CDP Public Procurement Programme 2009 Central Government Report
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CDP Public Procurement
Programme 2009
Central Government Report
Report written for Carbon Disclosure Project
Carbon Disclosure Project by: info@cdproject.net
Tel: +44 (0) 20 7970 5660
Web: www.cdproject.net
A world leading energy and climate change consultancy
CDP Public Procurement Programme 2009
Central Government Report
Carbon Disclosure Project 2009 Participating Members
Public Procurement Report for the
UK Government.
CDP Public Procurement Programme
is a mechanism for the Public
Sector to engage with, and gather
information from, Government supply
chains to better assess their impact
on climate change and the risk it
poses to disrupting Government
services.
If you are interested in becoming
a Member for 2010, please email
publicprocurement@cdproject.net
NHS PASA
iiForeword
Section Title
by Sir Gus O’Donnell
I am pleased to provide this This is important because there could
introduction to the second Carbon be nothing worse as a Government
Disclosure Project (CDP) Report on the supplier than having multiple
CDP Public Procurement Programme. departments come to you and ask
This year, 14 Government departments exactly the same set of questions.
and executive agencies have We need to allow suppliers to tell
participated in this initiative. In doing us once and to ensure that we then
this, they have begun a process of share the information. CDP can play a
communicating with our suppliers that hugely important role in ensuring that
climate change is a business issue, we are co-ordinated and, therefore,
and that Government expects them to don’t impose an unnecessary burden
be taking it seriously. on suppliers, but still get consistent
information. Climate change is not
Government knows how important an issue that we can tackle in our
robust measurement systems are to traditional departmental silos and
tackling climate change. For the last I hope that this initiative is just the
ten years we have been on a journey beginning of deeper collaboration
to understand and reduce our own between departments.
impact on the global climate. We have
learnt a great deal and found many We are all trying to get improvements
ways to make our operations more in value for money and what better way
efficient. This has served the twin aims to achieve that efficiency gain than by
of being responsible custodians of thinking about reducing operational
public money and reducing our output and supply chain emissions? If we can
of climate changing gases. reduce our carbon footprint by working
with more energy efficient suppliers,
This is why I welcome the initiative we will save money and help save the
taken by the participating departments planet. I have often said that prevention
and executive agencies to encourage is more cost-efficient than cure and
our suppliers to do the same thing. this report is a clear example of the
Suppliers that participated in the visionary way in which Government
CDP when requested to do so by needs to anticipate future changes and
departments are likely to reduce act before it is too late.
operational costs and be in a better
position to respond to new regulatory
and climatic changes. This is good for
the planet, good for society and makes
good economic sense.
I am particularly pleased that
Government has engaged in this Sir Gus O’Donnell
initiative on a collaborative basis. Cabinet Secretary and Head of the
Through this process, which was Home Civil Service
guided by the newly formed Centre of
Expertise for Sustainable Procurement,
departments have learned from one
another in an open and constructive
way. They have also shared the
responsibility of engaging and
communicating with suppliers.
iiiExecutive summary
The UK Government is seen as a The OCA assesses an organisation’s
Figure 1 Government average
world leader in the development of perception of its climate change
energy and climate change policies. risks and opportunities, awareness
Risks This ethos flows throughout its policies of its emissions, its environmental
3 and is put into practice by the setting leadership and reporting procedures,
Achievements Opportunities of carbon reduction targets for each and emissions reduction targets and
2 of its departments. However, to realise achievements. Through this analysis, a
1
its true impact and prepare itself for number of trends have been detected.
climate change, the Government must
Setting 0 also understand the impact of its The OCA will enable procurers in
Scope
targets 1 and 2 scope 3 emissions, most notably those Government to have conversations
associated with its supply chain. with individual suppliers about
performance against a range of metrics
This year, 14 Government departments related to climate change.
Leadership and Scope 3 and executive agencies have worked
accountability together to capture the wider impact Responses
Policy and
on the environment of the UK While many suppliers have started on
reporting their carbon reduction journey, most
Government’s activities by requesting
that suppliers respond to the Carbon are still in the early stages. Strengths
Disclosure Project (CDP) Public appear in the areas of environmental
Procurement Programme (PPP). leadership and ‘direct’ emissions
reporting (scope 1 and 2). Further
‘Defra was a founding member In all, over 250 suppliers across all details on these areas are included
of CDP’s Public Procurement sectors were asked to complete the within this report. Conversely, the
Programme. I am therefore CDP questionnaire. 164 suppliers core areas of weakness include the
delighted to see so much responded making a response rate integration of carbon reduction plans
support across Government across all departments of 64%, an and targets in organisational policies.
for this important initiative. excellent outcome considering that
many of these companies were Only by understanding all aspects of
CDP is an excellent tool for scope 3 emissions, such as supply
public-sector buyers who want disclosing for the first time.
chain and product emissions, can
to work with their suppliers to Participating departments are keen organisations start to appraise the
reduce CO2 emissions. It puts that the data collected lead to action potential weaknesses.
climate change mitigation and while reassuring suppliers that it
adaptation firmly on procurement has not reached the stage where Suppliers reported emissions totalling
directors’ agendas and sends emissions performance can influence 138 million tonnes of carbon dioxide
a very clear signal to suppliers commercial contracts. To this end, (CO2) equivalent. It needs to be
that acting on CO2 emissions is CDP has adopted a new appraisal recognised that this covers their entire
good for business as well as the methodology, the Organisational business, not just that relating to
Carbon Appraisal (OCA) (see Figure central Government contracts. The
environment.’
