UK Government Contracts Over £5m Only Available to Businesses with A Net Zero Plan – Here’s How to Prepare

30th June 2021

New procurement rules have entered into force for companies bidding for large government contracts, with those seeking to win these contracts needing to prove that they have credible plans for reaching net zero by 2050 by the end of September 2021. Our principal consultant Duncan Oswald explains what this means for companies and what they need to do to become compliant.

On World Environment Day, 5th June 2021, the UK Government announced that companies that bid for large contracts from UK Government Departments, Executive Agencies or Non-Departmental Public Bodies will have to commit to achieving net zero by 2050 and produce credible Carbon Reduction Plans before being considered from 30th September 2021.

If you are one of these companies, you have very little time to prepare for the new rules laid out in Procurement Policy Note (PPN) 06/21. This PPN requires any organisation bidding for a contract with a value of over £5 million per annum to publish a compliant Carbon Reduction Plan (CRP). This CRP must set out in detail how your organisation intends to achieve net zero greenhouse gas emissions by 2050 (at the latest), and it is far from just a paper exercise.

What do you need to do to be compliant?

To be compliant, CRPs must cover all Scope 1, all Scope 2, and some Scope 3 emissions. For anyone who is not an afficionado, Scope 1 includes direct emissions from burning fossil fuels such as coal, oil and gas, Scope 2 includes emissions from the generation of electricity that you use, and Scope 3 includes everything else across your entire value chain, from raw materials through logistics, processing, packaging, use and disposal of product. The PPN does not require reporting on all Scope 3 emissions, only upstream transportation and distribution, waste generated in operations, business travel, employee commuting, and downstream transportation and distribution. Still, if you haven’t already got this under control, there’s a lot to do in three months.

CRPs must comply with the internationally recognised GHG Protocol’s Corporate Accounting and Reporting Standard, and should be conducted to a reasonable level of assurance. In other words they are asking for a comprehensive net zero transition plan, rather than a quick workaround. Eunomia has a lot of experience helping organisations of all sizes in all sectors get to grips with their climate impact. We have the tools and experience to help develop a robust and credible CRP, and can mobilise quickly to ensure your company is compliant and able to continue bidding for key government work.

Your contribution to tackling climate change

Once your company is fully compliant, what you will have is a carefully crafted road map to achieve net zero. The 2050 net zero target is written in UK law, so you will need to start making progress towards this sooner or later anyway. By starting now to achieve compliance with PPN06/21, you will demonstrate your company’s green credentials, not only allowing you to bid for government contracts, but also increasing your chances of winning every contract.

By devising and implementing a credible CRP, you will be able to implement a future-proofed business model, bringing opportunities to reduce costs through energy and resource efficiency, fleet modernisation, process design, power purchase agreements, renewable energy and innovative business models, and of course you will be making a genuine contribution toward tackling climate change, so there are numerous benefits.

If any of this is relevant to you, please give us a call to talk it through.

Featured image: Chan Pac Swire via Flickr (CC BY-NC 2.0)