As of 24 February 2025, the UK Procurement Act 2023 is officially in effect, marking a significant transformation in public sector procurement. This legislation places corporate sustainability at the forefront of procurement decisions, reshaping how contracts are awarded and executed across the UK.
For businesses and public sector entities, this shift presents both challenges and opportunities. Understanding the nuances of the Act is crucial to navigating the new procurement landscape effectively. Below, we delve into the key changes introduced, examine potential challenges, and provide actionable recommendations for businesses and public sector buyers to adapt and thrive under the new regime.
Key changes in the UK Procurement Act related to sustainability
The UK Procurement Act 2023 introduced significant reforms to public procurement, with a strong emphasis on sustainability and social value. Key changes include:
- Broader definition of value: The Act replaces the “Most Economically Advantageous Tender” (MEAT) with the “Most Advantageous Tender” (MAT), allowing contracting authorities to consider factors beyond cost, such as environmental sustainability and social impact, when awarding contracts.
- Mandatory consideration of public benefit: Contracting authorities are now legally required to “have regard to the importance of maximising public benefit,” encompassing social, economic, and environmental outcomes, rather than merely considering them as optional factors.
- Enhanced transparency and accountability: For contracts exceeding £5 million, authorities must set and publish at least three Key Performance Indicators (KPIs), including those related to sustainability. Supplier performance against these KPIs must be monitored and reported annually.
- Strengthened supplier exclusion measures: The Act introduces a central debarment list, enabling authorities to exclude suppliers for reasons such as economic crime, poor performance, or unethical practices. This measure aims to uphold integrity and accountability in public procurement.
- Support for SMEs and social enterprises: The legislation mandates 30-day payment terms for subcontractors and encourages the removal of barriers that prevent SMEs and voluntary, community, and social enterprises (VCSEs) from participating in public procurement.
These reforms signify a shift towards a more sustainable, transparent, and inclusive public procurement system in the UK.
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How the Act strengthens sustainability opportunities
The UK Procurement Act 2023 strengthens sustainability opportunities by embedding environmental and social value more deeply into procurement decisions. Here’s how:
Making sustainability a core evaluation criterion
The shift from awarding contracts based on the MEAT to the MAT gives authorities the flexibility to prioritise environmental outcomes, not just cost. This enables suppliers offering greener products or services to be more competitive.
Legal requirement to maximise public benefit
Contracting authorities must now have regard to the importance of maximising public benefit, including environmental improvements. This shifts sustainability to a mandated consideration, encouraging more sustainable innovations and solutions from suppliers.
Mandatory KPIs on environmental impact
Contracts above £5 million must include at least three KPIs, which can and should include environmental metrics like carbon reduction, circularity, or biodiversity protection. This pushes suppliers to track and improve their sustainability performance to retain contracts.
Encouraging SMEs and social enterprises
By supporting smaller organisations, the Act opens doors for more local, mission-led businesses offering sustainable goods and services, broadening the sustainability supply base.
Improved supplier accountability
With stricter exclusion grounds (for example, poor environmental performance or unethical sourcing), suppliers are incentivised to uphold sustainable practices or risk being barred from future tenders.
What is green procurement?
Green procurement, also known as sustainable procurement, is the process of purchasing goods, services, and works with a reduced environmental impact throughout their life cycle. It considers not just the price and quality of a product, but also how it’s produced, used, and disposed of. Below are some key features of green public procurement:
- Environmental criteria: Prioritising products that are energy-efficient, recyclable, biodegradable, or made from sustainable materials.
- Supplier sustainability: Choosing vendors with low-carbon operations, ethical sourcing, or circular business models.
- Whole life costing: Considering total costs, including maintenance, energy use, and disposal, not just the upfront purchase price.
- Compliance and standards: Aligning with regulations like ISO 14001, the UK Procurement Act 2023, or the EU Green Public Procurement Criteria.
Green procurement practices include things like switching to recycled office paper instead of paper made from virgin pulp, or sourcing staff uniforms produced using organic cotton or recycled textiles. Public and private sector organisations alike are also investing in electric or hybrid vehicles to replace traditional petrol or diesel fleets.
Even services like catering or cleaning can be sourced more sustainably by prioritising local, low-impact providers. Green procurement helps organisations reduce their environmental footprint while promoting responsible consumption. It also enhances resource efficiency and can lower long-term operational costs through energy savings and reduced waste. From a strategic perspective, adopting these practices strengthens an organisation’s ESG credentials, improves stakeholder trust, and supports compliance with evolving regulations.
Challenges to watch out for
Businesses navigating the UK Procurement Act 2023 in the context of sustainability should be aware of several emerging challenges that could impact compliance, competitiveness, and delivery.
Meeting new transparency and accountability requirements
The UK Procurement Act places a greater emphasis on transparency across the entire procurement lifecycle. Public bodies must now justify their tender decisions and report on contract performance more robustly. This raises the bar for suppliers, who will need to back up sustainability claims with evidence. Businesses should invest in tools and processes that enable accurate ESG data collection, internal sustainability reporting, and third-party verification where relevant.
Adapting to the “Most Advantageous Tender” criteria
The shift from the MEAT to the MAT means environmental and social value will weigh more heavily in procurement decisions. While this opens the door for ESG-focused organisations, it also requires clear communication of impact. Suppliers should build capacity to articulate how their solutions support long-term environmental goals, social outcomes, and value for money, aligning with recognised models such as the Social Value Model.
Addressing supply chain sustainability
Contracting authorities will look beyond direct suppliers to evaluate the sustainability credentials of full supply chains. This means businesses must ensure their upstream and downstream partners meet environmental and ethical standards. Proactive engagement with suppliers, setting clear sustainability expectations, and undertaking supply chain due diligence are vital. Using tools such as lifecycle assessments and supplier audits can demonstrate compliance and commitment.
Proving value beyond price
Public procurement is now seen as a strategic tool to advance national sustainability goals. Businesses that can demonstrate how they contribute to net-zero targets, circular economy models, or social equity will stand out. This requires integrating sustainability into core strategy, not treating it as an add-on. Aligning internal stakeholders (especially finance and bid teams) and developing narratives that connect ESG efforts to tangible business outcomes will strengthen bids.
Bridging capability and skills gaps
For many organisations, particularly SMES, limited in-house knowledge around ESG and procurement processes may present a barrier. To succeed under the new Act, companies must upskill teams involved in procurement, compliance, and reporting. Investing in tailored sustainability training, engaging in peer learning, and using services like Sustainability Mapping can help identify gaps and create a clear roadmap for building internal capability.
Conclusion – What businesses and public sector buyers should do next?
With the UK Procurement Act introducing a new era of accountability and impact-led decision-making, the next step is clear: prepare strategically, not reactively. For businesses, this means embedding sustainability into your procurement strategies from the ground up.
Review internal ESG capabilities, assess supply chain resilience, and ensure you’re ready to evidence sustainability claims during tenders. Upskilling teams, developing sustainability reporting systems, and aligning with frameworks like the Social Value Model will position your organisation as a trusted, future-ready supplier.
For public sector buyers, the focus should be on building procurement frameworks that balance commercial outcomes with environmental and social value. This includes improving internal knowledge of sustainability metrics, developing transparent evaluation criteria, and engaging suppliers early to co-create sustainable solutions.
To succeed in this evolving environment, organisations must build internal sustainability capability. Our sustainability courses UK are designed to help procurement, operations, and leadership teams navigate policy shifts, drive measurable impact, and meet new regulatory expectations with confidence.