1). This ‘radar’ diagram is designed number of suppliers participating in
Dan Norris MP to show the change in values from a the CDP PPP in the future is likely to
Minister for Rural Affairs and central point. The highest performance increase. This illustrates the potential
Environment is indicated by how far the line extends that exists for central Government
outwards. OCA was developed by departments and their suppliers to
AEA following senior stakeholder work together to achieve real and
meetings with Member departments meaningful reductions in greenhouse
and agencies. It provides procurement gas (GHG) emissions.
teams with a platform to understand The diversity of Government suppliers
the current level of climate change is huge. Government procures from
awareness and emissions reduction suppliers across the world and a
activity that suppliers are engaged in. number of these organisations disclose
This will enable departments to work their emissions through other CDP
with suppliers to identify areas for programmes, most notably the Investor
improvement. Programme. There was also a spread
of suppliers with bases in the USA,
ivExecutive summary
Japan, France and other European Going forward, the CDP PPP looks to:
countries. This crossover is unique to ‘I welcome the launch of this
Government and the broad spectrum • Feed back more detailed results to report detailing the findings of
of goods and services it purchases. suppliers. the CDP Public Procurement
• Pilot an allocation process to Programme 2009. Involvement
The introduction of legislation related in the Programme provides
to climate change appears to have apportion supplier emissions to
individual departments, depending Government and its suppliers
stimulated action among a number with the opportunity to work
of suppliers. This was particularly on the services provided.
together to bring about real
apparent with just under 40% of the • Expand the pan-Government reductions in carbon emissions
organisations identifying the Carbon approach to capture more through joint working and sharing
Reduction Commitment Energy departments and increase the of best practice. I would like
Efficiency Scheme (CRC) as a potential number of participating suppliers. to thank participants in this
risk. Similarly, the most popular initiative and would commend
disclosure period was the calendar • Consolidate the OCA methodology future involvement to all those
year for 2008, the qualification year for and increase migration of suppliers concerned with effecting change
CRC. to a low carbon culture, including in this important area.’
agreeing long-term emissions
Interestingly, the trend in carbon reduction targets between The Rt Hon Lord Mandelson
reduction targets appears to be in line Government departments and their Secretary of State for Business,
with UK targets of a 34% reduction suppliers. Innovation and Skills
in emissions by 2020. However, the
majority of targets disclosed are short- This year has seen the PPP evolve and
term, small targets, which is not in line gain momentum. In recognition of this,
with the aspirational targets that the the group of participating departments
UK has set itself or would hope to see has been short listed for a Civil Service
from others. Award in the sustainability category.
This year has seen an ever-accelerating The leadership shown by the
release of white papers, regulations participating departments in 2009
and guidance, including Low Carbon has established new leading practice
Transition, the CRC, the World in terms of data gathering and
Resources Institute’s development collaboration in the drive to make
of scope 3 emissions guidance and public procurement low carbon. This
the appearance of a Presidential is a very positive sign at such a critical
Executive Order in Washington. The point in history. The challenge to
latter requires Federal agencies not Government is now to translate this
only to reduce their emissions, but into significant, tangible emissions
also to work with suppliers to achieve reductions. If this is achieved over
reductions. Organisations can no the next 12 months, UK Government
longer afford to ignore the climate procurement will have delivered
change agenda. something of long-term, global
significance.
vThe end Title
Section of the
single footprint
These days, most organisations As organisations become more carbon Given the pace at which the debate
recognise they have a carbon footprint. mature, tracking carbon emissions has over greenhouse gas (GHG) emissions
The more progressive ones measure transitioned from being a ‘good thing has changed in the past 10 years
it, report it and take action to reduce to do’ to becoming a legal requirement and the clear imperative shown by
it. But, increasingly, organisations and a key element of brand and politicians all over the world, it is only
have to manage multiple carbon reputation and, indeed, business as reasonable to assume that GHG
footprints, relating to differing scopes, usual. This means that sophisticated emissions reporting and reductions
and legislative and voluntary reporting data management systems are will become an increasingly important
standards. This poses regulatory and required to track emissions from part of business life. The pioneering
brand risks along with management energy use, transport and other work carried out in this project, the
and logistical challenges, as the right sources. But, while organisations imminent publication of the GHG
data manipulation is needed to make are perfecting the art of capturing Protocol guidance on reporting supply
sure the right body has the right their scope 1 and 2 emissions chain emissions and the US Executive
footprint at the right time. through legislation and good carbon Order requiring Federal Agencies to
management, the tools for easily accurately report scope 3 activities will
An organisation that operates in the capturing scope 3 emissions are still, all contribute to making supply chain
UK, Europe and North America is in many situations, absent. This makes emissions reporting and cooperative
likely to have a number of footprints. the Carbon Disclosure Project a unique reduction commonplace in the
In the UK, it is likely to manage its and powerful tool to capture supply near future.
emissions, report through the EU chain emissions.
Emissions Trading Scheme and the
Carbon Reduction Commitment It also acts as an incentive or ‘carrot’
Energy Efficiency Scheme, and may for supplier organisations to adopt
be a member of the Carbon Trust emissions reporting and develop their
Standard. In addition, it may, for brand own carbon management programme
and reputation purposes, report to its in advance of legislation. As well as
shareholders and potential customers financial risk from exposure to energy
through an annual corporate social prices, many supplier businesses also
responsibility report. And, finally, face risks in terms of brand, market Daniel Waller and
organisations are increasingly starting share and even gaining access to the Christine St John Cox
to capture data about their scope 3 best potential recruits if they are seen AEA
emissions to appraise their adaptability to be lagging in this area.
to climate change, using the process
as an opportunity to highlight Similarly, sustainable procurement
weaknesses in their supply chain and can become a powerful tool with
products. the emergence of organisations
using the existence of an active
To manage these individual emissions carbon management programme
footprints requires the capture and and public reporting of emissions
manipulation of a significant number of as prequalification criteria when
datasets, which may well be applied considering new suppliers.
