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Our Guide to PPN 06/21 (Procurement Policy Note 06/21)
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Climate change is an ongoing challenge that demands immediate and sustained action. In response, countries like the United Kingdom are ramping up their environmental efforts to meet stringent targets for reducing emissions. One such initiative is the introduction of the Procurement Policy Note 06/21 (PPN 06/21).
But what exactly is PPN 06/21, and how will it ensure businesses comply with the essential environmental regulations now being enforced? Let’s explore its role in shaping a greener future.
👉 In this article we examine PPN 06/21 and how it will push companies to meet the UK’s ambitious sustainability goals.
What is PPN 06/21?
“ PPN 06/21, otherwise known as 'Procurement Policy Note 06/21: Taking Account of Carbon Reduction Plans in the Procurement of Major Government Contracts', issued by the UK government on June 21, 2021, sets forth an important requirement for any company or organization bidding on central government or public contracts worth over £5 million annually. ”
Following the UK’s pioneering move as the first major economy to make a legal commitment to achieving net zero carbon emissions by 2050, companies are required, starting September 30, 2021, to calculate and report their carbon footprint, aligning with this national goal.
The goal of PPN 06/21 is to ensure that companies vying for major government contracts are actively measuring their carbon output and taking steps to reduce their environmental impact. This policy not only aligns with the UK's sustainability objectives but also serves as a driver for businesses to prioritize greener practices.
Failure to meet the requirements of PPN 06/21 results in automatic disqualification from tendering opportunities. In essence, this policy incentivizes businesses to implement and track net zero strategies to remain competitive.
👉 Importantly, PPN 06/21 applies to both U.K. and overseas companies bidding for government contracts valued at over £5 million per annum. Regardless of location, compliance is mandatory for those seeking to participate in the tender process.
PPN 06/21 requirements
Procurement Policy Note 06/21 (PPN 06/21) outlines specific obligations for businesses bidding on UK government contracts valued at over £5 million annually. The policy requires companies to demonstrate their commitment to reducing carbon emissions in line with the UK’s target to achieve net zero emissions by 2050. To comply with PPN 06/21, businesses must:
- Calculate carbon emissions: Businesses are required to calculate their Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and selected categories of Scope 3 emissions (indirect emissions related to business operations but not directly owned or controlled by the company).
- Develop a Carbon Reduction Plan (CRP): The CRP must include a baseline emissions footprint, current emissions reporting, and a clear commitment to reducing emissions. The plan should detail measurable targets and specific actions the business will take to reach net zero by 2050.
- Annual reporting: Companies must update and submit their Carbon Reduction Plan at least annually, providing transparency on their progress toward reducing emissions. This ensures that sustainability efforts are maintained and monitored over time.
“ Failure to meet these requirements will result in automatic exclusion from the procurement process for in-scope contracts, reinforcing the government’s commitment to making sustainability a core criterion in public procurement. ”
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Technical guidance for compliance
To ensure consistency and accuracy in reporting, PPN 06/21 mandates that businesses follow technical guidance when preparing their Carbon Reduction Plans. The technical requirements, as outlined by the UK government, include:
Scope of emissions reporting:
- Scope 1: Direct emissions from sources owned or controlled by the business, such as fuel consumption on-site or company-owned vehicles.
- Scope 2: Indirect emissions from purchased electricity, heat, or steam.
- Scope 3 (mandatory categories): Five specific categories of Scope 3 emissions must be measured and reported:
- Upstream transportation and distribution: Emissions from the transportation of goods from suppliers to the company.
- Waste generated in operations: Emissions from the treatment and disposal of operational waste.
- Business travel: Emissions from employees traveling for business in vehicles not owned by the company.
- Employee commuting: Emissions from employees commuting to and from work.
- Downstream transportation and distribution: Emissions from the transportation of goods from the company to end consumers.
Standards for measurement:
Emissions data must be calculated using recognized frameworks such as the Greenhouse Gas (GHG) Protocol or ISO 14064-1. Businesses must also use the UK Government conversion factors to translate their emissions into carbon dioxide equivalents (CO2e).
Carbon Reduction Plan content:
The CRP should include the following elements:
- Baseline year emissions: Establishing a reference point to measure progress.
