Understanding PPN 06/21: A Guide for Small Businesses

  • Carbon Reduction
  • Carbon reduction plans
  • Jun 21, 2024

PPN 06/21, short for ‘Procurement Policy Note,’ is a requirement for businesses bidding on major UK government contracts. It applies to contracts valued at £5 million or more annually. Here’s what small business owners need to know about PPN 06/21 and how it might apply to your operations.

What is PPN 06/21?

PPN 06/21 is a part of the government’s overhaul of procurement legislation. It mandates that suppliers bidding for significant government contracts must demonstrate their commitment to reducing greenhouse gas emissions. This aligns with the UK’s goal of achieving net zero emissions by 2050. In Wales, it’s referred to as WPPN 06/21, but the requirements are identical.

The initiative isn’t about being perfect, just showing that you have a plan for carbon reduction. Nonetheless it can feel overwhelming, especially when you’re rushing to meet bid deadlines.

Do Small Businesses Need to Worry About PPN 06/21?

If your business is bidding for, or plans to bid for, government contracts worth £5 million per year or more, then PPN 06/21 applies to you. Even if your business doesn’t reach this threshold, if you are a subcontractor or part of the supply chain for a larger contractor, you may still need to comply.

Preparing a Carbon Reduction Plan (CRP) in advance is a good idea, even if you don’t currently bid on public sector contracts. It can take a bit of time to prepare, and that’s the last thing you’ll want to be doing when a bid deadline is looming.

What You Need for PPN 06/21 Approval: Writing a Carbon Reduction Plan

To comply with PPN 06/21, you must develop a Carbon Reduction Plan that includes:

  • Your Current Carbon Footprint: Documenting your Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity) emissions, along with some Scope 3 emissions (indirect emissions from your supply chain).
  • Environmental Management Measures: Outline of the strategies and measures that you will use to manage and reduce your environmental impact.
  • Future Plans for Achieving Net-Zero Emissions: Show clear targets for reducing emissions and descriptions of how you plan to achieve them.

Your CRP should align with recognised standards such as the Greenhouse Gas Protocol or ISO 14064. There’s more information on this in our article How to write a Carbon Reduction Plan

The focus is on your future targets and strategies, rather than the work you’ve already done. If you’ve achieved key steps recently, you can backdate your Carbon Reduction Plan if you have the ‘before’ data to create a benchmark.

Steps to Comply with PPN 06/21

  1. Measure Your Carbon Footprint: Calculate your Scope 1 and Scope 2 emissions, and include significant Scope 3 emissions categories like upstream and downstream transportation, waste, business travel, and employee commuting.
  2. Develop a Carbon Reduction Plan: Create a detailed plan outlining your current emissions, future targets, and reduction strategies. For more detailed guidance, refer to our article with basic templates and examples for creating a Carbon Reduction Plan.
  3. Align with Standards: Ensure your CRP aligns with established standards such as the Greenhouse Gas Protocol.
  4. Monitor and Report: Regularly track your emissions and update your CRP as needed. Be prepared to adapt how you report your progress as government requirements change.

Benefits of PPN 06/21 for Your Business

Besides qualifying for sometimes lucrative government contracts, a robust CRP showcases your commitment to carbon reduction. A good CRP can be much more than a box-ticking exercise. Having a clear plan for carbon can potentially enhance your business’s reputation and attract new clients and partners. Additionally, many carbon reduction strategies can lead to cost savings through improved energy efficiency and reduced waste.

Additional Benefits of a Carbon Reduction Plan

Implementing a Carbon Reduction Plan can provide your business with several additional advantages:

  • Enhanced Brand Image: Demonstrating a commitment to sustainability can improve your brand’s image and make your business more attractive to customers and partners who value environmental responsibility.
  • Compliance with Future Regulations: As regulations around carbon emissions become stricter, having a CRP in place ensures your business is ahead of the curve and ready to comply with future legal requirements.
  • Access to Green Financing: Many financial institutions offer favourable terms to businesses with strong environmental practices. A CRP can help you qualify for green loans or investment opportunities.
  • Employee Morale and Recruitment: Employees increasingly prefer to work for companies that are environmentally responsible. A strong CRP can boost employee morale and help attract top talent.

Common Challenges and How to Overcome Them

Developing and implementing a Carbon Reduction Plan can come with challenges, especially for small businesses with limited resources. Here are some common obstacles and tips to overcome them:

  • Lack of Expertise: If your business lacks expertise in carbon accounting, consider hiring a consultant or using an online tool like Gopher Zero. Gopher’s digital carbon reduction planning service offers low-cost plans that will support your business to take action.
  • Initial Costs: While there may be upfront costs associated with implementing carbon reduction measures, these can often be quickly offset by savings in energy and resource efficiency.
  • Data Collection: Gathering accurate data on your carbon emissions can be challenging. Start with the most accessible data and gradually improve your data collection processes over time.

Conclusion

While the name might ring alarm bells about red tape, complying with PPN 06/21 is generally quite straightforward. By developing a Carbon Reduction Plan, your business can qualify for major government contracts. If you get it right, it can also lead you on to both enjoy potential cost savings and enhanced reputation. Get started on your CRP today to ensure your business stays competitive and sustainable.

For further assistance on creating a Carbon Reduction Plan, check out our ‘How it Works‘ page to see how quickly you can get started.