Zero Carbon Public Procurement
In 2019 the UK Government amended the Climate Change Act 2008 to establish a legally-binding target of Net Zero carbon emissions by 2050. On the 5th of June, the Cabinet Office issued PPN 06/21 which sets out how to take account of carbon reduction plans in the procurement of major government contracts. The new measures are set to impact both suppliers and contracting authorities and will help achieve the UK governments Net Zero by 2050 target.
Mandatory Selection Criteria
The PPN introduces new criteria relating to the selection of suppliers for government contracts. Regardless of organisation size, all suppliers will be required to submit a Carbon Reduction Plan (CRP) whereby they will need to detail their carbon footprint as well as confirming their commitment to achieving Net Zero by 2050. The criteria applies to all central government departments, executive agencies and non-departmental public bodies for major procurement contracts valued over £5 million that commence on or after 30th of September 2021.
A suppliers CRP must be approved by a senior leader within the organisation within 12 months of the date of the procurement exercise and submitted to the relevant contracting authority. The suppliers final CRP must:
- Be published and updated regularly on their UK website.
- Verify commitment to achieving Net Zero by 2050 for their UK operations.
- Provide current UK emissions for Scope 1 and 2 of the GHG Protocol and defined subset of Scope 3 emissions:
- Business Travel
- Employee Commuting
- Waste generated in operations
- Upstream transportation and distribution
- Downstream transportation and distribution
- Similarly, provide emissions reporting for the six greenhouse gases covered by the Kyoto Protocol.
- Detail the environmental management measures that can be applied in the delivery of the contract.
For suppliers that fall below the threshold for SECR, this could be the first time they need to implement carbon footprinting and the calculation of emissions reduction targets. The Government have provided a template for the CRP which will help suppliers determine what needs to be disclosed, however, collecting the data and completing the calculations will create a significant workload that needs to be completed in a relatively short timeframe. Beginning this process early will ensure eligibility for procurements that require CRPs.
Organisations that have already set targets and begun to disclose their emissions may well find that their current reporting methodology aligns to the requirements of PPN 06/21, in which case their only obligation is to copy the relevant data into the CRP template.
The accompanying guidance to PPN 06/21 outlines the circumstances in which a contracting authority may refuse to award a contract to a provider who fails to meet the selection criteria. These conditions might include a supplier’s failure to:
- Implement an organisational commitment to reducing Greenhouse Gas emissions.
- Disclose organisational GHG emissions to a contracting authority.
- Provide a CRP which has not been signed off, that does not include environmental management measures too.
Addressing the Challenge
Although the new measures outlined in the PPN 06/21 only apply to major government contracts, it reflects the broad direction in which the UK government is heading. The new standards are the latest UK government’s attempts to decarbonize the public sector in order to assist the UK economy reach Net Zero greenhouse gas emissions by 2050. The new measures will encourage suppliers to support the national Net Zero effort.
Whilst the new measures will apply from 30 September 2021, it is important suppliers use the next few months to review their current emissions reporting and make any necessary changes to ensure compliance with legislation.
Whilst many suppliers will be used to reporting on scopes 1 & 2, it is likely they will need to establish new data sets for the Scope 3 emissions. For now at least, contracting authorities may not need to consider their capability to evaluate bidding suppliers’ CRPs. The quality of the CRP is not really being evaluated, simply confirming you have a CRP and providing the base data should satisfy the requirement. However, will we see future legislation introduced to longer term arrangements to capture, and potentially challenge, failures in delivery against those targets?
For commercial reasons as well as being compliant, it makes sense for suppliers to go beyond a box ticking exercise and really commit to achieving net zero!
If you need support with carbon reporting or assistance to develop a carbon reduction plan, Trident have developed a suite of Net Zero services that will provide compliance with the legislation. We work with multiple technology partners that can help you on your journey to a Net Zero future.
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