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Procurement Carbon Reduction Plans – Are you prepared?

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The Cabinet Office has recently released a Procurement Policy note (PPN 06/21) which introduces a new mandatory selection criterion relating to carbon foot printing and against which bidders will be assessed on a pass/fail basis. 

The PPN provides that those bidding for Government contracts[1] in respect of goods, services and/or works with an anticipated contract value greater than £5 million per year (averaged over the life of the contract), and which are advertised on or after 30 September 2021, will be required to include within their bid a Carbon Reduction Plan ("CRP") setting out the bidder's commitment to achieving the UK's target of Net Zero by 2050. 

Whilst the requirement to provide a CRP during the selection stage will not apply where carbon reduction considerations are not related or proportionate to the contract, both the PPN and the accompanying guidance make clear that the Government's expectation is that carbon reduction considerations will be relevant to the majority of major public contracts.

In order to achieve a 'pass' against the new selection criterion, a bidder's CRP must meet the standard required by the PPN and the guidance.

In particular bidders must

• Confirm their commitment to achieving Net Zero by 2050 for their UK operations.
• Provide details of their current emissions for the sources included in Scope 1 and 2 of the Greenhouse Gas Protocol and a defined subset of five of any of the Scope 3 emissions.
• Provide emissions reporting in Carbon Dioxide Equivalent for the six greenhouse gases covered by the Kyoto Protocol.
• Set out the environmental management measures in place, such as certification schemes or specific carbon reduction measures adopted by the bidder.
• Publish the CRP on their website and update it regularly.

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Key practical considerations

Bidders likely to be bidding for large public procurement contracts (in excess of £5 million per annum) should use the time leading up to the implementation of the PPN on 30 September 2021 to ensure they can comply with the new requirements.

This could include carrying out an internal audit of their current processes and emissions reporting, addressing any issues which come to light and implementing an internal policy or procedure facilitating an annual review of the CRP.

However, the most important first steps are for bidders to read and understand the PPN and accompanying guidance and start the process of calculating their current emissions.

 

Comments

PPN06/21 is a significant step forward in terms of the extent to which the Government is committed to ensuring that its supply chains transition to net zero.   It is also reflective of the Government's aim to align its procurement strategy with its approach to the construction industry, and in particular the Construction Playbook, which sets out the Government's intention to focus on a whole life carbon approach to fight climate change and deliver greener facilities designed for the future.

Although the £5m per year threshold means that, as things stand, the requirement for a CRP only applies to major contracts, it is indicative of the general direction of travel, and we anticipate that, in time, the requirement to provide a CRP may also become mandatory for lower value contracts and/or procurements run by local authorities and other awarding bodies. It is also likely that those who are further on down in the supply chain may need to put their own reporting mechanisms in place in the future.

[1] Contracts let by Central Government Departments, their Executive Agencies and Non Departmental Public Bodies