The CO₂ Performance Ladder does more than just reduce carbon emissions. New research from the Utrecht University Centre for Public Procurement (UUCePP) shows that its use in public procurement is also linked to improved technological innovation among companies.

The study – carried out as part of an EU project funded by the IKEA Foundation – finds that companies winning tenders where the CO₂ Performance Ladder is applied demonstrate measurable improvements in the quality of their technological innovation – provided they are certified under the scheme within two years after winning the tender.

What was studied?

Researchers analysed Dutch public procurement data from 2010 to 2024 and combined this with company-level certification records and technological quality data of patents.

The focus was on how companies perform before and after winning the tender in which the CO₂ Performance Ladder is used.

The key question: to what extent does applying the Ladder in public procurement lead to stronger innovation outcomes?

Key findings

Innovation improves – but only for certified companies

Companies that win a contract and hold a CO₂ Performance Ladder certificate (or obtain one shortly after) show a statistically significant improvement in the technological quality of their patents.

This suggests that the combination of procurement and CO₂ Performance Ladder certification is the key condition for the innovation response.

A specific effect of the CO₂ Performance Ladder

No comparable effect is found for companies without certification. Similarly, companies certified only under ISO 14001 do not demonstrate the same innovation response as Ladder-certified companies.

General forms of green public procurement without the Ladder do not show similar innovation effects. This indicates that the structured, performance-based design of the CO₂ Performance Ladder is key.

Effects emerge gradually and persist over time

Innovation gains do not appear immediately. Instead, they develop over several years after winning a tender and persist over the medium term.

The Ladder appears to support sustained improvements rather than one-off changes.

Strongest impact in large contracts

The effects are most pronounced in large, high-value contracts. Smaller projects show little to no measurable impact.

Project scale plays an important role in enabling companies to invest in innovation.

Most visible in R&D-intensive sectors

Companies operating in sectors with higher R&D intensity show the strongest improvements. In less innovation-driven sectors, effects are limited.

Innovation depends not only on incentives, but also on a company’s capacity to respond.

What do these results mean?

The findings suggest that the CO₂ Performance Ladder is not only associated with emissions reduction, but also with improvements in the technological quality of innovation among companies.

However, these effects are not universal. They occur under specific conditions – particularly when the Ladder is actively applied in public procurement in sectors with higher R&D intensity and companies are certified.

This may be due to specific Ladder requirements related to collaborating across the supply chain and initiating projects to facilitate CO2-reduction across the sector.

“The most important takeaway from the study is that procurement policies can play a meaningful role in shaping firm behavior, particularly when incentives are designed to reward higher levels of environmental commitment. What makes this research distinctive is that it links procurement practices not only to environmental outcomes but also to firm-level innovation responses.”

– Jihwan Ryu, Utrecht University Centre for Public Procurement

Conclusion

This study provides new evidence that the CO₂ Performance Ladder can contribute to innovation in addition to reducing emissions.

The impact is targeted rather than universal: it is most visible among certified companies, in larger contracts, and in sectors with stronger innovation capacity.

This suggests the Ladder may play a broader role than emission reduction alone, though the evidence suggests this broader potential unfolds under specific conditions rather than as a given.