Public procurement's role in the journey to net-zero

Public procurement will play a central role in the UK’s bid to reduce carbon emissions and achieve net-zero, explains Jessica Boardman, associate in procurement law at Bevan Brittan

The UK Cabinet Office has issued an action note explaining how suppliers’ net-zero carbon reduction plans are to be considered in the procurement of major government contracts. While the measures contained in Procurement Policy Note 06/2021 will place carbon reduction into direct focus for these contracts, they will also bring about change on a wider scale. The PPN sends a very clear message that public procurement is an important tool in achieving carbon reduction goals and illustrates the types of proactive measures needed.

Carbon reduction plans

Under the PPN, since 30 September all suppliers bidding for relevant central government contracts have had to meet selection-stage criteria that relate to carbon reduction. The relevant contracts encompass goods, services or works procured by central government departments, their executive agencies and non-departmental public bodies, with an anticipated contract value of £5m per annum or above (excluding VAT) and to which the PPN is related and proportionate to the contract.

The pass/fail selection criteria require suppliers to provide a carbon reduction plan confirming their commitment to achieving net-zero by 2050, and setting out particular details about their carbon footprint, while the accompanying guidance explains how the criteria are to be assessed.

These carbon reduction plans are expected to become standard documents that suppliers will update periodically and use for all relevant procurements. Inevitably, this will prompt increased transparency about the environmental performance of companies bidding for central government contracts and, as such, it is likely to encourage a shift in supplier behaviour.

There is clearly scope for the production and evaluation of mandated carbon reduction plans to have wider applications than major government contracts in the not too distant future. Furthermore, as the practice of maintaining the plans is embedded in the companies bidding for public contracts, these documents will become a valuable source of information about supplier carbon footprints, which will be of interest to contracting authorities outside of central government.

Procurement to reduce emissions

Accounting for environmental considerations in procurement is not new; however, PPN 06/2021 is one of a series issued by the Cabinet Office in the past year, which demonstrates an increased emphasis on using public procurement as a tool to improve sustainability and reduce carbon emissions.

It ties in with PPN 06/2020 from September last year, which requires that social value forms part of the award criteria for central government contracts (where related and proportionate to the subject matter). And the Social Value Model, published in December 2020, included fighting climate change as a policy theme with award criteria focusing on delivering environmental benefits in the performance of the contract.

In addition, the National Procurement Policy Statement detailed in PPN 05/21 sets out tackling climate change and reducing waste as a national priority that should be considered by all contracting authorities in all procurements (where relevant and proportionate). This specifically includes contributing to achieving net-zero carbon emissions.

Together, these recent documents signal a shift in gear. They provide much firmer direction about the government’s intentions and the role public procurement is to play in reaching sustainability goals. Those working in public procurement should start preparing for change now because we can expect to hear a lot more on this topic in the coming months.

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