in numerous situations. Our advice to
customers with this challenge is that, Organisations must also look outside
while spreadsheets are good, the only of their own activities to the wider
way to track extensive datasets is to marketplace. How will consumer
run carbon data management systems. demands change, either through the
need to adopt a lower carbon lifestyle
or through needing help to adapt to the
impacts of climate change? Put simply,
will sales of patios go through the roof
or will it be too warm to sit outside in
comfort?
viContents Foreword by Sir Gus O’Donnell
Executive summary
iii
iv
The end of the single footprint
by Daniel Waller and Christine
St John Cox, AEA vi
1 Introduction - The CDP Public
Procurement Programme 1
Increasing engagement with
suppliers around sustainability
by Samantha Dunn, Centre of
Expertise for Sustainable
Procurement, Office of
Government Commerce 2
2 Analysis approach 4
3 Approaches to the Public
Procurement Programme
by Members 6
4 Results 8
Why ignoring the risks is not
an option by Lord John Krebs
Kt FRS, Chair, Adaptation Sub
Committee, Committee on
Climate Change Adaptation 12
5 Conclusions 19
6 Next steps 21
The Changing Nature of Value
for Money by Professor Alan
Knight OBE 22
Appendices
Appendix 1: Glossary of
key terms 23
Appendix 2: Detailed analysis 24
Appendix 3: Sector analysis 32
viiSection Title
Introduction - the
1 CDP Public Procurement
Programme
Climate change is having, and will In 2008, only three departments The pan-Government
continue to have, a significant financial (Foreign & Commonwealth Office (FCO), approach
impact on every organisation on the Department for Environment, Food
planet. The truth of this is undeniable; and Rural Affairs (Defra) and Office During the preparation phase for
the regulatory response to climate of Government Commerce (OGC)) the 2009 disclosure process, the
change is transforming the way we use participated and, together, approached Centre of Expertise for Sustainable
energy and is shifting the profit centres 60 suppliers for disclosure. In 2009, Procurement (CESP), which sits
of our economy. As a result, there will the Government built on this, with within the OGC, identified that there
be winners and losers in the business ten departments and four associate was a risk that all 14 Members and
community. Additionally, organisations members sending disclosure requests Associate Members could request
cannot manage this impact or their to over 250 suppliers. disclosure from the same suppliers.
progress towards reducing it unless This would have led to a duplication
they can accurately measure their Members (Associate Members in of effort by the Government and a
emissions and assess their climate italics) lack of interconnectivity. Therefore,
change risk. This year’s participants include: CESP, working with participating
departments, developed a pan-
These are the principles behind the • Department for Business, Innovation Government implementation approach,
CDP, which, since 2000, has collected and Skills (BIS). including a single request to suppliers
and distributed high-quality information - Department of Energy and Climate from the participating departments and
to motivate investors, corporations and Change (DECC). an agreement to share the data across
governments to take action to prevent • Cabinet Office. Whitehall.
dangerous climate change. This approach has been highly
• Defra.
CDP collects this information on - Environment Agency. successful and is an exemplary
behalf of two main groups. The first is approach to collaborative working in the
475 institutional investors controlling • Department for Transport (DfT). public sector. The departmental project
USD55 trillion in assets under • FCO. team was short listed for a Civil Service
management who request disclosure Award in the sustainability category.
from listed companies in whom they • HM Revenue and Customs (HMRC).
Collaborative approach
invest. The second is more than 55 • Ministry of Defence (MoD). The aim of this project is to encourage
purchasing organisations from the meaningful conversation between
public and private sectors that request • NHS Purchasing and Supply Agency.
suppliers and procurers so they can
disclosure from their suppliers. • OGC. better collaborate on the climate
- HM Treasury (HMT). change agenda.
After 7 years of operation, CDP hosts
- Buying Solutions.
the world’s largest registry of self- Supplier Relationship Management
reported, corporate, climate-change • The Home Office. (SRM) is a discipline of working
information, which, in 2009 alone, was collaboratively with suppliers that have
There are two reasons why an
collected from some 2,500 companies. the potential to impact on Government
organisation might have participated as
services, costs and ability to adapt and
What is the CDP Public an Associate Member:
respond to changing horizons.
Procurement Programme? • They were an executive agency for a There are several clear benefits
department. from supporting the procurement
This report focuses on the participation
of 14 departments and executive • They held joint procurement process with SRM. These range from
agencies of the UK Government capabilities. For example, DECC, as improved efficiency and transparency
in the CDP Public Procurement a newly formed department, shared in the management of the process, to
Programme (PPP) in 2009. This was membership with Defra and BIS. increased innovation, extra intelligence
the second time that CDP ran a full- in the sector or cost reductions.
scale programme in the public sector. The process of gathering climate
The level of participation from the change information from suppliers
Government, and the response from through CDP and feeding back to them
suppliers, show a significant step-up in in a meaningful way can contribute to
terms of ambition and action compared the supplier management agenda and
with 2008. build supply chains that are resilient
to the problems posed by climate
change.
1Introduction
Increasing engagement Additionally, this project is a
with suppliers around working example of successful
departmental collaboration. It has
sustainability reinforced the Government’s stance
A key commitment, identified in on sustainability and is providing
the UK Government’s Sustainable a clear message that Whitehall is
Procurement Action Plan, is to deliver approaching suppliers in a more
carbon reduction and resource co-ordinated manner. In adopting a
efficiency across the Government collaborative approach, departments
estate and supply chain. Working have had to change their behaviour
with suppliers to improve the and demonstrate:
sustainability of their goods and
• A pan-Government mindset.
services is critical to the Government
achieving this. • Cross-departmental, integrated
decision making, based on agreed
The main emphasis over the last 12
priorities.
months has been to build upon the
success of the 2008 CDP pilot by • Clearly defined processes and
mainstreaming the measurement of reports.
greenhouse gas (GHG) emissions.