- Current emissions: Reporting on the company’s current carbon footprint.
- Emissions reduction targets: Clear, actionable goals for reducing emissions.
- Carbon reduction projects: Description of ongoing or planned initiatives to lower emissions.
- Sign-off and approval: The CRP must be signed by a senior executive or board member and published on the company’s website for transparency.
How to comply with PPN 06/21
Complying with Procurement Policy Note (PPN) 06/21 requires a structured approach to ensure your business meets the UK government's standards for carbon reduction. Below are key steps your organization can take to align with the policy and demonstrate a commitment to achieving net-zero emissions by 2050.
1. Understand the requirements
The first step is to thoroughly review the requirements of PPN 06/21, particularly focusing on the need to measure and report Scope 1, Scope 2, and selected Scope 3 emissions. Make sure your team understands which parts of your business operations are affected and what data will be required.
2. Set up carbon emission tracking systems
Establish internal systems or tools to track and measure your carbon emissions across the required scopes. This can involve using software or collaborating with companies like Greenly who specialize in carbon accounting to ensure accurate data collection.
3. Conduct a baseline assessment
Before you can set reduction targets, you must assess your current carbon footprint. This involves calculating your baseline emissions for Scope 1, 2, and relevant Scope 3 categories. Make sure to capture data accurately from all UK operations and use government-approved conversion factors to convert this data into carbon dioxide equivalent (CO2e).
4. Develop a Carbon Reduction Plan (CRP)
Create a Carbon Reduction Plan that reflects your company’s commitment to achieve net zero by 2050. Use the UK government’s Carbon Reduction Plan Template as a guide, ensuring you cover all required sections: baseline emissions, current emissions, reduction targets, and carbon reduction projects. Your CRP should be a living document, updated annually to reflect progress and any changes in your operations.
5. Identify and implement carbon reduction initiatives
Once your carbon footprint is understood, identify key areas where emissions can be reduced. This might involve switching to renewable energy, improving energy efficiency, optimizing transportation and logistics, or reducing waste. Assign projects to specific teams within your organization to ensure accountability for implementing these initiatives.
6. Integrate carbon reduction into your business strategy
Ensure that carbon reduction becomes part of your overall business strategy. Align your sustainability goals with wider operational and financial plans to ensure the whole organization is moving toward the net-zero target. Encourage cross-department collaboration to embed these goals into daily operations.
7. Ensure leadership buy-in and sign-off
Your Carbon Reduction Plan must be signed off by a senior leader, such as a director or board member, demonstrating high-level commitment. This sign-off not only ensures accountability but also sends a strong message both internally and externally that your company is dedicated to reducing its environmental impact.
8. Publish your Carbon Reduction Plan
Once finalized, publish your Carbon Reduction Plan on your company’s website in a prominent location. This transparency is essential for compliance, as it allows the government and stakeholders to monitor your progress. Keep historical versions of the plan online as well, so progress can be tracked over time.
9. Maintain regular updates and reviews
Compliance with PPN 06/21 is not a one-time task. Your company must review and update its Carbon Reduction Plan annually to ensure it reflects any structural changes, new projects, and updated emissions data. Regular reviews will also help keep your business on track to meet its net zero targets.
10. Train and engage your teams
To ensure successful compliance, engage all levels of your business. Train your employees on the importance of carbon reduction, provide clear goals and guidelines for how they can contribute, and incentivize sustainability initiatives within teams. The more embedded carbon reduction is across your workforce, the more effective your overall strategy will be.
👉 By following these steps, your business can effectively meet the requirements of PPN 06/21 and play a role in the UK’s wider efforts to combat climate change. Compliance not only keeps you eligible for lucrative government contracts but also positions your company as a leader in sustainable business practices.
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Relevance of PPN 06/21 for US companies
PPN 06/21 is not limited to UK-based businesses; it also applies to international companies, including those in the US, that wish to bid on UK government contracts worth over £5 million annually. For US companies seeking to expand their presence in the UK public sector, compliance with PPN 06/21 is essential. This means measuring and reporting carbon emissions across Scope 1, 2, and select Scope 3 categories, as well as developing a Carbon Reduction Plan aligned with the UK’s net-zero goals.
