Net zero to be mandatory for government contracts
21 June 2021
New procurement measures will require firms to have credible carbon reduction plans before they can bid for major government contracts, in a significant move expected to ripple through supply chains.
New procurement measures will require firms to have credible carbon reduction plans before they can bid for major government contracts, in a significant move expected to ripple through supply chains.
The new rules, published on 5 June, will require prospective suppliers bidding for contracts above £5 million a year to commit to the UK’s climate change target of net zero emissions by 2050, and have a ‘clear and credible’ carbon reduction plan in place. Firms which fail to do so will be excluded from the bidding process.
Meanwhile, a separate notice published on 3 June advises that all forms of public procurement should consider a bidder’s approach to net zero when awarding contracts, as part of social value requirements.
The UK is believed to be the first country in the world to put a net zero requirement in place for major contracts. Bidders’ carbon reduction plans must cover what is known as ‘scope 1’ (direct), ‘scope 2’ (indirect energy) and some ‘scope 3’ (wider value chain) greenhouse gas emissions.
Although the requirements do not formally extend to the bidder’s own supply chain, working with suppliers to reduce their emissions is already a rising trend in the corporate world.
New research has found that nearly eight in ten multinationals plan to stop sourcing from suppliers who may negatively affect their carbon reduction commitments by 2025. Two thirds of the 400 companies surveyed said that reducing supply chain emissions was the ‘first step’ in their net zero strategy.
SMEs in Greater Manchester can now get step-by-step support to build their own net zero strategy through our online Journey to Net Zero workshop programme.