True Price Foundation & Impact Economy Foundation
November 2nd, 2026
Make true costs count: mandatory social and environmental criteria in EU public procurement
We call on the co-legislators to make environmental and social performance, and their costs,
mandatory parts of every award decision under the Public Procurement Act, by:
• Setting a minimum weighting of at least 15% for social and environmental criteria within the best price–quality ratio, so “quality” cannot be met while ignoring them.
• Requiring that costs be taken into account, including financial, environmental and social costs, rather than leaving them optional in the price–quality assessment.
• Extending life-cycle costing (Article 99) to cover social as well as environmental externalities.
The Impact Economy Foundation and True Price Foundation welcome the European Commission’s proposal for a Regulation on public contracts and concessions (Public Procurement Act). The shift away from lowest-price awards is a step in the right direction. However, keeping environmental and social criteria, and their costs, optional will not deliver the shift in public spending that the EU’s competitiveness and transition goals require.
Every year, public buyers across the EU award an estimated €2.5 trillion in contracts, close to 15% of the Union’s GDP. Yet tenders rarely include social and environmental criteria, and are too often awarded to the lowest-price bid. Voluntary frameworks for green and socially responsible public procurement have not changed this sufficiently. This leaves untapped a lever the Commission has made central to its industrial policy, from the Clean Industrial Deal’s push to use procurement to make decarbonisation a driver of growth, to the Industrial Accelerator Act’s use of public demand to scale up low-carbon technologies. We therefore welcome the Commission’s effort to align procurement rules with strategic priorities and make procurement a lever for competitiveness and the transition to a climate-neutral economy.
Still, two gaps risk keeping lowest-price thinking in place: how quality is defined, and whether
true costs – life-cycle costs including environmental and social external costs – will ever count at all.
Without minimum thresholds, environmental and social performance will continue to be overlooked
Making the best price–quality ratio the default award method, and with it the move away from lowest price, is much needed. But its current configuration lacks ambition and will fail to create the demand signals needed to support EU impact-driven businesses committed to the social and environmental transition. As it stands, quality can be met through many dimensions other than social and environmental performance, as no minimum thresholds are set for these aspects. Buyers with no interest in sustainability can fulfil quality through other criteria (e.g., technical or aesthetic characteristics, staff choice, after-sales assistance, delivery timelines, etc.) and continue to ignore social and environmental dimensions. This risks reproducing the very outcome the revision seeks to correct: contracts awarded on criteria that overlook the long-term environmental and social benefits and costs of what is being built or bought.
We therefore call on the co-legislators to adopt a narrower definition of quality that gives meaningful weight to social and environmental criteria, including a minimum of at least 15% (EU legislators already set such a floor for green award criteria (15–30%) in Article 65 of the Ecodesign for Sustainable Products Regulation, but the proposed Act deletes it, along with the green procurement provisions of four other sectoral acts, and replaces them with an article that sets no minimum weighting). This would prevent that these dimensions are neglected and would send suppliers across every sector a predictable, EU-wide signal that low-carbon, circular and socially responsible goods and services will be rewarded.
Mandatory criteria are needed to unlock the full potential of life-cycle costing
Binding social and environmental criteria would allow life-cycle costing (Article 99) to deliver its full potential. The new provisions on circular economy (Article 51) and on the quality and sustainability of food (Article 53) are welcome and much needed, recognising the role public buyers can play in driving durable, resource-efficient products, and fair, sustainable food systems. Life-cycle costing and the monetisation of environmental and climate externalities under Article 99 are the most effective tools to turn these ambitions into practice, by making visible the costs that lowest-price bids shift onto society, and allowing circular and sustainably produced offers to compete on equal terms. External costs depend heavily on the product. For public buildings, 60–80% of total costs come from operation, energy and maintenance, costs that a price-only comparison would ignore. For food or textiles, true cost accounting shows that damages to climate, nature and people are often much larger than the market price. (Hendriks, Sheryl, Adrian De Groot Ruiz, Mario Herrero Acosta, Hans Baumers, Pietro Galgani, Daniel Mason-D’Croz, Cecile Godde, et al. “The True Cost and True Price of Food.” Draft. United Nations Food Systems Summit 2021, June 1, 2021. https://sc-fss2021.org/wp content/uploads/2021/06/UNFSS_true_cost_of_food.pdf) Yet costs are currently only something that “can also be taken into account” when determining the best price–quality ratio. A general reference to life-cycle costing is not enough. Social and environmental externalities should be a distinct and mandatory part of the price-quality assessment. This creates an alarming double optionality: buyers can satisfy ‘quality’ without ever considering social or environmental performance, and then also leave costs, such as environmental and climate externalities, out of the comparison altogether, meaning the true cost of a purchase may never enter the award decision at all. We therefore also call on the co-legislators to require that costs (financial, environmental, and social) be taken into account in the best price quality ratio, and to extend Article 99 to cover social as well as environmental externalities.
