‍$75 Billion in Contracts Altered By New Environmental Procurement Policy

The call for environmentally conscious procurement policies by governments and large corporations worldwide is gaining momentum. A key example of this is the Australian Government's release of the Net Zero in Government Operations Strategy. 

The Australian Government Policy Update highlights key points from this strategy, focused on helping businesses understand the current state of policy and its implications for them.

Commitment to Net Zero by 2030:

• Reduce emissions from Australian Government operations
• Includes all non-corporate Commonwealth entities, such as government departments
• Reinstatement of public emissions reporting across government entities

Key Areas of Focus:

• Energy: Transitioning electricity to 80% renewable by 2028 and 100% by 2030
• Buildings: Minimum energy efficiency standards for leased/purchased offices
• Procurement: Assessing emissions across purchases and suppliers
• Fleet: Goal of 75% of new passenger vehicles to be electric by 2025
• Travel: Considering emissions impacts of air and land transport

What This Means for Businesses:

• Significant shift in government operations influencing procurement changes
• Strengthened emissions and environmental standards for government suppliers
• Increased expectations for businesses to understand and reduce their carbon footprint
• Competitive advantage for businesses leading on emissions reductions

The Australian Approach: Net Zero in Government Operations Strategy

Understanding Recent Government Announcements

Amidst recent government announcements, the Australian government's strategic commitment to achieving net zero emissions by 2030 is pivotal. The comprehensive Net Zero in Government Operations Strategy focuses on key areas—property, energy, procurement, fleet, and travel—to advance Australia's decarbonisation efforts. 

Examining the Proposed Three-Pillar Approach of Government Procurement

Within the Net Zero in Government Operations Strategy document, the three-pillar approach for net zero procurement is a cornerstone of Australia's commitment to sustainable practices:

1. What We Buy:

The Australian Government is set to assess the goods and services it purchases, strategically identifying and targeting high emissions categories. Areas such as construction services, ICT equipment, textiles, and furniture will see strengthened requirements. The forthcoming Environmentally Sustainable Procurement Policy will guide this approach.

2. Who We Buy From:

A significant stride toward informed procurement decisions involves mandatory climate risk disclosure for large companies from 2024. This disclosure will provide essential emissions data, enabling the government to make environmentally conscious choices in collaboration with major suppliers.

3. How and Where We Buy:

To enhance capability, a targeted uplift is anticipated by 2026, empowering procurement decision-makers with a broader range of climate information from suppliers. This initiative reflects a commitment to making well-informed, climate-aware procurement decisions.

Timelines for Implementation:

The critical milestones outlined in the Net Zero in Government Operations Strategy document include:

• The development of the Environmentally Sustainable Procurement Policy and associated guidance by January 2025. This phased implementation will introduce requirements for emissions reductions.
• Concurrently, guidance and training are slated for development by January 2025 to support the comprehensive implementation of the Policy across government buyers.

This strategic roadmap aims at achieving a key milestone: the creation and publication of a robust Environmentally Sustainable Procurement Policy by January 2025. 

Supported by guidance and training, this initiative will build the necessary capability for effective implementation, reinforcing Australia's commitment to sustainable and climate-conscious procurement practices.

Learning from the UK: Policy Procurement Note 06/21

In regards to sustainability policy, the UK can often be a good guide to understanding where Australia is headed. Their procurement policy has been in place since 2021.

The UK's PPN 06/21:

• Requires any organisation bidding on a central government or public contract over £5 million in value per annum to calculate their carbon footprint and work towards achieving net-zero emissions by 2050. 

• Ensures that organisations bidding for large contracts are taking responsibility for their environmental impact. 
• Highlights the potential associated cost savings from better transparency and visibility of emissions. 

Recognising the evolving global landscape and the increasing emphasis on sustainability, it’s clear that legislative changes like the UK's PPN 06/21 are inevitable for businesses worldwide. 

As countries like the UK set precedents with policies mandating carbon footprint calculations and commitments to net-zero emissions, businesses operating on an international scale must anticipate similar regulatory shifts. 

Proactive adaptation to these changes not only aligns with environmental responsibility but also positions organisations favourably in the competitive landscape, emphasising the importance for businesses to integrate sustainability practices into their core operations.

Implications for Companies

With a commitment to reduce their scope 3 emissions, major changes are expected for how companies are assessed by governments and large corporations. As the focus shifts towards adopting greener strategies and investment in environmentally friendly solutions, businesses that do not make proactive changes in their approach to emissions risk losing out in the competitive market.

How Companies Can Take Advantage of Upcoming Policy

In response to the Australian Government's Net Zero in Government Operations Strategy, we hear that leading businesses are starting to:

1. Conduct and Report Emissions Analysis: Evaluate Scope 1, 2, and 3 emissions per GHG protocols.

2. Embed Sustainable Practices: Innovate to integrate sustainability into operations.

3. Transparent Reporting: Include summaries of emissions analysis or sustainability policies in tenders to align with updated government procurement policies.

4. Proactively Adapt to Policy Changes: Stay informed and agile to maintain a competitive edge in evolving environmental regulations.

The impending changes in procurement policies are an opportunity for companies to reflect on their practices and make necessary changes towards achieving sustainability goals. How are your actions contributing to creating a greener future?

Conclusion

The evolving environmental procurement policies signal a growing emphasis on sustainability across various sectors.

Companies that adapt to the new requirements and proactively adopt sustainable practices will have a competitive edge in the market and contribute to a greener future.

Feel free to contact the NetNada team to discuss how this affects your business and options for automated carbon emissions analysis.