sustainable and socially responsible public procurement for more than 25 years. We started out by testing different qualification criterias, award criterias in contracts with the highest risks and we saw that we got good results from putting in minimum requirements, contract losses and using award criterias in these contracts. And even though these were good results in each of the contracts, this was not enough.

3:27 We saw that we could have a higher impact if we use the same type of criterias in all of the city's contracts. Because in the city Wales, we have what we call a decentralized organization, so that each of our fifty different agencies do their own procurements. And then we needed a way for all of them to demand the same things from our supplies so that we could use the entire force of the city's procurements to drive the market in the direction we wanted. So we had a great result in doing this in several different areas.

4:02 And the way we give rules for the entire city when it comes to public procurement is through city government decisions. So the first area where we got a city government decision was in the socially Responsible procurement area. This is what we now call the ASLA model. And the reason for getting the ASLA model in the 1st place were two things. One reason was the problems regarding social dumping and exploitation of the workers in the public construction sector, because we saw that there were many socially unsustainable suppliers on the contracts that were building our school kindergartens and so on.

4:41 And there were almost no skilled workers, no apprentices. And working in the construction sector was not popular due to all the negative publicity around this sector. And the second reason for the model was to do something about the violation of human rights in our supply chain. So since we first implemented the model, we have seen a big increase in skilled workers and apprentices in our city construction contracts. And the report from the authorities in Oslo says that the public construction sector is no longer that big a problem when it comes to social dumping and unsocially unresponsible suppliers.

5:24 So we believe that this have a big impact on this sector. A moment ago you said social dumping. I'm not familiar with that term. Could you just introduce it for us? Yeah, it means that the people working on our contract is paid below minimum wage. So we do not have minimum wage in Norway as such, but we have like agreements between the employee and employers organization that sets a standard in different sectors.

5:55 So this means that they're getting paid way less than they should be. That's what we call social dumping. OK. All right. So that's where the the social responsibility side of procurement really comes in here then. Yes. So as been touched on the Oslo model a moment ago, Kirsty, how do you apply the Oslo model across different sectors where you want to create a social impact and what do you think cities should keep in mind if they want to do something similar? Yeah.

6:23 As has been said, we believe that by using these standard social criteria in our procurements, we are able to move the market in the right direction. And when it comes to the ASLA model, we're using a specific risk based approach as to when the models contract clauses are applied. And as he said it was referring to that there are two different sets of criteria in the Osler model. You have the one work related crime and the second one is on human rights due diligence.

6:50 So as part of the Osler model, there are specific instructions as to when the different contract clauses should be used and then which type of procurements. So for instance, the contract clauses related to work related crime, they are mandatory to use in all procurements of constructions and cleaning with higher value than 500,000 which included. And this is because we know from experience that there's a high risk of work related crime in these sectors. Furthermore, when it comes to the due diligence contract clauses, these are mandatory to be used in all procurement where there's a high risk of violations of human rights and labor rights, where there might be a negative impact on the environment or risk of

7:29 corruption. So it's really the need to assess the bid by bid to see where's where's the risk and what kind of contract process should be used to really need mediate or yeah, lower the risk for these things to happen. Yeah. A few tips for the other cities. I think starting with a proper risk assessment, you should really look into your own procurements and see where is the highest risk for bad things happening and then you should focus your efforts there. We need to prioritize our efforts. The second one is that we shouldn't underestimate the power our allies.

8:05 So for instance, when the Oslo model was created there, we had strong backing from, for instance, the trade unions and civil society organizations that's strongly advocated for the city taking on a stronger and more focused role in using our purchasing power to create power positive change. And this is important to get political.

8:25 Well, right. It's the politicians that decide the politics we are running and that is really steering our our procurements. And do you know of any other cities that have applied or been directly inspired by the Oslo model? Well, we share our experiences a lot with different cities and I can come back to that later in terms of how we collaborate with different European and international actors. But for instance, the Swedes, they're different. They also have a very strong focus on social responsible public procurement in both the Swedish regions and also the other purchasing bodies there.

9:04 So it's definitely sort of inspired by, but they also develop their own things, I'd say. But yeah, we there are a lot of people reaching out to us and asking for us to share our experiences, at least as an inspiration. And then of course, you have to contextualize and you have to make sure it works in your own context. Countries and politics and cultures are different, so you need to adjust to your own context. Interesting.

9:29 Yeah, 2 two more things that I would like to say, which we've seen is important is that you do need to set aside enough resources to follow up on the contract clauses. Because if you just have sleeping contract clauses in the contract, it's then it's easy to just, well, you don't care about it, but but you really need to prioritize contract management.

9:50 And who? Sorry, just to clarify, who follows up on that sort of thing? Well, it like Espen said, the city of also has decentralized purchasing models. So it depends a little bit from agency to agency. So the department where we work, we have a specific section working on contract management and these are the ones that are responsible for the overall management and follow up of all the different contract clauses.

