Back in 2019, the Government amended the Climate Change Act (2008) to include a target of at least a 100% reduction in the net UK carbon account by 2050 – also known as the Net Zero target. One of the ways in which the government can reach that target is by ensuring that any public procurement that takes place includes commitments to reach net zero within winning organisations.
This has been formalised in Public Procurement Note 06/21, ‘Taking Account of Carbon Reduction Plans in the Procurement of major government contracts’ which has just been published. The note sets out the tenders that this will apply to, and what organisations will need to do in order to be compliant with the PPN.
What Tenders Does the PPN Apply To?
At present, the requirement only applies to tenders issued by Central Government, Executive Agencies, and Non-departmental Public Bodies. It also only applies to contracts over £5 million, whether those are tendered fully, or through an existing framework or Dynamic Purchasing System (DPS) to which the PCR Regulations would normally apply.
What does the PPN Change?
Bidding Suppliers will be required to have a Carbon Reduction Plan(CRP) confirming their commitment to reaching Net-Zero by 2050 and setting out the environmental measures they have in place, which will be in effect and used over the course of the contract. The PPN includes a template Carbon Reduction Plan as Appendix A to give guidance for what information is expected.
This plan will need to:
- Confirm the bidding supplier’s commitment to achieving Net Zero by 2050 for their UK operations.
- Provide the supplier’s current emissions for the sources included in Scope 1 and 2 of the GHG Protocol, and a defined subset of Scope 3 emissions.
- Provide emissions reporting in CO2e (Carbon Dioxide Equivalent) for the six greenhouse gases covered by the Kyoto Protocol.
- Set out the environmental management measures in effect, including certification schemes or specific carbon reduction measures adopted, and that will be applied when performing the contract and that support achieving Net Zero by 2050.
- be published on the supplier’s website.
For suppliers who are already on Frameworks, the PPN states that ‘Contracting authorities may verify that the supplier remains committed to achieving Net Zero prior to entering into any contract’.
It’s expected that the PPN will apply to most, if not all, contracts, given that environmental considerations and carbon reduction are a factor in many contracts.
How to be Compliant
The PPN will only apply to contracts advertised after September 30th 2021 however that only gives three months for suppliers to get their CRPs in order and published. We would recommend that companies who anticipate bidding for contracts that fall under the PCN start the exercise of compiling their CRP as soon as possible – not only to ensure that you are compliant with any tenders but to begin collecting data that demonstrates you are making progress towards your goals, as we anticipate this will become a factor in future tenders.
Net Zero – Future-Proofing Your Business
While this PPN only applies to larger contracts, it is to be expected that an increased emphasis on Net Zero ambitions will be seen in other public sector contracts. If you are a smaller business subcontracting to a larger one, you may see that the requirement to commit to Net Zero is cascaded down to you to boost the larger companies’ tender response.
If you are behind the power curve when it comes to taking environmental action, then please reach out to us today. We are more than happy to work with you to help you develop workable targets, policies, and processes that can help you compete on the Net Zero playing field and win more tenders!
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