Designing a Robust Compliance and Audit Framework for Sustainable Public Procurement

Abstract

Public procurement accounts for a significant share of government expenditure globally, representing roughly 12% of GDP in OECD countries and up to 30% in developing economies (OECD, 2019). As governments increasingly prioritize sustainability objectives, embedding environmental, social, and governance (ESG) criteria into procurement processes has become imperative. However, the effectiveness of sustainable public procurement (SPP) initiatives hinges crucially on strong compliance and audit mechanisms. This article presents a thorough framework for designing compliance and audit systems that ensure accountability, transparency, and continuous improvement in SPP practices. Drawing on institutional theory, principal-agent frameworks, and empirical evidence from multiple jurisdictions, we propose a multi-layered governance approach that addresses the particular challenges of monitoring sustainable procurement outcomes. The framework integrates preventive controls, detective mechanisms, and corrective measures across the procurement lifecycle, while emphasizing the role of independent audit institutions and civil society oversight. We further examine how digital transformation, particularly through e-procurement platforms and blockchain-enabled traceability, can strengthen compliance monitoring and reduce opportunities for greenwashing. By synthesizing comparative insights from both developed and developing country contexts, this study contributes to the emerging literature on SPP governance and offers actionable recommendations for policymakers seeking to institutionalize sustainability in public spending without compromising efficiency or value for money.