Procuring for Carbon Reduction Guidance P4CR Workbook

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2 Guidance P4CR Workbook Contents Introduction. 2 Context 3 P4CR Aims, Objectives & Further materials... 3 About the guidance... 7 P4CR Flexible Framework P4CR Supporting Materials Matrix... 9 Getting Started Achieving foundation level. 11 Choosing levels Keeping progress uniform Communications Feedback Policy & Communications levels People levels Procurement Process levels Engaging Suppliers levels Measurement & Results levels Glossary Acknowledgements

3 Introduction More than half of the carbon footprint of the NHS in England is associated with the products and services it procures. Carbon emissions associated with the extraction, processing, assembly, packaging, transport, storage and handling of products and materials that are consumed directly and indirectly by service providers are estimated to account for 60% of the total carbon footprint. Graph to show the NHS England Carbon Footprint (Source: NHS Carbon Reduction Strategy 2009) The NHS Carbon Reduction Strategy recognised a number of challenges in the area of Procurement and committed the Department of Health and the NHS Sustainable Development Unit (SDU) to develop guidance for procurement professionals on how they can effectively start to consider and address carbon emissions through procurement. Addressing this portion of the NHS carbon footprint is no small task and requires a systematic and strategic approach in every NHS organisation, combined with continued commitment and engagement at all levels. Procuring for Carbon Reduction P4CR (P4CR) aims to provide procurement professionals as well as other staff in NHS organisations with guidance, methodologies and tools that will help them identify, and realise significant procurement related carbon reduction opportunities for their organisation. The guidance has been developed around a Flexible Framework. Organisations can benchmark their practices against this Flexible Framework and identify actions that will make these practices more effective in delivering real carbon reductions. Additional supporting resources are signposted throughout this document to help organisations as they develop and implement a robust management process to deliver carbon reduction through procurement activity. This guidance is aimed to help you prepare your organisation to buy more sustainably. It will help you understand the carbon impact of what you buy and use and help you start reducing carbon emissions today. Four things you can do to get started with Procuring for Carbon Reduction P4CR. Identify a champion to lead your work. Benchmark your organisation against the P4CR Flexible Framework (presented in the guidance). Use the SCO 2 PE tool to start identifying your carbon hotspots. Start to raise awareness of carbon and emissions and build confidence of key procurement staff on this issue. 2

4 Context Procurement in the NHS is a significant contributor to the overall carbon impact of the NHS. Although it is clear that there are large gaps in our understanding of the root of carbon emissions associated with much of what we buy, the emissions reduction challenge means that no-one can afford to sit back and wait for someone else to find the solution. It s important to start taking action today. In many cases the reduction of carbon emissions can be closely aligned with financial savings and best value reinforcing the position that this needs to be central to business as usual. It is recognised that the NHS does not have direct control over the actions of its supply chains and while the overall expenditure of the NHS is large, the scope for improvement and influence is not uniform across all of the products and services procured. The diversity of procurement across the NHS means that a one size fits all approach is unlikely to be appropriate or effective. Different NHS organisations need to develop their understanding of the carbon emissions related to their procurement activity and then assess the extent to which they feel they can influence meaningful change in those emissions within the resources available. In some cases generic approaches and solutions may be applicable, increasing the potential for collaboration with peer organisations, whereas in other situations the solutions and approaches may need to be bespoke to the individual organisation and their suppliers. Procuring for Carbon Reduction P4CR Procuring for Carbon Reduction P4CR is a project initiated in February 2009 to address this challenge. It was clear from the outset that there was little existing guidance and few processes or examples of how carbon reduction can be systematically and effectively tackled through procurement. The P4CR programme has sought to draw on experience from a range of stakeholders active in this area, within NHS procurement, other government departments and third parties. The P4CR project has since been incorporated into the Quality Innovation Performance and Prevention (QIPP) Procurement workstream reflecting the linkages between increased efficiency and reduced carbon emissions. The P4CR programme is currently led by the Department of Health (DH) in partnership with the NHS Sustainable Development Unit (NHS SDU). Aims The programme aims to: identify and disseminate good practice guidance, tools and materials across the NHS test concepts through a series of focussed pilot projects with NHS organisations and gather evidence of carbon reductions achieved as a result of procurement and supply chain management activity. Objectives The P4CR project board has set out the following objectives. Provide a high level vision of what needs to be done in terms of procurement to meet targets set out in NHS Carbon Reduction Strategy. Develop guidance for procurement practitioners on how to address carbon through procurement. Develop a range of real life case examples that demonstrate application of concepts within the guidance and tangible measures of carbon reduction. Establish communities to enhance dialogue, dissemination and experience sharing. 3

5 The P4CR Workbook contains practical guidance primarily aimed at procurement practitioners. The Workbook is structured around a Flexible Framework that sets out a progressive series of practices for organisations. This will in turn underpin the effective consideration of carbon through procurement and ultimately deliver quantifiable carbon emissions reductions. Further materials developed to support this guidance include: Procuring for Carbon Reduction P4CR: Roadmap is a presentation slide pack setting out an overview of the P4CR programme and an indication of the carbon reduction required through procurement to keep the NHS in line with regulatory UK carbon emission reduction targets. These materials have been developed to help communicate the scale of the challenge but also to identify what is being put in place to support the NHS in meeting this challenge. SCO 2 PE prioritisation tool is an Excel based tool that allows organisations to input their expenditure data, under different categories, to calculate an approximate carbon footprint. The tool then provides a further screening methodology that will help to prioritise which categories of spend offer the greatest potential for carbon emission reductions. Two versions of the SCO 2 PE Tool exist: o o Standard version: this version has been designed to accept input of expenditure data against categories and provides a summary model and a detailed model for use. E-Class version: this version is based on the standard version but allows for expenditure data to be input against e-class codes and then automatically maps this data to the categories used in the SCO 2 PE Tool to calculate a detailed model output. Procuring for Carbon Reduction P4CR Hierarchy of Interventions is a simple hierarchy concept that is central to P4CR. This has been developed to assist procurers in identifying the most appropriate interventions to take with categories or individual suppliers. 4

6 Hierarchy of Interventions As mentioned above, the P4CR Roadmap provides an indication of the reduction in carbon emissions required through procurement to keep the NHS in line with regulatory UK carbon emission reduction targets. The chart below shows aspirational levels of reduction for the NHS on a trajectory that is in line with regulatory milestones set for 2020 and Overlaid on this is a prediction of the extent to which each intervention, identified in the hierarchy, would contribute in achieving these reductions. It is clear that this is a significant challenge that will require everyone in the NHS to think creatively about how we deliver health and social care now and into the future. Substitution, innovation and effective engagement with suppliers will all become significant elements of carbon reduction strategies. 5

7 The Procuring for Carbon Reduction P4CR project is working with a range of NHS and wider organisations on a series of proof of concept pilot studies. These pilot studies have been identified to help illustrate key principles of Procuring for Carbon Reduction P4CR and to provide examples of good and best practice that others may find useful to adopt and deliver carbon emission reductions in their organisations. This Workbook, along with a range of other supporting materials, has been developed in partnership with representatives from a broad range of stakeholder groups (see acknowledgements for a list of contributing organisations). This document represents the first stage in the development of guidance and a process of continual review and enhancement is proposed to ensure that the workbook and supporting materials reflect learning and practical experience that emerges over time. 6

8 About the P4CR Workbook All organisations differ and no single approach will be right for all. We therefore encourage you to use this Workbook as a guide, identifying the elements that are important to your organisation and interpreting the framework in a pragmatic and appropriate manner that reflects your circumstances. The guidance has been developed around the P4CR Flexible Framework (see following section) in a workbook format that a user can dip into when needed, as opposed to a document that should be read in its entirety prior to starting work. The P4CR Flexible Framework mirrors the approach of the Flexible Framework for Sustainable Procurement advocated by the Sustainable Procurement Task Force. The Flexible Framework (p 8) describes the practices that would characterise an organisation at each level under five broad areas for action. Policy and Communications People Procurement Process Engaging Suppliers Measurement and Results The Flexible Framework then identifies elements of management process and activity against five progressive levels of maturity, starting at level 1 (Foundation) and evolving to level 5 (Lead) Level 1 Foundation Level 2 Embed Level 3 Practice Level 4 Enhance Level 5 Lead A Progressive Model The P4CR Flexible Framework is a progressive model where the descriptions provided in each box assume that practices identified at preceding levels within that area have also been addressed (i.e. to satisfy level 3 of People you should be able to demonstrate that practices identified at levels 1 and 2 of People have also been addressed). Initial focus is on establishing effective policy and practices for the management of carbon reduction through procurement. As policy and practices evolve, the emphasis shifts towards activities that address improvement against specific areas of procurement. Guidance has been provided to explain the practices set out in each box of P4CR, Identifying: key actions, rationale for why the suggested activity is important tips on how an organisation might go about initiating the activity described additional resources 7

9 (P4CR) Flexible Framework Stage Foundation (Level 1) Embed (Level 2) Practice (Level 3) Enhance (Level 4) Lead (Level 5) Policy & Communication A strong business case for addressing carbon reduction through procurement exists and is endorsed by senior management. The business case has been communicated to key procurement staff. Key stakeholders, internal and external identified. Policy on reducing carbon through procurement is documented, integrated within procurement processes and has been communicated to all procurement staff and key stakeholders. Strategy and action plans are documented and identify how policy will be delivered. Strategy is endorsed by senior management and communicated internally and to all key stakeholders. Organisation reports internally on activity and performance that supports policy and strategy on reducing carbon through procurement. Processes are established for responding to enquiries and challenges from external interested parties. Organisation recognised as a leader by peers and other stakeholders in reducing carbon through procurement and reports externally on activity and performance. Case studies are developed to promote continual improvements. Feedback is sought from external stakeholders on the organisation s policy, practice and performance. People Named senior level champion for development and implementation of activity focused on reducing carbon through procurement. Initial awareness raising activity has been undertaken with key procurement staff. All procurement staff have received personal development activity on policy and good practice for reducing carbon through procurement and this is specifically identified within employee induction programme for procurement staff. Responsibilities around carbon reduction are defined and personal objectives set for procurement staff. Key procurement staff have undertaken detailed training on managing carbon reduction through procurement as part of a structured personal development process. Procurement staff to engage with clinical and patient groups on procurement related carbon reduction issues at an organisational level. The principal objective of engagement is to raise broad awareness, build understanding of needs and expectations and identify opportunities. The knowledge and capability to reduce carbon through procurement is a specific element of the role profile and competencies for all key procurement staff. Procurement Process High carbon impact categories / suppliers are identified through application of carbon Intensity modelling. Consideration of carbon is a feature of the procurement process. Prioritisation of categories / suppliers is undertaken based on carbon intensity modelling, levels of influence, profile and stakeholder views. Carbon reduction strategies are developed to address the identified priority categories / suppliers incorporating techniques such as demand management, whole-life costing, substitution, innovation and supply chain engagement. Baseline carbon emissions measurements and assessments are undertaken for priority categories / suppliers to support future benefits tracking. Carbon emissions measurement and assessments are undertaken for priority categories / suppliers at regular intervals to track benefits and the effectiveness of different strategies and techniques. Data collected on carbon reduction is robust and objective, and used to support best practice case study material. Engaging Suppliers Initial communication has been conducted with suppliers / trade associations around carbon reduction strategy and future aspirations. Two way dialogue is established with some key suppliers / trade associations to increase awareness and inform category prioritisation process. Dialogue aims to establish carbonawareness levels, and the position / maturity of key market sectors in carbon management. Structured supplier engagement process is in place to address priority categories / suppliers. Specific programmes identified with suppliers to address carbon reduction in priority areas. Organisation has in place approaches to recognise high performing suppliers or sectors which form the basis for best practice carbon reduction case studies. Measuring & Results Organisation regularly reviews implementation progress against the requirements of this framework. Practice indicators are adopted to monitor aspects of the organisation s approach to reducing carbon through procurement. Practice indicators are reported on regularly to inform internal audiences and key stakeholders. Plans are in place for the collection and verification of carbon emissions data related to initiatives with priority categories / suppliers. Data is available to support carbon emission baselines for priority categories / suppliers. Comparisons of results with peer organisations are undertaken, and information is used to generate and share best practice examples. Ongoing carbon data collection and measurement is undertaken to monitor progress against baselines for priority categories / suppliers. Benefits are reported and compared against predicted benefits identified in the business case. 8

