New rules to help reduce CO2 in public contracting show that at least 720 suppliers will be required to provide a detailed carbon reduction plan if they are to continue to win government contracts.
Procurement Policy Note 06/21 outlines how bidders on contracts worth £5m or more per annum will be expected to provide details of their carbon emissions on their own websites.
We analysed the last three years of data on public contracting and found that the new policy directly affects an average of 720 companies per year. This is based on the number of individual businesses that have won contracts with annual revenue in excess of £5m following a competitive tender process.
The new policy comes into effect in just a few week's time at the beginning of September and will include not just those winning contracts but also rival bidders. We've written before about how larger contracts attract less competition, but based on the average number of bids for high-value contracts, it is anticipated that around 1,000 suppliers will have to submit carbon reduction plans before September 2022.
Around 28,000 individual suppliers are awarded contracts by the public sector each year, more than half of the contracts awarded have an annual value of less than £100,000 per supplier. It will be interesting to see if the inclusion threshold of this policy moves as we get closer to the 2050 net-zero deadline. For example, changing the threshold to just £1m would double the number of contracts covered by the policy.
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