Did you know the City of London places a 30% weighting on your ESG (Environment, Social, Governance) performance for any bids to be a supplier? Are you aware of the need to comply with PPN 06/21 on many other bids for public monies?
ESG and the related Carbon Reduction Plan obligations under Public Procurement Notice PPN 06/21 are now critically important criteria for any business seeking growth and access to capital. Here, we explore the steps you need to take to satisfy these demands.
The PPN 06/21 is a procurement notice designed by the UK government to decarbonise the public sector. It applies where there is an anticipated contract value of £5m or more per annum and is used as part of the supplier assessment. We have heard numerous prospective clients comment that they will simply use their existing corporate social responsibility (CSR) statements to prepare their bids, but this is not enough. The PPN 06/21 requires a specific Carbon Reduction Plan template to be used, and the calculations must be conducted with a consistent and credible methodology. Without this, the bid will not even be considered.
So, are you at risk of being left behind? With 30% weighting for ESG on bids to supply the City of London, and up to 25% elsewhere, there’s a large amount of revenue and opportunity at stake.
Perhaps it seems like an unfair waste for companies who have CSR under their belts to be obligated to start yet another sustainability journey, but ESG is the evolution of CSR and carbon is but one component.
Once businesses begin working on their PPN 06/21, they’re already on track towards carbon neutrality and are therefore making strides which should be further emphasised through a full ESG report.
For many, it’s a chicken-and-egg dilemma between carbon and ESG reporting – and that’s okay! Keep in mind though, that ESG reporting can be much faster than carbon reporting. Whereas ESG reporting can see the first report completed within six months, carbon reporting usually requires 12 months of data collection before the real work begins.
If your business plans to submit bids in 2023, you should consider starting with ESG reporting so you can secure the ESG rating points.
However, it’s possible in certain circumstances to complete the carbon reporting very quickly, if you have the right consultants.
A case study
An SME had a sudden opportunity to punch above their weight on a government bid at the start of this year. They got all their documents in order and were a week from the deadline when they learned about the required PPN 06/21. They were of a size where they never considered sustainability before. With only 25 full-time employees but over 100 subcontracted workers, they were relatively small.
A brief call later and ESG Pro agreed to meet their deadline. With a hugely capable SME team in addition to our government team, we want to help every business to reach new heights.
We were able to produce their PPN by using approved methodologies for calculating averages based on national data. Fortunately, their operational style meant many of the more difficult Scope 3 emissions categories weren’t applicable to them, otherwise they would have failed to meet the deadline.
After submitting their bid, our client saw the value in not only completing a full annual carbon report, but also in having an ESG report. Why? Because they recognised the value added from having an ESG report and the difference meeting these requirements makes in their business relationships.
Avoid the panic of being unprepared
The PPN 06/21 does not have to be an intimidating hurdle, but ensuring its accuracy and credibility is essential to the proposition being put forward. The reputational damage of completing it without a strong and consistent methodology is why ESG Pro exists – to offer a stress-free, credible, reliable and fully-managed reporting service.
SMEs might think that sustainability reporting is not essential for them, but that mindset only lasts until an opportunity presents itself and they experience the panic of being unprepared.
ESG and carbon reporting add value to business, and SMEs can benefit most of all. To paraphrase Gartner, ESG and sustainability will dominate boardrooms throughout this decade, just as digital transformation dominated over the last.
A consultation costs nothing but could be invaluable to your business’s growth and success. The PPN 06/21 really is just the beginning, but it is entirely possible to complete.
Find out more about ESG Pro Ltd at www.esgpro.co.uk or email Natashia at nl@esgpro.co.uk