10:13 But my specific role and focus area is to support the contract managers on these specific due diligence clauses in the contracts where they are set. So I'm sort of a support role for them to be able to do their job in the best possible manner. The last point I would like to say, which I think is super important, is to implement the system for tracking results of your efforts. So for instance, the city of ASLA, we have our own system which is called HMS REC, which is really a system for registering who is working on our contracts on and this is related to work related crime.

10:54 So within cleaning and anything construction slated and that's a tool to track occupational health and safety and the other clauses that are related to work crime. So specifically that means the workers on our contracts have to check in when coming to a construction site and then we use the system in random checks and control to check safety and personal protective equipment, working hours, insurance, tax, etcetera. And one thing is that we are ensuring that our suppliers actually are doing what they have to according to our contracts.

11:25 But this is also important to track changes over time. So we know for instance, that the there's been an increase in the level of skilled workers on our construction sites and there's been an increase in the level of apprentices also on our construction sites. And by having such a system, we're able to showcase results of our efforts and work, which again is important to really underline the importance of having such a focus in our public.

11:55 And is that something that it feels like you want to be able to show to politicians, or is it something you want to be able to show those kind of results to the public? Like who do you feel the success is most important to see? But all of those scripts and stakeholders you mentioned, it's definitely important for our politicians to see results.

12:14 So that I mean, politicians are always eager to know that their money are being used in a good way. And for all the different stakeholders such as trade unions, businesses or whatever, it's important to really showcase that this is what comes out of having such a focused effort on these issues and it's also something which is gains interesting in media and communications.

12:37 I'd like to hear from both of you on this next one. How do you think the industry is responding to the Oslo model? Have you seen increased sustainability and social responsibility? As Ben, let's start with you. Yeah, as we said a couple of Times Now, for instance, the Oslo model consists of these two parts.

12:55 And I think I'll start with the part that goes to the work being done here in Norway and in this area. We can see that the supplier has welcomed these different requirements. The problem of not paying minimum wage, work related crime and so on was something that both the suppliers, the employees and the employers organization considered a big problem and wanted to do something about. And it was especially a big problem in the city of Oslo. So this problem of course created problems for recruitment to the sector and the socially unresponsible suppliers were winning competition on behalf of the more socially responsible suppliers.

13:43 So the competition was not fair because of course they could give better prices and so on if they were paying their employees less money than they should. So we worked closely both with the employer and employee organization when we drafted the requirements in the Oslo model. So we had meetings with them.

14:01 We talked about implementing this, what kind of contract clauses we wanted to put in. We have had a close relation with them when we worked with these requirements. So this was like working together. So great success, as we said, we've seen both an increase in skilled workers and apprentices to our construction sites.

14:26 The public work sector is no longer unlike the high risk for work related crime. This makes us believe that going in the right direction, still it's a problem. Of course it's impossible to get it all the way, but it's going in the right direction. We're still working close with the different lawyers and employee organization to adjust our requirements to see how can we do it better, do we need to put more emphasis on some areas than others and so on.

14:56 Christy, anything you'd like to add to that? Well, not necessarily on the work related crime, but I would like to add something on the due diligence requirements and how we follow up on violations of human rights and labor rights in our supply chains. So the feedback we get from our suppliers is that they overall applaud the city of Oslova having such a strong focus on labor rights and human rights and our supply chains. And what they're specifically commenting is that this creates a level playing field and that is definitely something which is appreciated.

15:28 Furthermore, what they tell us is that having the due diligence requirements in all our high risk contracts contributes to a positive development towards more responsible business conduct in the supply chains overall. For instance, we recently did an office audit of one of our main suppliers of fruit and vegetable and this was definitely one of their main feedback on the whole process.

15:51 As such that it makes it easier for them to work with their suppliers and sub suppliers and require responsible business conduct from their end. When they can point to us as a customer requiring it right. So they can point to the city telling them that the you need to have this in order and and that makes it easier for them to push it further on.

16:15 Yeah, they've got that support behind them. Yeah, lots. And, and I think that's also what, what many of these sustainability advisors working in these suppliers that we have is that they also use us as a leverage to have a stronger focus on sustainability and push it towards their own CE OS and leadership to increase the focus on sustainability and responsible business conduct.

16:38 And then this second thing, which is definitely where we see a shift over the years is that after we introduced the due diligence requirement that there's a greater willingness to share information about traceability or transparency issues in general, but also if there are specific challenges in their supply chains so that they share this information spontaneously without us having asked for it.

17:04 And I think that is definitely something that we didn't see some years ago. Then it was more of a no, no, everything is fine in our supply chain. And that has definitely shifted now that we have a more focus on the process. How do you as a supplier work to avoid having these violations in your supply chain?

17:24 What kind of measures do you implement to mitigate the risk of having violations? And that sort of more process based approach to working on human rights and labor rights in supply chain means that our suppliers have a greater willingness to share information. And that creates a space and room of maneuver for us to having a positive dialogue with our suppliers on what kind of changes can be made to actually improve the situations in the global supply chains. So that is, that's great.

