U.K. Tells Business: Phase Out Carbon or Lose Out on Contracts

(Bloomberg) -- Boris Johnson’s government told companies to publish their carbon reduction plans and commit to phasing out greenhouse gas emissions altogether by 2050, or lose out on large U.K. state contracts.

Firms that haven’t committed to so-called net zero emissions or published a “clear and credible” carbon reduction plan by September won’t be allowed to bid for contracts worth more than 5 million pounds ($7.1 million) a year, the Cabinet Office said in an emailed statement.

Johnson is seeking to position the U.K. as a leader in the battle against climate change as he carves out a post-Brexit identity for the nation, and Saturday’s announcement, timed for World Environment Day, means the government is using its 290 billion pounds of annual procurement to push businesses into swifter action to slash emissions.

“It’s important we use this purchasing power to help transform our economy to net zero,” Minister for Efficiency and Transformation Theodore Agnew said. “Requiring companies to report and commit to reducing their carbon emissions before bidding for public work is a key part of our world-leading approach.”

The U.K. hosts a major round of United Nations climate talks in Glasgow in November, and Johnson has unveiled a succession of ever-more ambitious targets in an effort to spur international and domestic action.

The U.K. has a legally-binding goal to phase out net emissions by 2050, and Johnson has announced interim plans to reduce them by 68% by 2030 and 78% by 2035, from 1990 levels -- the most ambitious targets among major economies.

The announcement also adds to government efforts to spur action from business, after Chancellor of the Exchequer Rishi Sunak in November said the U.K. would compel large companies and financial institutions to report their climate risks by 2025. It’s a measure he’s pushing other major economies to adopt at a two-day meeting of finance ministers from the Group of Seven industrialized nations that concludes on Saturday.

The latest proposals require firms to publish a carbon reduction plan setting out where their emissions come from, and any environmental management measures they have in place.

They’ll be required to publish so-called Scope 1 and Scope 2 emissions, encompassing their direct emissions and those from the power they consume. They’ll also have to include reporting of some Scope 3 emissions taking in their wider footprint -- including business travel, employee commuting, transportation, distribution and waste.

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