Harnessing Public Procurement for the Green Transition

United Kingdom

Framework, scope, action-plans

The Greening Government Commitments set out the actions UK government departments and their agencies will take to reduce their impacts on the environment in the period 2021 to 2025.1 This includes the following commitments pertaining to procuring sustainable products and services:

• To continue to buy more sustainable and efficient products and services whilst also achieving value for the UK taxpayer, UK government departments will report on the systems they have in place and the action taken to buy sustainably, including to:

  • embed compliance with the Government Buying Standards in departmental and centralised procurement contracts, within the context of the UK Government’s overarching priorities of value for money and streamlining procurement processes.

  • understand and reduce supply chain impacts and risks.

The UK has the National Procurement Policy Statement (NPPS). The NPPS sets out the national priorities that all contracting authorities should have regard to in their procurement where it is relevant to the subject matter of the contract and it is proportionate to do so. Contracting authorities should consider outcomes that contribute to effective stewardship of the environment including tackling climate change and reducing waste.

Furthermore, the UK has enacted procurement policies to support Green Public Procurement (GPP) and its commitments on Net Zero. The Procurement Policy Note 06/212 introduces a new Selection Criteria for major government contracts, where suppliers failing to produce a Carbon Reduction Plan (CRP) and commit their organisation to Net Zero by 2050 are deselected from the procurement process. Since its adoption in September 2021, over GBP 300 billion of contracts and frameworks have applied the measure and thousands of suppliers have produced CRPs and committed to Net Zero by 2050.

The UK has an overarching commitment to achieve Net Zero by 2050, which incorporates procurement and whole economy measures, as established by an amendment to the Climate Change Act in 2019. Delivering net zero through public procurement is referenced in the UK’s Net Zero Strategy.

In May 2022, the UK published the Draft environmental principles policy statement. This supports the introduction of core environmental principles established by the Environment Act 2021. These principles play an important role in supporting environmental improvement plans and delivering the country net zero commitment to tackle climate change. It aims to provide ministers, and those developing policy on their behalf, with the space to use the principles to enable and encourage innovation. This approach will ensure that nature and the environment are proactively designed into the policymaking process.

Responsibility to ensure co-ordination between environmental and GPP commitments is split between departments. The Cabinet Office holds responsibility for procurement policy, and the Procurement Policy Working Group is responsible for discussing policy development and disseminating new policy requirements across Government. This is an interdepartmental group led by the Cabinet Office and is used to develop and share procurement policy, including GPP. Other departments will have their own structures in place to monitor policy adoption in their own areas, which may include other areas of GPP.

The Cabinet Office, the Department for Energy Security and Net Zero and the Department for Environment, Food and Rural Affairs all play a role in the co-ordination and collation of data relating to departmental emissions and wider Net Zero commitments.

Implementation

The UK has adopted mandatory requirements for central government which include:

• Procurement Policy Note (PPN) 06/21 - Taking account of Carbon Reduction Plans in the procurement of major government contracts.

In 2019, the UK became the first major economy to adopt a legal commitment to achieve Net Zero carbon emissions by 2050. To support this, the Government Commercial Function has developed a new commercial policy measure for all central government departments and arm’s length bodies. This procurement policy measure requires suppliers bidding for major government contracts to commit to achieving Net Zero by 2050 and publishing a Carbon Reduction Plan (CRP) at the selection stage of the procurement. Suppliers failing to meet this requirement are deselected from the procurement process. Procurement Policy Note 06/21 applies to procurement valued at GBP 5 million per annum and above.

CRPs must meet a published standard which includes but is not limited to:

• Confirming the bidding supplier’s commitment to achieving Net Zero by 2050 for their UK operations.

• Providing the supplier’s current emissions for the sources included in Scope 1 and 2 of the Greenhouse Gas Protocol and a defined subset of Scope 3 emissions.

• Providing emissions reporting in CO2 (Carbon Dioxide Equivalent) for the greenhouse gasses covered by the Kyoto Protocol

• Setting out the environmental management measures in effect, including certification schemes or specific carbon reduction measures you have adopted, and that you will be able to apply when performing the contract and that support achieving Net Zero by 2050.

• Publication of the CRP on the supplier’s website.

The measure applies to all categories of spend (including construction, fleet, digital etc.) where it is relevant and proportionate to do so. To date PPN 06/21 has been applied to procurements totalling over GBP 300 billion, ranging from large scale Defense contracts, Digital Services, Construction and Fleet, and has also been adopted voluntarily by many sub-central bodies such as the NHS and Local Government authorities.

• Procurement Policy Note (PPN) 06/20 - Taking Account of Social Value in the Award of Central Government Contracts.

This PPN launches a new model to deliver social value through the UK Government's commercial activities. Central government organisations should use this model to take account of the additional social benefits that can be achieved in the delivery of its contracts, using policy outcomes aligned with this government’s priorities:

• Fighting climate change

• Effective stewardship of the environment

• Deliver additional environmental benefits in the performance of the contract including working towards net zero.

All government departments and their connected non-departmental public bodies must make sure that they meet the minimum mandatory Government Buying Standards (GBS) standards when buying goods and services. The UK also encourages the wider public sector to specify the minimum mandatory standards in tenders. The product specifications set out in the GBS are aimed primarily at public sector organisations procuring goods or services. However, any organisation concerned about sustainable procurement may choose to follow them or to specify them in tenders. The GBS are part of public procurement policy, with individual standards developed with input from across government, industry and wider stakeholders. The standards have been extensively reviewed with market research and analysis to establish criteria that take long-term cost effectiveness and market capacity into account.

Furthermore, the Construction Playbook sets out key policies and guidance for how public works projects and programmes are assessed, procured and delivered. Contracting authorities will also have to have regard to the strategic priorities in the National Procurement Policy Statement (NPPS). Finally, the Greening Government Commitments to continue to buy more sustainable and efficient products and services with the aim of achieving the best long-term, overall value for money for society.

Measurement and impact

Contracting authorities are not required to collect data on GPP beyond the requirements of the Greening Government Commitments.

Regarding the existence of an aggregated evaluation of impact of GPP: PPN 06/21 has been applied to 280+ procurements since 30 September 2021, these procurements have a total value of GBP 300 billion. The commitments made under PPN 06/21 apply to all suppliers who are bidding for the procurement, and these commitments apply across the whole organisation, not just in the delivery of that contract.

Access to granular data on GPP is not currently available in the UK, but systems are under development to capture more detail in this area.

Recent developments

The UK is reforming the way public authorities purchase goods, services and public works by simplifying and modernising procurement rules and procedures. The Procurement Act, which received Royal Assent on 26 October 2023, is anticipated to come into force in October 2024, along with secondary legislation required to implement some of the Act’s provisions. The Act introduces a new supplier selection regime, based on principles including non-discrimination, fair treatment, value for money, maximising public benefit, transparency, and integrity. While value for money remains the core objective of procurement, the Act requires public sector buyers to take account of the national strategic priorities set out in the NPPS. The NPPS states that contracting authorities should have regard to wider public benefits, such as creating new jobs, tackling climate change and improving supplier diversity, and innovation throughout the procurement process.

At COP28, the UK was signatory to two leading commitments to use the power of public procurement to decarbonise the construction sector.

• The UK was signatory to the Forrest and Climate Leaders’ Partnership (FCLP) commitments3 to increasing the use of sustainably sourced timber in the construction process.

• The UK was signatory to the Industrial Deep Decarbonisation Initiative (IDDI) commitments4 to establishing standards for low carbon steel and cement, and to utilise these products in major construction projects.