Firms must commit to net zero to win major government contracts
Newly announced government measures will require businesses to commit to net zero by 2050 and to publish ‘clear and credible’ carbon reduction plans before they can bid for major government contracts.
By September, prospective suppliers bidding for government contracts above £5million a year will need to commit to the government’s target of net zero by 2050 and must have published a carbon reduction plan. The government says that firms which fail to do so will be excluded from bidding for the contract.
A carbon reduction plan identified where greenhouse gas (and notably carbon) emissions come from and the measures in place to manage and reduce emissions. Many large companies already self-report on key elements of their carbon emissions, known as Scope 1 (direct) and Scope 2 (indirect but owned) emissions.
However, Scope 3 emissions can also be a significant proportion of an organisation’s carbon footprint and the new rules also require reporting of some Scope 3 emissions (such as business travel, employee commuting, transportation, distribution and waste).
The measures will apply to all central government departments and arms-length bodies, and all those bidding for government contracts above the £5million threshold will need to comply with the new requirement, not just those who are successful in winning contracts.
The government spends more than £290 billion on procurement annually.