The carbon reduction contract schedule: PPN 016 explained

The key facts

• PPN 016 applies to all central government departments, their executive agencies and non-departmental public bodies. Other public sector contracting authorities may wish to apply the same approach.
• The PPN was previously issued in March 2024 and updated in February 2025 to reflect Procurement Act 2023 terminology. It applies to procurements commenced on or after 24 February 2025; earlier procurements remain under PPN 01/24.
• The Cabinet Office has published a standard carbon reduction contract schedule: standard terms and conditions to be included in government contracts where relevant to the subject matter and proportionate.
• The schedule supports contract specific greenhouse gas emissions reporting, supplier emissions reduction targets, and monitoring through a supplier Carbon Reduction Plan across the life of the contract.
• Use of the schedule is optional. Before including it, buyers should assess their own maturity, the supplier's maturity, the value and estimated emissions linked to the contract, and the contract's criticality.
• The schedule is expected to be incorporated into future iterations of the Model Contracts suite, and can be applied to existing contracts through variation where appropriate.
• The policy sits under the UK net zero target: a 2019 amendment to the Climate Change Act 2008 requiring at least a 100 per cent reduction in the net UK territorial carbon account by 2050.
• PPN 016 supports PPN 006, which requires bidding suppliers to publish a Carbon Reduction Plan for contracts with an estimated value above £5 million per year including VAT.

What PPN 016 is and who it applies to

PPN 016 introduces a standard carbon reduction contract schedule developed by the Cabinet Office: a set of standard terms and conditions intended to be considered alongside broader sustainability obligations and included, where relevant and proportionate, in government contracts. The rationale is straightforward: environmental and greenhouse gas emissions considerations feature in the delivery of most public contracts, so procurement is a practical lever for supporting the UK's net zero commitment.

The PPN applies to all central government departments, their executive agencies and non-departmental public bodies, referred to as in-scope organisations. It is aimed at commercial, procurement and contract management roles, and is also relevant to finance, operational and sustainability teams. Other public sector contracting authorities may wish to adopt the same approach.

The note was previously issued in March 2024 and updated in February 2025 to reflect the terminology of the Procurement Act 2023 and the Procurement Regulations 2024, which apply to procurements commenced on or after 24 February 2025. For procurements commenced or contracts awarded before that date, buyers should refer to PPN 01/24. The update does not change policy or create a new call for action.

What the carbon reduction schedule contains

The schedule, published alongside the PPN, provides standard terms and conditions that allow contract specific decarbonisation objectives to be set and delivered, and gives buyers a framework to monitor and assess a supplier's decarbonisation performance through the life of the contract.

In practice that means three things. First, contract specific greenhouse gas emissions reporting, so the emissions associated with delivering the contract are visible rather than buried in corporate averages. Second, supplier greenhouse gas emissions reduction targets, agreed for the contract. Third, ongoing monitoring and reduction of emissions through a supplier Carbon Reduction Plan, treated as a live management tool rather than a bid document.

Further guidance on applying the schedule is published alongside the PPN and within the schedule itself. The government also expects the schedule to be incorporated into future iterations of the suite of Model Contracts, which are covered by the standard contracts PPN. In the meantime, in-scope organisations may use the terms in relevant procurements or apply them to existing contracts through contract variation, where appropriate.

Deciding when to use it: the four factor assessment

Use of the carbon reduction schedule is optional. The PPN is clear that it should be included where it is relevant to the subject matter of the contract and proportionate to do so, and that it may not be appropriate for all contracts. This is a deliberate design choice: a decarbonisation schedule imposed on a contract with negligible emissions, or on parties who cannot operate it, produces paperwork rather than reductions.

Before including the schedule, the PPN asks buyers to assess four things: their own organisation's understanding and maturity in carbon reduction initiatives, including how to apply and monitor them; the supplier's maturity and ability to introduce effective measures; the value of the contract and the estimated greenhouse gas emissions linked to it; and the criticality of the contract.

That assessment does useful work in both directions. It stops immature buyers from writing obligations they cannot monitor, and it focuses effort on the contracts where value, emissions and criticality justify the management overhead. The honest answer for some organisations will be to build capability first and expand use of the schedule over time.

Why it matters: net zero through public procurement

The policy context is the UK's net zero target. In 2019 the government amended the Climate Change Act 2008 to require at least a 100 per cent reduction in the net UK territorial carbon account by 2050. The Climate Change Act itself established a comprehensive legal framework for emissions reduction, including carbon budgets, and the 2050 target was recommended by the Committee on Climate Change, the UK's independent climate advisory body. Net zero requires reducing emissions and, where necessary, balancing residual emissions through offsetting schemes such as tree planting or carbon capture and storage.

PPN 016 supports PPN 006, which requires bidding suppliers to detail their commitment to achieving net zero by publishing a Carbon Reduction Plan. PPN 006 applies to public contracts, including frameworks and dynamic markets, with an estimated value above £5 million per year including VAT, except where that would not be relevant and proportionate; special regime contracts are excluded. The two notes work together: PPN 006 gets a Carbon Reduction Plan onto the table at selection, and the PPN 016 schedule turns decarbonisation into a managed contractual obligation after award.

How eSourcing Data helps

The four factor assessment in PPN 016 is a records question as much as a judgement question: which contracts carry material emissions, how critical they are, and why the schedule was or was not included. eSourcing Data captures those decisions in the audit trail of each procurement, so the proportionality reasoning is evidenced and repeatable across the pipeline.

Where the schedule is used, the platform's contract and supplier management workflows give the obligations somewhere to live: emissions reporting cycles, reduction targets and Carbon Reduction Plan reviews can be tracked against the supplier record rather than in spreadsheets, with reporting that shows performance across the portfolio.

Because eSourcing Data covers the full pipeline, including below threshold purchasing, teams can also apply a lighter touch version of the same thinking to smaller contracts, keeping sustainability questions proportionate without losing sight of them.

What to do about it

1. 1Assess your organisation's maturity in setting and monitoring carbon reduction obligations before mandating the schedule anywhere.
2. 2Screen the contract pipeline by value, estimated emissions and criticality to shortlist where the schedule will genuinely add value.
3. 3Test supplier maturity during preliminary market engagement so obligations land on suppliers who can deliver them.
4. 4Include the schedule where relevant and proportionate, and record the decision and reasoning either way.
5. 5Set contract specific emissions reporting requirements and reduction targets at award, not as an afterthought.
6. 6Review supplier Carbon Reduction Plans through the life of the contract as part of routine contract management.
7. 7Consider contract variation to apply the terms to existing strategic contracts where appropriate.