10 P4CR: Supporting Materials Reference Matrix Stage Foundation (Level 1) Embed (Level 2) Practice (Level 3) Enhance (Level 4) Lead (Level 5) Policy & Communication Stakeholder Identification Template * P4CR Roadmap * People Carbon Literacy learning module P4CR Workshop NHS Sustainable Procurement E-Learning Module 2.2 Environmental Issues in Procurement (note that materials for class based training are also freely available) P4CR Roadmap* Carbon Literacy learning module P4CR Workshop NHS Sustainable Procurement E-Learning Module 2.2 Environmental Issues in Procurement (note that materials for class based training are also freely available) P4CR Roadmap * Stakeholder Identification Template * NHS SCO 2 PE tool (Standard version and E-Class version) * Procurement Process 2009 Defra / DECC Greenhouse Gas (GHG) Conversion Factors for Company Reporting (30 th September 2009) NHS Carbon Reduction Strategy for England, Saving Carbon, Improving Health PAS 2050: 2008 Specification for the assessment of the life cycle greenhouse gas emissions of goods and services ISO :2008 Buildings and constructed assets. Service life planning. Life cycle costing ISO 14040: 2006 Environmental Management Life Cycle Assessment (LCA) Principles and Framework NHS SCO 2 PE tool (Standard version and E- Class version) * Environmental issues in purchasing (joint guidance of OGC and Defra) Buy green and make a difference how to address environmental issues in procurement (OGC) Commission interpretive communication on the community law applicable to public procurement and the possibilities for integrating environmental considerations into public procurement. Hierarchy of Interventions slide deck * Carbon Intervention Plan template PAS 2050: 2008 Specification for the assessment of the life cycle greenhouse gas emissions of goods and services ISO 14040: 2006 Environmental Management Life Cycle Assessment (LCA) Principles and Framework Engaging Suppliers Carbon Literacy learning module Defra Supplier engagement programme Measuring & Results Excel based - P4CR Self Assessment tool * World Resources Institute Greenhouse Gas Reporting protocol * All available as document downloads at > search P4CR 9

11 Getting started The P4CR Workbook has been developed around the P4CR Flexible Framework The guidance has been developed around the P4CR Flexible Framework in a workbook format that a user can dip into when needed, as opposed to a document that should be read in its entirety prior to starting work. The Flexible Framework indicates what actions an organisation needs to take to improve its management practices and performance in relation to reducing carbon emissions through procurement. Four things you can do to get started with Procuring for Carbon Reduction P4CR. 1. Identify a champion to lead your work. 2. Benchmark your organisation against the P4CR Flexible Framework (presented in the guidance). 3. Use the SCO 2 PE tool to start identifying your carbon hotspots. 4. Start to raise awareness of carbon and emissions and build confidence of key procurement staff on this issue. 1) Identifying a champion to lead your work Any project or initiative requires leadership and your organisation should identify a champion, project manger or responsible officer who has a clearly defined responsibility for leading activity on reducing carbon through procurement. Ideally this person should hold a senior management role within the organisation so that they have access to resources, communication channels, and a good understanding of other policies and strategies that will influence the success of the initiative. 2) Benchmarking your Organisation The next practical step you can take in using this guidance will be to benchmark your organisation against the P4CR Flexible Framework, that is, determine which of the characteristics set out at each level, by area, best describe your organisation. Once you have identified the level your organisation is at on the Flexible Framework you should consider the characteristics described in the box immediately to the right (next level) to inform your next actions. In some cases, you may find it difficult to position your organisation at any level of the Flexible Framework, effectively level 0. This is not uncommon when starting work on an area that you may not have previously addressed and should not be seen as detrimental. The key when undertaking initial benchmarking is to be as honest and objective about your assessment as possible as this will enable you to manage expectations, build a case for necessary support and resource and avoid difficulties in communicating progress at a later date. A simple excel based tool has been developed to help you benchmark your current position against the P4CR Flexible Framework and to set out a simple action plan. Details of this tool are provided in the Measurement and Results section Level 1. 3) Identify Carbon Hot Spots in your Procurement Another key early step in developing an effective Procuring for Carbon Reduction P4CR initiative is to analyse your organisation s current procurement activity and the carbon 10

12 emissions related to this. Accompanying this guidance is the SCO 2 PE tool which has been developed to enable your organisation to calculate the indicative carbon emissions and carbon hot spots related to your different areas of expenditure. The tool then prompts you to assess a range of strategic factors which are combined with the carbon emissions information to provide prioritisation support charts. Identifying your carbon hot spots and prioritising which procurement categories or key suppliers you need to focus your efforts on is an important first step that ensures your activity is focussed on real carbon reduction and areas where there is greatest scope for improvement. This work is also invaluable in helping procurers and other staff within your organisations to understand where and how they may be able to influence carbon reduction most effectively through procurement. 4) Raise Awareness and Build Capacity As with any new initiative, it is important to ensure that your staff and other key stakeholders understand the underlying principles and business case for action. They will need to feel confident with the terminology and in turn starting dialogue with other key stakeholders to try and make progress. Scheduling early awareness raising and capacity building activity with key staff and stakeholders will be important to ensure that effective action planning can take place and that the momentum of the initiative can be maintained. In addition to the four starting action points identified above, the following points may also prove useful in helping you to plan your approach: Achieving Level 1 Foundation If you find that your organisation needs to work towards achieving Level 1 Foundation in all areas then it is suggested that the initial focus should be in the areas of Policy and Communications and People. All of the other three areas are important but they will be facilitated by having policy and people elements in place first. Choosing levels While the boxes in a specific area have been designed to build on one another, there may be some situations where it is appropriate for you to cover more than one level at a time. For example, some organisations may choose to develop the business case and policy as part of the same exercise. You need not attempt to complete all of the Level 1 Foundation areas before initiating work on the Level 2 Embed areas. However, in general, it is advisable that all Foundation areas are complete before moving to Level 3 Practice. Keeping progress uniform It is likely that progress against different areas will vary and at the early stages (Levels 1 to 3) this is likely to be more noticeable. However, it is recommended that the organisation does try to make progress across all five areas simultaneously rather than pushing a long way ahead in one area before addressing other areas. Communications 11

13 This guidance is primarily aimed at procurement practitioners. However it is important to consider that other staff may also make or influence procurement decisions and therefore core messages around reducing carbon through procurement should be communicated across the organisation and fed into its overarching corporate policy on sustainable development and carbon reduction. Feedback We would welcome any feedback on this workbook or supporting materials. Feedback can be sent to If you have any examples of good practice then please at the NHS Sustainable Development Unit. 12

14 P4CR Policy & Communication 13

15 Policy and Communications Foundation (Level 1) A strong business case for addressing carbon reduction through procurement exists and is endorsed by senior management. The business case has been communicated to key procurement staff. Key stakeholders, internal and external identified. Key components Business case developed Key stakeholders, inside and outside the organisation have been identified Business case approved by senior management Business case communicated to procurement staff Guidance Developing the organisation s business case Developing a clear and robust overarching business case for the organisation that addresses the question: why address carbon reduction through procurement? is a critical first step. The business case should identify what is important to the organisation and may include the following aspects: Values and aims Stress the need for purchasing to be in line with the organisation s values and aims as well as those of key stakeholder groups such as staff and patients. For example your organisation may already have a carbon reduction strategy or sustainable development action plan in place that highlights the importance of influencing change through procurement. Outline the problem The NHS in England spends 20 billion every year on goods and services. This comprises the largest contribution to the NHS carbon footprint totalling over 11 million tonnes of CO2 per annum; nearly 60% of the total. Nearly 6 million tonnes of CO2 can be attributed to the pharmaceuticals, medical instruments and equipment that the NHS procures and uses. This is more than the emissions from either building energy use or travel. Identify the opportunities for the organisation The case for taking action to mitigate and adapt for climate change has convincing evidence and now forms part of UK law in the form of the Climate Change Act. There are however many other good reasons to try to reduce the carbon impact associated with the goods and services that the NHS procures: reduced operating costs from procuring more efficient capital, equipment and infrastructure an increased understanding of the supply chain, interactions and stages at which value is added 14

16 more productive relationships with suppliers and therefore increased supply chain security potential to influence reductions in carbon emissions associated with products and services at a local, national and international level reputational benefits to individual organisations that take action and lead the way long-term health benefits, which will lead to an overall reduction in demand for healthcare. Identify the risks to the organisation There are risks to the NHS from unsustainable consumption patterns. Energy security, Energy price volatility, Adaptation to the effects of climate change and Security of supply are potential risks for both buyers and suppliers that could be mitigated through effective consideration of carbon impacts. Documenting the business case for the organisation While the broad case may be well understood, it is worth formally documenting it to support consistent communication and to provide a point of reference for management and staff now and in the future. It may also be necessary to provide a documented business case to justify actions and decisions in the event of a challenge. It is important to recognise that the development of a business case does not remove the requirement to assess the relevance of energy and carbon in each procurement exercise. The identification of key stakeholders, inside and outside the organisation Identifying key stakeholders, both inside and outside your organisation, is a valuable early stage when developing a business case, communications plans and policy. In identifying key stakeholder groups you are identifying who you need to consult and communicate with and also who may be able to support your work. The process also helps to identify any stakeholder that may raise objections and/or present barriers to progress. This is understanding is important for planning initiatives and communication. Recognising the key stakeholders enables you to identify additional drivers for carbon reduction that can be included in the business case. Good practice suggests that you should discuss aspects of your plans with key stakeholders to get their views and to understand their aspirations. In identifying which stakeholders will be key to your project, it is worth assessing the level of influence they have over you and the project and also the level of influence you have over them. For example, approval from the Chief Executive might be essential for the project to go ahead, therefore they have a high degree of influence over you and project. On the other hand you might assess that you have a high degree of influence over suppliers, as a stakeholder group, whereas they would have a limited influence over you and the project direction. It is also useful to assess the level of interest or activity of the stakeholder on the subject, some stakeholders may have little interest while those that do have an interest will vary in how active they are on the issue. The degree of interest or awareness that a stakeholder has will influence the nature and extent of engagement required. It is important to note that a stakeholder with limited interest or awareness may be critical for the success of the project, so while it may be 15

