NHS Scope 3 Reporting Additions: What NHS Suppliers Need to Know

The NHS has taken significant steps toward its commitment to achieving net zero emissions. Among these efforts, the latest updates to Scope 3 emissions reporting requirements stand out as a critical component for NHS suppliers. If you're a supplier to the NHS, here's what you need to know about these new rules and how they will impact your operations.

Understanding Scope 3 Emissions

Scope 3 emissions encompass indirect greenhouse gas emissions that occur in a company's value chain. For NHS suppliers, this includes emissions from activities such as transportation, waste management, and employee commuting. These emissions, although not directly controlled by the supplier, are crucial to understanding the full environmental impact of their operations.

Summary of the Current Scope 3 Reporting Requirements

The NHS currently asks for Scope 1, Scope 2 and a subset of Scope 3 emissions (from the full set defined by the GHG Protocol) and since April 2024, these must include a company's UK operations at minimum. In terms of Scope 3 emissions, the current reporting must include:

• Upstream transportation and distribution.
• Waste generated in operations.
• Business travel.
• Employee commuting.
• Downstream transportation and distribution.

What is happening in 2027

In 2027, the NHS will implement significant new requirements for its suppliers concerning Scope 3 emissions reporting. Suppliers will be required to publish a comprehensive Carbon Reduction Plan (CRP) that includes global Scope 1, 2, and all relevant 3 emissions. This means that suppliers must account for and report all indirect emissions related to their operations both in the UK and globally.

Specifically, in terms of scope 3 emissions, suppliers will need to cover:

1. Purchased Goods and Services: Emissions from the production of goods and services purchased by the supplier.
2. Capital Goods: Emissions from the production of capital goods, such as buildings, machinery, and equipment.
3. Fuel- and Energy-Related Activities: Emissions from the extraction, production, and transportation of fuels and energy purchased and consumed by the supplier, not already included in Scope 1 or Scope 2.
4. Upstream Transportation and Distribution: Emissions from the transportation and distribution of goods and services purchased by the supplier.
5. Waste Generated in Operations: Emissions from waste disposal and treatment of waste generated by the supplier's operations.
6. Business Travel: Emissions from business-related travel by employees, such as flights, car rentals, and hotel stays.
7. Employee Commuting: Emissions from employees commuting to and from work.
8. Upstream Leased Assets: Emissions from the operation of assets leased by the supplier.
9. Downstream Transportation and Distribution: Emissions from the transportation and distribution of products sold by the supplier, occurring after they leave the supplier’s control.
10. Processing of Sold Products: Emissions from the processing of intermediate products sold by the supplier by downstream companies.
11. Use of Sold Products: Emissions from the use of goods and services sold by the supplier.
12. End-of-Life Treatment of Sold Products: Emissions from the disposal and treatment of products sold by the supplier at the end of their life.
13. Downstream Leased Assets: Emissions from the operation of assets leased by the supplier to other entities.
14. Franchises: Emissions from the operation of franchises not included in Scope 1 and 2.
15. Investments: Emissions associated with the investments made by the supplier.

The implications of this are extensive:

1. Enhanced Transparency and Accountability: Suppliers will need to provide detailed emissions data, increasing transparency and accountability in the supply chain.
2. Compliance and Contract Eligibility: Suppliers who fail to meet these requirements will risk being ineligible for NHS contracts. This places significant pressure on suppliers to invest in robust emissions tracking and reporting systems.
3. Operational Adjustments: Suppliers may need to make substantial changes to their operations to gather accurate data and reduce emissions. This could involve new technologies, processes, and potentially higher upfront costs.
4. Support and Guidance: The NHS will provide support through tools like the Evergreen Sustainable Supplier Assessment and a CRP checking service to help suppliers meet these requirements.

Why These Changes Are Happening

The NHS's push for comprehensive Scope 3 reporting is driven by its ambitious goal to reach net zero emissions by 2040 for direct emissions and by 2045 for indirect emissions. Scope 3 emissions play a significant role in this strategy as they often constitute the largest portion of an organisation's carbon footprint. By mandating detailed reporting, the NHS aims to create a more transparent and accountable supply chain, driving overall emission reductions.

Implications for NHS Suppliers

These new requirements mean that NHS suppliers must now take a proactive approach to measure and report their emissions. This change could present several challenges, including the need for more sophisticated data collection methods and the potential cost of implementing these systems. However, compliance with these rules also offers benefits, such as improved operational efficiency and a stronger alignment with the NHS's sustainability goals, which can enhance a supplier’s market reputation.

Steps for NHS Suppliers to Comply

To comply with the new Scope 3 reporting requirements, NHS suppliers should:

• Begin by conducting a thorough assessment of their current emissions across Scope 1, 2, and 3 categories.
• Integrate emissions reporting into their existing business operations, ensuring continuous monitoring and annual updates to their Carbon Reduction Plan.
• Speak to C Free. We work with mostly NHS suppliers helping them calculate their emissions and create bespoke CRP’s. We also help with answering the Evergreen Sustainable Supplier Assessment.

Conclusion

The updated Scope 3 reporting requirements represent a significant step in the NHS’s journey toward net zero emissions. For suppliers, understanding and complying with these new rules is not just about meeting contractual obligations but also about contributing to a larger goal of sustainability and environmental stewardship. Now is the time to start preparing and integrating these practices into your business operations.

Call to Action

Start now! Carbon calculations are not an easy thing to do, especially when considering full scope 3. It is not something that can be completed in a few weeks before that crucial tender. 2027 might look like a way off but it will come around quickly so begin collating your carbon data as soon as possible.

If you’re feeling overwhelmed about meeting these requirements, get in touch! C Free can helps with all of your carbon reporting requirements. Stay informed and prepared by subscribing to updates on the NHS's sustainability initiatives. Join relevant webinars, reach out to NHS support services for assistance, and ensure your company is on the right path to meeting these crucial environmental standards. Together, we can help achieve a healthier planet and a healthier future.