Considering CO2 emissions when selecting suppliers in The Netherlands
Considering CO2 emissions when selecting suppliers in The Netherlands

Considering CO2 emissions when selecting suppliers in The Netherlands

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The Netherlands implements a system called the CO2 Performance Ladder in order to consider CO2 emissions when awarding public procurement contracts. The Performance Ladder is an instrument that organizations can use to reduce their carbon emissions, both within the business, and in specific projects. There are 5 levels on the Ladder depending on the scope of the organization’s effort to reduce CO2 emissions.

Organizations can obtain a certificate with their level on the Ladder, which they can use to receive an award advantage for their registration on tenders. In this way, contractors can benefit for a reduction of the submission price by proving and developing their efforts to reduce CO2 emissions. This mechanism is sometimes known as an optimal discounts system. As can be seen in the example on the following table, although supplier C had a higher entry price, the application of the discount associated with their level on the CO2 ladder (level 4) results in them being awarded the contract. By taking this approach to accounting for carbon emissions in procurement processes, sustainable suppliers can be selected even if the contract is awarded solely based on price.

COMPANY
ENTRY PRICE
LEVEL ON THE LADDER
DISCOUNT / AWARD ADVANTAGE
PRICE AFTER APPLYING ADVANTAGE
AWARD THE CONTRACT
A
€ 9.7 million
none
0%
€ 9.7 million
NO
B
€ 10 million
3
4%
€ 9.6 million
NO
C
€ 10.3 million
4
7%
€ 9.58 million
YES: € 10.3 million