17 attractive to focus on working with more active stakeholders more challenging stakeholder engagements may well be essential at some stage. Senior management sign off of business case It is important to get the business case for reducing carbon through procurement agreed and signed off by senior management. This help to ensure consistency with other organisational policies and objectives as well as assisting in gaining the necessary buy-in at operational levels. It is also valuable in helping to ensure consistency of communications with stakeholders. Business case communicated to procurers Once the business case has been signed off, it will be important to ensure it is communicated effectively to all procurement staff so that they are aware of the rationale for reducing carbon through their activities. Work with your Communications Manager and/or team to develop the best approach to communicating effectively with procurers and ensuring business case/guidance is readily available to prospective suppliers. It is important that any staff (with total or partial procurement responsibilities) are aware of this business case and the corporate objectives around carbon reduction and sustainable development that it links in to. It may be helpful to develop a short briefing document and communications strategy for all relevant groups, outlining the key elements of the business case. Communication of this could be combined with awareness raising activity and/or more detailed process training (see guidance People and Procurement process). Stakeholder Identification Template 16

18 Embed (Level 2) Policy on reducing carbon through procurement is documented, integrated within procurement processes and it has been communicated to all procurement staff and key stakeholders. Key components Commitment to driving carbon reduction through procurement is documented in the policies of the organisation. Approved policy commitments are effectively supported by procurement processes. Policy and procurement process requirements have been communicated internally to procurement staff. Policy requirements have been communicated externally to suppliers and other key stakeholders. Guidance Developing policy for reducing carbon through procurement Once the business case has been established and agreed it is important to ensure that the underlying principles are reflected in the organisation s policy. This will ensure that all stakeholders have an official and consistent, point of reference for the organisation s position on carbon and procurement. The organisation s commitments on reducing carbon through procurement can be expressed through a stand-alone policy on carbon reduction through procurement or as part of an existing relevant policy (e.g. Procurement Policy, Sustainable Development Policy). Policy commitments around should: reflect the overarching business case (see guidance on Policy and Communications, level 1) be consistent with other policies and strategies that address climate change, energy and carbon reduction be achievable for the organisation and ideally measurable be consistent with relevant legislation (e.g. public sector procurement regulation). The policy commitment, be this a new policy or a policy amendment, will need to be approved in line with the organisation s governance procedures and made accessible to key stakeholders. Ensuring policy commitments are supported through procurement processes It is important to ensure that the procurement processes employed within your organisation support procurers in upholding the organisation s policy commitments. Especially with new policy commitments it is important to ensure that the process leads procurers to evaluate policy commitments for relevance to the subject of procurement and provides some guidance on how and when to address the commitment within the procurement process. 17

19 Communicating procurement process requirements internally (procurement staff) The policy or policy reference should be clearly communicated to all staff affected by it. This will include, as a minimum, all those who: are responsible for adhering to and implementing procurement policy (e.g. supplies department, estates and facilities management, and other contract managers) are involved in the specification of products or services interact directly with suppliers or their staff are involved in communications or public relations budget holders and decision makers. This should be done through the standard channels for policy and process communication and can also be included in awareness raising and training activity (see guidance on People - levels 1 and 2). Communicating procurement process requirements to key suppliers The policy or policy reference should be communicated to key suppliers. That is, those suppliers that are viewed as being most important to the organisation and/or suppliers who operate in supply chains already identified as presenting a good opportunity for carbon reduction. This should be done using established communication routes with suppliers although formal communication in writing is recommended for the avoidance of any doubt in the future. The applicability of the policy should also be referenced in formal procurement documentation (e.g. tender specification, terms and conditions). P4CR Roadmap Practice (Level 3) Strategy and action plans are documented and identify how policy will be delivered. Strategy is endorsed by senior management and communicated internally and to all key stakeholders. Key components 18

20 Strategy and action plan that support the reduction of carbon through procurement are developed and documented Senior management have endorsed the strategy and action plan Strategy and action plan have been communicated internally and to all key stakeholders Guidance Procuring for Carbon Reduction P4CR strategy and action plan developed and documented The strategy and action plan should have been developed in line with the organisation s strategic approach set out in the board level sustainable development management plan. This should pull together what is set out in the business case and give details of how it is to be delivered, by when and by whom. Senior management have endorsed the strategy and action plan Senior level sign off is essential to ensure organisational buy-in and alignment to corporate objectives and the board level sustainable development management plan. Communication of the Strategy and action plan The strategy, action plan and supporting information should be clearly communicated to all staff. This should be done through the standard channels for policy communication and also included in awareness raising, staff induction and training activity. The strategy, action plan and supporting information should be communicated to all stakeholders using established communication routes, although formally communicating in writing for the avoidance of future doubt is recommended. The applicability of the strategy, action plan and supporting information, should also be referenced in any formal procurement documentation (e.g. advert, tender specification, terms and conditions), although we would advise against introducing such information to suppliers for the first time at this stage of a procurement exercise where possible. Enhance (Level 4) Organisation reports internally on activity and performance that supports policy and strategy on reducing carbon through procurement. Processes established for responding to enquiries and challenges from external interested parties. Key components Internal reporting undertaken routinely on activity and performance A process is in place for responding to enquiries and challenges from external parties Guidance 19

21 Reporting internally on activity and performance Performance against aims, targets and plans should be regularly reviewed and reported on internally to help maintain commitment and reinforce ownership. Internal reporting should provide senior management with an overview of how the organisation is upholding its policy commitments and addressing the business case. It should also provide senior management (or whoever is responsible for signing things off), procurement staff and other key internal stakeholder groups with information on progress, successes and challenges. The nature and timing of internal reporting will depend upon governance structures put in place for the policy and strategy. This will also be influenced by the key stakeholder groups with which you wish to communicate, established internal communication procedures, data availability and the resources available to compile the reports. Generally, organisations would seek to report at least annually to align with other corporate reporting cycles. Whatever the local situation the following tips will generally apply: keep reports short, simple and easy to read, using graphics to interpret complex data make achievements, successes and key challenges prominent report on key commitments, targets, agreed actions and programmes maintain consistency of format between reports as far as possible ensure reports are as up to date as possible when issued to enhance relevance set reporting schedule to coincide with significant dates (e.g. financial year end) keep the reporting schedule manageable, don t spend more time reporting than doing. Responding to challenges and enquiries from external interested parties The organisation should build on existing processes for responding to external enquiries. Enquiries and challenges on procurement related carbon emissions may be received from interested members of the public, campaign groups or the media, and it is important that a consistent and responsive approach to handling such communications is adopted. Typically such communication procedures should: identify the person(s) responsible for co-ordinating responses to external queries ensure that they are fully briefed on the policy (plus supporting documents where relevant), its implementation and reporting reference position statements relating to identified difficult or sensitive issues, such as pharmaceuticals. These should summarise the organisation s policy and set out the steps the organisation is taking to address the issue in question identify trigger points when enquiries should be escalated. 20

22 Leadership (Level 5) Organisation recognised as a leader by peers and other stakeholders in reducing carbon through procurement and reports externally on activity and performance. Case studies are developed to promote continual improvement. Feedback is sought from external stakeholders on the organisation s policy, practice and performance. Key components Organisation demonstrates leadership in reducing carbon through procurement Proactive external reporting on activity and performance Case studies developed to promote continual improvement Seek feedback from external stakeholders Guidance Demonstrating leadership Taking a lead on the reduction of carbon through procurement will help enhance the organisation s reputation gaining the trust and respect of key stakeholders and facilitating more productive engagement with suppliers and peer organisations. Organisations can show leadership by: providing evidence of delivering real carbon reductions through procurement activity (quantifiable and verifiable) publicly reporting on performance, practice and learning points 21

23 sharing tools, practices and experiences achieving recognition through award schemes leading and participating in discussion groups, think tanks and forums establishing or engaging with practical initiatives and programmes Reporting externally on carbon reduction activity Accurate and open reporting to an external audience on the organisation s activities and performance can be a powerful tool for strengthening dialogue, engendering trust and demonstrating leadership. Carbon reduction performance information may be made public in a number of ways: within reports with a wider scope, e.g. annual report, environmental report, sustainable development report, good corporate citizenship report as part of a formal carbon disclosure report or process through specific information provided in web pages Due consideration needs to be given to the organisation s external reporting policy and accessibility for the target audience. What and how you communicate will probably need to vary from one stakeholder group to another in order to meet their needs or to make information accessible. The stakeholder identification process identify at Level 1 of this area should help to highlight target audiences and inform approach. Whatever the approach, the organisation should ensure that the report conveys a clear sense of how the organisation is doing against its key commitments, targets and action plans. If the organisation is establishing a report from scratch it can be useful to look at the reports of other organisations (see link to ACCA reporting awards) or some of the reporting frameworks developed for sustainable development and environmental reporting such as the Accountability - AA1000 assurance standard or the Global Reporting Initiative Sustainable Reporting Guidelines. There are also initiatives and guidelines available on carbon accounting and reporting such as those produced by the World Resources Institute, the UK Government and the Carbon Disclosure Project. With any reporting it is advisable to start simple and concise. A report on carbon reduction through procurement might cover: a brief description of the organisation s procurement activity, scope and level of expenditure. an overview of the strategy and actions adopted to address carbon reduction through procurement details of progress against action plans details of any objectives or targets set, and information on performance against these targets specific details of amount of carbon reduced as a result of procurement activity money spent or invested to achieve carbon reductions descriptions of successful initiatives or activities that have either enabled carbon reduction to be addressed through procurement or actually delivered carbon reduction information on other, non carbon related, benefits realised as a result of activity 22

24 outline of future plans and vision for the procuring for carbon reduction programme Developing case studies to support continual improvement Where initiatives and activities have proved successful in delivering carbon reduction through procurement, it is good practice to try and learn from these to inform strategy and action across other areas in the future. However, many organisations face changes in personnel over time and it is therefore beneficial to capture experiences and learning points in some form of project report or case study. As well as their role in supporting continual improvement, case studies that are concise but clear can be extremely effective aids to: maintaining senior management support training and awareness raising reporting (internal and external) disseminating good practice to peers and key stakeholders competing for and winning awards raising the profile of your organisation and demonstrating leadership. Sharing good practice with others enables an organisation to develop its own understanding of the subject area and to make a contribution to the development of other organisations. Organisations should seek to use existing networks and communication channels to disseminate good practice, advice, tools and experiences to their peers and wider stakeholders. However consideration should be given to communication with specialist forums or networks with a specific interest in procuring for carbon reduction or carbon reduction issues. Seek feedback from external stakeholders Organisations should also actively seek feedback from key stakeholders on their policy, practice and performance. The external reporting process provides a good opportunity to give stakeholders something tangible to assess and comment on. Seek feedback on any reporting from the target audience on what they would like to see additional information about and, importantly, what elements they did not value. Feedback can be sought at other stages, prior to the development of a report or as part of an ongoing process of stakeholder engagement and dialogue. Seeking feedback can enable the organisation to: verify that policy and practice is meeting stakeholder expectations build dialogue and trust with external stakeholders develop ideas for improving policy, practice and future reports identify how external stakeholders can assist and add value to initiatives. Decisions on whom and when to seek feedback from should be taken by responsible persons in line with established procedures for communicating with external stakeholders. 23

