Can You Afford to Drop Down in the Queue for Your Most Important Customer?
Updated: Nov 15, 2021
If there's one thing that's become clear in the past few years, it's that reducing carbon emissions is a collective effort, regardless of industry, country or continent. As Andrew Griffith, UK Net Zero Business COP Champion, put it:
“The message to businesses is clear — engaging on net zero is no longer an option but a necessity from today, with businesses large and small now needing firm climate plans and commitments in place to supply major government contracts.”
A New Focus in Carbon Reduction
In 2019, the government formally committed the UK to achieve Net Zero carbon emissions by 2050. This is to be done through a combination of renewable power generation, energy efficiency measures including equipment and buildings, electrification of transport, green finance and various offsetting processes, such as planting trees and direct carbon capture.
As part of this strategy, from November 2021 all government organisations are required to ensure any company bidding for a contract has an effective carbon reduction policy in place. And this is likely to affect you — even if you're an SME or micro-business.
What Does the Government's New Regulations Cover?
The new regulations cover all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies, which are referred to as "In-Scope Organisations". Essentially, this is going to include any public body you might be working with.
These organisations are required to ensure that their suppliers are planning for Net Zero status by 2050. They'll therefore have to ask any company tendering for a contract worth more than £5 million to provide a carbon reduction plan — and failure to do so will result in losing your chance at the contract.
What Information Will You Need to Supply?
If you're tendering for a government contract, you'll be asked to submit a form on which you outline both the measures you're currently taking to reduce your carbon emissions and your future plans towards achieving Net Zero status. Even if you have no major industrial operations, measures could include changing lighting to LED/PIR controls or electrifying your fleet of vehicles.
Larger companies have already been required to report their direct and indirect carbon impact. Under these new regulations, however, so-called Scope 3 emissions are included, from sources such as:
· Purchasing of goods and services
· Commuting by employees
· Transporting and distributing goods
· Disposal and treatment of waste
· The impact of your products' end-of-life
Will the Regulations Affect Smaller Businesses?
If you're at the smaller end of the SME spectrum, you might assume that these new regulations will never apply to you. After all, even if you did win a public contract, it's unlikely to be worth £5 million.
It's not as simple as that, though. As a smaller or micro business, you probably supply many companies, and if they tender for government contracts they'll have to account for all their carbon emissions — including those produced by their own suppliers.
This means that, even if you don't go near public contracts, you might still find yourself asked to provide a carbon reduction plan. And, if you don't already have one in place, it's unlikely that you'll be able to improvise effectively.
The time to show your commitment to Net Zero carbon is now. Get in touch with us to learn how to take the steps you need.