From the end of September 2021, businesses with operations in the UK who bid for large public sector tenders, will for the first time have to show their commitment to reaching net zero by 2050.
This seismic change for businesses bidding for contracts of £5 million or more comes in the form of an environmental policy coming into effect on 30th September.
'Procurement Policy Note 06/21: Taking account of Carbon Reduction Plans in the procurement of major government contracts' (PPN), published in June 2021, applies to bids for contracts with government departments and "arm's length bodies".
It means that from now on, bids will have to detail your emissions and your measures to reduce them. All of this needs to be set out in a Carbon Reduction Plan at the selection stage.
The "arm's length bodies" include central government's executive agencies and non-departmental public bodies like CPS, DVLA and HMRC. Along with the government departments, the PPN calls all of them 'in-scope organisations'.
According to our sources in the Cabinet Office, this framework may well be used in years to come to establish wider SME carbon reporting as and when it becomes mandatory.
The PPN comes two years after the UK became the first major economy to etch into law a commitment to reach net zero emissions by 2050. The country can't do that without businesses on board, so this policy is a way of encouraging businesses to play its role.
It could be easy to see the policy as another tiresome addition to your mounting pile of paperwork. Frame it in a different light, however, and it's an opportunity to help your business become part of the solution to the climate crisis.
It's not just about reviewing and reducing your emissions. See it as a way to help you join the businesses already putting more back into society than they take out. It's a way to prepare for the impacts of the climate crisis and to learn about the emerging opportunities.
Complying with the PPN isn't quite the same as receiving CDP recognition for your ambitious climate action. Demonstrably following national policy however can help build trust among your customers and suppliers.
Your Carbon Reduction Plan must, using this template, set out your emissions in line with the technical standard and GHG Reporting Protocol corporate standard. You need to detail your commitment to meeting net zero in the UK by 2050 and the measures helping you.
These measures can include things like signing up to Science Based Targets or Race to Zero, your team booking fewer flights, using certification schemes like ISO14001 or PAS 2060, or electrifying your fleet.
You'll have to show how you're reducing direct emissions from assets you own or control (scope 1), indirect emissions from energy you buy (scope 2), and a selection of indirect emissions from your supply chain (scope 3). Read our handy scope 1, 2 and 3 explainer.
This scope 3 subset covers business travel, employee commutes, waste, and transportation and distribution. Across all scopes, you have to report both baseline emissions and current emissions.
Baseline emissions, according to the PPN, are those "produced prior to the introduction of any strategies to reduce emissions" and are there to measure your current emissions against.
You need to get someone in your senior leadership team to sign off on your plan - a way to solidify a clear commitment to net zero. Once signed off, you will need to get it up on your website where it can easily be found, and then update it at least every year.
There is no scoring. The policy requires government departments or arm's length organisations not to rank the plans they assess. It's either a pass or a fail - and if you don't meet the requirements, you may be excluded from the application process.
That means, however, that a plan that gets you to net zero faster won't give you an advantage. If you're on track to meet net zero by 2040 while your competitor will only reach it 3 years later, it doesn't matter. You both will reach it by 2050 and that's what counts.
Unless the contract is less than £5 million and not subject to the Public Contracts Regulations 2015, there are few exemptions. This is because, in the policy's own words, "environmental considerations... will be a factor in most, if not all, contracts".
Any business has an impact on the planet in some form - from the natural resources used in your products to the vans delivering them. Even your emails have emissions.
While it's not mandatory for devolved administrations to ask you for a Carbon Reduction Plan, they can still choose to. If your contract started before 30th September 2021, then you won't need to complete a plan.
The guidance gives two exceptional instances when you may not need to submit a plan, which "may often be temporary" anyway. It's not an exhaustive list, however, and government departments would need to explain why they're not asking you for a plan.
First, where the market for a contract is struggling to such a degree that it's likely public service delivery is put at risk or value for money is severely compromised. Second, where there is a civil emergency.
This will be an entirely new process for many businesses, especially those who haven't yet begun their journey down the net zero path.
According to leading sustainability consulting firm Anthesis, “data required to complete baseline and current emissions can take up to 8 weeks”. Not with Spherics.
Our carbon measurement tool takes about 30 minutes to set up and within the hour you can have the UK Government’s Carbon Reduction Plan template ready to be exported with all your necessary information. No other measurement tool currently provides this service (as far as we know!).
If you are interested in learning more please drop us an email or click "book a demo" above.