• Improved communication and
The main aim of the project was information sharing.
to have a central request for GHG
emissions data from Government to • Working together across internal
suppliers. This has helped to: and external boundaries to capture
insight, innovate and identify
• Provide a clear and consistent opportunities.
Government message that climate
change is a priority issue. Most importantly, it provides a
platform from which common
• Drive cohesion between the departmental sustainability priorities
private and public sectors. can be identified and addressed on a
collaborative basis.
• Enable Government to work with
suppliers to make GHG emissions Work is about to commence with the
reporting transparent, support a private sector to develop a common
reduction in their carbon footprint apportionment methodology for GHG
and plan adaptation to climate emissions that effectively determines
change. how suppliers’ carbon emissions
may relate to individual departments.
• Encourage shared learning
This is being led by the MoD, with
across Government and between
involvement from Defra, DfT, the
suppliers to reduce duplication
Department of Health (DH) and OGC.
of effort and drive this agenda
forwards. Additionally, a standard approach
for the analysis, reporting and use of
To facilitate this, participating
results by departments with suppliers
suppliers attended a pan-
is being led by DfT.
Government conference, which
communicated the Government’s The work is vital to advancing the
priorities and had a single understanding of suppliers and
departmental point of contact encouraging them to improve the
throughout the process. impacts of their supply chains.
Samantha Dunn
Centre of Expertise for Sustainable
Procurement, Office of Government
Commerce
2CDP Public Procurement Programme 2009
Central Government Report
The rapidly changing levels by 2020, as set out in the 2009 relative to a fiscal year 2008 baseline of
landscape Budget. It also shows that the UK has agency scope 3 emissions.’
already reduced emissions by 21%
There are a number of contributing – equivalent to eliminating emissions Through the process that the CDP has
drivers for all stakeholders involved from four cities the size of London. In developed, the UK Government and
in the PPP. The landscape of doing the LCTP, DECC states: ‘Transforming other international governments have
business is evolving rapidly, especially the country into a cleaner, greener the ability to understand, appraise and
when it comes to climate change. and more prosperous place to live is influence organisations, their carbon
Businesses and governments are at the heart of our economic plans for ethos, culture and, most importantly,
facing the introduction of legislation, “building Britain’s future” and ensuring emissions.
risk from changing weather patterns the UK is ready to take advantage of Just one week after the publication of
and media scrutiny on the way the the opportunities ahead.’ this report, world leaders will assemble
business and political systems are in Copenhagen to ‘seal the deal’
meeting the challenges that climate Even sectors that were previously
unaffected by legislation are beginning and agree on deep cuts in carbon
change presents. emissions in an attempt to prevent the
to feel the pressure with the European
With carbon continuing to be released Union Emissions Trading Scheme (EU worst effects of climate change.
into the atmosphere at an alarming ETS) expanding into aviation. The expected ‘Copenhagen Protocol’
rate, the world continues to focus on is likely to set more rigorous targets
how we best meet the challenges Many sectors are signing up for
voluntary targets such as the 10:10 than have previously been agreed for
that climate change presents. At countries, organisations and individuals
international, European, national and campaign6.
to adopt.
organisational levels, a wide spectrum Adapting for the future
of topics are being considered: Similarly, organisations need to be The UK Government is seen by
aware of the growing movement many as a world leader in climate
• How will energy demands be met? change policy, guidance and
towards preparation for the changing
• How can business continue weather patterns the world is legislation. Through the CDP PPP, the
to operate in the changing experiencing. Government is starting to understand
environment? its supply chain’s climate change
Adaptation needs to be built into impact and to reduce the risks
• In which ways does business need planning and risk management now associated with its current activities. It
to adapt to meet every eventuality? to ensure the continued and improved is also demonstrating its commitment
success of businesses, Government to carbon reduction and showing
This growing momentum for change is policies, and social and environmental how it intends to continue building its
being reflected in a number of ways, operations. To this extent, the CDP reputation as a world leader.
but 2009 has seen the biggest change questionnaire asks organisations to
in legislation and guidance. identify the risks and opportunities
CDP provides a platform for related to climate change. This
organisations to demonstrate their year, the UK Government has been
awareness and knowledge of climate consulting about if some organisations
change, an understanding of their should start reporting on adaptation7.
perceptions of emissions, the risks UK public-sector impact
climate change poses and how they The Government has been clear in
integrate these into their normal showing leadership in emissions
practices. To preserve an organisation’s reduction for many years. Each
standing for prudent business department has a sustainability plan
planning, as well as reputational risk, it that lays out how it intends to meet
will soon become the norm to publish a its Sustainable Operations on the
detailed corporate social responsibility Government Estate (SOGE) targets.
(CSR) report and cut emissions. 1
www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/
These targets cover a wide spectrum, crc/crc.aspx
In the UK including carbon, waste and water. 2
www.decc.gov.uk/en/content/cms/consultations/open/
The UK Government has introduced Progress is reported annually through carbon_neutrality/carbon_neutrality.aspx
the Carbon Reduction Commitment the OGC, but will come to an end in 3
www.defra.gov.uk/environment/business/reporting/pdf/
Energy Efficiency Scheme (CRC)1 and, 2010/2011. Discussions have already ghg-guidance.pdf
at the same time, released guidance begun on the content of the next phase. 4
www.defra.gov.uk/environment/business/reporting/
on carbon neutrality2 and company conversion-factors.htm
reporting3. It has also updated its The US Government recently released 5
www.decc.gov.uk/en/content/cms/publications/
emissions factors4. an Executive Order8 stating that within lc_trans_plan/lc_trans_plan.aspx
240 days a percentage reduction 6
www.1010uk.org/
In addition, DECC released the Low target must be established and
Carbon Transition Plan5 (LCTP), reported ‘for reducing agency-wide
7
www.defra.gov.uk/corporate/consult/
climate-change-adapting/index.htm
which plots how the UK will meet scope 3 greenhouse gas emissions 8
the 34% cut in emissions on 1990 in absolute terms by fiscal year 2020,
www.whitehouse.gov/assets/documents/
2009fedleader_eo_rel.pdf
3Section Title
Analysis approach
2
The PPP continues to evolve and so The traditional analysis route be considered or perceived as
do the analysis process and outputs. divisive, especially where Government
This section provides an explanation of To date, the methodology used to procurement is concerned.
