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 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.
The measures announced on World Environment Day, 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.
Under the new measures, by September, prospective suppliers
bidding for contracts above £5million 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 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.
Requiring companies to report and commit to reducing their
carbon emissions before bidding for public work is a key part
of our world leading approach.
These measures will help green our economy, while not overly
burdening businesses, particularly SMEs.
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.
The new rules drive forward the government’s green agenda, while
also striking a balance to not overly burden and potentially
exclude small and medium sized enterprises (SMEs) from bidding
for government work.
Tom Thackray, Director of Infrastructure and Energy, at the CBI
said:
As the world looks towards the UK and COP26 for leadership on
decarbonisation, business is already playing a vital role in
driving progress towards a greener future.
The CBI has long supported using procurement policy to ensure
government spending supports the UK’s environmental objectives
and these changes will encourage more firms across the country
to demonstrate their own commitment to net zero when bidding
for government contracts.
Partnership between the public and private sectors can make the
UK a global role-model, not only in delivering vital public
services but working together to tackle climate change.
A spokesperson from the Business Services Association added:
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.
The approach is similar to the successful prompt payment measure
introduced in 2019, which allowed a supplier’s performance in
paying their subcontractors promptly to be taken into account
when bidding for government work. As a result of this measure, we
have seen improvements in payment performance across the UK
economy.
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.