25 People 24

26 Foundation (Level 1) Named senior level champion for development and implementation of activity focussed on reducing carbon through procurement. Initial awareness raising activity has been undertaken with key procurement staff. Key components Senior level champion identified Individual with lead responsibility for implementing procuring for carbon reduction identified Initial awareness-raising activities with key procurement staff undertaken Guidance Identifying a senior level champion Any initiative to address carbon through procurement within an organisation will benefit greatly from having an identified champion within the senior levels of management with a reporting responsibility through to a member of the board. The role of the lead is to act as an advocate for reducing carbon through procurement in the organisation, provide a focus at senior management levels for the business case and policy, and to guide implementation through the people tasked with implementing the action plans. The champion should also ensure that the person with lead responsibility for implementation has adequate support to operate effectively. Identifying an individual responsible for effective delivery Successful implementation of procuring for carbon reduction will require the identification of a person (or group of people) with specific responsibility for this. This person(s) will need to plan and lead the organisation s approach to the development and delivery of policy, objectives and actions. The person(s) identified should be: experienced in the procurement function of a sufficient level of seniority to influence decision-makers interested in carbon reduction and sustainable development a good programme manager (the role will require the person to initiate and implement a series of concurrent projects) a relationship builder (the role will require the person to establish and build on relationships with a wide range of stakeholders including senior management, procurers, suppliers and external stakeholders) able to contribute sufficient time to the role. Ideally, clear responsibilities and objectives should be agreed with the responsible person. These may form part of the individual s personal review and objectives. It will also be important to identify lines of accountability, reporting and escalation protocols, especially where a senior management champion is identified within the organisation. 25

27 Raising awareness in key procurement staff This will help to build and embed the business case for carbon reduction through procurement within the organisation. Key procurement staff may include: Department Heads Heads of Category Sourcing Directors Senior Procurement Managers Contract Managers Awareness raising should focus on: the issues surrounding carbon and climate change and how these relate to the organisation s procurement activity the business case for carbon reduction through procurement (see guidance on Policy and Communications, level 1) the organisation s policy commitments (see guidance on Policy and Communications, levels 2 and 3) roles and responsibilities approaches for embedding the consideration of carbon reduction in the procurement process (see guidance on Procurement Process) strategies for engaging suppliers (see guidance on Engaging Suppliers) carbon accounting and approaches to measuring carbon reduction. Awareness raising can be undertaken in a number of ways (e.g. briefing sessions, bulletins, fact sheets, intranet message boards, discussion groups or through more formal induction and ongoing staff training sessions) but the approach taken should allow for dialogue and feedback on approaches and strategies. We recommend that the initial awareness-raising is refreshed periodically to ensure that all key procurement staff are covered on an ongoing basis. P4CR Roadmap Carbon Literacy learning module (National Sustainable Procurement Training Programme) materials for class based training will be freely available early Procuring for Carbon Reduction Workshop materials will be freely available early in NHS Sustainable Procurement E-Learning Module 2.2 Environmental Issues in Procurement (note that materials for class based training are also freely available) 26

28 Embed (Level 2) All procurement staff have received personal development activity on Procuring for Carbon Reduction P4CR, policy and good practice for reducing carbon through procurement and this is specifically identified within employee induction programmes for procurement staff. Key components Personal development activity undertaken with all procurement staff on reducing carbon through procurement Reducing carbon through procurement is included in inductions for procurement staff Guidance Undertaking personal development activity with all procurement staff Procurement staff will need to be aware of the issues and realise the risks and opportunities to the organisation if they are to implement the policy and action plans. Initial personal development activity should be carried out with all procurement staff to ensure that they are aware of carbon and climate change issues, core concepts, key terminology, the role procurement can play and the organisation s business case, policy and approach (See guidance on People, level 1). It will also be important to raise awareness amongst others who may be involved in procurement, for example, business partners, procurement consultants, interims and non-permanent staff. Awareness raising materials should be made available to any staff either through paper copies of documents or by publicising information on an intranet site. For recommended content of awareness raising see guidance on People, level 1. Note: For the purposes of self assessment it is suggested that procurement staff are classed as staff for which more than 50% of their time is spent on procurement activity. Including information of the reduction of carbon through procurement in employee inductions Information on policy, strategy, action plans, objectives and past performance should be included within induction processes for all staff who will have some role in procurement, be this specifying goods and services, ordering, negotiating with suppliers, or contract management. Inclusion of information in inductions ensures that new staff are made aware of the programme from the outset and do not have to wait until routine training or refresher training is scheduled. P4CR Roadmap Carbon Literacy learning module (National Sustainable Procurement Training Programme) materials for class based training will be freely available early 27

29 2011. Procuring for Carbon Reduction Workshop materials will be freely available early in NHS Sustainable Procurement E-Learning Module 2.2 Environmental Issues in Procurement (note that materials for class based training are also freely available) Practice (Level 3) Responsibilities around carbon reduction are defined and personal objectives set for procurement staff. Key procurement staff have undertaken detailed training on managing carbon reduction through procurement as part of a structured personal development process. Key components Responsibilities for all procurement staff defined Personal objectives for all procurement staff defined Detailed training on managing carbon reduction measures is included as part of structured personal development plan for key procurement staff Guidance Defining responsibilities To help procurement staff understand what they need to do to address carbon reduction through procurement and implement policy it is recommended to define responsibilities. Responsibilities may be generic for procurement roles or grades or may be identified for specific individuals, or posts within the department or category teams. Once responsibilities become established then they could be built into job descriptions, role profiles or introduced as part of a personal review process. To ensure that staff have the confidence and capability to fulfil their responsibilities, staff and their managers should review competencies and development needs on a regular basis, ideally in line with other personal review processes. Defining personal objectives Defining personal objectives around carbon reduction through procurement may be appropriate (especially for those with defined responsibilities in this area) in order to raise the profile and importance of the concept. This also provides an opportunity to recognise staff efforts and achievement. Where possible personal objectives should be made specific (e.g. to an issue, projects, objectives), measurable, accountable (i.e. the objective is primarily influenced by the individual) realistic and time-bound (a meaningful timescale is applied to achieving the objective). Personal objectives, by definition need to reflect an individual s role, capabilities and situation and while generic group or corporate objectives can be effective in ensuring that all staff play their 28

30 part, personal objectives tat are specific to the individual often prove to be more effective in driving achievement. Some examples of personal objectives, focussed on typical activities around reducing carbon through procurement are shown below: To communicate information on the carbon reduction policy to all contracted suppliers by end November To have successfully completed training on carbon literacy by end March To have identified appropriate interventions to effectively drive carbon reductions in all priority procurement projects, initiated over the year, within the project plan. To have identified and initiated at least three initiatives with key suppliers targeting carbon reductions over the next 12 months, supported with estimates of envisaged carbon reductions. To identify the reductions / increases in consumption on the ten fastest moving lines of clinical consumables and the associated carbon emissions (using established carbon intensity factors) on a quarterly basis over the coming year. Including detailed training in Personal Development Plans The People, level 1 area identified the importance of undertaking basic awareness raising activity with key procurers, however it is recognised that for some key procurers it may be necessary to supplement this initial activity with more structured and strategic development around the subject. Additional development activity should be determined on a personal needs basis and included in the structured personal development plan for key procurement staff. Organisations may look to draw on existing training materials, from inside or outside the organisation, to meet development needs, or may choose to develop materials tailored to their specific circumstances, strategies or approaches. Enhance (Level 4) Procurement staff to engage with clinical and patient groups on procurement related carbon reduction issues at an organisational level. The principal objective of engagement is to raise broad awareness, build understanding of needs and expectations and identify opportunities. Key components Engaging with clinical and patient groups on procurement related carbon reduction issues Findings from stakeholder engagement used to inform policy, strategy and actions Guidance Engaging with clinical and patient groups on procurement related carbon reduction issues There is a substantial level of public interest in climate change and carbon and it is reasonable to expect that some of the organisation s stakeholders will have an interest in it is trying to reduce carbon emissions related to the goods and services it procures. Stakeholder analysis undertaken at the earlier stages of the project should help in identifying sub groups and engagement 29

31 approaches (see Policy and Communications level 1). Organisations should engage proactively with key stakeholder groups in order to understand their level of awareness, their expectations and the strength of feeling. An organisation should follow its established procedures to engage with users (e.g. clinical staff) and recipients or beneficiary groups (e.g. patients). Decisions such as, from whom and when to seek feedback, should be taken by relevant person(s) in line with the priority category assessment (see guidance on Procurement Process, level 2 and established procedures for communicating with internal and external stakeholders. Engaging these groups will: establish whether policy and practice is addressing stakeholder expectations help to generate more widespread understanding extend the influence of the project over key stakeholders (e.g. suppliers, senior management) inform enhancements of policy, practice and future reports. Using findings from stakeholder engagement to inform policy, strategy and actions Outputs from stakeholder engagement should be included in reviews of policy and actions. This should help to ensure that the organisation s policy, strategy, decisions and actions to reduce carbon through procurement reflect the views and expectations of user, recipient and beneficiary groups (e.g. patients, clinical staff, non-clinical staff and the wider public) see Policy and Communications level 5 Stakeholder Identification Template 30

32 Leadership (Level 5) The knowledge and capability to reduce carbon through procurement is a specific element of the role profile and competencies for all procurement staff. Key components Guidance Carbon reduction is incorporated into the role profile of all procurement staff. Incorporating carbon reduction into the role profile of all procurement staff To ensure that the principles of carbon reduction through procurement are sufficiently established to remain in place irrespective of changes in personnel, the nature or amount of procurement activity, organisations should seek to build in specific requirements into the role profiles of key procurement staff. The role profiles should set out relevant experiences and competencies that would be expected of individuals filling these roles. This effectively formalises the responsibilities and objectives established for individuals at level 3 by making it a requirement for the role rather than it remaining specific only to the individual currently filling that role. The organisation should ensure that these role profiles are used in recruitment, development, assessment and reward of procurement staff. Core competencies might include: understanding of carbon and climate change issues at global, national, local, organisation and health sector level understanding of the principles and key terminology of carbon accounting and carbon in the context of product or service life cycles understanding of how carbon emissions may be influenced through procurement practices understanding of the principles of engaging suppliers to drive improvement. Where competencies or responsibilities are written into role profiles it is important to ensure that appropriate personal development support (e.g. training courses or job coaching) is available for staff to facilitate them in meeting these requirements. 31