the methodology and reasons for the score disclosure and performance has
development of a further phase. More been based on the Carbon Disclosure So, this year, as part of the evolving
detail on the developed methodology Leadership Index (CDLI) (see Figure Programme, AEA developed an
can be found in Appendix 2. 2) scoring methodology, which is analysis methodology following senior
based on the level of detail supplied in stakeholder meetings with Member
responses. departments and agencies. The
methodology, called Organisational
From this, key trends were drawn out Carbon Appraisal (OCA), assesses
under four headings: how companies are addressing climate
• Risks and opportunities. change, specifically GHG emissions.
One of the primary objectives is to
• Emissions accounting, analyse and score the data in a way
verification and trading. that facilitates dialogue between
suppliers and procurers.
• Performance.
• Governance.
Developing a framework for
appraisal
Comparisons were carried out for
industrial groupings and organisational Capturing an organisation’s migration
size. to a low carbon culture needs to cover
a wide range of aspects including:
However, a number of Government
departments highlighted their wish to Perception - how an organisation
ensure that a ranking of organisational perceives climate change and if it has
disclosure was not linked to public identified the associated risks and
procurement. It was felt this could opportunities. This is linked to the risks
Figure 2 Performance score by industry group
35
Average score for industry group
30
Number of respondents in industry group
25
Number of responses
20
15
10
5
0
Automobiles and
components
Banks
Capital goods
Commercial services
and supplies
Consumer durables
and apparels
Consumer services
Diversified financials
Energy
Food, beverage
and tobacco
Healthcare equipment
and services
Materials
Media
Pharmaceuticals, biotechnology
and life sciences
Real estate
Retailing
Software and services
Technology hardware
and equipment
Telecommunication service
Transportation
Utilities
4CDP Public Procurement Programme 2009
Central Government Report
and opportunities section of CDP’s Figure 3 Industry group averages
questionnaire.
Awareness - how aware an Risks
organisation is of its environmental
impact and how it is measured. This 3
is linked to the emissions section of
CDP’s questionnaire.
Achievements Opportunities
Integration - how an organisation has 2
integrated its environmental practices
into business processes. This is linked
to the section on organisational culture,
1
roles, responsibilities and reporting in
CDP’s questionnaire.
Action - what firm action an 0
Scope
Setting targets 1 and 2
organisation has taken through
committed carbon reduction plans,
target setting and reductions achieved.
This is linked to the emissions and
cutting carbon section of CDP’s
questionnaire.
OCA was then used to capture each Leadership and Scope 3
organisation’s progress and score it accountability
on a scale from zero to three - zero
for no activity and three for optimum
performance. Policy and reporting
This was then mapped onto a radar
chart (see Figure 3) with each spoke
representing one of those areas and
linked back to at least three of the Energy
performance metrics.
Materials
The scoring was developed to provide
Telecommunications services
a platform for analysis on an annual
basis and support the sharing of Automobiles and components
best practice. This should help and Media
encourage the supply chain to reduce
its emissions and prepare for the Technology hardware and equipment
potential impacts of climate change. Diversified financials
As a result, the Government can take Software and services
on a facilitative role in disseminating
best practice to help build a robust, Utilities
low carbon supply chain. Banks
Use of results Pharmaceuticals, biotechnology
and life sciences
Providing information in this format will
also enable Government departments
to use it as a procurement aide and
provide feedback to their suppliers.
Through discussions between
departments and suppliers, the
graphical representations in each
sector will be used to encourage
suppliers to consider their performance
and discuss how it might improve in
the future.
5Section Title
Approaches to the
3 Public Procurement
Programme by Members
An evolving programme OGC, HM Treasury, Buying suppliers of varying sizes and types.
Solutions This tested the disclosure system and
Last year (2008) in the PPP pilot, As home to the pan-Government challenged suppliers of different sizes
data were captured from Government procurement, OGC approached and sectors to respond to the request.
departments and other public-sector many suppliers that work with several Defra was delighted with the response
bodies (eg local authorities). departments. HMT procurement works rate - 40 out of an initial 65 suppliers.
FCO, Defra and OGC participated and closely with the OGC procurers and
shares many functions. This year, it It was the first time the Environment
each department selected a limited Agency had been involved. It targeted
number of suppliers. has expanded its focus to capture
a number of different sectors (eg a small group of high-impact suppliers
OGC limited its selection to just two the automobile industry) and invited from its construction, plant and
areas: automotive and energy supply. suppliers from all key supplier sectors vehicles supply chains that had not
This year, it expanded its selection to to disclose; 53 were invited and 36 disclosed previously.
capture a number of different sectors. responded.
One key learning point from the pilot BIS, DECC Figure 4 Percentages of total
was that there was duplication of effort BIS joined the scheme for the first time responses received in 2009
in the 2008 process. this year. It will soon be responsible for
all of the suppliers for BIS and DECC,
However, each participating but currently shares the procurement
department realised the benefit of the for DECC with Defra. As such, BIS
PPP and committed to continue with 20% 3% 2%
and Defra already had a good working
it. Indeed, even the suppliers that had relationship. Much of their work was 23%
disclosed saw the benefit; at a Defra independent, but they joined forces to
feedback session, one supplier stated: provide suppliers with more detailed
‘If you don’t do this again, we will think 4%
information.
less of you.’ 1%
Cabinet Office 5%
This year The Cabinet Office is a smaller
department than many of those 7%
Though 2009 saw the launch of
participating in the PPP. This allows
the pan-Government approach
it to approach things in a slightly 6%
(detailed earlier), each department 30%
different way; it works in parallel with
had a different approach or ethos for
its sustainable development policy
engaging suppliers on the PPP.
advisors and treats the PPP as part of
The PPP has expanded to include its overall sustainability strategy.
