Firms with no net zero plan to be blocked from tenders

7 June 2021

Suppliers must publish a “Carbon Reduction Plan” detailing their commitment to achieving net-zero by 2050 in order to bid on major UK government contracts, according to new guidance.

In a Procurement Policy Note, the Cabinet Office (CO) said from 30 September 2021, prospective suppliers bidding for contracts above £5m will need to have published a Carbon Reduction Plan.

The plan sets out where an organisation’s emissions come from and the environmental management measures that are in place. Some large firms are already self-reporting scope one (direct) and scope two (indirect owned) emissions, the guidance added.

Under the new measures large firms will be required to report on some scope three emissions including “business travel, employee commuting, transportation, distribution and waste”, representing a “significant proportion of an organisation’s carbon footprint”.

Published plans should confirm the supplier’s commitment to achieving net zero by 2050 in the UK, and set out the environmental management measures that will be utilised during the performance of the contract, the guidance said. 

“Firms which fail to do so will be excluded from bidding for the contract,” the CO said.

The measures apply to all central government departments and arms length bodies.

The guidance added: “The government is committed to continuing its efforts to reduce greenhouse gas emissions and deliver on its carbon budget commitments, while keeping costs down for consumers and supporting the creation of good jobs and growing the economy. 

“As environmental and carbon considerations feature in the aspects of delivery of most public contracts, this is an opportunity for us to take steps to support that commitment and reduce emissions through public procurement.”

Lord Theodore Agnew, minister for efficiency and transformation, said: “The government spends more than £290bn 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.”

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