We already know how to do this, and it works
Mandatory, cost-based frameworks already exist across Europe. In the Netherlands, the Milieukostenindicator (MKI; Environmental Cost Indicator) is already widely used in infrastructure tenders, and a mandatory framework is currently being set up for 2027. It converts EU legislators already set such a floor for green award criteria (15–30%) in Article 65 of the Ecodesign for Sustainable Products Regulation, but the proposed Act deletes it, along with the green procurement provisions of four other sectoral acts, and replaces them with an article that sets no minimum weighting a product’s or project’s environmental impact into a single monetary figure, with the best performing bid receiving a fictitious discount on its price. In France, a mandatory environmental award criterion and mandatory environmental and social conditions apply to all public contracts since August 2026. (“Les critères environnementaux des marchés publics évoluent le 21 août” [Environmental criteria for public procurement are set to change on 21 August], Service Public Entreprendre, August 18, 2026, https://entreprendre.service-public.gouv.fr/actualites/A19042)
In Zurich, mandatory green and circular criteria for concrete and cement have led to 90% of public buildings using at least 50% recycled concrete, and to the emergence of ten local producers and the jobs that came with them. (Cherhat, Tudor. “Buy Better to Build Better: Driving Public Purchase Towards Green Construction Products.” Edited by Katarzyna Krok. ECOS – Environmental Coalition on Standards, 2024. https://ecostandard.org/wpcontent/uploads/2024/11/ECOS-report-Buy-better-to-build-better-November-2024.pdf )
And such frameworks do not need to come at a high price: applying basic green procurement criteria to low-carbon concrete and steel would cut 11.9 Mt CO2e per year for a cost increase of only 1.6%.(Steinmann J, Le Den X, Witteveen E, Kovacs A,Pirttikoski K, (2024). Green public procurement in construction – Driving public purchase towards truly green construction products and materials. https://doi.org/10.5281/zenodo.14000359 )
The same approach can be extended to social impacts: true cost accounting methods already monetise living wage gaps, child labour, and health and safety risks alongside environmental costs. The Public Procurement Act should build on these examples and make cost-based environmental and social criteria the norm across the EU, turning public spending into a driver for clean and competitive EU markets.
Without binding environmental and social requirements, the Act will fall short of the Commission’s own goals
A Public Procurement Act that leaves environmental and social criteria as one option among many ways to satisfy quality, and costs as an afterthought, will not deliver the resilient, decarbonised Single Market the Commission has set out to build through the Clean Industrial Deal, the Industrial Accelerator Act and the Fit for 55 objectives. We therefore urge the co-legislators to make environmental and social dimensions, and their costs, mandatory components of award evaluation. The Act is an opportunity to make procurement a tool for industrial transformation, towards markets where sustainability, resilience and market creation go hand in hand.
About Impact Economy Foundation
Impact Economy Foundation is a non-profit organisation that exists to accelerate the transition
to the Impact Economy, an economy in which doing good is profitable, and where positive impact
is rewarded in the market.
About True Price Foundation
True Price Foundation is a non-profit organisation working towards a world where the price of
products reflects their true cost to people and planet. It develops open methods to measure and
monetise the environmental and social external costs of products, and supports governments,
businesses and consumers in using true prices to make better decisions
Contact:
Adriana Cerdeira – Policy & Public Affairs Lead
(adriana.cerdeira@impacteconomyfoundation.org)