BIS
ten Members and four Associate
Defra, Environment Agency Cabinet Office
Members, and has seen Members
Defra has a mature supplier Defra
supporting each other, sharing
engagement programme aiming to
knowledge, best practice and events. DfT
build capacity among suppliers on
Figure 4 shows the breakdown of FCO
sustainability issues. It has been
responses received by participating Home Office
hosting annual conferences and
Members. HCA
supplier forums since 2007, as well
as numerous other workshops. This MoD
year, it invited BIS and its suppliers to NHS PASA
attend its workshops. It also selected OGC
diverse suppliers to encourage greater
awareness levels across the business
community. Having piloted the process
in 2008, Defra invited suppliers that
had already participated to disclose
again, but expanded the selection with
6CDP Public Procurement Programme 2009
Central Government Report
FCO Developmental Members Independent Members
The FCO is a second-year member
of the PPP. It also used the 2009 This year, alongside the Members, a Homes & Communities Agency
Programme to stress test the process number of Developmental Members (HCA)
to better understand how to engage participated in the PPP. These include: HCA was trialling the CDP PPP
suppliers of varying sizes and independently this year rather than
MoD participating in the pan-Government
countries of operation. This included The MoD invited its largest supplier,
organisations that are sub-contractors approach. Its aim was to see if the PPP
BAE, to disclose this year. MoD used fits with its internal mechanisms and
to FCO’s first-tier suppliers, those that the year to begin incorporating CDP
declare in other programmes (eg BA structures.
into business as usual for 2010.
and Virgin) and SMEs from across the As such, it was not included in the
world. Much like Defra, the FCO aimed It has created a synergistic list of 14 participating Government
to measure how difficult assessing the sustainable procurement group with departments and agencies.
full supply chain might be. However, by its key suppliers. This group has been
opening communications at a senior developing a sustainable procurement
level in supplier organisations, the FCO strategy for the MoD.
achieved a response rate of 50% with
which it was very pleased. HMRC
Likewise, HMRC spent this year
DfT developing a clear strategy for the
DfT, which joined the PPP earlier in the forthcoming year’s PPP, using another
year than some, prioritised suppliers sustainability tool for appraising all
on potential sustainability risk/impact. of its 250 suppliers. It has created a
Initially, it wrote to 90 organisations balanced score card to engage its
to request participation – 65 agreed suppliers and envisions the CDP data
to participate and a massive 55 being incorporated within one of the
disclosed. DfT has seven executive scorecard modules.
agencies (eg the Highways Agency,
Maritime and Coastguard Agency) and NHS Purchasing and
has worked closely with its internal Supply Agency
stakeholders to draw up a list of NHS PASA (now dissolved into the
participating suppliers, spanning a Department of Health and Buying
wide range of goods and services. Solutions) has long been among the
leaders on sustainable procurement.
The Home Office As a part of its pilot year with the
The Home Office has benchmarked CDP, it opened its membership to the
its top suppliers and, through use Healthcare Purchasing Consortium
of the prioritisation methodology, it (HPC). HPC selected a number of
identified those suppliers that have the strategic suppliers to approach about
greatest impact on the sustainability carbon disclosure. In addition, NHS
agenda. It worked with commercial PASA/DH has led work with over 15
managers to encourage the selected further NHS procurement organisations
suppliers to participate in the PPP, as and key suppliers, in conjunction
well as engaging with these suppliers with CDP, to identify how the carbon
on a one-to-one basis. This included disclosure model could be used within
providing information, prompts/ a suite of guidance and tools being
reminders and updates via a regularly developed under the NHS Procuring
monitored dedicated email inbox. for Carbon Reduction programme.
7Section Title
Results
4
Response rate Figure 5 Participation in other supplier disclosure subsets
Of the 268 suppliers that were invited
to disclose in 2009, 164 responded. 25
The economic climate was one of the
most frequently quoted excuses for
declining to disclose. 20
In total, 43 organisations stated that
Number of responses
they already disclose under another 15
CDP programme. Figure 5 shows
the range of sister programmes that
overlap with the PPP. This diverse 10
range of programmes is unique to
the PPP and shows its international
impact. 5
Of the Developmental Members, the
MoD had the highest response rate 0
(100%), but it invited only one supplier.
France 120
FTSE100
FTSE250
Global 500
Japan 500
Netherlands 50
Other responding
corporations 2009
S&P 500
Spain 85
Switzerland 100
DfT had an 85% success rate and BIS
75% (see Figure 6).
SMEs
This year, CDP trialled a questionnaire
for use with small and medium sized
enterprises (SMEs). The specially Figure 6 Suppliers invited and response rate
designed questionnaire reduces the
burden on SMEs, but can still be Total suppliers invited
mapped directly onto the traditional 70
Suppliers completed
questionnaire for fair comparison.
60
17 SMEs participated out of an invited Suppliers declined
24, giving a good overall response 50
rate of 70%. They also covered all the
Number of suppliers
sectors, with the largest number in 40
consumer services, commercial and
capital goods. 30
The OCA methodology was trialled
on large organisations and SMEs. 20
However, it is recognised that the
assumptions made for one group do 10
not always apply to another.
