New guidance to help the public sector encourage suppliers to go green

A new Procurement Policy Note has just been published by the Cabinet Office which will help the public sector influence the decarbonisation of its supply chain. PPN 01/24 Carbon Reduction Contract Schedule sets out optional terms and conditions in relation to reducing carbon that can be inserted into government contracts.  

This builds upon PPN 06/21, which requires in-scope organisations when procuring goods/services/works with an anticipated contract value above £5 million per annum to include, as a selection criterion, a requirement for bidding suppliers to provide a Carbon Reduction Plan (CRP). The CRP must confirm the supplier’s commitment to achieving net zero in the UK by 2050.

In scope organisations are defined in both PPNs as all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies.  However, it is expressly stated that other public sector contracting authorities may wish to apply the approaches set out in the PPNs.

Local Partnerships is working with a number of councils which are considering how to decarbonise their supply chain, including by requesting CRPs to be included in tenders. Scope 3 greenhouse gas (GHG) emissions will be on average around 70-80% of a council’s total emissions, and a large part of Scope 3 emissions will be linked to what councils procure.

PPN 01/24 will help councils by giving them a template set of standard terms and conditions which can be used in public contracts alongside broader sustainability obligations. The T&Cs support:

• contract-specific decarbonisation objectives;
• contract-specific GHG emissions reporting;
• setting supplier GHG emissions reduction targets; and/or
• requiring suppliers to produce a GHG emissions reduction plan to monitor and reduce GHG emissions throughout the life of the contract. 

There is even a suggested gain-share mechanism, which can be used to incentivise suppliers to continue to reduce carbon even after meeting the contractual target. Councils must ensure that the application of the T&Cs are relevant to the subject matter of the contract and proportionate to its value and objectives. To ensure that councils encourage suppliers to go green while continuing to achieve value for money, councils must consider their own resources and that of their supply chain when considering what to request in tenders.  

Local Partnerships has free tools for councils to use calculate their emissions on our website. If you would like to discuss reducing your emissions by using these tools or the PPNs discussed above, please contact us using the “Can we help?” form on the right hand side of this page.