Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Sri Lanka based on a desk review. It applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective SusPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
  
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
  
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.
  

The Factsheet is intended to be a living document that will be revised and improved as new information is uncovered and advances are made. It is designed to support the ADB training programs on SusPP.

Public procurement accounts for about US$ 4 billion or 24% of total government spending and 6.3% of GDP in Sri Lanka. The Government has prioritized sustainable and green public procurement as key targets in national policies on climate change and energy.

The 2006 Procurement Guidelines and Manual open the door for SusPP by allowing life-cycle costing considerations. A 2018 update proposed a mandatory requirement for all Government authorities to buy green. However this has never been formally adopted. A draft Green Public Procurement Policy was also developed in 2022, but also does not appear to have been formally adopted. Meanwhile, the Government clearly endorses the granting of preference for domestic suppliers in procurement contracts especially in the IT and construction sectors.

Sri Lanka, an island of 65,610 sq. km, on the Southern tip of the Indian sub-continent, has high topographical, geological, and eco-climatic diversity. This diversity, along with the ever increasing frequency of extreme weather events, pose challenges in managing the environmental and climate impacts of construction and infrastructure projects.. However, income disparities and gender inequality remain key social issues, with about 50% of its urban population living in slums. The country has a substantial number of internally displaced persons (IDPs) and refugees.

Greening of construction activities is a priority. Such activities contribute about 40% of total solid waste volume. Illegal dumping of construction waste in sensitive ecosystems is causing severe impacts. Illegal sand mining, logging, stone quarrying and other environmentally damaging sourcing practices of building materials remain major concerns in Sri Lanka. .

>> Snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Early-Intermediate Stage

Key Achievements

• SusPP is prioritized as key target in national policies on climate change, energy and sustainable consumption and production
  
• Draft Green Public Procurement Policy drafted (not formally adopted) that prioritizes recyclable and recycled content goods and preferences for local suppliers.
• 2020 Policy promotes preferences for local suppliers in IT and construction projects and requires sourcing of local materials for 18 building materials
• Domestic market appears ready to deliver sustainable building materials and low-carbon vehicle fuels.
• National ecolabels and green building standards exist in the country

Potential pathways forward

• Pilot the integration of sustainability criteria in ABD-financed procurements, guided by the Green Infrastructure Guide and other available national standards and guides
  
• Launch awareness raising campaigns on the benefits of SusPP and linkages to national environmental and social goals
• Support adoption and implementation of the draft Green Public Procurement Policy
  
• Support procurement law reform to explicitly promote sustainable procurement
  
• Create training opportunities and guides and support pilot sustainable procurements
• Develop monitoring framework and system to track SusPP

>> Timeline of Implementation of Sustainable Procurement Activities

2006

2011

2016

2018

2019

2020

2021

2022

Government Procurement Guidelines adopted allowing life-cycle costing and domestic preferences

Sustainable Housing and Construction Roadmap 2020-2050 prioritizes carbon neutral construction

National Climate Change Policy promotes sustainable consumption and production

National Procurement Commission created

Green Public Procurement integrated into revised Procurement Manuals

National Policy on Sustainable Consumption and Production promotes SusPP

National Energy Policy set target to introduce energy efficient public procurement

draft National Policy on Green Procurement developed (status unknown)

National Framework for Ecolabelling validated

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Sri Lanka first promoted the concept of Sustainable Consumption and Production with the 2012 adoption of its National Climate Change Policy. Seven years later, the 2019 National Energy Policy outlined a specific ambition to introduce green procurement processes in state and private sector organizations to improve energy efficiency (Article 3.4.2). Article 4.4b sets a goal to enforce minimum energy performance standards for LEDs and energy labelling for air conditioners, personal computers, refrigerators, ceiling fans, linear fluorescent lamps and induction motors by mid-2020.

The 2019 Sustainable Consumption and Production Policy sets out sustainable public procurement as an overarching policy goal with the following targets:

• Administrative and legislative framework established for the promotion of Sustainable Public Procurement (SPP) in relevant sectors before 2021.
  
