SME guide to preparing a Carbon Reduction Plan – PPN 06/21
Many businesses bidding for public sector work have been faced with the requirement to publish a Carbon Reduction Plan. The requirements stem from a Procurement Policy Note (PPN) published by the Cabinet Office in June 2021 (hence the 06/21). Although intended to impact those businesses bidding for ‘major government contracts’, the fact that the requirements extend to framework agreements and dynamic purchasing systems means that many SMEs have had to meet the requirements.
This post is intended as a simple, practical, plain-English guide to producing a Carbon Reduction Plan in the UK, with links to all of the resources you will need. There is no reason to feel daunted. It is far easier to meet the requirements than it might at first seem.
If you do feel daunted though or you simply don’t have time, we can prepare a Carbon Reduction Plan for you from only £1,077 + VAT. The fee will be lower if you have already assessed your carbon footprint and/or if you already have an Environmental Management System (EMS).
The Carbon Reduction Plan template
If you’re keen to have a go, a template for a Carbon Reduction Plan was published alongside the PPN. Download the Carbon Reduction Template here. Note that you do not have to use the format of the template. You can use your own document templates and branding, providing that you include all of the relevant sections and meet the content requirements. Guidance is published here and there is a helpful FAQ document.
Having downloaded the template, you will notice that there are six sections:
- Commitment to achieving Net Zero
- Baseline Emissions Footprint
- Current Emissions Reporting
- Emissions Reduction Targets
- Carbon Reduction Projects
- Declaration and Sign Off
We provide a guide to completing each of these sections in turn below. But first, one over-arching point:
The requirement for a Carbon Reduction Plan is a pass/fail requirement. No comparisons will be made with the plans of other businesses and no extra scores can be achieved by being extra-ambitious or by stating particularly grand plans.
We’re all for businesses being ambitious in reducing their carbon footprints but too many are lapsing into dubious claims and target-setting. There is no advantage to be gained from doing so under the PPN.
Commitment to achieving Net Zero
This is a simple statement of your commitment to achieving net zero emissions by 2050 in the UK. This means that you commit to reducing your emissions as far as possible, before then offsetting the ‘unavoidable’ emissions that remain. To understand a little more about what this means, see our step-by-step guide to carbon footprinting.
Key points to note:
- If you already have a net zero target date which is earlier than 2050, use that date, but otherwise there is no advantage to selecting an earlier date. If you have not considered these issues before, it would be better to use 2050 as a target date. You can always bring that forward when you have a clearer idea of your carbon footprint and how you might reduce it as you move towards net zero.
- No carbon offsetting is required now. The concept of net zero involves using carbon offsetting only when you have reduced your emissions as far as possible.
- Your net zero target does not have to be compliant with any external standards or verification schemes such as the Science-Based Targets Initiative.
Baseline Emissions Footprint
If you have previously calculated your carbon footprint, you may already have baseline data to enter here. If not, you will need to calculate your carbon footprint so that you can include the data in your Carbon Reduction Plan. See our step-by-step guide or let us do the work for you with our Carbon Footprinting Package.
Key points to note:
- Only a limited set of Scope 3 emissions categories needs to be included in your Carbon Reduction Plan – Upstream transportation & distribution; waste generated in operations; business travel; employee commuting; downstream transportation & distribution.
- If yours is a professional UK services business, the emissions from some of these categories will be zero. Zero should be recorded against such categories, with a short explanation. See example below.
- Upstream and downstream transportation & distribution emissions will be zero unless you are selling (and shipping) physical products.
- Based on advice received at a recent webinar by the Crown Commercial Service, waste emissions can also be recorded as zero if you are an office-based business, since emissions from waste will be negligible.
- Estimating emissions from employee commuting can be tricky and in medium-sized businesses may be best approached using a staff survey. We provide a template survey as part of a carbon footprinting package but essentially you will need to gather commuting distance, frequency and usual mode of transport. Average UK commuting distances and transport mode split can be used as a short-term gap-filler if needed. This data is available from the Office for National Statistics.
- If you have a significant amount of homeworking, emissions can be included under category 7 – ‘Employee teleworking’ is a sub-category of employee commuting. The Homeworking Emissions Whitepaper provides a methodology for calculating emissions, or you can just estimate the number of days worked from home across your business and convert that to carbon emissions using the emissions factor for homeworking newly included in the Government’s emissions factors for company reporting in 2022.
Current Emissions Reporting
If this is all new to you, your current emissions reporting will be the same as your baseline emissions. If that’s the case, just copy and past the table from the previous section and add an introductory sentence explaining that your current reporting year is your baseline year.
Key point to note:
- Your current emissions data is required to be updated every 12 months. You will need to update it within 6 months of your reporting period ending. So, if your reporting period ends at the end of March, you will need to update your Carbon Reduction Plan by the end of September each year.
Emissions Reduction Targets
You may have already set emissions reduction targets that can be stated in this section of your Carbon Reduction Plan. If not, you could simply restate your commitment to achieving net zero by 2050. Note that your Carbon Reduction Plan will not be compliant with PPN 06/21 without this commitment.
You may also want to consider a shorter-term target, as suggested in the template, although this is not a formal requirement.
Key points to note:
- There is no consequence under the PPN for not meeting your stated targets. Nevertheless, it may be a reputational risk so it is advisable to set targets when you have a clear idea of the emissions reduction that are possible for you. More on this below.
- According to guidance provided at a recent Crown Commercial Service webinar, the targets stated here must be absolute emissions reduction target, i.e. they cannot take account of planned or projected business growth. Even more reason for caution to be applied here!
- Should you be confident in setting short term targets, many businesses are aligning with the UN’s Race to Zero campaign, which suggests the need for 50% carbon emissions reductions by 2030. The Science-Based Targets Initiative indicates the need for target reductions in the region of 4-5% per year.
- Adding a graph (as suggested in the template) is optional and not a requirement!
Carbon Reduction Projects
This is an opportunity for you to state any action that you are taking or that you have planned that will lead to reductions in your carbon emissions.
If you have an environmental management system, you may want to summarise the action outlined within that that will lead to emissions reductions.
If you have never considered these issues, review your carbon footprint and what it tells you about where emissions come from in your business. Then think about actions you can take to address these. Should you need help, our Environmental Management System package includes action planning for your business.
Remember, there are no extra points for making bold claims here so be honest about what you can do.
Declaration and Sign Off
You’ll need to have your Carbon Reduction Plan signed off by a representative of your board of directors or equivalent.