In 2019 the UK Government amended the Climate Change Act 2008 to establish a legally-binding target of Net Zero carbon emissions by 2050. On 7th Jun 2021 it issued PPN 06/21 which sets out how to take account of carbon reduction plans in the procurement of major government contracts. The PPN applies to all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies who should apply it when procuring goods, works or services with a contract value above £5M pa that are subject to the Public Contract Regulations 2015. It also applies to framework agreements and dynamic purchasing systems of similar value, and will apply to procurements advertised on or after 30th September 2021.
The Cabinet Office expects that the PPN will be relevant to the majority of contracts.
Requirements of PPN 06/21
In-scope organisations are required to include the requirement for bidding suppliers to provide a Carbon Reduction Plan (CRP) detailing their organisational carbon footprint and confirming their commitment to achieving Net Zero by no later than 2050 in their UK operations.
Required standards for Carbon Reduction Plans are set out in supporting guidance. These specify that the supplier accounts for emissions in Scope 1, Scope 2 and a defined subset of Scope 3; includes the 6 greenhouse gases covered by the Kyoto Protocol; and sets out the measures that will be applied in support of the Net Zero commitment. The supplier is required to have the CRP approved by a senior leader, update it annually at a minimum and publish it on its UK website using the template provided for this purpose.
The CRP must set a baseline year and disclose scope 1, 2 and 3 emissions for both that period and the current reporting period. Any existing emissions reduction targets must be stated, or new targets set if this is the organisation’s first carbon footprint.
The CRP must also include details of emissions reduction measures that have been completed or implemented since the baseline, and the reduction achieved by these. This may include certification schemes such as ISO14001 or PAS 2060, signing up to SBTI or details of individual interventions. Description of future carbon reduction projects is also requested.
Emissions must be calculated and reported in accordance with the GHG Reporting Protocol corporate standard and use the appropriate Government emissions conversion factors. Scope 1 and 2 emissions are to be reported in accordance with SECR requirements and Scope 3 emissions with the GHG Protocol Scope 3 reporting standard.
What happens next?
Regardless of organisation size, any supplier planning to bid for a Government contract valued in excess of £5M pa will need to publish a CRP. Those that fall below the threshold for SECR may need to implement carbon footprinting and the calculation of emissions reduction targets for the first time. The template makes this fairly straightforward in terms of determining what needs to be disclosed but collecting the data and preparing the calculations will produce a significant workload that needs to be completed by 30th September. Beginning this process early will ensure eligibility for procurements that require CRPs.
Organisations that have already set targets and begun to disclose their emissions may well find that their current reporting methodology aligns to the requirements of PPN 06/21, in which case their only obligation is to transpose the relevant data into the CRP template.
Carbon Reduction Plan and Social Value
The FAQ makes it clear that two measures are distinct from one another, as they apply at different points in the commercial process. The CRP applies at the selection stage of the procurement process and relates to the suppliers’ organisational impacts; The Social Value Model is applied at the later evaluation stage and is specific to the delivery of the contract.
BY TRACEY RAWLING CHURCH