• Life cycle databases for key product categories with significant environmental impact either created or updated by 2025.
  
• Implementation of SPP ensured at least in 5 major product categories, in relevant sectors that have a significant impact, before 2022, at least 50% of product categories by 2030.
  

A draft National Green Procurement Policy has been formulated aimed at implementing SDG Target 12.7. It is unclear whether the document has been formally adopted. However, it sets out a clear plan for implementation of GPP across the country. The Policy sets out a mandatory obligation for all Government agencies to follow rules and procedures for green procurement (Article 4e) and recognize environmental accountability as an essential means of effective implementation of Public Procurement (Article 4f). Key priorities include to:

• promote and purchase recyclable and recycled contented products which include the highest percentage of locally generated post-consumer recovered materials and pre-consumer recovered material available in the market (Article 8c).
  
• preference to local producers and SMEs to improve their access to local and international markets for green goods, works and services (Article 9.6)
  

In the construction sector, the Sustainable Housing and Construction Roadmap 2020-2050 sets out a vision that “housing and construction in Sri Lanka are socially inclusive, environmentally sustainable and carbon neutral by 2050. It builds on the National Physical Plan 2050 that adopted the principles of the 17 SDGs, setting out a development framework aligned with SDG 13 on climate change. The Roadmap sets out goals to create green standards for building construction, operation, maintenance and demolition.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

The Government of Sri Lanka applies the Government Procurement Guidelines and Manual published in 2006 by the National Procurement Agency (NPA). Public procurements are guided by the principle of ensuring maximizing cost effectiveness, timeline, and quality in procurement, resulting in least cost together with high quality. Bid evaluation criteria can include factors beyond price, including equipment efficiency, operating costs, life cycle costing and domestic preferences.

In terms of social procurement, Article 3.9.1 of the Procurement Guidelines allows for direct contracting to Community Based Organizations (CBOs) for construction works “in the interest of project sustainability or to achieve certain specific social objectives such as creating employment opportunities…[with] the participation of local communities.” Article 3.9.4 allows procurers to invite bids from local contractors for construction works not exceeding 2 million rupees.

The Government gazetted an updated Procurement Guidelines and Manual in 2018 that specifically endorses Green Public Procurement. However, the legal status of these documents remains unclear - the 2006 version appear to remain in force.

The 2018 Guidelines proposed a mandatory approach, requiring all Government Institutions to take into account environmental considerations. The Manual prioritizes 12 product categories (based on a New Zealand ecolabel) and sets out guiding questions to guide procurers to assess the environmental characteristics of procured goods and services.

In October 2020, the Government issued a Circular to adjust the Procurement Guidelines to favor local contractors (more than 51% ownership by Sri Lankan nationals) for the software and hardware, construction, furniture and allied products industries. Procurements for IT and construction projects up to threshold values may only be bid on by suppliers accredited by Sri Lanka government agencies. In large construction works, a minimum of 25% of subcontractors must be awarded to local small and medium sized (SME) suppliers. State-owned enterprises receive a 15% preference over all other contractors. In addition, the policy outlines a listing of 18 building materials that must be sourced from domestic producers.

The draft National Green Procurement Policy calls for a review of the existing procurement law framework to identify gaps and implement reforms to enable environmentally preferable procurement practices (Article 9.3).

Pillar 3: Institutions & Capacity

The Ministry of Finance, Department of Public Finance, is the lead agency responsible for overseeing the implementation of green public procurement. The Ministry of Environment provides support in mainstreaming green standards and specifications into the procurement cycle. The draft National Green Procurement Policy proposes the creation of an interagency expert committee on Green Public Procurement (IAEC – GP) coordinated by the Ministry of the Environment to develop green specifications. A Citizen Advisory Bureau is also envisioned to engage multi-stakeholder oversight to guide the transformation from convention to green procurement.

