It has never been more important to understand your carbon footprint and how to reduce it if you want to be successful in winning public sector contracts. This article sets out why bidders for public sector contracts should formulate a Carbon Reduction Plan (CRP), and what they need to do in three stages, including before a tender comes to market.
Why Organisations should create a Carbon Reduction Plan
Since 30 September 2021, all organisations bidding for particular Public Sector contracts with an annual contract value of £5m or more must “detail their commitment to achieving Net Zero through the publication of a Carbon Reduction Plan (CRP).” The principal document is PPN 06/21, which from a procurement perspective applies to all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies, and sets out how to take account of suppliers’ Net Zero Carbon Reduction Plans in the procurement of major Government contracts. However, it is worth noting three emerging trends:
- In a recent a Crown Commercial Service, the Buyer (a government department) changed the value threshold in the procurement from annual contract value to the total contract value.
- Wider public sector bodies including this requirement.
- Prime contractors are likely to seek a similar commitment from supply chain partners.
For the purposes of this article, Carbon Net Zero (CNZ) is defined as:
– A “net-zero” target refers to reaching net-zero carbon emissions by a selected date through balancing the amount of greenhouse gases (GHG) emitted into the atmosphere with the equivalent emissions being offset or sequestered.
Environmental considerations and carbon reduction will be a factor in the delivery of most, if not all, contracts. Contracts over the value threshold will be assessed to determine whether a “supplier has the necessary technical ability to perform the contract” particularly if the contract has a direct impact on the environment or requires the use of buildings by staff, the transportation of goods or people, or the use of natural resources. If you can’t evidence this, it will be difficult to win the contract.
Bidders should note that for contracts over £5m (the Invitation to Tender (ITT) should state if the threshold is annual or total contract value) they will need a CRP to qualify. This article proposes that they should develop carbon reduction planning in three stages:
- Stage 1. Pre-tender: what ground work needs to be completed.
- Stage 2. Tender: what is generally required in a tender.
- Stage 3. Post tender: the behavioural changes necessary, the implementation of a CRP and the measuring and reporting requirements.
Stage 1. Pre-tender: what ground work needs to be completed?
The work needed to create a CRP is significant, therefore it is unlikely that a high-scoring CRP could be completed within normal tender timelines, unless bidders have the necessary expertise in-house and already understand their carbon footprint. Bidders will need to identify the activities across their UK operations that emit GHG in each Scope (see diagram below) and measure them. If the work needs to be outsourced, then it should form part of bidders pre-engagement work.
What is a CRP? A CRP contains six elements:
- A commitment by the organisation that it will achieve CNZ by 2050 for their UK operations (or an earlier target year).
- A statement of the company’s emissions footprint for the baseline year (self-selected) for Scopes 1 and 2 of the GHG Protocol and a subset of five Scope 3 emissions. The GHG Protocol focuses on those in the Kyoto Protocol (shown along the top of the diagram) and divides emission sources into three Scopes:
– Scope 1 are the direct emissions from the organisation’s activities, such as buildings, processes and vehicles, and within its control.
– Scope 2 are the indirect emissions from any energy source used by the business.
– Scope 3 are the other indirect emissions that are outside direct control, but which the organisation can influence. The defined subset of five Scope 3 emissions is: Upstream transportation and distribution; waste generated in operations; business travel; employee commuting; and downstream transportation and distribution.
- A statement of the current emissions for the three Scopes.
- A projection of the carbon emissions decreases year on year out to the target year.
- A statement of the company’s carbon reduction initiatives and its environmental management measures and projects, including certification schemes (such as ISO 14001), that will enable it to achieve net zero by the target year.
- A declaration and the signing-off of the CRP by a board member, which is then placed on the company’s website.
The Ground Work – Pre-Tender Preparations
To deliver the first five elements requires the organisation to have a strategy, roadmap and implementation plan. The key to success is to identify the organisation’s activities that emit GHGs across the three Scopes and then create a framework for action comprising:
- Being committed to achieve Net Zero by a defined target year and ensuring that strategy, policies, working practices, training and employee and supplier motivations and behaviours are aligned with the objective.
- Identifying the sources of GHG emissions covering the organisation’s products and/or services and its supply chain across each Scope.
- Creating a carbon footprint for the company’s emissions in the baseline year, the current year, and the projected years out to the target Net Zero year.
- Creating a measuring and reporting methodology covering GHGs. This may require a specialist organisation to assess the activities and measure emissions.
- Determining across the three Scopes the policies, procedures, actions and behaviours the business should adopt to measure and reduce its carbon footprint and integrate them into the business’s operating model.
- Setting out the environmental management measures, including offsetting, that it will deliver when performing public contracts and which support achieving Net Zero.
- Creating an organisational CNZ strategy (possibly using the values and principles in ISO 44001: collaborative working) to achieve net zero by the target year.
Stage 2. Tender: what is generally required in a tender?
Understanding the full tender requirements, including Social Value and Climate Change requirements, is the first action. The requirement for a CRP may be contained in a Selection/Qualification Questionnaire with a number of questions. In a recent Public Sector tender the questions were evaluated as pass/fail. For example, bidders were asked to confirm that they had a CRP, including the environmental management measures, or if not whether they had an acceptable explanation, were taking steps to reduce GHG emissions, and were committed to CNZ.
With the increasing emphasis on climate change, the likelihood of the tender containing Quality or Award questions on the subject is possible. Possible question themes for which bidders should be prepared include (illustrative):
- How will you implement a CRP in order to meet the year-on-year carbon reductions and achieve net zero?
- How will you integrate certified environmental management measures into your solution?
- How will you engage your employees/suppliers to implement the environmental measures?
Stage 3. Post Tender
Once signed off, the CRP should be implemented and progress to net zero reported. This is likely to fall into two areas:
- Implementation. Implement the CRP with senior sponsorship, including:
– Measure and report annually against the CRP’s projected Year-on-Year reductions in emissions.
– Adjust, if necessary, the pace of reductions to meet net zero by the target year. For example, company growth may increase activities and emissions, so further carbon reductions and/or offsetting may be needed to counter the increased emissions as a consequence of growth.
– Strive to identify innovative, cost effective technologies, working practices or behaviours that contribute to reducing emissions.
- Behaviours. Success is largely predicted on changing people’s behaviours.
– Make employees Aware of the challenge
– Create a Desire in them to achieve the target.
– Give them Knowledge and Ability to act.
– Reinforce environmental behaviours to succeed.
There is a legal requirement for the UK to be carbon net zero by 2050. Organisations bidding for Public Sector contracts over £5m are required to have a CPR in place, which is often a pass/fail criterion in a Pre-Qualification Questionnaire, so to be successful this needs to be in place pre-bid.
Contracts Advance can provide support in developing a high-scoring CRP and links to organisations that will measure your current carbon footprint, enabling you to start the journey to cleaner operations and greater success in the public sector.