33 P4CR Procurement Processes 32

34 Foundation (Level 1) High carbon impact categories suppliers are identified through application of carbon Intensity modelling. Key components Carbon intensity assessment used to identify high carbon impact categories and suppliers Carbon intensity assessment approved by senior level champion Guidance Carbon intensity assessment Everything that we buy has some level of carbon emissions associated with it. For goods, carbon emissions may arise from initial extraction of raw materials, cultivation and harvesting, processing, assembly, packaging, transport storage and handling, use or disposal. Services, while often less tangible, also generate carbon emissions through the use of goods and equipment in the delivery of the service. Different goods and services will cause different amounts of carbon emissions (carbon intensity). Emissions depend on the the amount and type of materials used, the way the supplying organisation operates, the type of energy and materials they use, the way in which the product/service reaches the client and the life span of the product. This is not an exhaustive list but does cover some of the more common factors that can influence carbon emissions. When trying to identify which products or services to prioritise to achieve carbon reduction through procurement it is important to have some feel for the respective carbon intensity. Another key consideration is how much of a product or service you use. The more products or services you use then the higher the carbon emissions associated with your procurement will be. While detailed life cycle carbon studies (e.g. Life Cycle Assessment [LCA] or PAS 2050) will seek to measure carbon by a typical unit for the product (e.g. tonne, square metre, pallet, pack etc) there are no units that apply universally across all products and services. In view of this the cost of the products or services is commonly used instead and carbon intensity expressed in terms of carbon per (GBP) spent. Carbon intensity based on cost is a useful measure but has its limitations; calculating the resulting emissions based on carbon intensity numbers can vary with price fluctuations. For example, the carbon intensity for product X is 5grams CO2 per 1, and the standard unit cost is 2, giving a unit of product X a carbon footprint of 10grams CO 2., If a unit of product X was bought at an increased price of 3, according to its carbon intensity value, its carbon emissions would be calculated to be 15grams CO2, as opposed to 10grams CO2 (based on the standard price of 2). However, the actual carbon emissions associated with that one unit of product X would remain the same in reality. On balance, this approach is reliable enough to identify the most significant (in terms of carbon) categories or suppliers of products and services. 33

35 In guidance produced by the UK Government, a range of carbon intensity factors, providing grams CO 2 (carbon dioxide) per spent, are provided covering 75 industry sectors. These carbon intensity factors are based on the same research used to inform the NHS Carbon Reduction Strategy. The SCO 2 PE tool accompanying this guidance provides an Excel template where spend data can be entered for your organisation which will then be multiplied by these carbon intensity factors to give you an indicative carbon intensity profile for your organisation s spend (see guidance in Procurement Process Level 2 for more information on prioritising categories and/or suppliers). Two versions of the SCO 2 PE Tool exist: Standard version: this version has been designed to accept input of expenditure data against categories and provides a summary model and a detailed model for use. E-Class version: this version is based on the standard version but allows for expenditure data to be input against e-class codes and then automatically maps this data to the categories used in the SCO 2 PE Tool to calculate a detailed model output. The adage that the most carbon efficient product is the one you never use is a useful principle to remember, insofar as reducing consumption is the most effective way of reducing the carbon emissions associated with procurement. The use of carbon intensity factors based on CO 2 per spent also demonstrate this. Category carbon intensity assessment approval With any assessment that is to be used to inform strategy, actions and decisions it is always prudent to invite review from peers and other key stakeholders to ensure that the approach and any assumptions made in the assessment process are sound. It is suggested that carbon intensity assessments should be conducted drawing on input from a team rather than being the responsibility of one individual. Ideally this group might include some key stakeholders from outside the procurement function. Likewise, it is useful to seek sign off or approval from senior management for the assessment, so that they understand the basis for future strategy and action plan development, ensure consideration of other related strategies and external pressures and also to give them opportunity to review and question any assumptions. Senior management approval will also help should it be necessary to share any of the findings with suppliers or other external stakeholders. NHS SCO 2 PE tool (Standard and E-Class versions available) 2009 Defra / DECC Greenhouse Gas (GHG) Conversion Factors for Company Reporting (30 September 2009) Saving Carbon, Improving Health NHS Carbon Reduction Strategy for England Annex A 34

36 PAS 2050: 2008 Specification for the assessment of the life cycle greenhouse gas emissions of goods and services ISO : 2008 Buildings and constructed assets. Service life planning. Life cycle costing ISO 14040: 2006 Environmental Management Life Cycle Assessment (LCA) Principles and Framework 35

37 Embed (Level 2) Consideration of carbon is a feature of the procurement process. Prioritisation of categories / suppliers is undertaken based on carbon intensity modelling, levels of influence, profile and stakeholder views. Key components Carbon is considered in the procurement process Prioritisation of categories and/or suppliers has been undertaken Guidance Considering carbon in the procurement process In order to address carbon through procurement it is important to ensure that there is a stage in the process at which carbon is given due consideration as to its relevance to the subject of the contract and (if deemed to be so) how it will be addressed through the procurement process (see OGC Guidance signposted below for guidance on determining relevance). It is advised that this carbon review stage of the procurement aligns with any review of wider sustainable development issues and that it occurs early in the procurement process to ensure that it can be adequately addressed at the most appropriate juncture. The results from the carbon intensity assessment, (see Process level 1) as well as any prioritisation of categories (see below) should inform the consideration of carbon within procurement processes. Prioritising categories and/or suppliers The SCO 2 PE tool offers the facility to assess each category on four strategic, risk and opportunity questions. Stakeholder Profile Sector is of significant interest to key stakeholders, especially in the context of climate change or wider sustainable development, and is subject to close scrutiny. This presents significant public relations risks and opportunities. Strategic Criticality Sector represents strategically critical areas of supply for the organisation in terms of providing goods or services that are vital for the delivery of health and social care or where supply is concentrated with one or very few suppliers. In this context high energy dependency and carbon emissions present significant security of supply risks. Scope for Improvement Sector offers significant opportunity for reduction in carbon emissions due to current practices within the organisation and suppliers, the nature of the products or services, or the availability of new technologies and solutions. 36

38 Scope for Influence Procuring organisation has a high degree of influence over the suppliers within this sector as a result of competition within the market, longer term relationships, more direct management control over the contract delivery, or imminent contracting activity. [In considering scope for influence the extent to which changes may impact on patient outcomes and experience, and other key objectives of the organisation need to be considered, given that such priorities may impose restrictions on the extent and pace of change]. By assessing each category against these four areas you can then view a chart (generated automatically by the SCO 2 PE tool) that compares strategic risk and opportunity against the carbon intensity of each category of spend. Categories in the top right hand corner of the chart are the categories that you should prioritise for action as they pose the greatest level of risk if not addressed, provide the greatest opportunity for reducing carbon and represent the most carbon intensive area of spend. NHS SCO 2 PE tool (Standard and E-Class versions available) Environmental issues in purchasing (joint guidance of OGC and Defra) Buy green and make a difference how to address environmental issues in procurement (OGC) Commission interpretive communication on the community law applicable to public procurement and the possibilities for integrating environmental considerations into public procurement. 37

39 Practice (Level 3) Carbon reduction strategies are developed to address the identified priority categories / suppliers incorporating techniques such as demand management, whole-life costing, substitution, innovation and supply chain engagement. Key components Strategy determined for addressing priority categories suppliers Strategy summaries developed for each priority category supplier Action plans developed to support the delivery of strategies Guidance Determining strategy for addressing priority categories / suppliers Having determined the priority categories or suppliers that you want to focus on to identify and deliver carbon reductions, it will be important to consider how you intend to realise these reductions. In some cases the actions you need to take will be apparent from the start so you can start developing an action plan straight away. However, in many cases it will be necessary to gather further information and views that will inform your approach and specific actions. The Hierarchy of Interventions, presented in the diagram below, provides a clear structure to help you determine an initial plan of action, or intervention. Figure 3.3.1: Hierarchy of Interventions This diagram shows four generic interventions in a hierarchy which is designed to help identify the best intervention strategy for different products or services being procured. In general, those 38

40 interventions that are higher up the hierarchy will be easier to implement and will realise greater benefits for the procuring organisation (in terms of financial savings as well as carbon reduction). When identifying approaches and actions to address priority categories or suppliers; organisations should consider interventions at the top of the hierarchy first and work down to other interventions if the higher interventions have already been implemented or the product or service situation does not fit the model exactly. Reduce Demand The most effective way to reduce carbon emissions is to reduce the amount of goods or services used (or procured). Challenge the need and consider different ways of meeting the desired outcome. In addition identify unnecessary waste as a result of overstocking, poor storage and handling, lack of operational management control or poor custom and practice. Reduce in-use Emissions Focussing on the energy performance (and associated carbon emissions) of infrastructure, equipment or services at the procurement stage can help to reduce the whole life costs of ownership for the end user as well as the carbon footprint. Consideration should also be given to disposal, both in terms of cost and carbon, and in this context this intervention may well apply to non-capital and infrastructure items. Procuring organisations will be able to exert a good degree of influence over this aspect of the footprint, and the realised financial savings can help to justify the investment of resource or higher upfront costs. Costs associated with energy consumption and carbon emissions should be factored into assessments of the total cost of ownership (also know as whole life cost). Substitution and Innovation If the need is established then it may be possible to meet that need in a different way that effectively reduces the carbon footprint. Substitution may deliver reduced carbon emissions by utilising materials or approaches with a lower carbon footprint, while the introduction of innovation and new technologies can radically change the way a need can be met (e.g. Telecare). Innovation can help deliver carbon reduction in a number of different ways: Innovative technology or approaches may enable reduced consumption of goods, services (demand reduction). For example, the introduction of high air flow hand dryers, removes the need to provide paper hand towels, reducing carbon and waste generation. Innovative technology may deliver the same utility with lower energy demand therefore reducing direct carbon emissions from energy consumption in use (increased in use efficiency). For example, Light Emitting Diode (LED) lighting replacing incandescent lighting systems will dramatically reduce ongoing energy consumption, carbon and costs. Innovative technologies, processes or materials may reduce carbon emissions associated 39

41 with supply chain activities such as extraction, manufacture, packaging and transport (substitution). For example, the introduction of strong carbon fibre into surgical instruments can reduce reliance on steel. Supply Chain Management Ultimately a large proportion of the carbon footprint of goods and services procured is related to the practice and performance of suppliers in the supply chain. There are regulatory, market and competition drivers for suppliers at all stages of the chain to improve energy efficiency and reduce relative carbon emissions, however, additional client influence can provide a powerful further incentive to improve. Influencing carbon emissions in the supply chain relies on an informed client, that is a client that has a good understanding of the product or service being procured, the market, the supply chain structure, production processes and carbon emissions at different stages of the product life cycle (see links to information on life cycle assessment and the Publicly Available Standard PAS 2050). In addition supply chain management activity should be based on a strategic approach which realises mutual benefits. Bilateral, long-term commitment is required for effective supply chain management. Developing strategy summaries for each priority category supplier For each priority category or supplier identified at Level 2 it is advisable to develop a strategy for driving carbon reduction. To support consistent communication and understanding among procurement staff and other key stakeholders (internal and external to the organisation), strategy summaries should be documented for each priority. Strategy summaries should include: strategy aims and objectives summary of key milestones and performance indicators name of person(s) responsible for delivery of the strategy short overview of the priority category (or supplier) including information on why this has been determined as a priority. information on perceived drivers and barriers to carbon reduction with the category (or supplier) information on carbon hotspots as well as scope for improvement and influence description of proposed interventions (based on hierarchy) details of headline actions and approaches proposed to support delivery of the strategy details of management review and progress reporting systems stakeholder identification and communication plan. Developing action plans to support the delivery of strategies To support strategies developed for priority categories or suppliers it will be helpful to develop detailed action plans that support the advancement of those strategies. 40

