Green economy: firms required to commit to net zero emissions to secure government contracts

Published by Rhys Taylor-Brown on June 7th 2021, 2:02pm

The government has introduced new measures requiring businesses to commit to net zero carbon emissions by the year 2050 and produce carbon reduction plans before being allowed to bid for major government contracts.

The ruling is the first of its kind to be brought in by any government, and reaffirms Westminster’s commitment to pursuing a green economic recovery from the Covid-19 pandemic by ensuring that prospective partners clearly publish plans to cut carbon emissions across all their operations.

The ruling was announced on June 5, coinciding with World Environment Day.

The measures require businesses bidding for contracts above the value of £5 million per year to commit to the government’s target of net zero carbon emissions by 2050 and to have published a carbon reduction plan, by September this year. Failure to comply will result in the offending firm being excluded from the tender process.

A carbon reduction plan outlines where an organisation is responsible for carbon emissions, and declare the environmental measures to reduce such emissions that are in place. Numerous large companies already self-report parts of their carbon emissions which come directly from themselves and indirectly, known as Scope 1 and Scope 2 emissions, respectively.

The new rules will require that even Scope 3 emissions generated by business travel, employee commuting, transportation, distribution and waste must be reported in the carbon reduction plan put forward by companies.

Any firm bidding for a major government contract is required to comply, even if unsuccessful in the tender process, to widen the impact of net zero efforts. The ruling will also be extended to cover all central government departments and associated organisations.

Efficiency and transformation minister, Lord Agnew, stressed that the new green measures would be balanced to avoid placing too great a burden on SMEs who look to bid for government contracts.

He said: “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.”

The Confederation of British Industry's director of infrastructure and energy, Tom Thackray, added: “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.”

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Authored By

Rhys Taylor-Brown
Junior Editor
June 7th 2021, 2:02pm

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