New greener rules for companies bidding for major government contracts come into force today

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From today, all companies bidding for government contracts worth more than £5m a year must commit to achieving Net Zero emissions by 2050.

The UK is the first country in the world to put such a measure in place, and this policy will apply to all central government departments, as well as their Executive Agencies and Non-Departmental Public Bodies.

The new rules, first announced in June, are set to 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.

Andrew Griffith, UK Net Zero Business COP Champion, commented on the announcement: “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.

Scope 3 emissions represent a significant proportion of an organisation’s carbon footprint.

According to the Cabinet Office, understanding, reporting and reducing these emissions will play a substantial role in decarbonising government’s supply chain, and the UK economy as a whole.

CBI’s Director of Decarbonisation, Tom Thackray, added: “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.”