New measures will require businesses to commit to net zero by 2050 and publish clear and credible carbon reduction plans before they can bid for major government contracts.
The measures, published earlier this week (June 7), make the UK government the first in the world to put this requirement in place, underlining the UK’s global leadership in tackling climate change.
The rules will support the government’s plan to build back greener by ensuring that potential government suppliers publish plans to reduce carbon emissions across their operations in order to bid for major government contracts. They will also support the NHS’s journey towards net zero, helping Trusts to reduce their Scope 3 emissions - that is, indirect emissions that occur in producing and transporting goods and services, including the full supply chain.
Under the new measures, by September, prospective suppliers bidding for contracts above £5 million a year will need to have committed to the government’s target of net zero by 2050 and have published a carbon reduction plan. Firms which fail to do so will be excluded from bidding for the contract.
The contract value has been set so as not to overly burden, or potentially exclude, small and medium sized enterprises, (SMEs) from bidding for government work.
Minister for Efficiency and Transformation, Lord Agnew, says: “The government spends more than £290 billion on procurement every year, so it’s important we use this purchasing power to help transform our economy to net-zero.”
A carbon reduction plan sets out where an organisation’s emissions come from and the environmental management measures that they have in place. Some large companies already self-report parts of their carbon emissions, known as Scope 1 (direct) and Scope 2 (indirect owned) emissions.
The new rules will go further, requiring the reporting of some Scope 3 emissions, including business travel, employee commuting, transportation, distribution and waste. Scope 3 emissions represent a significant proportion of an organisation’s carbon footprint.
All companies bidding for major government contracts will need to comply with the measure, not just those who are successful in winning contracts. This further widens the impact of the measure, as more and more suppliers commit to achieving Net Zero.
The measures will apply to all central government departments and arms-length bodies.
Leaders from business and industry have welcomed the initiative.
A spokesperson from the Business Services Association says: “Achieving Net Zero means everyone - government, businesses, the VCSE sector and the public as a whole - working together as one.
Harnessing the power of public procurement is one important tool at the government’s disposal. That’s why the BSA welcomes this move. We and our members contributed to the process of drawing it up. It is another important step on the road to Net Zero.”