On urban planning, the Urban Development Authority (UDA) is the apex urban planning and development regulatory institution mandated with the preparation, enactment and implementation of development plans in urban areas. The main national organization in the construction sector in Sri Lanka is the Construction Industry Development Authority (CIDA), whose mission is to provide strategic leadership to the sector. The establishment of a new National Planning Commission is envisioned under the Sustainable Housing and Construction Roadmap.

Pillar 4: Market Practices & Sustainable Supply Chain

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The draft National Green Procurement Policy plans a broad program of support for local providers to shift to green technologies and practices, including capacity building, investment promotion and financial incentives. The Government plans to foster, award and recognize business and industry groups that demonstrate eco-innovation and sustainability (Article 9.6). An environmental conservation levy will be introduced based on the polluter pay principle, with funds used to provide capacity building for suppliers to comply with environmental criteria and standards. Further financing support will be encouraged from the banking sector (e.g. concessionary/soft loans to entrepreneurs) and through international cooperation projects.

The National Cleaner Production Centre Sri Lanka was engaged to undertake market research and stakeholder outreach to understand:

• market demand for green buildings, presently and what may be induced;
  
• market supply of green buildings and how the market supply capacity may be grown
  
• finance market characteristics that may impact the cost-benefit analysis of green property features and design of green financing instruments.
  

The market research showed that green construction practices are emerging in Sri Lanka, mainly as a marketing tool for high-income consumers.

The use of resource-efficient building materials is growing due to their increased availability in the Sri Lankan market, including Compressed Stabilized Earth Blocks (CSEB), bamboo, durra boards, mud bricks, manufactured sand, rammed earth, micro concrete roofing tiles, precast concrete panels and lead-free paints. A combination of crystalline silica and the water-soluble polymer was tested as a replacement to the conventional concrete, granite, and asphalt in infrastructure developed by both government and private sector companies.

The Green Building Council has developed a certification, GreenSL, to recognize sustainable building materials based on a life-cycle assessment. Consumers are increasingly aware of unsafe chemicals in paints and cements, and price differences between standard and green options in these categories appear modest. Suppliers appear to be ready to meet market demand, but believe that current demand remains low. To further promote sustainable sourcing, the Government aims to establish an annual plan for sustainable sourcing and production of building materials and incorporate sustainability and low carbon criteria into building specifications.

Since 2018, Euro 4 emissions standard diesel and petrol have been available in the country in an effort to reduce harmful emissions and air pollution from transport activities.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

The draft National Green Procurement Policy promotes a market-led, iterative learning-by-doing approach to green procurement. Article 9.1(c) sets out a three step process to integrate green criteria into government procurements: making the producers and consumers initially aware of the desire of listing (level 3); market analysis of the opportunities and challenges and development of specific criteria (Level 2); and the official listing (level1). Green procurement provisions will be incorporated into guidelines, manuals and standard bidding documents, made publicly available and periodically updated based on lessons learned, best practices and technological advances.

The draft Policy proposes several tools to mainstream GPP practices. An Eco-product Directory will be developed and published as a tool for showcasing a range of green goods, works and services and made available for the general public (Article 9.2a). The Ministry of Environment will establish a Knowledge Hub with a dedicated system of networking for exchange of expert knowledge and information (Article 9.2d). The National Green Reporting System is proposed to promote industries to improve their system efficiencies as well as their reporting capabilities (Article 9.2f).

Ecolabel Sri Lanka is the first national green product certification scheme in Sri Lanka. Certifications are available for products in the agrifood sector (e.g. dairy, tea) and construction sectors (materials, paint, steel, cement). All NCPC Ecolabel

tea) and construction sectors (materials, paint, steel, cement). All NCPC Ecolabel standards include comprehensive sustainability criteria related to the environment, human health, social issues, and fitness for purpose.

There are two notable green building certification programs in place in Sri Lanka: the Green Building Council (GBCSL) Green Rating System for Built Environment and Urban Development Authority’s “Neela Haritha” (Blue Green Sri Lanka) scheme. The GBCSL program has granted certifications to 80+ buildings. UDA has made its Green Building certification mandatory for all new government and semi-government buildings larger than 400 m2 under the Urban Development Regulations 2020. In addition, about 100 buildings in Sri Lanka have been certified to the international LEED standard.

