In 2019, the UK Government introduced a new target of reducing greenhouse gas emissions by at least 100% (compared to 1990 levels) by 2050. This is known as the “Net Zero” target.
To ensure we deliver on this target, the government is putting in place new public procurement requirements that mandate contractors to have a clear carbon reduction plan to be eligible for tenders over £5m per year in value. This follows the trend of tightening regulations to reduce the impact of construction on the planet.
The objective of Public Procurement Note 06/21 (PPN 06/21) is to understand your environmental impact and carbon footprint related to delivering construction projects.
Construction firms must be able to meet the following requirements to be in the running to win projects:
- Commit to reducing emissions over time to achieve Net Zero by 2050.
- To declare your organisational Greenhouse Gas emissions in accordance with the required reporting standard.
- Make sure you have a Carbon Reduction Plan that has been signed off by the appropriate internal stakeholders.
- Provide specific details about how the carbon reduction plan will be implemented as part of the performance of the contract.
- Provide a Carbon Reduction Plan that meets the technical standard for completing such a plan.
Two key priorities for construction firms are to take action on:
- Get senior leadership to agree on a baseline for carbon reduction and commit to a plan for reducing emissions.
- Ensure you measure and report your progress in as much detail as possible.
The Technical Standards require all Scope 1&2 emissions and some Scope 3 to include:
A. Upstream transport and distribution
B. Waste generated in operations
C. Business travel and employee commenting
D. Downstream transport
Construction teams face challenges associated with managing and reporting on A & B above. Time and labour-intensive processes can lead to inaccurate data being captured and reported. The Qflow Web and Mobile application is a powerful alternative to relying on paper and MS-Excel-based methods of capturing site reality with near real-time reporting.
The Challenge Posed by Scope 3 Emissions
Scope 3 emissions are emissions originating with the supplier’s activities, but not emissions generated by their company or the energy their company uses. As such they can be extremely difficult to track with a high degree of accuracy. PPN-06/21, however, dictates that businesses must account for Scope 3 emissions without providing a blueprint for how to do so.
As such the challenge of accounting for Scope 3 emissions under PPN-06/21 is formidable considering the various categories that constitute Scope 3 emissions including:
- Emissions generated by business travel and employee commuting. Notably, this only includes non-company vehicles as company vehicle emissions are accounted for under Scope 1.
- Upstream and downstream transportation.
- And waste generated by operations.
In particular, the need to account for emissions generated by business travel are likely to keep business owners up at night since failure to account for them in a reliable way could lead to the loss of a major project or projects.
But how, exactly, does one account for all the emissions generated during a business trip to a foreign country? And how can you be certain that emissions from non-company cars should be applied toward Scope 3 emissions when they may have been generated by the vehicle owner conducting normal family business?
Most construction firms have shown a willingness to adhere to PPN-06/21 rules and regulations but even the most enthusiastic have been left scratching their heads about how to comply with these Scope 3 emissions reporting requirements. And while Qflow can help, it is clear that new and better carbon accounting methods will need to be developed to meet these challenges.
No Substitutes
Some may be wondering if they can get around Scope 3 reporting requirements by submitting a Corporate Social Responsibility (CSR) statement or case studies instead. The government is very clear that when it comes to the reporting requirements established in PPN-06/21 no substitutes will be accepted. The government claims to have taken extraordinary steps to lessen the reporting burden on SMEs and suggests that the process will get easier with every bid.
UPDATE: Construction News recently shared their thoughts on this and how some of the industry pioneers are approaching this new opportunity.
If you’re unsure how to ensure compliance with PPN 06/21 in your organisation, we can help. We’ve learned a lot by working with other clients on this journey and are happy to share our knowledge with you.
