New net zero commitments required for government contract bids

New net zero commitments are now required for companies bidding for government contracts worth more than £5 million...

New net zero commitments required for government contract bids

Companies bidding for government contracts worth more than £5 million must commit to achieving net zero by 2050, under new rules which came into force on 30 September.

The UK is the first country in the world to enforce such measures, which apply to any company bidding for government contracts and not just those who are successful. The new requirements come into effect ahead of COP26, with officials at the event working closely with climate experts and campaigners to encourage other countries to follow suit.

Chancellor of the Duchy of Lancaster Steve Barclay said: “These new rules show our bold and ambitious agenda to achieve net zero by 2050, protecting ourselves and future generations. Government spends £290billion a year on procurement and it’s right that we use this spending power to green the economy. Working arm-in-arm with business, we are taking giant strides to ensure this country is building back greener and tackling climate change.”

Andrew Griffith, UK Net Zero Business COP Champion, said: “The message to businesses is clear – engaging on net zero is no longer an option but a necessity from today, with businesses large and small now needing firm climate plans and commitments in place to supply major government contracts. As we prepare to host the UN COP26 Summit this is exactly the type of leadership and collaboration required from government and business to show the world that we are serious about investing in a greener, more prosperous future.”

A carbon reduction plan sets out where an organisation’s emissions come from and the environmental management measures that they have in place. Some large companies already self-report parts of their carbon emissions, known as Scope 1 (direct) and Scope 2 (indirect owned) emissions as part of the Streamlined Energy and Carbon Reporting regulations published in 2018.

The new rules will go further, requiring a commitment to achieving net zero by 2050 at the latest, and the reporting of some Scope 3 emissions; including business travel, employee commuting, transportation, distribution and waste for the first time.

It is hoped that the new rules will drive forward the government’s green agenda while also striking a balance to not overly burden and potentially exclude small and medium sized enterprises (SMEs) from bidding for government work. The measures will apply to all central government departments as well as their executive agencies and non-departmental public bodies.

Welcoming the measures, the Confederation of British Industry’s Director of Decarbonisation Tom Thackray commented: “The scale and breadth of spend makes public sector procurement an essential tool in driving net zero progress across all sectors and regions of the country. This new policy will provide a sharp focal point for public-private partnerships. Responding to their customers and investors, businesses are eager to accelerate progress towards net zero as part of a broader sustainability agenda. Working with the public sector they can demonstrate their excellence and underline the world-leading progress many industries have already made.”

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