Boost Procurement Readiness with a Carbon Reduction Plan

Welcome, Net Zero News readers! As we steer towards a sustainable future, the pressure on organisations and their suppliers to achieve carbon neutrality and net zero is intensifying. In particular, suppliers to the public sector are finding that what was once a mere expectation is now a firm requirement.

Under the recent Procurement Policy Note (PPN) 06/21, suppliers desiring to provide goods or services to public sector entities—including the NHS—must now present a formal Carbon Reduction Plan (CRP) aimed at slashing their business emissions. This shift is not just a procedural formality; it is a fundamental part of how procurement processes will be conducted moving forward.

Understanding PPN 06/21

PPN 06/21 dictates that any suppliers with central government contracts valued at over £5 million, as well as all NHS contracts, are mandated to have a strategy in place to reduce their emissions and overall environmental impact. This policy marks a significant transformation in procurement practices across the public sector.

For high-value contracts, suppliers are required to develop a comprehensive carbon reduction plan. Conversely, those dealing with lower-value contracts can submit a simpler Net Zero Commitment. This tiered approach allows flexibility while ensuring that all suppliers are held to the same standard of accountability regarding their carbon emissions.

The introduction of PPN 06/21 signifies a paradigm shift in how procurement contracts within the public sector are allocated. Rather than simply expressing intentions to pursue sustainability, organisations must now demonstrate tangible progress in their emissions reduction efforts.

The Importance of a Carbon Reduction Plan

It is crucial to recognise that a significant portion—up to 90%—of an organisation’s total carbon emissions can originate from its supply chain. This means that suppliers play an instrumental role in helping businesses achieve their net zero ambitions. While emissions produced directly by a business’s operations (known as Scopes 1 and 2) are within its control, the emissions that arise from the supply chain (Scope 3) present a more complex challenge.

By requiring suppliers to develop a CRP and adopt more sustainable practices, organisations can bolster their own emissions reduction strategies. A well-crafted CRP is not intended to replace existing sustainability reporting but serves to reinforce a company’s commitment to minimising its environmental impact and outlines the steps it plans to take to achieve its sustainability goals.

Preparing the Supply Chain

The NHS has set an ambitious target to become a net zero health service, aiming for net zero emissions under its control by 2040 and for those outside its influence—like suppliers—by 2045. With NHS contracts totalling over £6 billion annually, suppliers must be ready to produce a CRP to support the NHS in its transition to net zero.

To comply with these new expectations, NHS suppliers are required to:

• Make a formal commitment to achieving net zero by 2050 or earlier.
• Publish a link to their carbon reduction plan on their website using a PPN 06/21 template as a minimum standard.
• Monitor and record their Scope 1 and 2 emissions, as well as selected categories within Scope 3.
• Outline the specific steps they plan to take to reduce their carbon emissions.

These requirements are not solely the result of public sector initiatives; businesses should also be aware that an increasing number of customers—both public and private sector—will expect them to provide their decarbonisation plans during the procurement process. Without an established CRP, organisations risk missing out on vital contracts and opportunities. By proactively developing a carbon reduction plan, businesses can not only comply with regulations but also stay ahead of industry trends and evolving customer expectations.

Creating Systemic Change

The PPN 06/21 represents a significant shift in procurement policies, driven by the UK Government’s ambitious target to achieve net zero by 2050. This policy leverages supply chains to foster positive change in decarbonisation efforts. By prioritising sustainability in contract appointments, the ripple effect of these changes spreads through supply chains, facilitating easier reporting and emissions reductions for all businesses involved.

In summary, the shift towards carbon neutrality is not just a buzzword; it is a reality that organisations must embrace to remain competitive and responsible in today’s market. As we move forward, it is essential for suppliers to understand their role in this journey and take the necessary steps to ensure compliance with PPN 06/21. By doing so, they will contribute not only to their own success but also to the larger goal of creating a sustainable future for all.

For more insights and guidance on navigating the evolving landscape of carbon reduction and procurement, visit www.teamenergy.com.

This article first appeared in the May 2025 issue of Energy Manager magazine. Subscribe here for more updates!