0
Cabinet Office
Defra
BIS
DfT
FCO
HCA
MoD
NHS PASA
OGC
The Home
Office
8CDP Public Procurement Programme 2009
Central Government Report
Key trends Figure 7 OCA average score
The effects of the political and
economic changes of 2008 Risks
Over 80% of responding organisations 3
disclosed their scope 1 and 2
emissions. This shows that there Achievements Opportunities
is a clear awareness of emissions 2
within organisations. However, the
demonstration of real reductions has 1
been less positive; certain sectors
disclosed reductions that are likely 0
to be associated with the recession Setting targets Scope 1 and 2
rather than investment in emissions
reduction.
The introduction of legislation appears
to be driving a transition towards
the intent to reduce emissions in the Leadership and accountability Scope 3
majority of responding organisations.
This was particularly apparent as
almost 40% of the organisations Policy and reporting
identified CRC as a potential risk.
Similarly, the most popular disclosure Figure 8 Top performing industry groups
period was the 2008 calendar year,
the qualification year for CRC.
Risks
Interestingly, the trend in carbon
reduction targets appears to be in line 3
with UK targets of a 34% reduction Achievements Opportunities
in emissions by 2020. However, the 2
majority of targets disclosed are short-
term, small targets, which is not in line 1
with the aspirational targets that the
UK has set itself or would hope to see
from others. 0
Setting targets Scope 1 and 2
The emerging picture
Using the OCA methodology, it was
clear that, while many organisations
have started their carbon journey, the
majority have a long way to go (see
Figures 7 and 8) - three organisations Leadership and accountability Scope 3
failed to score anything. Appendix
3 provides further detail on sector Policy and reporting
analysis.
The shape shown on Figure 7 Software and services Banks
indicates the areas of strength (those Utilities Pharmaceuticals,
scoring higher on the scale) and the biotechnology
areas where organisations could and life sciences
improve (scores lower on the scale).
However, it would be expected
that some criteria need to be fully that organisations are most aware of interest in climate change issues,
developed before the others can start their ‘direct’ emissions (scope 1 and 2) there is scope to improve carbon
to improve. Typically, an organisation and, surprisingly, a large number have management.
might set a target and thus score senior-level environmental leadership
and accountability within their Action
well in that respect, but it will be the Organisations have a general
following year before the organisation organisations.
awareness of their direct emissions
can demonstrate achievements and The lower awareness of scope and many are considering how they
improve its score on that metric. 3 emissions indicates that, while might start cutting them. However,
Awareness and integration organisations profess to be aware of over half have not set long-term targets
The average shape and format for this the impacts of climate change and or considered the options available to
year’s analysis (Figure 7) clearly shows many identify senior-level management achieve them.
9Results
Perception Risks and opportunities
Centrica Similarly, while the majority of
organisations consider themselves By capturing an organisation’s
‘We are also exposed aware of the impacts of climate awareness of the potential risks and
to regulatory risks from change, only a few have given in-depth opportunities associated with climate
environmentally led changes consideration to the potential effects change, it is possible to understand
in legislation or regulation that on business. Only by understanding all the degree of its knowledge and
could impact on the profitability aspects of scope 3 emissions (eg their understanding of climate change
of our upstream portfolio. supply chain and product emissions) issues and how this may affect
Regulatory risks include failure by can they start to appraise the potential future performance. The benefits
governments to deliver legislative risks that climate change poses to their to organisations that explore the
frameworks that support our low- business. scenarios are substantial.
carbon strategy.’
Sectors With the carbon landscape moving
In addition, there are sector differences at a rapid pace, it is essential that
in performance (ie where specific organisations are aware of potential
legislation, brand and reputational risks posed through regulation,
Barclays issues demanded excellence in business and physical changes. Figure
sustainability). These sectors include 9 shows the average score by sector.
‘Although carbon is a new
market driven by regulation and telecoms and utilities. (Note - only one Risks
is yet to grow to market maturity, bank submitted a disclosure under the
PPP). Legislation
carefully designed cap-and-trade CRC was the most commonly named
schemes offer real potential This year has been the pilot year of regulation, listed by 38% of the
to manage emissions globally. the OCA appraisal and it may well be respondents. For 21% of respondents
The UNFCCC conference at refined in years to come. However, it was the only regulation specifically
Copenhagen must move forward it has shown a number of different named.
on the international architecture trends. As organisations continue to
to ensure that market participants evolve, it is hoped that the webs on the This trend links to the response
have the certainty and confidence radar patterns will move outwards as received regarding the baseline year
to make longer-term investment organisations and departments work used by organisations for emissions
decisions. In time, these (cap- together towards low carbon adaptive reporting. 2008 was the most popular
and-trade) schemes could easily operations. year, which is in line with CRC reporting
merge into a new global carbon requirements.
market. Investors are concerned
about climate change and climate EU ETS was the next most common
policy because these will have an legislation mentioned, with 31
impact on the global economy as respondents recognising it as a
well as on individual assets.’
Figure 9 Risks and opportunities
Automobiles
and components
Utilities 3 Banks
Transportation Capital goods
2
Telecommunication services Commercial services
and supplies
Technology hardware 1 Consumer durables
and equipment and apparels
Software and services 0 Consumer services
Retailing Diversified financials
Real estate Energy
Pharmaceuticals, biotechnology Food, beverage and tobacco
and life sciences
Media Healthcare equipment and services
Materials
Risks Opportunities
10CDP Public Procurement Programme 2009
Central Government Report
relevant regulatory risk. Suppliers Interestingly, increased incidence of
from the aviation sector, in particular, staff illness is listed as a risk associated Kier Homes
regarded the addition of aviation to the with climate change. Meanwhile,
EU ETS as a risk to their businesses. adapting to changes in working ‘The number of very hot days in
practices (eg flexible and remote summer is also predicted to rise
These two pieces of legislation alone working) is seen as a potential solution sharply and this has implications
were listed as regulatory risks by over to some issues, especially those for worker health. There is an
half the participating suppliers. associated with changing weather increased risk of skin cancer from
patterns. long-term exposure to ultraviolet
When considering the results at a more
radiation. Kier has in place an
granular level, few SMEs stated specific Sourcing products/components from occupational health team that
pieces of legislation. Conversely, multiple suppliers was a solution provides advice to workers
car manufacturers demonstrated suggested by a number of suppliers on how to reduce this risk. All
the most in-depth understanding of to ensure continued supply should workers on Kier sites must wear
international regulatory impacts on their one supplier be badly affected by the shirts and long trousers. Sun
business. Construction companies also physical impacts of climate change. block is freely available.
