ESG Criteria in Public Procurement Law 2026

ESG criteria in public procurement: environmental, social and governance requirements in the award of public contracts. Legal basis and application.

Definition: ESG criteria (Environmental, Social, Governance) in public procurement law are requirements and award criteria by which public contracting authorities anchor environmental, social, sustainability and governance standards in procurement procedures, in order to align strategic procurement policy with broader societal goals.

Last updated: January 2026 · Legal basis: Directive 2014/24/EU Art. 67–69, BVergG 2018, GWB § 97(3), German Supply Chain Due Diligence Act (LkSG)

What are ESG criteria in public procurement law?

ESG criteria in public procurement allow contracting authorities to use the State's considerable purchasing power to promote sustainable, socially responsible and well-governed undertakings. The term "ESG" originally comes from finance and stands for Environmental, Social and Governance. In public procurement law it has become established as an umbrella term for sustainable procurement requirements, even though the underlying legal provisions use older terms such as "environmental characteristics", "social aspects" or "life-cycle costs".

ESG in European procurement law

Directive 2014/24/EU expressly allows and promotes the integration of environmental, social and innovation aspects in all phases of the procurement procedure.

Environmental criteria (E – Environmental)

Article 67 of Directive 2014/24/EU permits the evaluation of tenders against environmental characteristics, for example:

CO₂ emissions over the life cycle
Energy efficiency and resource use
Use of recycled or renewable raw materials
Environmental certifications (e.g. EU Ecolabel, Blue Angel)

Life-cycle costing (Art. 68), which can also monetise external environmental costs, is of particular importance.

Social criteria (S – Social)

Social procurement criteria may relate to the following areas:

Compliance with workers' rights and collective agreements (see § 97(4) GWB)
Minimum-wage requirements (collective-agreement compliance)
Accessibility and inclusion of people with disabilities
Promotion of employment for disadvantaged groups
Compliance with social standards in supply chains (LkSG in Germany)

Governance criteria (G – Governance)

Governance requirements cover corporate governance and compliance:

Grounds for exclusion for corruption, fraud and money laundering (§ 123 GWB, § 78 BVergG 2018)
Certifications of management systems (ISO 14001, ISO 26000)
Transparency and traceability of the supply chain

Legal anchoring in national law

In Austria and Germany, ESG requirements are increasingly anchored in law.

In Austria, BVergG 2018 enables environmental and social aspects to be considered as award criteria, eligibility requirements and contract performance conditions. Mandatory sustainable procurement is provided for, among other things, by the federal Act on Sustainable Public Procurement (the naBe action plan).

In Germany, § 97(3) GWB requires public contracting authorities, when awarding contracts, to take into account not only economic factors but also social, environmental and innovation aspects. The Supply Chain Due Diligence Act (LkSG, in force since 2023) requires larger undertakings to apply due diligence in their supply chains, thereby indirectly affecting procurement.

ESG as an award criterion vs. a minimum requirement

In the procurement procedure ESG requirements can be anchored at various levels.

As an exclusion criterion: undertakings that fail to meet certain ESG standards are excluded from the procedure.
As an eligibility requirement: proof of an environmental management system as a condition of participation.
As an award criterion: bonus for tenders with better ESG performance (e.g. lower carbon footprint).
As a contract performance condition: contractual obligation to comply with social standards during the term of the contract.

Challenges and risks

Integrating ESG criteria into procurement procedures involves legal and practical challenges. Criteria must be linked to the subject matter of the contract – purely politically motivated ESG requirements without a connection to the contract subject matter are inadmissible under procurement law (the connection requirement). Contracting authorities must define ESG criteria clearly and measurably in order to ensure equal treatment and avoid procurement-law infringements.

Related terms

FAQ

Must ESG criteria always be linked to the subject matter of the contract? Yes. According to the case law of the CJEU and the prevailing view in procurement-law literature, award criteria must have a link to the subject matter of the contract. Purely undertaking-related ESG aspects without a contract link are inadmissible as award criteria.

Can ESG criteria entirely replace price as an award criterion? No. Art. 67 of Directive 2014/24/EU requires that the contract be awarded to the "most economically advantageous tender". Price or costs must always be taken into account, but can be weighted alongside quality and ESG criteria.

Which certifications can be required as ESG evidence? Contracting authorities can require recognised environmental certifications (e.g. ISO 14001, EMAS) or social certifications, but must accept equivalent proof.

Last updated: January 2026 All information without warranty. For legally binding advice please consult a law firm specialising in public procurement.