Navigating PPN 06/21 Reporting for Small and Medium-Sized Businesses

In an era where sustainability is no longer optional but a business imperative, the UK government has introduced Procurement Policy Note 06/21 (PPN 06/21) to usher in a new era of carbon accountability. This policy, effective from 30th September 2021, mandates suppliers bidding for major government contracts to demonstrate their commitment to achieving Net Zero by 2050 through Carbon Reduction Plans (CRPs). This guide aims to unpack PPN 06/21, focusing on its implications for Small and Medium-sized Enterprises (SMEs), providing the necessary background, frequently asked questions, and useful insights gleaned from government documents.

What is PPN 06/21?

Procurement Policy Note 06/21 (PPN 06/21) requires suppliers to report their carbon footprint and commit to achieving net zero by 2050 as a condition of bidding for major government contracts. This initiative is part of the broader strategy to leverage government procurement to drive down carbon emissions and stimulate the market's transition towards net-zero.

Background

PPN 06/21 is a response to the UK's legal commitment to achieve 'Net Zero' carbon emissions by 2050, as outlined in the amended Climate Change Act of 2008. It applies to all Central Government Departments, their Executive Agencies, and Non-Departmental Public Bodies, affecting procurements regulated by the Public Contracts Regulations 2015 with an anticipated contract value of £5 million per annum and above​​​​.

Why It Matters for SMEs

For SMEs, compliance with PPN 06/21 is not just about eligibility for government contracts; it's an opportunity to align with global sustainability trends, enhance their marketability, and contribute to the fight against climate change. Understanding and implementing the practices required by PPN 06/21 can also lead to operational efficiencies and cost savings in the long run.

Steps to Compliance

1. Carbon Footprint Measurement: The first step for SMEs is to calculate their GHG emissions across Scopes 1, 2, and where applicable, Scope 3. This involves assessing direct emissions from owned or controlled sources, indirect emissions from purchased electricity, and all other indirect emissions that occur in the value chain.
2. Set Reduction Targets: After understanding their carbon footprint, SMEs need to set realistic yet ambitious targets for reducing their emissions. This includes short-term actions and long-term strategies aligned with the goal of achieving net zero by 2050.
3. Implement Reduction Strategies: Strategies may include improving energy efficiency, switching to renewable energy sources, optimizing supply chains, and reducing waste. SMEs should focus on actionable and measurable steps that can have an immediate impact on their carbon footprint.
4. Report and Commit to Net Zero: Compliance with PPN 06/21 involves not just reporting current emissions but also committing to a clear plan for achieving net zero. This requires transparency about the SME's strategies, targets, and progress.

Leveraging Technology for Compliance

Technology plays a pivotal role in enabling SMEs to meet PPN 06/21 requirements efficiently. Tools like CarbonRP offer a streamlined way to calculate emissions, set reduction goals, and generate reports in line with PPN 06/21 guidelines. These technologies can simplify the process, making it more accessible for SMEs to comply with reporting requirements and manage their carbon reduction efforts effectively.

FAQs

1. What are Scope 1, 2, and 3 emissions?
   Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 are indirect emissions from the generation of purchased electricity, heating, and cooling. Scope 3 emissions are all other indirect emissions, including business travel, waste generated in operations, and transportation​​​​.
   
2. Do SMEs need to create a CRP?
   Yes, any SME bidding for a government contract valued at £5 million or more per annum must submit a CRP that aligns with the technical standards outlined in PPN 06/21​​​​.
   
3. Can SMEs use existing CSR policies as their CRP?
   No, CSR statements or policies cannot replace a CRP. A specific CRP template must be completed, ensuring all information required by PPN 06/21 is provided​​.
   
4. What if an SME's emissions increase?
   An increase in emissions does not automatically fail the CRP check. However, SMEs should provide an explanation for any increase and may need to undertake further action to mitigate their carbon emissions​​.
   
5. Are subcontractors required to have a CRP?
   The primary organization bidding for the contract must have a CRP. While subcontractors are not required to produce a CRP under this policy, they must do so if bidding on a procurement in their own right​​.
   
6. How often should a CRP be updated?
   A Carbon Reduction Plan should be reviewed and updated within 6 months of your organization's financial year-end to reflect any changes in organizational structure and to account for efforts made to reduce emissions over time​​.
   
7. Is there a specific format for reporting emissions in the CRP?
   Yes, emissions should be reported in tonnes of carbon dioxide equivalent (CO2e) using conversion factors published by BEIS. The CRP should include all seven greenhouse gases named by the Kyoto Protocol, ensuring adherence to the Greenhouse Gas Protocol’s Corporate Accounting and Reporting Standard​​.
   
8. What support is available for SMEs in creating a CRP?
   The Cabinet Office, Crown Commercial Service, and other partners host webinars and roundtables to support the implementation of PPN 06/21. Additionally, many private sector organizations, charities, and industry bodies offer tools and resources, sometimes free for SMEs, to assist in calculating carbon footprints and creating CRPs​​ like CarbonRP.
   
9. What happens if an SME does not have a website to publish their CRP?
   If an SME does not have a website, it must provide a copy of the CRP in writing to anyone who requests one within 30 days. However, it is strongly recommended to maintain an online presence where the CRP can be easily accessed to ensure transparency and ease of verification​​. CarbonRP provides this feature for free where you can create embeddable CRP reports easily.

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