Net-Zero Commitments Mandatory to Bid for Government Contracts 

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07 June 2021

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.

By September 2021, prospective suppliers bidding for contracts above £5 million 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 that fail to do so will be excluded from bidding for the contract.

Boris Johnson and Business and Energy Secretary Kwasi Kwarteng have additionally urged every small business in the UK to take small, practical steps to cut their emissions as part of the UK’s journey to net-zero, through the "Together for our Planet Business Climate Leaders" campaign. This is a new drive to encourage small and micro businesses to commit to cutting their emissions in half by 2030 and to net-zero by 2050 or sooner through the new UK Business Climate Hub.

Ethical Procurement and Corporate Social Responsibility

The government spends more than £290 billion on procurement every year, so requiring companies to report and commit to reducing their carbon emissions before bidding for public work will be a key part of promoting ethical procurement.

The approach is similar to the prompt payment measure introduced in 2019, which allowed a supplier’s performance in paying their subcontractors promptly to be taken into account when bidding for government work. 

Carbon Reduction Plans

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.

Picture: a photograph of Big Ben

Article written by Ella Tansley | Published 07 June 2021

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