Read: Firms must commit to net zero to win major government contracts
New measures will require businesses to commit to net zero by 2050 and publish clear and credible carbon reduction plans before they can bid for major government contracts.
The rules will support the government’s plan to build back greener by ensuring that potential government suppliers publish plans to reduce carbon emissions across their operations in order to bid for major government contracts.
The measures announced on World Environment Day, make the UK government the first in the world to put this requirement in place, underlining the UK’s global leadership in tackling climate change.
Under the new measures, 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.
“Requiring companies to report and commit to reducing their carbon emissions before bidding for public work is a key part of our world leading approach.
“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 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.
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.
The new rules 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.
Harness the energy transition is one of the Levelling Up Goals, launched to set out clear objectives for the UK's Levelling Up challenge in the wake of Covid-19.