A Construction Green Guide and draft Technical Guidelines on Building Demolition Work (Section 6.2) are available with guidance on environmentally responsible demolition work. Additional guides and standards for environmentally-friendly construction include:

• Energy Efficiency Building Code 2021 that covers the building envelope, HVAC system, water heating system, electricity, lighting and other equipment;
  
• Energy performance standards for compact fluorescent lamps, ceiling fans, ballasts, LED lights, refrigerators, air conditioners, computers and electric motors.
  
• Mandatory phase out of HCFC refrigerant gases from the Sri Lankan market by 2030 in alignment with the Montreal Protocol.
  
• A practitioner’s guide for rainwater harvesting by the Lanka Rain Water Harvesting Forum
  

To encourage investments in recycling and reuse of construction material, the Government introduced a 10 year tax holiday in its 2021 budget. The World Bank applies a new approach to infrastructure development called “Green, Resilient and Inclusive Development (GRID)” to projects in Sri Lanka. For example, road infrastructure projects have been designed to deliver social and environmental co-benefits including increased access to markets for farmers, undisturbed migration for wild elephants and more resilience to flash and seasonal floods.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

The draft National Green Procurement Policy sets out a system for monitoring, verification, evaluation and reporting (Article 8.4). The Ministry of Finance in collaboration with the Ministry Environment is responsible for publishing a comprehensive Green Procurement Performance Report annually. The Ministry of Environment must also produce Supplementary reports that demonstrate the real benefits to the environment produced through green procurements.

The Policy also calls for tracking of both the progress of GPP implementation and the impact made in terms of environmental, social and financial gains made (Article 9.4). A Human Resource Development (HRD) mechanism is envisioned to ensure effective and efficient implementation of the policy at all levels in the public procurement process. However, it is unclear whether this reporting has been developed to date.

Projects Supported by ADB

to come

Other Initiatives supported by National/International Agencies

UNEP/SAICM/GEF (2019 - present):

• Coordinates a programme on chemicals of concern in building materials with the goal to implement a ‘sustainable public procurement’ policy in Sri Lanka that would cover construction materials
  
• Supports local manufacturers and suppliers to increase market supply
  
• Supports development of an eco-label type I certification for selected building products, including criteria related to chemicals of concern.
  

EU Switch-Asia: Coordinates various projects to build capacity of Sri Lankan companies to adopt resource efficient practices, including in the metal, tourism, food and beverage, paint, (renewable) energy and plastics industries.

UN-Habitat, UNEP and UNOPS (2020-2022): Coordinates the United Nations Joint Programme on Resource Efficient Housing, is led by UN-Habitat in partnership with UNEP and UNOPS, and in support of the goals of the One Planet Network Sustainable Buildings and Construction (SBC) Programme. Project outputs: 1) provide strategic support to the United Nations Country Teams to help countries in improving the sustainability of buildings and their impact on the environment, in particular on carbon emissions, 2) support governments in transforming their buildings and construction sector to be a resource efficient, low carbon and climate resilient sector, through coherent policy support and results-focused programming based on science and facts.

Resources

Ministry of Environment (2021). Presentation on Green Public Procurement in Sri Lanka.

UNEP (2021). Sustainable Building Finance: Supporting green mortgage development in Sri Lanka.

R. U. Halwatura & K.A.B.P. Kodithuwakku (2022). “Incorporating Sustainable Procurement Practices in the Construction Industry in Sri Lanka: Benefits and Challenges” PM World Journal (ISSN: 2330-4480) Vol. XI, Issue X – October 2022.

W.M.C.R. Wijekoon & Anura Lokugamage & W.A.S.S. Wickrama & D.M.A.K. Dissanayake, 2023. "Analysis of sustainable practices adopted in the health sector public procurement process of goods by the Provincial Director of Health Services Office, Central Province of Sri Lanka," International Journal of Procurement Management, Inderscience Enterprises Ltd, vol. 16(2), pages 252-274.

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