demonstrated good understanding of
the UK legislation governing climate Other, less frequently cited, risks ‘There is a risk that buildings
change impacts. include reduced availability of raw designed using current design
materials, energy scarcity, reduced codes and standards are not
Physical willingness of staff to travel (due to sufficiently “future proofed”
Changes in weather conditions, and weather extremes and increased public against the effects of climate
the resulting floods and temperature transport costs) and reduced demand change, such as increasing
changes were the most frequently cited for services, due to shifting markets temperatures. Together with our
physical risks. It was recognised that and reduced client spending power. design teams, we will, for our
this would have financial impacts in
clients, endeavour to identify and
terms of greater damage to properties Opportunities
mitigate these risks.’
and increased insurance premiums. What is also apparent from this
analysis is that many organisations
Many suppliers also list rising sea recognise the potential benefits that
levels as a risk, although few cite it as climate change may present.
a direct risk to any of their properties.
Conversely, water shortages were Legislation
listed as another physical risk due to With regard to legislation, 85% of
higher summer temperatures. all respondents and 59% of SMEs
believe that regulatory requirements do
Responding companies identified present them with opportunities.
a variety of potential physical risks
resulting from climate change, Physical
including travel disruptions, relocating Interestingly, just over two thirds of
offices, increased use of air- responding organisations believed
conditioning, and extreme weather physical changes offered opportunities
impacts on power and IT infrastructure. to them. Many organisations identified
certain aspects (eg flooding) as
Business continuity presenting new business opportunities
Organisations also considered the for regeneration and adaptation.
aspects of their business that might be Conversely, the majority of SMEs (65%)
linked to business continuity. felt that physical changes do not offer
These risks include increased costs them opportunities.
(energy, materials and transport) and Other opportunities
changing client needs/expectations. 74% of respondents believe climate
It was recognised that a new client change does offer other opportunities.
expectation is for carbon footprinting/
management, resulting in the need 59% of SMEs do not think it offers
to have appropriately trained staff other opportunities.
in this area. Similarly, employees
are increasingly looking to their The most commonly identified
employers to act sustainably, making opportunities were cost savings,
environmental performance a key employee engagement, recruitment,
consideration for recruitment and retention and protection of brand
retention of staff. reputation.
11Results
Why ignoring the risks is Since our creation in June 2009, we
not an option have set up a programme of work to
assess and build the UK’s capacity to
Climate change is already happening. adapt and provided our first advice
We know that the average global on the Government’s Climate Change
mean temperature is already Risk Assessment10.
around 0.8°C above pre-industrial
levels9. Gases, such as CO2 that Government departments will begin
cause global warming, stay in the to draw up their adaptation plans
atmosphere for a long time and early in 2010 and could begin
this means that, even with a global to address these challenges by
agreement to curb GHG emissions, modifying their procurement policies.
changes to our climate will continue Purchasers may want to check that
for many decades to come. In fact, suppliers have robust contingency
the most optimistic view is that the plans and adequate insurance before
average temperature rise might be agreeing new contracts. These would
kept to about 2°C. cover business interruption, and
loss of key employees and premises
Therefore, preparing for the inevitable as a result of, say, flooding. Trade
future changes in our climate will associations could help smaller
be just as important as making businesses assess risks by sharing
strenuous efforts to reduce our best practices. Suppliers may even
GHG emissions. The impacts from obtain a competitive edge if they can
climate change will depend on show purchasers how their strategies
how we, as a society, adapt. For exploit opportunities presented by
national and regional governments, future climates. Within this context,
measuring, monitoring and reducing the information provided by the
the vulnerability of supply chains will CDP is a very welcome start. These
be crucial in ensuring that essential measures, in combination with
services are well adapted to climate others already introduced by the
change. Suppliers will need time to Government, such as the Reporting
understand the threats they are likely Powers requirement introduced
to face and what they can do to under the Climate Change Act, could
reduce them. improve businesses’ preparedness
and ensure the continued delivery
What do we need to prepare for? of key public services in a world of
The future is uncertain, but the changing climate.
starting point is the latest UK Climate
Projections (UKCP09) generated Lord John Krebs Kt FRS
by the Met Office’s Hadley Centre. Chair
These projections attempt, for the Adaptation Sub Committee
first time, to generate probabilities of Committee on Climate Change
changes in key climate variables on Adaptation
a national, regional and local scale.
The overall headline is that summers
are likely to be hotter and drier while
winters may be warmer and wetter.
Climate change is also likely to lead
to increased risks of flooding, water
shortages and drought.
The 2008 Climate Change Act
created the Adaptation Sub-
Committee. Our goals are to:
• Help identify the risks climate
change will create for the UK.
• Assess our preparedness to cope
with these risks. 9
Solomon, S., et al. (eds.) Climate Change 2007: The
Physical Science Basis. Contribution of Working Group I
to the Fourth Assessment Report of the Intergovernmental
• Promote effective steps to reduce Panel on Climate Change. Cambridge, UK, Cambridge
these risks. University Press. p36
10
These can be found at: www.theccc.org.uk/asc-home
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