42 For some areas it may be relatively easy to identify actions that should deliver carbon reduction, however, for other areas there will be much less clarity. In these cases initial action may focus more on gathering information, views and undertaking exploratory activities. The outcome of such activity will then hopefully inform further action planning that will deliver real reductions. Action plans should seek to: identify clear actions have deadlines for completing tasks set milestones and review dates for larger and more complex actions identify a responsible person who is accountable for delivering the action identify supporting person(s) who are responsible for contributing to the delivery of the action have resources required to support delivery of the action (e.g. people, time or finance) other actions or conditions that can impact on action delivery or progress (interdependencies) A template has been developed in conjunction with the NHS in the South West for identifying interventions and approaches at the outset of specific procurement projects, referred to as a Carbon Intervention Plan (see resources section below). Hierarchy of Interventions slide deck Carbon Intervention Plan template PAS 2050:2008 Specification for the assessment of the life cycle greenhouse gas emissions of goods and services ISO 14040:2006 Environmental Management Life Cycle Assessment (LCA) Principles and Framework 41

43 Enhance (Level 4) Baseline carbon emission measurements and assessments are undertaken for priority categories suppliers to support future benefits tracking. Key components Scope of carbon emissions to be tracked and has been identified for each category supplier strategy Methods of establishing current (baseline) carbon emissions developed Baseline carbon emissions data collated and verified Guidance Identifying the scope of carbon emissions to be tracked Strategies and action plans developed for priority categories or suppliers should identify how the real reductions in carbon that result will be captured. In the first instance this requires a clear definition of the carbon emissions data that will be collected, and used to determine the baseline and ongoing performance. In defining the carbon emissions data that needs to be collected, consideration needs to be given to the following: How will carbon emissions be influenced by the procurement intervention(s) Are carbon emissions likely to be influenced greatly by any other factors outside your control or influence? Where will carbon emissions reductions arise? What data will need to be collected to allow calculation of carbon emissions at the specific points where emissions are likely to be realised? Can this data be collected to establish a baseline or can a baseline be calculated from broadly similar data? If not then you may need to review the data you intend to collect What are the boundaries or scope of this data? Emissions sources that are in scope and those that are not should be determined to support consistency What conversion, estimation or extrapolation will be applied to raw data to derive carbon emissions (e.g. conversion of litres petrol to related CO2 emissions, you need to define the conversion factor to be used, and its source) Will data be related to a unit of consumption or activity to allow for comparison in periods of growth or contraction, or will absolute data, based on baseline levels of activity be used? Is it practical to collect and process this data on an ongoing basis? Consider the availability of data, commercial sensitivity, the resource needed to collect the data (time and cost)? Note that relatively small changes in the scope of data to collected can have 42

44 significant impacts on the practicality of collecting data Who will be best placed to collect the carbon emissions data (e.g. procuring organisation, supplier)? Are there any risks with data continuity? What skills will people need to undertake data collection? How frequently will you need to collect data? How frequently will you collate and analyse data? This may appear to be an onerous task but in many cases the answers to these questions will be relatively easy to determine. Experience shows that it is better to plan for data collection rather than rushing in, only to find at a later date that you do not have all the data you need, that you have collected data you did not need or that the data is unreliable. It should be recognised that data collection and management can be costly, in terms of both time and resources. The key to tracking carbon reduction is to try and identify the areas of reduction you want to track as early in a process as possible. This will enable baseline data to be collated well in advance of the point where carbon emissions actually need to be tracked and reported. In some cases it may be possible to establish a baseline and calculate new performance data retrospectively. However, this can be time consuming and commonly relies on a range of assumptions and estimation that reduces the accuracy of the performance data. The fewer assumptions you make, the more robust your data will be. Establishing current (baseline) carbon emissions Once you have clearly defined the carbon emissions data that will be collected (to determine the baseline and ongoing performance) you will need to establish the baseline carbon emissions. Setting a baseline measure of carbon emissions is important to enable you to measure improvement over time and the effectiveness of your actions. For example to document both carbon and financial savings from switching to energystar labelled goods which provide a degree of assurance that the goods will be energy efficient you will need to know the baseline energy consumption for the products previously used. The baseline is generally the current situation, that you aim to improve on, which will require collection of current data. Baselines are best derived from primary (actual) performance data (e.g. energy rating of previous equipment, volume of product consumed) however, where such data is not readily available it is possible to utilise secondary data, for example, market average data. However, in some cases you may seek to measure improvement retrospectively. For example, a change was made to a procurement specification a year ago which has resulted in carbon reductions that you want to capture and report. In such cases the baseline will be based on a previous situation which will require collation of historical data which can be more challenging than dealing with current situation data. Care should be taken when trying to establish baselines retrospectively to ensure that an accurate model of previous activity is used and that the data used is the same, or at least broadly comparable, with the data that will be collected to demonstrate current and future performance. When calculating a baseline it is worth making a record of any assumptions, estimations, or calculation methodology applied. This provides an auditable record in the event that other people pick up this work in the future. It also ensures that the baseline can be interrogated and verified 43

45 in the event that expected reductions do not materialise or indeed appear to be substantially above expectations. Collation and verification of baseline carbon emissions data Baseline carbon emissions data is very important to any carbon reductions programme because it is the data against which you will measure your future performance, and in turn this will inform reporting, strategy and action, reviews and future objective and target setting. If the baseline data is inaccurate or is based on faulty assumptions, estimates or calculations then this can have serious implications for the programme in the future around reliability of reporting, credibility of the programme and adversely influencing actions and decisions. In view of the importance of baseline data it is recommended that some verification of the data, assumptions, estimations and calculation is undertaken. This could be done internally or by external specialists. It is advisable that verifiers are remote from the original baseline development work to ensure a thorough and objective verification process is followed. 44

46 Leadership (Level 5) Carbon emissions measurement and assessments are undertaken for priority categories suppliers at regular intervals to track benefits and the effectiveness of different strategies and techniques. Data collected on carbon reduction is robust and objective. Key components Carbon emissions performance data is collated throughout the implementation of category supplier strategies Carbon emissions performance data is compared against carbon emissions baseline data Carbon emissions performance data is used to review effectiveness of activity and to inform future strategy and action plans Data and calculation processes are routinely reviewed for accuracy Guidance Collating carbon emissions performance data Baseline carbon emissions data should have been established for each category supplier strategy (see Procurement Process Level 4) and the scope of data defined for this process should be used to inform the collection and collation of ongoing carbon emissions performance data. Using consistent data for the baseline and ongoing performance measurement will help to ensure comparability of data. In scoping out what carbon emissions data is to be collected, when establishing the baseline, due consideration should have been made as to how, where, when and who would need to collect ongoing performance data (as this is an important consideration when setting data scope) and also how carbon data would be collated and calculated. This model should be followed as closely as possible for ongoing carbon emissions data collection. In some cases you may find that the actual data available is slightly different from that available (or predicted to be available) when establishing the baseline. You may find that more detailed or more reliable data is available, alternatively, that the opposite is the case. When this situation arises it will be important to assess what impact the use of new data would have on the accuracy of comparisons with the baseline. If the impact is significant then efforts may need to be made to recalculate the baseline data ( re-baseline ) in line with the new data available. Another approach would be to make adjustments to ongoing performance data to align it with the methodology used for calculating the baseline. Recalculation of baseline data or adjustment of ongoing performance data however, is not ideal and can easily lead to calculation errors being introduced. In view of this it is recommended that if you need to do this, thorough records of all assumptions, adjustments, estimations and calculations are made and that an objective verification review is undertaken to ensure that the approach taken is sound. Comparing carbon emissions performance against baseline data Once ongoing carbon emissions data is being collected and collated it should be relatively easy to compare this with your baseline data to identify how well you are performing against reductions 45

47 targets that should have been set out in the category / supplier strategy. Performance obtained from this comparison should be reviewed to see if it reflects expectations. If performance appears to be much worse than expected then reasons for this should be investigated. This could be for a number of reasons, for example: emissions are closely linked to consumption yet baselines and targets were based on absolute data emissions are influenced by other factors not considered in strategy and action plans baseline data quality is suspect (including estimations, calculations and assumptions) ongoing emissions data quality is suspect (including estimations, calculations and assumptions) ongoing emissions data availability and scope have changed actions are ineffective. Similarly, if it is found that performance greatly exceeds expectations, the reasons for this should be investigated to understand the causes of this. In any case, this activity will equip you with very useful management information that will help you in your future procurement decisions. Using carbon emissions performance data to review future strategy and action plans As identified in the section above, carbon emissions performance data (derived from comparing ongoing emissions with baseline emissions) can help you identify how effective strategy or action plans are in delivering real carbon emissions reductions and thus can inform future strategy and action plan development. For example, if a programme to reduce product packaging through closer supplier engagement starts to realise significant reductions in carbon, it may be effective to employ this strategy in other areas. Similarly, it may just suggest that this strategy should be extended in the current category area. It is recommended that carbon emissions performance data is routinely reviewed as part of any strategy and action planning work so that lessons can be learned, in terms of what did and did not work well. Routine review of data and calculation processes If carbon performance data is to be used to inform future actions, underpin dialogue with suppliers, demonstrate the organisation s performance or support case studies then it is recommended that routine reviews of data are undertaken. Such reviews should also consider any calculation processes that are applied to data, as in some cases errors in pre formatted calculations can have substantial effects on the eventual data. The organisation should seek to schedule data reviews or audits and have in place a good system for ensuring reviews are undertaken in an objective and timely manner. Use of third party assessors can help to improve the objectivity and credibility of such processes, especially if the data is to be used to underpin important external communications. 46

