Summary
Cut through the green tape
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Details
Deep dive
Background
The Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets (short title: Greenhouse Gas Emissions Disclosure Standard) is a key component of the Canadian government’s commitment to reducing emissions and promoting sustainability in public procurement in line with its Greening Government Strategy. In 2021-2022, the Canadian government spent approximately $22.2 Billion on public procurement and there were 380,316 active procurement contracts between 2017 and 2022. Public procurement can therefore serve as a major tool for the advancement of policy objectives including the Canadian government's 2035 emissions reduction target. Prior to the introduction of the GHG Disclosure Standard, environmental considerations in public procurement were guided by policies such as the Policy on Green Procurement (2006) and the Federal Sustainable Development Strategy, which encouraged but did not mandate emissions reporting. The GHG Disclosure Standard, introduced as part of the Canadian government's broader climate action plans, requires suppliers to disclose their GHG emissions when bidding on federal contracts above a specified threshold. This initiative aligns with Canada’s goal of achieving net-zero emissions by 2050 and ensures that public procurement supports the transition to a low-carbon economy.
Requirements of the GHG Disclosure Standard
Effective from 1 January 2023, the GHG Disclosure Standard requires suppliers to measure and report their GHG emissions and adopt a science-based target to lower GHG emissions in line with the Paris Agreement as part of participating in the Net-Zero Challenge (a program which encourages Canadian businesses to adopt plans to achieve Net Zero by 2050) or in a similar initiative or standard. Suppliers are expected to calculate their emissions using internationally recognized methodologies and submit their data through channels specified by the government agency they are bidding to.
Which businesses are affected?
The GHG Disclosure Standard applies to suppliers bidding on federal contracts valued at $25 million or more, covering a wide range of industries, including construction, transportation, manufacturing, and professional services. This threshold ensures that large suppliers, who typically have a significant carbon footprint, monitor their emissions. Exemptions from the GHG Disclosure Standard include contractual arrangements (agreements between governments), procurements under the Foreign Military Sales program, or those made through emergency contracting authorities. The standard does not apply to procurements with a value of less than $25 million, though voluntary disclosure is encouraged to enhance their competitiveness in the procurement process.
Penalties for noncompliance
While the standard does not directly establish penalties, failure of a supplier to disclose emissions or provide an adequate emissions reduction plan would place their bid at a disadvantage or disqualify them from the bidding process altogether. Moreover, suppliers that provide false or misleading GHG emissions disclosures may face legal penalties under prevailing misrepresentation laws in Canada. Suppliers must therefore ensure that their GHG emissions data and other required information are accurate and verifiable. Businesses should carefully review the solicitation and contract documents to understand the specific GHG disclosure requirements for each procurement.
