PPN 006 Carbon Reduction Plans and other government contract ESG requirements
ESG is now embedded throughout UK government procurement. Depending on the contract, suppliers may be assessed on carbon reduction targets, social value, modern slavery controls, cyber security and payment practices. Understanding these requirements early can significantly improve your chances of success when bidding for government work.
ESG requirements for government contracts
Government requirements for public procurement are communicated via Procurement Policy Notes (PPNs). These were updated, streamlined and consolidated into one location as part of the Procurement Act 2023, and they continue to evolve.
If your company is hoping to work for the government then there are several key environment, social and governance (ESG) considerations included in these PPNs that you need to understand. Some you just need to be aware of; some will determine whether you can be considered for a tender at all; and some will impact your tender score.
ESG-related PPNs you should be aware of:
PPN 001: SME and VCSE procurement spend targets. All central government departments must set targets for direct spend with small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs). If your organisation falls into these categories, then you might be in with a better chance of winning a contract than you previously would have been.
ESG-related PPNs that you need to pass:
PPN 014: Cyber essentials scheme. All central government departments and NHS bodies must ensure that for contracts considered to be at higher risk of cyber threats, appropriate technical controls must be met. These can be met by either Cyber Essentials or Cyber Essentials Plus certification.
PPN 018: How to take account of a supplier's approach to payment in the procurement of major contracts. For contracts valued over £5m, all central government departments must use suppliers that pay 95% of invoices within 60 days and an average payment timeframe of 45 days or less (or be able to explain why).
PPN 0061: Taking account of Carbon Reduction Plans in the procurement of major government contracts. All central government departments must apply PPN 006 when awarding contracts with an estimated value over £5 million per year. For companies, this means they need to produce Carbon Reduction Plans (CRPs) and ensure they meet all the PPN 006 scoring criteria. This involves measuring GHG emissions, committing to Net Zero by 2050, and describing environmental management measures that will be applied to the contract.
PPN 016: Carbon Reduction Contract Schedule. All central government departments should include standard T&Cs (the ‘carbon reduction schedule’) to support contract specific decarbonisation objectives to be set, delivered and monitored. Application of PPN 016 should be relevant to the subject matter of the contract and proportionate to the nature, complexity and cost of the contract. Companies responding to these tenders will need to go beyond the Carbon Reduction Plan they produced for PPN 006 and produce contract-specific carbon information (e.g. footprints, reduction plans, yearly reduction targets) with progress tracked annually.
ESG-related PPNs that could increase your tender score:
PPN 008: Armed Forces Covenant. All central government departments should consider encouraging suppliers to sign the Armed Forces Covenant. This PPN is loosely worded and whether Covenant signatories get preferential procurement selection will be contract specific, however, if they do, becoming a signatory could be an opportunity.
PPN 003: The Public Services (Social Value) Act 2012. All central government departments must apply The Public Services (Social Value) Act 2012. This Act requires authorities to consider how what is being procured might improve the economic, social and environmental well-being of the relevant area; and how, in conducting the process of procurement, it might act with a view to securing that improvement. The details for ‘how’ the authorities should do this reside in PPN 002, and the more recent (August 2026) PPN 026.
PPN 002: Taking account of social value in the award of central government contracts. All central government departments, excluding private utilities contracts and Ministry of Defence in relation to defence and security contracts, must use the PPN 002 Social Value Model and apply a minimum 10% weighting of the total score for social value.
The model is flexible and so the specific contract requirements will vary depending on the outcome(s) selected and their associated criteria and sub-criteria (read the details here). The 8 possible outcomes cover fair work (including modern slavery); skills for growth; resilient, innovative and flexible supply chains; sustainable procurement practices; support the reduction in crime; employment and training; opportunities for the contract workforce and under-represented groups; physical and mental wellbeing.
Companies should be prepared to meet contract-specific social value requirements or risk not winning the contract.
PPN 009: Tackling modern slavery in government supply chains. All central government departments must identify and manage modern slavery risks in new procurement activity in accordance with statutory guidance. When the risk is not low this should be incorporated into government procurement by selecting modern slavery as an objective in the Social Value Model (see PPN 002 above).
PPN 026: The Social Value. All government departments from 1st January 2027 must apply a new version of the Social Value Model to their procurements. This new version replaces the stipulations of PPN 002 and has significantly narrowed the available outcomes to focus on good jobs, skills and opportunities. The thresholds for applicability have also changed:
◦ Contracts < £1m ➡️ no requirement for a Social Value Model assessment
◦ Contracts £1m - £5m ➡️ Social Value Model counts towards 10% (minimum) of the total score.
◦ Contracts >£5m ➡️ Social Value Model counts towards 20% (minimum) of the total score.
How to prepare for government contract ESG requirements
Meeting all these different requirements can feel complicated but it doesn’t have to be. To put your company in the best position to win an upcoming government contract, take these steps:
Review the requirements for the Armed Forces Covenant and see if there’s a fit with your business. This is an optional requirement so prioritise implementation based on the likelihood of tender inclusion (more so for MOD tenders, for example).
Self-assess which of the Social Value Model outcomes you think the tender may include. Use PPN 002 for tenders coming out in 2026 and thereafter use PPN 026 (and only if the contract is worth >£1m). Start planning your responses to these. If PPN 002 applies, cross check your industry against the industries the government has identified as at higher risk of modern slavery and if listed, prepare for the modern slavery requirements.
Measure your company greenhouse gas emissions (scope 1, scope 2 and scope 3 categories 4, 5, 6, 7 and 9), set a company Net Zero target for 2050 (or sooner), and produce your PPN 006 Carbon Reduction Plan. Remember to publish this on your website.
Review if and how you could measure the contract specific GHG emissions. Don’t worry if you can’t, inclusion of this criteria in the procurement process is based on relevance and it most likely means it’s not relevant. If however, the project is clearly energy related or impactful, and measuring GHG emissions is routine for that type of work (e.g. construction/infrastructure projects), you should prepare and plan for reductions.
Obtain Cyber Essentials certification or review the PPN 014 requirements and ensure you demonstrate compliance in other ways.
Check your supplier payment history meets the requirements of PPN 018 and if it does, consider signing up to the Fair Payment Code to differentiate from your competitors.
If you’re regularly conducting work for the government consider integrating these into your sustainability strategy.
For support with sustainability strategy or producing your Carbon Reduction Plan for PPN 006, contact us.
Authored by Caroline Johnstone.