48 P4CR Engaging Suppliers 47

49 Foundation (Level 1) Initial communication has been conducted with suppliers or trade associations around carbon reduction strategy and future aspirations. Key components Guidance Communication on carbon has been initiated with key suppliers and or trade associations Initiating communications on carbon with key suppliers and/or trade associations This section is predominantly about direct engagement with suppliers but it is recognised that in some cases an effective way of engaging with suppliers in a specific category or sector may be through the relevant trade association. For conciseness the remainder of this section will refer mainly to suppliers but the intention is that this also encompasses trade associations. In the first instance it may be that full analysis of carbon intensity and prioritisation of categories and suppliers has not taken place (see Process levels 1, 2 and 3). While it is always beneficial to orientate supplier engagement around clear direction and objectives there can be value in introducing carbon into the dialogue with suppliers ahead of having conducted this analysis. Indeed some of the engagement may well help to inform prioritisation, strategy development and action planning. Another benefit from early dialogue around carbon is that it provides advanced notice of your intentions and aspirations. This allows suppliers to start developing their thinking around the subject in preparation for more concerted activity. Potential methods of initiating communications with suppliers on carbon and climate change include: Building carbon into existing supplier relationship management or review processes Writing to suppliers to advise them of your policy and objectives Articles within news letters or on web sites targeted at the supplier community Presentations or workshops with groups of suppliers Approaches to trade associations Targeted one to one discussions on carbon with a sample of pre selected suppliers Establishing a programme of regular, informal, face-to-face supplier engagement with no commercial ties. At this initial stage we would recommend avoiding the use of questionnaires as these can prove burdensome for responding suppliers and on your own resources to collate, analyse and act on the responses. Indeed, some initial informal dialogue with a few suppliers can be very useful in helping you shape any future questionnaire development, should you choose to take this approach as part of strategies developed at later stages. It is suggested that prior to any initial engagement staff develop a basic awareness of: the organisation s business case for Procuring for Carbon Reduction P4CR climate change concepts and relationship to sustainable development 48

50 greenhouse gasses, their sources and CO 2 equivalence basic principles and terminology of carbon accounting and reporting national, regional and local strategies and objectives relevant regulation and international agreements. Early dialogue can be used to start to establish some common understanding and definitions of terminology as this will help to avoid confusion at later stages. Maintaining records of dialogue with suppliers on carbon and climate change is recommended as this will support consistency of approach and also helps to ensure that it remains part of ongoing dialogue. However, this should be done in a balanced way in order to encourage openness. Carbon Literacy learning module (National Sustainable Procurement Training Programme) materials for class based training will be freely available early

51 Embed (Level 2) Two way dialogue is established with some key suppliers or trade associations to increase awareness and inform category prioritisation process. Dialogue aims to establish carbon-awareness levels, and the position or maturity of key market sectors in carbon management. Key components Two-way dialogue has been established with some key suppliers or trade associations Supplier and market awareness and maturity of carbon management approaches has been determined (where two way dialogue has taken place) Guidance Establishing two way dialogue with key suppliers and trade associations As a follow up to initial communications with suppliers (as discussed in the previous section Level 1) it will be important to try and establish ongoing two-way dialogue, especially with suppliers in priority categories. The focus of this dialogue will ultimately need to be dictated by the strategy you develop to address priority categories or suppliers (see Process level 3), however, there is no reason why a two way dialogue cannot be established ahead of this. Indeed constructive dialogue at an early stage can inform strategy development. Dialogue with suppliers should always make it clear why working towards reduction in carbon emissions is important, and beneficial, to your organisation as well as the suppliers. The use of examples and case studies to illustrate benefits realisation can prove very useful. Determining supplier and market awareness and maturity One objective of establishing two-way dialogue with suppliers early is to help you develop an understanding of suppliers awareness, current practice and the overall maturity of the market (for identified priority categories). This is important information to have when determining priority categories and suppliers (e.g. scope for improvement assessment in the SCO 2 PE tool) and later on when developing strategies and action plans. Areas to focus on with suppliers to gain an understanding of their awareness and maturity could include: the level of focus or commitment on sustainable development and carbon reduction leadership and governance arrangements and responsibility for climate change and carbon management within the supplier organisation the suppliers level of awareness of their carbon emissions (scope 1,2 and 3) the suppliers understanding of their product or service life cycles and supply chains and where the most significant carbon emissions are created the suppliers awareness of Government policy, targets and commitments the extent to which climate change and energy efficiency regulation applies to and effects the supplier initiatives the supplier has, or plans to put in place to address carbon emissions 50

52 formal strategy, programmes and management systems that the supplier has in place to maintain focus on energy efficiency, carbon emissions and climate change evidence of carbon reductions already achieved how carbon information is collated, analysed and reported (internally or externally) by the supplier the level of independent verification applied to performance data collected the suppliers involvement in voluntary climate change or carbon reduction initiatives or schemes (e.g. annual reporting, Carbon Disclosure Project, 10:10 Campaign, carbon product labelling) the suppliers recognition of risks associated with energy supply, climate change and carbon emissions. The Carbon Disclosure Project (CDP) is an independent scheme that encourages organisations to disclose information on a range of energy, carbon and climate change themes, which broadly mirror the bullet points above. The approach and structure that CDP offers could make it a useful tool to support meaningful dialogue with your suppliers. Feedback is available for disclosing organisations and their customers. It should be noted that CDP is one of a number of approaches to working with suppliers to understand their carbon impacts. Feedback will greatly support assessment of the maturity of the market, and individual suppliers, and provide a structured basis for dialogue and improvement action planning. Feeding findings of supplier engagement back into carbon reduction strategies A key aim of initial dialogue with suppliers should be to develop a good understanding of the maturity of suppliers and markets, in relation to the management of carbon and climate change. This will inform prioritisation of categories and suppliers as well as strategy and action plan development. For this reason it is important that records of stakeholder dialogue on this agenda are maintained and shared with members of the team who will be responsible for prioritisation and the development of strategy and action plans. Similarly records of ongoing dialogue need to be frequently reviewed to identify any necessary changes to strategies and plans. 51

53 Practice (Level 3) Structured supplier engagement process is in place to address priority categories/suppliers. Key components Regular and structured engagement process exists with suppliers in priority categories Guidance Regular and structured engagement with suppliers Building on work at level 2 this level aims to ensure that suppliers are aware of the category strategy. Procurement managers should engage with suppliers on the key issues in a regular and structured manner. This activity may take place outside procurement exercises either as market engagement or as part ongoing contract management. Agree priority areas. Based on dialogue with suppliers, the organisation should identify and agree priority areas for action. Agree an action plan. The organisation should agree actions with its suppliers which help to tackle recognised priority areas. These may be specific actions focussed on delivering real emissions reductions or they may be more general actions relating to good practice and enabling future initiatives. Review progress made. The organisation should regularly review progress against agreed actions. 52

54 Enhance (Level 4) Specific programmes identified with suppliers to address carbon reduction in priority areas. Key components Guidance Improved programmes are in place with suppliers that deliver carbon reductions Developing improvement programmes with suppliers As regular and structured supplier engagement processes and action plans develop it will be important to focus on the actual carbon reductions achieved through initiatives and action plans (see also Procurement Process, levels 4 and 5). Agree objectives and targets As part of the engagement process it will be important to try and establish some actual carbon reduction targets. These may be at an overall level or specific to an initiative or project. This will help to ensure that activity is not purely focussed on process and actually starts to deliver carbon reduction. Note that it may be necessary to set emissions targets that are relative to the level of activity of the suppliers business (e.g. CO 2 per Tonne of product) as this allows the business to grow but also to demonstrate improved performance. Review performance in terms of carbon reduction Following the same principle as for your own carbon reduction strategies (see Procurement Process level 5) it will be important to review carbon reduction performance of initiatives and actions agreed with specific suppliers. Collation of data on carbon reductions resulting from actions taken in response to supplier engagement will be important for reporting the benefits realised by your organisation s Procuring for Carbon Reduction P4CR programme (see Measurement and Results levels 4 and 5). Defra s Supplier engagement programme ( ent_2008.pdf - p17) 53

55 Leadership (Level 5) Organisation has in place approaches to recognise high performing suppliers or sectors which form the basis for best practice carbon reduction case studies. Key components Development of schemes for the recognition of high performing suppliers Benchmarking practice and performance through priority supply chains Identifying case studies to capture good practice from collaborative projects Guidance Recognition schemes In order to encourage continuous reduction of carbon emissions, the organisation should actively recognise the achievements of suppliers who demonstrate good practice for carbon reduction performance. Developing a scheme to recognise suppliers can be an effective way of encouraging all suppliers to become more proactive. The scheme may look to recognise suppliers that can demonstrate significant carbon reductions (irrespective of business growth or contraction). Alternatively it may focus on good management practices that seek reductions across the organisation, manages risks associated with energy supply, price volatility and the effects of climate change itself. It also provides an opportunity for an organisation to identify suppliers who are doing good work in this area either as potential partners in future initiatives or purely as models of what can be done to support wider learning and understanding. Benchmarking practice and performance through priority supply chains As the organisation becomes more experienced in working with identified priority supply chains, there can be value in starting to benchmark key suppliers within categories or across categories. The aim of benchmarking is to assess different suppliers or categories against a set of criteria related to carbon reduction practice and performance. By assessing a range of suppliers or even whole market categories against these criteria you can start to build up a picture of how well they perform in different aspects of their carbon management and performance and also compare suppliers against their category peers or across all key suppliers. Benchmarking criteria should focus across a range of indicators including management actions such as training, risk assessment, planning and ambition of objectives and targets. In addition the criteria should cover actual carbon reduction performance, level of engagement, extent of disclosure on carbon practice and performance and how they seek to stimulate innovation for reduced carbon outcomes. Benchmarking can be an effective tool in motivating suppliers to enter into meaningful engagement as well as providing an indication of what they need to do to improve. Such benchmarking processes will often contain commercially sensitive information and should be used in confidence with suppliers, anonymising information where appropriate. 54

56 Identification of case studies Identifying good practice allows suppliers and procurers to learn from the experiences of others and builds the expertise of the entire supply base. Leading organisations should capture good practice from suppliers who are reducing their carbon emissions and/or working on collaborative projects and roll out the learning to other suppliers. Suppliers should be invited to share their good examples with their peers. In order to effectively capture good practice the case study should communicate the following. Context Project actions and steps Successes, difficulties and future learning points Project outcomes Project legacy future prognosis. 55

57 P4CR Measurement & Results 56

58 Foundation (Level 1) Organisation regularly reviews implementation progress against the requirements of this Framework. Key components Regular reviews of progress held against the Procuring for Carbon Reduction P4CR Flexible Framework Progress against the framework is recorded Guidance Reviewing progress against the Procuring for Carbon Reduction P4CR Flexible Framework Organisations should track their progress against the Procuring for Carbon Reduction P4CR Flexible Framework (see Introduction section) using the Excel based P4CR self-assessment tool to: assess what level they have achieved in each area identify next steps and actions inform progress reporting. The Procuring for Carbon Reduction (P4CR) Flexible Framework self-assessment tool can also be used to plan activities through a basic project planning function. This process should be coordinated by the person(s) with responsibility for implementing the Procuring for Carbon Reduction P4CR programme with the involvement of procurement managers and other key internal stakeholders. Outputs from reviews can be used to inform reporting to senior levels in the organisation and reporting against wider sustainable development or carbon reduction strategy. Recording progress It is recommended that when progress against the flexible framework is reviewed, this should be recorded with commentary and notes on any assumptions, interpretations and evidence that demonstrates achievement of the key components. This will support consistent interpretation and can be used to demonstrate continual improvement. Use of the Excel based P4CR self-assessment tool should support this record keeping. Excel based - P4CR self assessment tool Case study/example: The Excel based self-assessment tool can be used to establish an initial baseline and to monitor progress against the P4CR Flexible Framework. The following outputs can be generated through use of the tool. The table below shows progress by level and area of the P4CR flexible framework. 57

