Suppliers facing Net Zero challenge

Suppliers facing Net Zero challenge

Businesses bidding on many large public contracts in the UK are to be bound by the Net Zero commitment under new government guidance.

As of September 2021, contractors securing work packages exceeding £5 million per year (exc VAT) must commit to effectively eliminating their carbon emissions by 2050.

Carbon reduction plans will be required at the selection stage unless such measures are not relevant to the procurement, although the majority of in-scope contracts will be affected.

Suppliers will be required to declare their current carbon emissions in a variety of categories and detail the environmental management measures they will have in place during the contract lifecycle.

Larger firms tend to be the sole or principle suppliers for contracts of such value, but the trend towards green purchasing – combined with more access for small businesses to high value work packages via service-specific lots – makes the pursuit of Net Zero a pressing priority for suppliers of any size.

Sustainable procurement

The recent release of a stark report by the Intergovernmental Panel on Climate Change (IPCC) can only serve to catalyse public policy efforts to promote sustainable supply chains, although the situation may be more manageable than sensationalist headlines suggest.

Going green, however, is as commercially astute as it is civically conscious: more than ever, customers care about the consequences of their transactions.

The use of sustainability-centric branding – and generally talking up green credentials – is widespread, not least by firms heavily involved in the production or use of fossil fuels and other pollutants.

Moves by large manufacturers such as Porsche to insist on environmentally friendly supply chains demonstrate the depth of realisation that many of our favourite products and pastimes are unacceptably damaging to the ecosystems that sustain us.

Efforts to achieve the ambitious Net Zero target will inevitably increase inexorably in the decades to come, with government contractors bound by the most stringent regulation and oversight.

The upcoming changes – preceded by the proactively green Construction Playbook – are only the first steps towards an important but difficult objective.

The long-term lurch towards sustainability presents a common challenge to companies and organisations of every size and description: more responsibility, more workload and more overheads.

Although the government insists that smaller firms will not be disadvantaged by the changes, recent research has found that despite environmental protection being viewed as important by the vast majority of SMEs, 40% do not know how Net Zero will affect them.

Burden on business

The average entrepreneur or community innovator could be forgiven for groaning at the prospect of more red tape in the already paperwork-heavy and labour-intensive arena of public sector contracting.

We’ve previously discussed the disconnect between high level public policy and practical application, one that technology has the power to mitigate by rationalising and catalysing some of the daily administrative dirges that impede productivity.

These new measures may also encounter on-the-ground issues, with questions being asked, for example, about where responsibility for compliance lies when joint bids / consortia are involved.

And if suppliers are being held to the highest standards, are buyers also pulling their weight?

Late last year, the bane of inefficient government – the National Audit Office – reported that many departments are falling short of their own carbon reduction targets and standards.

The problem with well-meaning and valuable initiatives – like the green agenda or the search for social value in public spending – is that suppliers have to foot the bill.

For business owners and bid writers without deep pockets, too many bells and whistles can skew the cost-benefit ratio of public sector bids and create a damaging drain on capacity.

For taxpayers, of course, maintaining gold standards for government contractors – and securing as much value for society as possible while they’re at it – is the right deal.

Removing structural and systemic barriers to SME access is an ongoing policy priority, but businesses must ultimately rely on themselves and accept that benefitting from public funds is a two-way street.

Obstacles, however, can often be opportunities when met with the right attitude: more regulation means more headaches, but meeting new benchmarks is a crucial formative process for premium professionals and top-tier teams.

Adapt and overcome

An adaptable team – as well as an agile business model – is central to survivability in markets undergoing epochal change.

The quest to qualify and compete for public contracts is a golden opportunity to build engaged and well-oiled workforces that deliver sustainability in another key commercial metric: growth.

Setting fresh standards, securing new certifications and acing external audits are “all hands on deck” efforts that can coax professionals out of their comfort zones and help them delve into new disciplines.

Although snowballing workforces are great news for budding businesses and their communities, one of the drawbacks of expansion is the tendency towards “pigeonholing”, whereby remits harden around the edges and individuals are inhibited from honing and applying the totality of their talent.

Continuous up-skilling and cross-skilling is not just crucial to capability and productivity: it is a core element of employee engagement and a key driver of innovation in business.

The pursuit of Net Zero will be taxing for many companies and organisations, but any difficulties can be eclipsed by those who view change – or adversity – as a chance to improve and excel.

The pandemic has provided plenty of both: firms focused on Covid-specific specialisms or associated services have benefitted from huge public and private demand, but most businesses and industries have experienced highly challenging or even catastrophic market conditions.

Even as economies claw their way to recovery and a semblance of normality returns to society, business – much like life – has undergone a permanent reset in many respects..

The dramatic drop in carbon emissions resulting from virus lockdowns has focused minds as to the gravity of the task ahead: we can be certain that profoundly transforming our economy and society in order to avoid a environmental emergency will be an ever-increasing imperative in public policy in years to come.

Sustainability is one of many commercial variables that businesses will face in the long term, but leveraging challenges in your favour can help to develop a winning formula of resilience, flexibility and commitment in your workforce

For SMEs – particularly those targeting public sector contracts for the first time – alignments and alliances with operators within the same or similar spheres can provide cost-effective knowledge transfer, more bidding options and a cushion against radical market realignment.

One of the aims of the Tenderhood’s suite of online tools is to allow procurement and bid professionals to collaborate with peers of like mind and complementary ability in a forum designed to help SMEs compete with the dominant operators in their industries and secure a fairer share of public spend.

If you’re grappling with Net Zero or any other aspects of your public sector strategy, answers and allies can be found at The Tenderhood.

John Cutt Reporter for The TenderHood

John Cutt is a storyteller and researcher with extensive commercial experience in public sector tendering and procurement.

His services include creative and technical copywriting, SEO, social media management and brand consultancy.

Disclaimer: all views expressed are the authors opinion unless expressly stated as factual

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