17:54 Illuminating, Interesting. OK. I think it's also important to shine a light on those initiatives or those efforts that were less successful, those initiatives that just couldn't get off the ground. Kristy, can you give us an example of one of those procurement initiatives? One of the things that I've been thinking myself is the in a few of our contracts we have a specific contract clause on social dialogue.

18:19 And that we have tested with a few of our suppliers and where we really wanted to encourage them to implement specific systems and tools for social dialogue. And the focus area was really on training of workers in factories. It's an extremely important topic and tool because we need to ensure that the workers are aware of the rights and aware of what are the room of maneuver to ask for higher payment or generally ensure that they have proper occupational health and safety measures in place.

18:54 I think what we missed a bit when we implemented that specific contract laws and social dialogue in some of the contracts was that many of our suppliers, they are, they don't necessarily have their own factories, right? So it's quite hard and maybe not even possible to really have that direct influence. And what kind of training do factory workers actually get in the faraway factory in China, for instance? I guess we sort of underestimated that having such a specific content of that contract clause would make it very difficult for our suppliers actually to be able to fulfill the contract clause.

19:33 If I can add, not a specific contract, but in general in this area we wanted to want to achieve much things. We're always trying to have contract clauses or minimum requirements and so on that we want our suppliers to follow up in the contract. But as Justice said, we also need to follow up on those contract clauses.

19:56 And I think we've been better at putting in the contract clauses than following the market. So it's important not only to set the minimum requirements to also have the resources to actually make sure that you get the deliveries that the suppliers have promised. Yeah. Something to work towards then. Yeah, something.

20:16 To work towards. So we're going to change pace a bit. Now we've arrived at the second-half of our show, which we call Hot Takes. I'm going to ask you some questions and I'm looking for a brief instinctual response. Are you ready? Yes. Yes. OK, Christy, let's start with you. When does Oslo aim to become climate neutral?

20:37 By 2030, no. 2030, yeah. 20-30 OK, yeah. 95% by 2030, yeah. Nice. OK, this next one's also for you. Oslo is the most sustainable Nordic capital city. True or false? I don't know. What do you think? What do I think? Yeah, it's, it's definitely high up there. I'd say yeah. Nice. All right, Espen, this one's for you. What percentage of Oslo's tenders are sustainable or less? I would say almost all of them in some way. I can say why because I would get back to that on a different question.

21:23 But for instance, we're asking for 0 emission delivery of goods and services. And that is something that we do in all of our contracts in the city. Nice, Christy, this next one's for you. In which product category, industry or sector will Oslo make the next big push for sustainable public procurement?

21:43 Right now we're working hard in ICT. ICT OK. Yep, and that is definitely it's a good combination of both working on circular economy and that, but also a lot on human rights and workers rights. Yep, if I could add another area, it's sustainable materials in the construction sector. OK, Christy, this one's for you.

22:06 In the long term, sustainable public procurement is cheaper than traditional public procurement that awards contracts based on lowest price. True or false? OK, that was quick. That was easy as been. Do you believe that Oslo has benefited from European collaboration, specifically in regards to public procurement?

22:27 Yes, of course, both in learning from other people's experience also because what we do in Oslo has can push the market in direction, but we need the full force of the European Union to really push the market. Yeah. If I could just add to that question on what would benefit from the European collaboration. We've been part of the big buyers working together, for instance, as an example of this kind of collaboration and we've been part of that since 2019.

22:55 Right now we participate in three different communities of practice. It's on socially responsible public procurement, on heavy duty electrical vehicles and also 0 emission construction sites. All of these groups aim to find joint solutions to move the market through market dialogue, collaboration of criteria, study visits and strategic work. And this is definitely a good example of how the city of Oslo benefits from European collaboration. OK, so it sounds like it's been a nice benefit. All right, as been this next one's for you as well. If Oslo were to host an event on the future of sustainable and socially responsible public procurement, what would be the main topic?

23:34 You can give me a couple if you can't pick. Yeah, I think that couple of them, the social aspect of sustainability and circular economy, how to take more circular choices where we can both save money and push the market and more sustainable direction. Nice. Kirsty, this last one's for you. Can you give me one final tip to E Clay members on how they can make their city more sustainable?

24:01 You need the city or these the procurements more sustainable. Procurement. You're the expert, let's say. Well, I the final tip would be to really dig into the sector. What's the main challenge you see? Put that into the contract laws and follow up on the contract laws. Very clear guidance. Nice. And that's it.

24:23 We've made it to the end of our show. Kirstie Espen, thank you for joining us and shining a light on the procurement topic, particularly from the sustainable and socially responsible perspective. It's been great having you with us. Thank you. Thanks. Listeners, if you'd like to learn more on today's topic, I invite you to check out some of the informative links in our show notes. Thanks for joining us today.

24:44 We'll be taking a brief break over the summer, but we'll be back in September, so until next time.