Embedding Environmental, Social and Governance Principles in Healthcare Procurement: A Case Study Example

Context

This case study is based on practical guidance shared during Health Procurement Africa’s (HPA) Ask the Expert webinar on embedding Environmental, Social and Governance (ESG) principles in healthcare procurement. The session was delivered by HPA procurement experts drawing on experience from Kenya and Nigeria, exploring how public-sector health procurement teams can move from ESG policy to measurable procurement outcomes.

Watch the full Ask the Expert webinar recording here.

Introduction

ESG provides a framework for measuring sustainability performance in procurement. It is distinct from, but complementary to, Corporate Social Responsibility (CSR) and sustainability. Sustainability defines the long-term vision across the triple bottom line (environmental, social, and economic); CSR sets out aspirations and plans; and ESG translates those plans into concrete actions, performance indicators, and measurable outcomes.

ESG offers tangible benefits beyond compliance: competitive advantage (ESG performance can differentiate suppliers at contract award, with legislation in many contexts requiring minimum weightings of 10% or more); reputational improvement; innovation driven by the need to meet ESG measures; risk reduction across reputational, financial, and supply chain dimensions; and long-term supply quality through a more holistic view of suppliers.

ESG must be embedded throughout the procurement cycle — not introduced just at the supplier selection stage. It begins at the requirements definition stage, where ESG criteria are built into specifications. It carries through supply market assessment, contracting strategy, supplier selection and award, and performance monitoring, with suppliers engaged collaboratively rather than having requirements imposed on them.

Case Application: ESG Through Procurement System Strengthening, Kenya (Murang’a County)

HPA’s work with Murang’a County — one of six Kenyan counties in the programme — illustrates how strengthening procurement systems can simultaneously improve efficiency and reduce environmental impact. The starting point was a set of persistent operational problems: manual ordering using paper-based records, routine medicine expiries, and patients travelling long distances to facilities, often by motorbike or matatu, to collect prescriptions or attend consultations.

Environmental Impact of Procurement Failure

The environmental cost of poor procurement is often invisible. In Murang’a, a mountainous county with up to nine sub-counties spread across many kilometres from the Level 5 referral hospital, the cumulative carbon impact of repeated patient journeys — multiplied across many patients and facilities — was significant. Pharmaceutical waste from expiries required incineration, adding further environmental burden. Paper-based prescriptions and records generated additional waste.

Procurement System Improvements and Environmental Outcomes

The Murang’a experience demonstrates a core principle: sustainable procurement is not only about buying greener products. It is about designing smarter systems. Procurement improvement and environmental benefit are not separate agendas — they are the same agenda.

Case Application: ESG Embedded in Procurement Processes, Nigeria

Nigeria has established policy foundations for ESG in public procurement. The Public Procurement Act (Section 2) provides a legislative basis for incorporating environmental, social, and governance requirements. The Bureau of Public Procurement (BPP) is introducing guidelines on affirmative procurement — covering women’s inclusion, disability access, SME capacity building, and community-based procurement. The Climate Change Act 2021 reinforces the environmental pillar. A CIPS–BPP memorandum of understanding supports professional certification and capacity building for procurement practitioners.

From Policy to Practice: Weighted ESG Criteria in Tendering

HPA worked with KADHSMA (Kaduna State Health Supplies Management Agency) and YODMA (Yobe State Drugs and Medical Consumables Management Agency) to introduce ESG requirements into pre-qualification and tendering processes. ESG criteria were given a weighted scoring of up to 25% of technical requirements, structured across the three pillars.

The approach also addressed local manufacturing development. PVAC tax exemptions — totalling over ₦10.8 billion assessed to date — provide government incentives to local manufacturers. Procurement practitioners were encouraged to identify which suppliers benefit from these incentives and actively include them in procurement processes, with the objective of translating tax exemptions into price stability, competitive pricing, and assured product availability for patients.

Lessons Learned

• ESG is a measurement framework, not an aspiration. The value lies in setting concrete goals, tracking them with KPIs, and generating evidence.
• Embedding ESG at the requirements stage is more effective than just adding it at supplier selection. Specifications, supply market assessments, contract terms, and performance monitoring should all consider ESG criteria.
• Procurement system improvement and environmental benefit are the same agenda. Reducing expiries, cutting unnecessary journeys, and eliminating paper waste achieve procurement efficiency gains and environmental outcomes simultaneously.
• Weighted ESG criteria in tendering make sustainability measurable and defensible, and provide a practical starting point for organisations at any stage of ESG maturity.
• Start with a point of focus. Rather than attempting organisation-wide change at once, select one county, category, or contract, establish success there, and build outward in true change management fashion.

Conclusion

This case study demonstrates that ESG principles can be embedded practically within public health procurement in Africa, both through system-level design and through formal procurement evaluation criteria. Kenya’s experience in Murang’a County shows that smarter procurement systems reduce environmental waste as a direct consequence of improved efficiency. Nigeria’s approach through KADHSMA and YODMA demonstrates that ESG can be operationalised through weighted tendering criteria covering environmental, social, and governance dimensions. In both cases, the goal is the same: procurement that is transparent, responsible, and sustainable — and that delivers the right health commodities to the right patients at the right time.