By adhering to these standards, US companies can not only remain competitive in the UK market but also demonstrate their commitment to global sustainability initiatives.
The advantages of PPN 06/21 compliance
Compliance with PPN 06/21 offers a range of benefits that extend beyond eligibility for government contracts. Key advantages include:
| Advantage | Description |
|---|---|
| Access to Government Contracts | Complying with PPN 06/21 ensures eligibility to bid for UK government contracts worth over £5 million annually, opening up lucrative opportunities in the public sector. |
| Improved Reputation & Brand Value | Demonstrating a commitment to sustainability enhances your company’s reputation, showcasing it as a forward-thinking, environmentally responsible business. |
| Alignment with Net-Zero Goals | By complying, your company actively contributes to the UK’s net-zero emissions target for 2050, positioning your business as a leader in climate action. |
| Increased Operational Efficiency | Implementing carbon reduction strategies often leads to greater energy efficiency, waste reduction, and streamlined operations, which can lower costs in the long term. |
| Stakeholder Confidence | Compliance boosts transparency and accountability, helping to build trust with clients, investors, and partners who prioritize environmental responsibility. |
| Competitive Advantage | Businesses that comply with PPN 06/21 are better positioned to win public sector contracts, giving them an edge over competitors that fail to meet these requirements. |
| Attracting Talent | Sustainability-focused businesses are increasingly appealing to top talent, particularly employees who value working for companies with strong environmental commitments. |
| Regulatory Readiness | Complying with PPN 06/21 ensures your company is well-prepared for future environmental regulations, reducing the risk of non-compliance as government policies evolve. |
| Innovation and Market Leadership | Engaging in carbon reduction often encourages innovation in green technologies and sustainable practices, allowing your company to lead within its industry. |
| Long-Term Cost Savings | Many carbon reduction initiatives, such as energy-saving measures and sustainable sourcing, can result in significant cost savings over time. |
How Greenly can help your company comply with PPN 06/21
Complying with PPN 06/21 requires precise carbon measurement, strategic action plans, and ongoing reporting to meet the UK government’s sustainability requirements. Greenly is here to help you achieve compliance while enhancing your sustainability practices.
Carbon Footprint Measurement
Greenly offers advanced tools to help businesses measure their greenhouse gas emissions across Scope 1, 2, and 3, as required by PPN 06/21. Our platform provides a detailed breakdown of your carbon footprint, ensuring that you capture all relevant emissions, including upstream and downstream activities. This complete data set allows your business to track its progress toward net zero with confidence.
Tailored Carbon Reduction Plans
Developing a Carbon Reduction Plan (CRP) that aligns with PPN 06/21 is crucial for compliance. Greenly’s climate experts work with your team to create a custom CRP that not only meets government standards but also reflects your company’s specific sustainability goals. From setting a baseline year to identifying actionable carbon reduction projects, Greenly helps ensure your CRP is both compliant and impactful.
Supply Chain Decarbonisation
A key aspect of PPN 06/21 is managing Scope 3 emissions, which can be challenging due to the involvement of your supply chain. Greenly offers tailored solutions to help you engage with suppliers, promoting transparency and collaboration to reduce emissions throughout your value chain. By fostering sustainable partnerships, Greenly enables your business to minimize environmental impact beyond direct operations.
User-Friendly Platform
Greenly’s intuitive platform helps you stay on top of your carbon management obligations. With seamless integration across your operations, you can track emissions, update your Carbon Reduction Plan, and publish compliance reports. Greenly’s platform streamlines the process of meeting PPN 06/21 requirements, making compliance more efficient.
Why Choose Greenly?
Partnering with Greenly gives your business the tools, expertise, and ongoing support needed to comply with PPN 06/21. From carbon measurement and tailored reduction plans to supply chain engagement and seamless reporting, Greenly is your trusted partner in sustainability. With our expert guidance, your company can meet regulatory requirements while leading the way toward a more sustainable future.
Start your journey to PPN 06/21 compliance with Greenly today and ensure your business is positioned for success in the public sector while making a positive environmental impact.
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