Carbon Neutral Procurement Policy: The Thin End Of The Wedge?
In 2019, in response to the need to limit environmental impact, the UK Government committed to reducing emissions by 100% by 2050. This is commonly known as the Net Zero Target. For this to be achieved major changes must happen especially regarding attitude towards the impact we are all having on the environment.
By Andrew Childers, CEO of Beyond Procurement Ltd
In 2019, in response to the need to limit environmental impact, the UK Government committed to reducing emissions by 100% by 2050. This is commonly known as the Net Zero Target.
For this to be achieved major changes must happen especially regarding attitude towards the impact we are all having on the environment.
Those that have been around for a while in procurement and contract management know how the process works when it comes to implementing change. It starts at the thin end of wedge then moves out fast.
High value government contracts start to include new requirements, term and conditions, initiatives, or requests from the market. Soon these changes solidify and become common place, they become standards of best practice, which get filtered and then mandated into all above threshold contracts.
Cyber security, Modern slavery, Social Value are now commonplace standards as we evolve, protect, and look to improve the way in which we do business – doing the right thing and working in the right manner flows down fast to even the smallest contracts, and so it should.
In response to doing the right thing for the planet, the procurement policy note PPN06/21 currently stipulates that all public sector goods and services contracts over £5m need to include a carbon reduction plan from tenderers.
To be considered for projects, tenderers need to submit details of their existing carbon footprints and their plans to reduce to Net Zero by 2050 and are encouraged to achieve the new environmental standard PAS 2060.
Currently this criterion is not scored and set as a Pass/Fail. I think this will change and evolve to suppliers being judged on the robustness and timescale of their plan to achieve zero carbon. It seems the obvious next step.
It’s currently at the thin end of the wedge and it’s picking up momentum fast. It will affect us all professionally, so we need to be ready. Changes to procurement practices and policies are coming fast, they must. The commitment the UK has made won’t be achieved by just addressing the big few, we have to address the all.
Carbon reporting, carbon reduction, carbon offsetting – basically carbon accountability is here and no organisation is or should escape its responsibilities.
We can look up at those larger organisations with the view that they are the worst offenders so it’s right they should take some responsibility and action. However, circa 90% of businesses globally are SME’s. It will be impossible to achieve the changes required to reduce carbon without major changes at every level and by everyone.
The Net Zero initiative is broken done into scopes:
- Scope 1 Direct emissions within an organisations control
- Scope 2 Indirect emissions associated with procured energy
- Scope 3 Indirect emissions across an organisations supply chain
Plans put in place by organisations are generally going to be firstly looking at their scope 1 and 2 actions. For instance, energy contracts usually make up 25% of an organisations carbon footprint (Scope 2). The high impact areas will be the first targets.
However, once a carbon strategy is in place and quick wins have been addressed, how long will it be before organisations will be looking at their supply chain and make the decision to only, or preferably sub-contract with suppliers who are in line with their own objectives and targets?
Green products and carbon neutral suppliers will be ahead of their peers and gain quick wins within a scope 3 strategy.
As a procurement professional, I think it makes good commercial sense to ensure Net Zero is on your radar and very quickly in your procurement strategy. Again, those that have been around for a while, have experienced initiatives with their subsequent catchy moniker become vogue.
Current focus is on ‘triple bottom line reporting’ – Social, Economic and Environmental benefits are the assessment criteria as we look to ensure best value while ensuring local and global advances on every new procurement.
We all know that greenhouse gasses are bad. We know that carbon dioxide is majorly contributing to global warming. We also know that doing nothing is no longer an option. The old arguments of not having the time, not having the money and not having the knowledge are no longer acceptable.
Green products are readily available in the marketplace now. Costs have reduced to rates where its now cheaper to buy greener products. The knowledge is readily available.
The journey to Net Zero is one we all must go on, it’s not a very difficult path. The UK has made a commitment to become net zero for carbon by 2050. I imagine they set this timeline based on history and experience of slow change.
What or who in the UK is going to deliver this moral commitment?
I’m looking at all my procurement, supply chain and commercial peers when I say we have a massive influence. It’s going to have to be us!
Let’s not wait to be told. Let’s not wait for mandated procurement policy. Let’s not only act as commercial professionals, but also humans and get behind the commitment – lets own it. Let’s take responsibility now and pull ahead Net Zero 2050 to 2030 or sooner.
ZERO – a sustainable future for your business (and the planet).
Meercat is a low cost, low carbon procurement company with services to help you measure your carbon footprint and reduce emissions. To discuss this, please call us on 01444 416529 or email email@example.com