The UK government has announced in a statement that it will require companies to commit to zero carbon emissions by 2050 before being eligible for major government contracts.
According to the government, the rules will support its plans to “build back greener” by ensuring that potential suppliers have published plans to reduce their carbon emissions in their operations before bidding on lucrative public contracts.
The UK is the first country to introduce this requirement. From September, companies seeking to win contracts in excess of £5 million a year must have committed to the national target of zero greenhouse gas emissions by 2050 and also published a plan to achieve this target.
Companies that do not meet these requirements will be excluded from the bidding process. A carbon reduction plan should identify the sources of an organization’s carbon emissions and the effects of green actions they have already taken.
Scope 1 refers to direct CO2 emissions and Scope 2 refers to indirect emissions. According to the government statement, companies must go further and report their Scope 3 emissions, which represent a significant portion of an organization’s carbon footprint, taking business travel into account; employee commuting; transport;
distribution and waste. Some companies — especially the largest petroleum companies — have been criticized for their creative carbon accounting, excluding major sources of greenhouse gas emissions when reporting their progress to net-zero.
According to a report by Carbon Tracker, seven of the top 10 oil and gas companies have no climate targets related to reducing overall CO2 emissions, while their emissions targets range from a full spectrum of operations to just a select fraction of emissions.
Lord Agnew, Minister for Efficiency and Transformation, commented: “The Government spends more than £290 billion on procurement every year, so it’s important that 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 on public works is an important part of our industry-leading approach.
These measures will help make our economy greener, while not overburdening businesses, especially SMEs.” Tom Thackray, director of infrastructure and energy at CBI, commented on the new rule:
“As the world looks to the UK and COP26 for leadership on decarbonisation, business is already playing a vital role in driving progress towards a greener future.
“The CBI has long supported procurement policies to ensure government spending supports the UK’s environmental goals and these changes will encourage more businesses across the country to show their own commitment to net zero when bidding on government contracts.
“Collaboration between the public and private sectors can make the UK a global role model, not only in delivering vital public services, but also in working together to tackle climate change.
” The government is likely to face questions about how it will fairly apply the new rule. In April, Transparency International UK reported that 20 percent of Covid-19 contracts between February and November 2020 (worth more than £3.7 billion) raised at least one “red flag of possible corruption”.