59 Procurement Organisation Procuring for Carbon Reduction P4CR - Flexible Framework progress Level 1 Level 2 Level 3 Level 4 Level 5 Foundation Embed Practice Enhance Lead Policy and Communication 75% 0% 0% 0% 0% People 67% 0% 0% 0% 0% Procurement Process 100% 50% 0% 0% 0% Engaging Suppliers 100% 22% 0% 0% 0% Measurement and Results 33% 0% 0% 0% 0% 58

60 Embed (Level 2) Practice indicators are adopted to monitor aspects of the organisation s approach to reducing carbon through procurement. Key components Guidance A range of indicators exist that reflect extent of management practices for the reduction of carbon through procurement Developing indicators of management practice The effects of management activity and practice on reducing the carbon emissions associated with the products and services your organisation procures can take time to realise. It is therefore useful to measure management activity itself to gain confidence that sufficient action is being taken to implement policy and facilitate to the realisation of benefits. Practice indicators (sometimes referred to as Management Performance Indicators - MPIs) can also support budgeting decisions on future activities and approaches. Building on the single broad based indicator of management practice provided by the P4CR Flexible Framework, as discussed under level 1, it is suggested that more specific indicators of management practice may be useful. These may include: number of procurement staff who have attended awareness raising training number of suppliers who are engaged in initial dialogue number of categories assessed on carbon intensity to inform category strategy percentage of procurement processes taking carbon into account percentage of nominated suppliers disclosing on carbon, climate change and energy percentage of identified corrective actions closed out in agreed timescale number of good practice case studies developed. As the organisation develops its Procuring for Carbon Reduction P4CR activities, indicators should be reviewed to ensure that they track aspects of process that are relevant to the organisations circumstances and challenges. 59

61 Practice (Level 3) Practice indicators are reported on regularly to inform internal audiences and key stakeholders. Plans are in place for the collection and verification of carbon data related to initiatives with priority categories / suppliers. Key components Regular internal reporting is undertaken on practice indicators Plans in place to collect and verify carbon data to demonstrate the organisations carbon reduction performance (performance indicators) Guidance Reporting internally on process indicators As for any programme or initiative, it will be important to report regularly on progress and performance to key internal stakeholders, be this senior management, procurement staff or wider staff groups. The need to regularly report progress helps to maintain focus and commitment to the initiative. It also provides an opportunity to keep others informed of what is being done and achieved. Maintaining a good level of visibility of the programme will strengthen its credibility and promote feedback and input from other sources that may not normally have been engaged. Collection and verification of carbon data from categories or suppliers Previous levels in this section have focused on the monitoring of the organisations practice, however, the ultimate aim of a programme or initiative is to achieve real reductions in carbon emissions associated with products or services procured. Levels 4 and 5 of the Procurement Process section go into detail on how carbon reduction benefits may be captured at a project or individual procurement level. Under the Measurement and Results section the focus is on developing measures of the organisations overall performance. There are a number of techniques available to organisations wishing to measure emissions associated with the goods and services they procure and these break down into four classifications. 1. Sector average intensity factors linked to consumption by spend or volume 2. Aggregation of product specific carbon life cycle assessments 3. Aggregation of supplier carbon emissions data (apportioned by consumption) 4. Aggregation of emissions reductions derived from your organisations project measurements (benefits tracking) Each of the above approaches have strengths and weaknesses as outlined below. Sector average intensity factors 60

62 Sector average intensity factors are generally derived from a process referred to as input / output analysis. The factors are derived by taking national data on economic activity and carbon emissions, broken down by standard industry sector classifications. Some models may use data from a number of countries whereas others will rely on single country data. In all cases the data will work on averages and therefore will mask variations in performance between the best and worst in the sector. Sector average intensity factors will identify a carbon intensity value for a unit of consumption be this in terms of spend or volume. The carbon emissions are calculated by multiplying the consumption data by the intensity factor (the SCO 2 PE tool accompanying this guidance Procurement Process level 1 uses sector average intensity factors). Advantages This approach provides a relatively quick means of calculating carbon emissions related to products and services procured, especially where the consumption measure is already recorded. The information allows for an overview of all procurement and the prioritisation of key categories and suppliers. Disadvantages The approach uses averaged data and therefore does not pick up where suppliers with better or worse performance are being used. This also means that using such an approach to track ongoing performance would not reflect benefits derived from actions and initiatives taken by your organisation. The approach often relies on data that can be a few years old and new or refined data may not be available frequently enough for internal reporting demands. The approach will reflect emissions reductions from demand reduction well, but is unlikely to reflect emissions reductions derived through procuring more efficient equipment, substitution, innovation or supply chain management activity. 61

63 Aggregation of product specific carbon life cycle assessments Product specific life cycle assessments, such as those undertaken in line with PAS 2050 provide a detailed breakdown of carbon emissions associated with stages of the lifecycle of a product or service. This data on carbon emissions will generally be much more accurate than the sector average intensity factors in relation to a specific product or service procured however, the assessments can be time consuming and costly to undertake and at present the range of assessments that are publicly available only represents a small proportion of the full range of products and service procured by any single organisation. Advantages This approach provides an accurate means of calculating carbon emissions related to products and services procured. The information allows for detailed identification of the main causes of carbon emissions at different stages of the life cycle, enabling more targeted activity. Disadvantages The approach is unlikely to allow for complete mapping of carbon emissions for all products and services procured due to the relatively small number of products fully assessed. The approach often relies on data that can be a few years old and new or refined data may not be available frequently enough for internal reporting demands. The approach often relies on average emissions data and in such cases will not reflect suppliers with good or poor performance, however, this approach is more likely to reflect such variations than sector average intensity factor approaches. 62

64 Aggregation of supplier carbon emissions data Another approach similar to the aggregation of product life cycle emissions is the aggregation of supplier carbon footprint data. This requires the supplier to provide information about the carbon emissions related to their activity and that of their supply chains (sometimes described as scope 1, 2 and 3 carbon emissions data see link to the World Resources Institute Greenhouse gas reporting protocol below). The supplier will also need to apportion their carbon emissions according to some measure of client consumption (e.g. value of products purchased or number of units ordered) over a period of time. It is advisable to seek some degree of data verification or assurance if using this approach. Advantages This approach can provide an accurate means of calculating carbon emissions related to products and services procured. The fact that suppliers are providing the information supports detailed identification of the main causes of carbon emissions at different stages of the life cycle, enabling more targeted activity. Data will be specific to your supplier s performance and also be more up to date than if using sector average intensity factors or life carbon cycle assessments. Disadvantages The approach is unlikely to allow for complete mapping of carbon emissions for all suppliers due to the relatively small number of suppliers who currently calculate their scope 1, 2 and 3 emissions. The way suppliers calculate their emissions may make it difficult to identify emissions related to specific products or services procured and therefore difficult to identify practical actions. The approach relies on good data being provided by all suppliers. Verification of supplier data can be complicated, time consuming and administratively burdensome. 63

65 Aggregation of emissions reductions derived from your organisation s projects This approach seeks to collate and aggregate the benefits realised from your own organisations projects and initiatives. This approach will not give a full carbon footprint picture but will enable you to measure the direct influence your organisation is having on its carbon emissions. This approach relies on measuring carbon emissions at a project level against baseline values as opposed to calculating an overall footprint and comparing this against a baseline footprint. Advantages This approach provides the most accurate measure of carbon emissions change related to the actions of your organisation, ensuring that local efforts can be recognised. The approach aligns well with project benefits tracking processes and the organisation will understand how reliable the data is. Disadvantages The approach is unlikely to allow for complete mapping of carbon emissions for all suppliers due to the likely focus on a small number of priority categories or suppliers. However, it could be used in conjunction with one of the other approaches. The approach is unlikely to capture changes in emissions related to categories or suppliers that are not the focus of specific projects. Data will be up to date and specific to suppliers and/or products or services procured, supporting identification of further improvement opportunities. The approaches described above are not mutually exclusive and it is possible to use different approaches in combination to improve carbon emissions data accuracy or to allow for recognition of local initiatives while still considering the full range of products and services procured by your organisation. In planning, due consideration needs to be given as to how the data will be collected, with clear specification of the measures to be used and the frequency of collection. Plans also need to consider how collected data will be managed and reported as well as how the quality of the data will be checked and verified. World Resources Institute Greenhouse Gases Reporting Protocol 64

66 Enhance (Level 4) Data is available to demonstrate the organisations procurement carbon emissions performance related to priority categories or suppliers. Comparisons of results with peer organisations are undertaken and information is used to inform strategy. Key components Data collated to demonstrate carbon emissions performance for identified priority categories or suppliers Comparative assessments made with peer organisations (benchmarking) Guidance Collating data to demonstrate carbon emissions performance Level 3 required that plans are put in place to demonstrate how the organisation will monitor and measure carbon emissions related to its procurement activity. At this level it will be necessary to show evidence that those plans have been put in place and that initial data on the procurement related carbon emissions performance is being collected and collated for the organisation as a whole. In particular data relating to identified priority categories and suppliers should be collated from projects and initiatives. Assessing performance against peer organisations (benchmarking) Benchmarking your organisations practice and performance against peer organisations can be an effective way of identifying areas of good practice and also areas where existing systems or performance can be enhanced. Some benchmarking approaches are offered by industry bodies and consultancies and can be used for this purpose. Alternatively benchmarking activity can be less formal and built up from dialogue across regional and national networks or forum. 65

67 Leadership (Level 5) Ongoing carbon data collection and measurement is undertaken to demonstrate the organisation s overall procurement carbon emissions performance. Benefits are reported and compared against predicted benefits identified in the business case. Key components Ongoing data collection and measurement in place to support collation of overall procurement carbon emissions performance Benefits compared against business case rationale Guidance Collating information to demonstrate overall procurement carbon emissions performance At this level you will need to ensure that systems have been in place for the collection and measurement of carbon emissions related to procurement overall. The plans developed at level 3 should form the basis for this. Reviews of the quality and usefulness of the information being collected should form part of the systems in place and data on the organisations performance should be collated and made available on a regular periodic basis. Comparison of realised benefits against business case rationale In the Policy and Communications area at level 1 the development of a business case was identified as being important to the success of the programme. The original business case should have made some predictions of the benefits that would arise for the organisation. While it is anticipated that the business case will have been enhanced as your programme progresses it is suggested that when good quality performance information starts to become available, the business case rationale and predictions are reviewed and compared against actual outcomes. This will help to ensure that the business case and supporting communications remain realistic and supported by actual experiences and it may also identify additional benefits that have been realised but which were not considered in the original business case. Capturing this information may also be of use to other organisations that you work with closely who may be looking to learn from your experiences in order to strengthen their own activity to reduce carbon emissions. 66