NHS Net Zero Commitment requirement for suppliers on lower contract thresholds comes into force  

More companies must demonstrate their net zero ambitions when bidding for NHS contracts under the newest guidance. 

What is the context? 

The NHS net zero supplier roadmap sets out the steps suppliers must take to align with the NHS net-zero ambition through to 2030. 

From April 2023, the NHS has required suppliers for all new contracts above £5 million per annum to publish a Carbon Reduction Plan for their UK Scope 1 and 2 emissions and a subset of scope 3 emissions as a minimum (aligning with PPN 06/21).  

This roadmap has reached another milestone, placing new Carbon Reduction Plan requirements for suppliers from April 2024. 

The requirements apply to the commissioning and purchasing of goods, works and services, including pharmaceuticals and healthcare services, by in-scope organisations. In-scope organisations are defined as NHS organisations as well as organisations acting on their behalf. 

To ensure these requirements are extended in “a proportionate and relevant manner” to all procurements, the policy is applied in a two-tiered approach. 

What does this mean in practice? 

From April 2024: 

• A full Carbon Reduction Plan is required for procurements of high value (£5m per annum excluding VAT and above) and new frameworks operated by in-scope organisations, irrespective of the value of the contract, where relevant and proportionate to the framework. 

• A Net Zero Commitment is required for procurements of lower value (below £5m per annum excluding VAT and above £10k excluding VAT). 

The requirement to provide a Carbon Reduction Plan or Net Zero Commitment is in addition to the inclusion of a minimum 10% weighting on net zero and social value in NHS procurements, which has been required since April 2022. 

The NHS Net Zero Commitment 

A Net Zero Commitment is a public commitment to achieve net zero by 2050 or earlier, confirming the supplier is taking steps to reduce their greenhouse gas emissions over time. 

To comply with the NHS Net Zero Commitment requirements, a bidding supplier must: 

• Confirm their commitment to achieve net zero by 2050 or earlier for their UK operations on the sources included in scope 1 and 2 of the GHG Protocol, and a defined subset of scope 3 emissions. Note, the UK is a minimum geographical boundary, and a global emissions boundary meets the requirements. 
• Clearly signpost and publish the commitment on the supplier’s website. 

NHS England has offered a suggested format for suppliers to use. However, suppliers can provide a Net Zero Commitment in a different format if the commitment is clear, concise and easy to locate on the supplier’s website (via a link). 

To demonstrate the public commitment at contract award stage, the contracting authority will be asking the supplier to provide a URL where the commitment is clearly stated.  

The supplier should ensure the commitment is board- or company director-approved, if no board is in place, and be able to demonstrate this if asked to do so.  

The supplier should also be able to provide evidence of activities to reduce their greenhouse gas emissions over time if asked by the contracting authority. For example, this evidence could include the organisation’s carbon footprint measurement. 

The Net Zero Commitment requirements are a subset of the Carbon Reduction Plan requirements. Therefore, a supplier already complying with the Carbon Reduction Plan requirements is also complying with the Net Zero Commitment requirements and does not require further action. 

Key information 

The threshold to demonstrate net-zero commitments being lowered from contract value of £5m to only £10k is a significant drop and headline news for companies bidding for NHS contracts. 

In practice this means that businesses which may not have needed to submit formal net-zero reporting before are now required to demonstrate their targets and ambitions. 

Although the NHS Net Zero Commitment requirement is quite free format, it can still place new demands on smaller companies, companies without sustainability expertise in-house, as well as companies where the reporting responsibility relies on a small team or one person.   

Net-zero reporting can be overwhelming, especially if there is no starting point for you to assign goals and interim targets on your way towards them. An expert partner can support you in measuring your carbon footprint and identifying ambitious but achievable decarbonisation targets and measures.

All this allows you to communicate your commitments in a clear and concise manner when demonstrating compliance against requirements like the NHS Net Zero Commitment. 

Building a Carbon Reduction Plan 

A Carbon Reduction Plan identifies a supplier’s current carbon footprint and their plan to achieve net zero emissions. 

The requirements for a Carbon Reduction Plan align with PPN 06/21. Therefore, the NHS will accept any existing and current Plan developed in accordance with PPN 06/21. 

To comply with the NHS Carbon Reduction Plan requirements, and align with the PPN, the Plan must: 

• Confirm the bidding supplier’s commitment to achieve net zero by 2050 or earlier for their UK operations as a minimum geographical boundary. Note, a global emissions boundary meets the requirements. 
• Provide the supplier’s baseline and current emissions for the sources included in scope 1 and 2 of the GHG Protocol, and a defined subset of scope 3 emissions (at a minimum). The five relevant GHG Protocol scope 3 categories are: 
  • upstream transportation and distribution 
  • waste generated in operations 
  • business travel 
  • employee commuting; and 
  • downstream transportation and distribution. 
• Provide emissions reporting in CO2e (carbon dioxide equivalent) for the seven greenhouse gases covered by the Kyoto Protocol: (carbon dioxide [CO2], methane [CH4], nitrous oxide [N2O], hydrofluorocarbons [HFCs], perfluorocarbons [PFCs], sulphur hexafluoride [SF6] and nitrogen trifluoride [NF3]). 
• Set out the environmental management measures in effect, including certification schemes or specific carbon reduction measures adopted. These should be measures the supplier can apply when performing the contract and support the supplier to achieve net zero by 2050 or earlier. 
• Board-approved or company director-approved if no board is in place. 
• Clearly signposted and published on the supplier’s website. 
• Updated regularly – at least annually. 

Receiving support 

Although bidding for larger NHS contracts might already be a familiar exercise for your business, this announcement requires new NHS framework or Dynamic Purchasing Systems agreements to apply the full Carbon Reduction Plan requirements irrespective of contract value. 

An expert partner can support framework owners in adhering to the new carbon reduction plan thresholds. This can be through incorporated ESG questions built into standard tender documentation and validation checks, where suppliers are asked to evidence their carbon reduction plan for all contracts above £5 million per annum. This ensures a compliant tender process in line with central government Public Contracts Regulations 2015. 

Commitment timings and further guidance 

The Net Zero Commitment requirement is set to be extended to contracts below the relevant Public Contracts Regulations 2015 (PCR) threshold from 1 April 2026. However, this will be reviewed prior to the planned implementation date.  

More information about this guidance is available on the NHS England website. 

How can Inspired help? 

This announcement demonstrates an increasingly knowledgeable market landscape, where businesses must demonstrate their net-zero compliance to operate and sell their services.  

However, while stakeholder interest is only growing, Environmental, Social and Governance (ESG) matters are puzzling many organisations. 

Audience polls from Inspired’s first 2024 webinar showed 42% of the respondents did not know if they were able to communicate their business strategy from an ESG perspective, while only 40% of the attendees stated they have in-house capabilities to prepare their ESG disclosures. 

Inspired offers a comprehensive ESG Disclosure Service, where our experts support you in making the disclosure process as simple and streamlined as possible.