#154 What are PPN 06/21 Carbon Reduction Plans, and why do you need one?

Nov 8, 2023

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Sustainability has become one of the main focal points for businesses to address in the last few years, and for good reason! We’re already seeing the devastating effects of simply doing nothing in the form of more extreme weather, occurring much more frequently in areas not equip to handle it.

To encourage action from businesses, we’re seeing more public and private sector contracts include a tendering requirement to show your commitment to sustainability. One such example is the need for a PPN 06/21 Carbon Reduction Plan.

In this weeks’ episode David Algar, Principal Carbonologist at Carbonology, joins Mel to explain exactly what PPN 06/21 Carbon Reduction Plans are, what the requirements mean in practice and the consequences if a business does not meet the requirements.

You’ll learn

· What are PPN 06/21 Carbon Reduction Plans?

· What the requirements mean in practice

· Benefits to a business

· What if a business does not meet the requirements?

Resources

● Carbonology

● Book a call with David Algar

● A quick Guide to creating your PPN 06/21 Carbon Reduction Plan

In this episode, we talk about:

[00:42] Episode Summary - We’re talking about PPN 06/21 Carbon Reduction Plans because there is a government requirement to submit one. This episode will cover the what and why, in part 2 we’ll go into more detail about how to create a Carbon Reduction Plan.

[02:10] What is a PPN 06/21 Carbon Reduction Plan? Procurement Policy Note 06/21 was introduced back in June 2021, hence the 06/21 part, and is a tendering requirement for companies looking to win contracts in the public sector that links to the Government’s Net Zero target.

[02:28] What is the UK government’s Net Zero target? The ‘net zero target’ refers to a government commitment to ensure the UK reduces its emissions by 100% from 1990 levels by 2050.

[02:55] Who does PPN apply to?: Public sector, so any businesses that works with education, local authorities, housing, infrastructure, defence, transit, and of course, the NHS who have set a goal of Net Zero by 2040.

Officially this is for contracts that are valued at £5M or more, but in April 2024 the NHS will be requesting a Carbon Reduction Plan for all procurement.

Unofficially, this framework could be adopted by any business, so even if you don’t deal directly with the public sector, or are a subcontractor, your supply chain may soon be requesting a Carbon Reduction Plan!

[04:05] Why do you need a Carbon Reduction Plan? Although the Government’s targets and policies around Net Zero keep changing, the overall goal of PPN 06/21 is to encourage businesses to reach Net Zero before 2050, come up with a plan to do so, and implement emission reduction initiatives in the delivery of Government contracts.

[04:35] From a businesses perspective, what are the main benefits? There are 2 main benefits:

● It’s essential for some tendering, with as much as a 10% weighting based on your carbon management and social values. Put simply, if you don’t produce one when needed, you may fail the tender requirements and probably won’t make the sale.

● The second main benefit is that this isn’t just a piece of paper with a graph on it, it’s a great opportunity to investigate your business’ GHG emissions, and put a plan in place to reduce them. This also helps you show to stakeholders that you are actually committed to environmental protection and could identify some cost savings in your business after going through all the data.

● It’s also a great addition to any existing ISO 14001 or ISO 50001 Management Systems!

[06:10] What are the key requirements of PPN 06/21? –  Firstly you’ll need to make a commitment to achieving net zero by 2050 at the latest. This includes annually calculating your emissions and updating the Carbon Reduction Plan.

Next you’ll need to report on a minimum set of GHG categories: 100% of your Scope 1 emissions, so direct emission from company vehicles, gas heating (so stuff you burn) and any fugitive emissions, which are leaks from HVAC systems for most businesses. 100% of your Scope 2 emissions which is electricity most of the time but can also refer to steam you import from an external source.

You’ll also need to report on 5 Scope 3 categories, these are your indirect emissions:

● Waste generated in operations

● Business travel in vehicles you don’t own, so staff cars, flights, trains, etc

● Commuting, so staff traveling to and from work, being careful not to double count business travel not already claimed under expenses

● And arguably the most complicated, upstream and downstream transportation, i.e. goods in, and goods out – physical transport of goods

[09:50] Are there any other categories covered by scope 3 that we should consider? – Generally, when we produce a CRP for our clients, we’ll look at a few extra Scope 3 categories such as water, homeworking, or purchased goods, so carbon reduction planning can extend to other elements of the business. In all cases you’ll need to report in tonnes of carbon dioxide equivalent, or tCO2e, as this accounts for the global warming potential of multiple GHGs.

[11:30] Are there any ISO standards that you can align the Carbon Reduction Plan to? Yes! At Carbonology, we use ISO 14064-1. This sets out a series requirements and guiding principles for the quantification and reporting of emissions. We wouldn’t necessarily have to go all the way to meeting every single requirement of the standard for your CRP but we always align with the key requirement of the standard when completing a CRP.

And if you’re lucky we’ll also cover your SECR figures!

[12:05] What is SECR? - Streamlined Energy and Carbon Reporting. This is mandatory reporting for businesses that are defined as large, so 250+ staff, and 36M turnover or 18M on the balance sheet.

[18:20] Asset Management - In 8.2 there is a consideration for Asset Management on your side. You should take care of any assets relating to the customer, where it’s stored and how it’s being looked after.

Standards such as ISO 27001 (Information Security) and ISO 55001 (Asset Management) already have some considerations for this.

[13:30] You’ve calculated your GHG results, what’s next?- Once you’ve calculated emission from the required sources, you’ll then need to look at the carbon reduction side of your Carbon Reduction Plan.

To start with you’ll need to outline existing initiatives you have, for instance, a sustainable travel policy, EV charging on site or a hybrid working model. It’s really important that these are relevant to the delivery of the contract you are trying to secure.

Next, you’ll need to outline planned future initiatives, but bear in mind, these will need to be realistic and relevant, so no wild claims about buying an EV fleet or going zero waste next week!

Once you’ve done all this you can then start looking at carbon reduction forecasts and what the numbers might look like between now and 2050 (or you chosen date.

[15:10] Additional PPN 06/21 tips from David: It will need to be signed off by a director, or equivalent, at your business to demonstrate leadership commitment. If the document isn’t signed off on you may fail on the tender.

You’ll need to publish it on your website, making it easy to access. Simple solution to this is just add a link at the bottom of your landing page.

And finally, you’ll need to make sure this is kept up to date each year. Reporting for emissions occurs on a 12 monthly basis. This can either be calendar year or your financial year, but ideally, you’ll want to publish the updated version as soon as you can after the year-end, certainly no longer than 6 months after.

[16:40] What does a Carbon Reduction Plan look like? - When the government announced this requirement, they also released a template document that businesses can complete. This is to simplify the process for businesses that are reporting on emission for the first time, but more importantly it standardises reporting. However, the template is a bit basic!

You’re not marked on presentation, but you can dress it up a little as long as you don’t deviate from the template too much. So feel free to put come company branding on it, make a cover page, change the font, etc.

You could also make a ‘full’ version of your CRP that includes further details on boundaries, methodologies and results, just make sure you only submit the template version to tenders.

[19:10] What happens if you don’t meet the requirements? - If you don’t meet the requirements without a valid reason, chances are you’ll fail the selection criteria. The selection criteria is a bit like the marking scheme associated with PPN. We can’t say for a fact that this means you’ll subsequently fail the tender, but it will certainly have a negative impact.

For further information, David has prepared a quick guide for creating your PPN 06/21 Carbon Reduction Plan. Feel free to download it from the link provided in the Resources section.

Lastly, if you have an questions or would like to learn more about how Carbonology can help you, feel free to book a call in via David’s Calendly.

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