The NHS has been taking bold steps towards a sustainable future with the introduction of its Net Zero Supplier roadmap.
This initiative aims to reduce carbon emissions by setting strict sustainability requirements for suppliers. While the legislation has the potential to drive positive change in the business landscape, there are possible downsides that may arise along the way.
So, let’s explore what has been announced, the benefits, and the challenges.
What’s happening?
April 23 - suppliers for contracts over £5 million per annum are required to publish a Carbon Reduction Plan (CRP) for their UK emissions. Not much of a shock here as this simply brings the NHS in line with other public sector organisations in the UK that already have similar requirements due to PPN 06/21. Current reporting includes all scope 1, all scope 2 but only a subset of scope 3 namely, Business Travel, Employee Commuting, Waste Generated in Operations, Upstream Transportation and Distribution, and Downstream Transportation and Distribution.
April 24 - the requirement for a CRP extends to cover all NHS procurements, regardless of the contract value. This means that every supplier will need to measure their emissions and demonstrate their commitment to net zero, reducing emissions, and embracing sustainable practices.
April 2027 - suppliers will have to report all global emissions. Yes, that includes all 15 scope 3 categories. 4 years will go very quickly so prepare yourself for this undertaking.
April 2028 - carbon footprinting of individual products supplied to the NHS will be required. For those not working in the space, this is a huge commitment. If a company supplies thousands of products, that’s thousands of LCAs required.
2030 - this one is possible the most promising. At the moment, suppliers are not scored on their reduction efforts. From 2030 they will only be able to work with the NHS if they are showing their progression towards net zero.
So why is this a good thing?
- Encouraging sustainability: The net zero requirements will motivate suppliers to prioritise sustainability, adopt greener practices, and reduce their carbon footprint. This will help the NHS and its suppliers contribute to the UK's climate change goals.
- Market differentiation: Suppliers that excel in sustainable practices and meet the new requirements can differentiate themselves in the market, potentially attracting more customers and contracts - NHS or non NHS.
- Green economy growth: As businesses invest in sustainable technologies and solutions, the green economy in the UK will continue to grow, creating new job opportunities and boosting the nation's overall economic health. We will need to innovate to achieve these goals, especially carbon footprinting of every product.
- Setting a standard for other sectors: The NHS's net zero roadmap could inspire other public and private sector organisations to follow suit, driving a nationwide shift towards sustainability.
All sounds fantastic, doesn’t it?!
Like with all policies it’s not all good news, especially for smaller suppliers whose sole business is with the NHS.
Let’s take a look at some of the potential challenges:
- Increased costs: Implementing sustainable practices and technologies can be expensive, especially for small and medium-sized businesses. Suppliers may need to invest in new infrastructure, equipment, or training, which could lead to higher costs in the short term.
- Reduced competition: The stringent requirements may make it difficult for smaller suppliers to compete with larger companies that have more resources to invest in sustainability. This could lead to reduced competition in the market and possibly higher prices for the NHS.
- Compliance challenges: Suppliers may struggle to meet the new requirements, especially if they have complex supply chains or operate in industries with high emissions. Ensuring compliance and accurate reporting could be time-consuming and resource-intensive.
- Potential for greenwashing: There may be an increased risk of "greenwashing," where companies exaggerate their sustainability efforts to win contracts or improve their public image. This could undermine the intent of the legislation and make it challenging for the NHS to identify truly sustainable suppliers.
There is also a huge administrative burden for both suppliers and the NHS who will need to allocate time and resources to track, monitor, and report emissions and progress towards net-zero targets. This increased administrative workload could divert resources from other important areas.
Challenges aside, the NHS's Net Zero Supplier roadmap presents a unique opportunity for businesses to embrace sustainability and contribute to a greener future. It is crucial to acknowledge and prepare for the potential challenges that may arise from this new legislation. By developing strategies to mitigate any negative impacts while capitalising on the opportunities that come with embracing sustainability, suppliers and the NHS can work together to build a more resilient and sustainable healthcare system for all.
If you’re struggling with completing a carbon footprint calculation, CRP for PPN 06/21, or setting net zero targets please email info@c-free.co.uk where we’ll be sure to give you support and advice on the matter.
