Firms Must Commit to Net Zero to Win Government Contracts

NEW MEASURES will require businesses to commit to net zero by 2050 before they can bid for major government contracts.

Firms must publish clear and ‘credible’ carbon reduction plans, says the Government. The rules are part of the government’s plan to build back greener.

The measures make the UK government the first in the world to put this requirement in place. Under the new rules, by September, prospective suppliers bidding for contracts above £5million a year will need to have committed to the government’s target of net zero by 2050 and have published a carbon reduction plan. Firms which fail to do so will be excluded from bidding for the contract.

Minister for Efficiency and Transformation, Lord Agnew, 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.

“These measures will help green our economy, while not overly burdening businesses, particularly SMEs.”

A carbon reduction plan sets out where an organisation’s emissions come from. It includes 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.

The new rules will go further, requiring the reporting of some Scope 3 emissions, including business travel, employee commuting, transportation, distribution and waste. Scope 3 emissions represent a significant proportion of an organisation’s carbon footprint.

Tom Thackray, Director of Infrastructure and Energy, at the CBI said: “The CBI has long supported using procurement policy to ensure government spending supports the UK’s environmental objectives. These changes will encourage more firms across the country to demonstrate their own commitment to net zero when bidding for government contracts.”

All companies bidding for major government contracts will need to comply with the measure, not just those who are successful in winning contracts.

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

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