Greenhouse Gas (GHG) Emission Target-Setting

When you're evaluating bids on federal contracts worth over $25 million, you'll now need to consider whether suppliers have set meaningful targets to reduce their greenhouse gas emissions. This isn't just environmental window dressing—it's a formal requirement under the Treasury Board's Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets, which came into effect April 1, 2023.

How It Works

Suppliers bidding on high-value federal contracts must now demonstrate they're actively working toward net-zero emissions by 2050 or earlier. They do this by participating in programs like Environment and Climate Change Canada's Net-Zero Challenge, or equivalent initiatives such as the Science Based Targets initiative (SBTi), UN Race to Zero, CDP, or Climate Action 100+. The standard applies directly to procurement activities over $25 million, though departments are encouraged to use it for smaller contracts too.

What does participation actually mean? Suppliers need to establish at least two interim emissions reduction targets leading up to their 2050 net-zero commitment. They must disclose their Scope 1 and 2 emissions—that's direct emissions from operations and purchased energy. Scope 3 requirements (supply chain and product-related emissions) vary depending on the supplier's size and sector. The expectation includes creating a baseline inventory and conducting scenario analysis to show how they'll reach their targets. Here's the catch: by July 1, 2026, Net-Zero Challenge participants working on most goods and services procurements will need to achieve Bronze level status, which demonstrates they're making measurable progress.

In practice, this means procurement teams need to request this information during the bid evaluation phase. The Green Procurement policy framework now incorporates these disclosure and target-setting requirements as part of evaluating a supplier's overall environmental performance. Public Services and Procurement Canada and other departments are building these criteria into their procurement processes, so you'll see them reflected in RFPs and technical evaluation scoring.

Key Considerations

• The $25 million threshold matters. While the standard is mandatory above this amount, it's encouraged for smaller contracts. Consider your contract's total potential value, including options and amendments, when determining applicability.

• Equivalency is acceptable. Suppliers don't have to join the Net-Zero Challenge specifically—SBTi, UN Race to Zero, and other recognized programs count. Focus on whether their targets align with net-zero by 2050 and include interim milestones, not the specific program name.

• Implementation is phased. The Bronze level requirement for Net-Zero Challenge participants doesn't kick in until July 2026, giving suppliers time to mature their emissions reduction programs. Early procurements under the standard may see more variation in supplier readiness.

• This connects to broader green procurement requirements. Target-setting is just one element. You're also evaluating suppliers on other environmental criteria, so coordinate your assessment approach across all sustainability dimensions.

Related Terms

Green Procurement, Net-Zero Challenge, Scope 1/2/3 Emissions, Environmental Performance Criteria, Sustainable Procurement

Sources

• Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets (Treasury Board Secretariat)

• Implementing the Standard on the Disclosure of Greenhouse Gas Emissions (Public Services and Procurement Canada)

• Green Procurement (CanadaBuys)

Bottom line: if you're working on procurements approaching or exceeding the $25 million mark, build supplier GHG target-setting into your evaluation framework early. This requirement isn't going away.