The environmental and social impact of the energy generation and distribution industry on the biosphere is negative or unknown due to a lack of supply chain transparency. For electricity and gas distribution system operators (DSOs), the opportunity to contribute significantly to more environmental and social sustainable development in the energy industry is large. DSOs own and use large amounts capital assets that consist of finite materials, are focal actors in large global supply chains, and are able to make large purchases due to their public role and their financial means. The long (20-80 years) useful lifetime of infrastructure assets puts great emphasis on asset risk management, and operation and maintenance strategies to optimize technical and economic performance. As a result, the purchase decision of the assets mainly focusses on technical and economic requirements and criteria. This purchase moment can be considered to be the start of the assets’ life cycle and its outcome thereby determines to a large extend the design and use of the asset. To reduce the social and environmental impact of the asset, environmental and social demands must thus be incorporated in this procurement process. Currently, a matured approach to sustainable procurement is unavailable within the infrastructure industry. Alliander, a large Dutch DSO, attempts to include sustainability as an addition to the existing procurement process. However, procedural integration in the existing processes is required to successfully and effectively integrate sustainability in asset procurement. Infrastructure asset management, and DSO asset management in particular, are embedded in a risk-averse culture with high emphasis on technical, legal ,and economic values. Introducing innovative and more sustainable asset alternatives in daily decisions generates resistance among actors as no compromise on existing technical and economic values is desirable. This actor resistance needs to be overcome as procurement decisions are made by a team of actors. Decisions therefore require group consensus rather than actors that unwillingly agree to the decision. The long asset lifetimes, dispersed and interdisciplinary knowledge, and uncertain need for specific DSO asset functions and services in the future complicates optimal decision-making even further. The infrastructure procurement process is an assessment process in which multiple suppliers and their asset alternatives are appraised using a large set of demands. By adding environmental and social sustainability demands to this assessment, procurement becomes partly value-based. Actor-dependent prioritization of demands leads to divergent and/or contradictory objectives. The subsequent trade-offs between individual (actor) and mutual (organizational) objectives are therefore embedded in a multitude of different interests, perspectives, and values. To overcome this decision-making difficulty, effective and goal-oriented collaboration among the actors that are involved is required. Multiple scientific and corporate sustainability assessment and decision frameworks are currently available. However, a proven approach that can facilitate interdisciplinary group decision-making in the procurement processes is not yet available. A general sustainable procurement policy needs to be developed to provide formal guidance in the complicated procurement. Developing such a policy will provide an answer to the research question in this report:
How can sustainability goals be incorporated in the multi-actor decision-making process of infrastructure asset procurement by Dutch distribution system operator Alliander?
To develop the sustainable procurement policy and answer this question, four procedures were followed. Firstly, problems related to sustainability in (public) procurement were explored via an explorative and systematic literature study, as well as 23 informal expert interviews. Policy development goals, constraints, and criteria were taken from this first procedure into the second procedure, namely: the development of the policy. Developing a robust and suitable policy was done by merging the insights from the following five knowledge areas: sustainable development, asset life cycle management, multi-actor networks, multi-criteria decision-making, and (sustainable) procurement. The third procedure validated the policy through two case study applications at Alliander. Insights from these practical cases and the consultation of Alliander experts served as input for the final procedure: the evaluation of the policy. In this procedure, the added value and compliance with the policy constraints and criteria were evaluated.

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Figure 1 Sustainable procurement policy overview

The resulting policy, depicted in Figure 1, discusses the methodological steps that are required for successful sustainability-focused procurement in eight sequential phases. The core elements of this methodology are four-fold: (I) Collective formulation of procurement goals and the function of the asset; (II) Formulating technical, economic, environmental, and social demands throughout the complete asset material life cycle; (III) Expanding the perceived added value concept from technical and economic values to equally important environmental and social values; and (IV) Establishing unanimous consensus in decisions with diverging actor priorities to put the interests of the organization above those of individual actors, and to make long-term actor collaboration possible. In addition to the methodology, a decision support tool was developed, based on the matured Analytic Hierarchy Process and pairwise comparison weighting method, which facilitates essential dialogue within the multidisciplinary procurement team throughout the procurement process. The tool offers a structured and logic-based decision-making approach: actor-specific value judgements, drivers, and priorities are made explicit by transparent documentation and visualization of individual criteria weight distributions. The differences between individual and group priorities regarding asset demands hereby become clear. The actor dialogue can thereby be limited to major differences in actor priorities rather than discussing numerous minor or non-existent differences. Future scientific research is required on how to deal with interrelations between high amounts of procurement demands from different knowledge disciplines. To make sustainable procurement business-as-usual within the infrastructure industry, committed and inspiring leadership is required. A crucial step is the acknowledgement and of environmental and social added value, in addition to the current appreciation of technical and economic added value. Expanding the concept of added value creation, and thereby the core values of infrastructure organizations, makes sustainable procurement more accepted within asset management and incentivises supply chain actors throughout the supply chain to act more sustainably.