Home News Firms must commit to net zero to win major government contracts

The Cabinet Office has revealed that businesses will need to commit to net zero carbon 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.

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: “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.

Tom Thackray, Director of Infrastructure and Energy, at the CBI said: “The CBI has long supported using procurement policy to ensure government spending supports the UK’s environmental objectives and these changes will encourage more firms across the country to demonstrate their own commitment to net zero when bidding for government contracts.

“Partnership between the public and private sectors can make the UK a global role-model, not only in delivering vital public services but working together to tackle climate change.”

All companies bidding for major government contracts will need to comply with the measure, not just those who are successful in winning contracts. This further widens the impact of the measure, as more and more suppliers commit to achieving Net Zero.

The measures will apply to all central government departments and arms length bodies.

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