Carbon emissions in tendering

Lately, we have seen more and more tenders in which the carbon and environmental section asked suppliers to set out their understanding of scope 1, 2 and 3 carbon emissions and the actions being taken to reduce these. With questions like this, together with the requirement for many businesses bidding for public sector opportunities to publish a carbon reduction plan, what do you need to know about carbon emissions?

Emissions

The GHG Protocol, which provides a global standardised framework to measure and manage greenhouse gases (GHGs), categorises emissions into three groups or ‘scopes’:

• Scope 1. These are the direct emissions which occur from sources that an organisation has ownership or control of. For example, they typically include emissions from fuel combustion on company premises such as gas boilers and back-up generators, emissions from company vehicles, and fugitive emissions – the gases accidentally emitted from air-conditioning leaks.
• Scope 2. These are indirect emissions, for example when an organisation buys electricity (or heating or cooling) for its offices. It is the emissions that physically occur at the facility where electricity is generated.
• Scope 3. All other indirect emissions from sources not owned or controlled by an organisation but which are the consequence of its activities. For example, this can include employee commuting, business travel, and waste generated in its operations (i.e. the disposal and treatment of waste in facilities not owned or controlled by the organisation), and can represent 70% or more of an organisation’s total emissions, especially where products are manufactured. Scope 3 emissions are categorised as upstream emissions-producing activities, in other words all those activities used to produce a product or service such as business travel, and downstream emissions-producing activities such as transporting and distributing your products to customers.

Carbon footprinting

For any organisation wanting to understand the impact they have on the environment, it will be necessary to calculate their carbon footprint. This will measure the total greenhouse gas emissions (expressed as carbon dioxide equivalent or CO2e) caused directly and indirectly and enable a clear understanding of their key emission sources and potential opportunities to reduce them. As well as providing a starting point to develop a carbon reduction plan, it will also provide a benchmark against which to measure progress.

Most organisations will have the data needed to calculate their scope 1 and 2 emissions, for example through converting direct purchases of gas and fuel, and will also be able to implement measures for reducing these emissions. This might include sourcing electricity from renewable sources or introducing the electric vehicles into their company care fleet. Under the GHG Protocol, all organisational footprints must include Scope 1 and 2 emissions.

The big challenge is scope 3 emissions, partly as these might be quite extensive, and also because an organisation might have limited data on these emissions and less influence on how these can be reduced as part of their carbon reduction plan. Mapping scope 3 emissions and understanding how much control you have over them is a good starting point, and there are many online resources and organisations who provide support with benchmarking, such as the Carbon Trust.

PPN 06/21

If this is the first time you’ve heard about scope 1, 2 and 3 emissions, it’s unlikely to be the last. In 2021, the Cabinet Office published PPN 06/21 ‘Taking Account of Carbon Reduction Plans in the procurement of major government contracts’. The PPN demonstrates the government’s commitment to bringing central government procurement in line with its 2050 net zero carbon goal by expanding the level of emissions information bidders must include in their submissions.

The PPN applies for procurements with an anticipated tender contract value above £5 million a year (the requirement is not mandatory for devolved administrations) and the main feature is the requirement for bidders to submit a Carbon Reduction Plan (CRP) at selection stage. The CRP must:

• Confirm the organisation’s commitment to achieving net zero in their own operations by 2050
• Report current emissions using both:
  • Scope 1, 2 and 3 emissions – for the CRP, organisations are only required to cover five of the 15 categories in scope 3
  • CO2e for the six greenhouse gases covered by the Kyoto Protocol.
• Detail of environmental management measures that will apply during the contract, such as relevant certifications (for example ISO 14001:2015) or specific carbon reduction initiatives (for example reducing vehicle mileage or energy use)
• Be published on the organisation’s website
• Have been signed off ‘at an appropriate level’, i.e. director-level, within 12 months of the date of the procurement.

A template CRP was published alongside the PPN, although organisations can use their own version as long as it includes all of the necessary information. Suppliers’ CRPs will not be scored or compared against each other, and assessment takes the form of a check that they meet the requirements of the measure.

Environmental impacts are often a key element of social value requirements within tenders. For more information on responding to social value tender questions, visit our dedicated division The Social Value Practice, contact us free on 0800 612 5563 or email info@executivecompass.co.uk / enquiries@thesocialvaluepractice.co.uk.