Prorail's CO2 Performance LadderBack to Search
The CO2 Performance Ladder is a procurement tool whereby participating suppliers obtain external verification of their carbon management approach, scored on a 1-5 scale against a number of set criteria. A score of 5 is awarded an advantage equivalent to a 10% discount on the price of their bid in the tender evaluation process. Lesser scores receive smaller virtual discounts.
|Activity types||Purchasing Approaches|
|Organisation leading the initiative||Prorail|
|Region from which the initiative is led||
Participating suppliers are almost exclusively based within the Netherlands, although any company seeking to supply to Prorail, Rijkwaterstaat or buyer municipalities are able to join the programme. SKAO is currently in discussions with NGOs and other institutions in other European countries, with the intention to expand the scheme's coverage.
|Supply chain sectors targeted||
Cement, Iron and steel, Non-ferrous metals, Non-metallic minerals, non-specified
Predominantly cement and construction materials, (e.g. supply of railway sleepers, rails, overhead power cables). Suppliers are companies who wish to tender for infrastructure projects such as road construction, and construction and maintenance of dams and waterworks. As examples, participating suppliers include BAM and ABB. SKAO notes that the majority of participants are currently large enterprises within the Netherlands, who have the capacity to address the requirements of the CO2-Performance Ladder. Over 170 suppliers have partaken in the initiative so far.
|Program or partnership linkages||
CO2 Performance Ladder
The CO2 Performance Ladder is fully compatible with European regulations and the Public Procurement (Tendering Rules) Directive [*2]. The CO2-Performance Ladder is now a fully embedded tool in Prorail's and Rijkwaterstaat's (Dutch highways agency) procurement processes.
|Policy linkages||Dutch Long-Term Agreement (LTA) programme, EU Emissions Trading System|
To encourage efficiency and innovation of both suppliers and buyers with respect to their energy and carbon profile, while also minimising the adminstrative and bureaucratic burden placed on these companies. Such measures can also contribute towards meeting investor expectations.
Many suppliers are motivated to join the scheme largely due to the opportunity for their tender to receive advantageous treatment within the procurement processes of large buyers implementing the scheme (ie Prorail, Rijkwaterstaat). However, approximately 20% of existing certified companies joined the scheme of their own initiative, in order to anticipate sustainability requirements from other buyers. In this way, suppliers are able to address the current or anticipated reporting requirements of multiple buyers, reducing their administrative workload.
Inititiated by ProRail in 2005. Administered by SKAO since 2011.
|Description of the scheme||
The CO2-Performance Ladder uses a methodology that is based on the Capability Maturity Model (CMM) developed by the US Department of Defense and Carnegie Mellon University [*3]. The CMM assesses the level of maturity of a company’s approach to carbon management. A company can reach the next level through incremental improvements in its existing processes, and through innovations in technologies and methods.
In the CO2-Performance Ladder, the CMM has been categorised into five levels, numbered from 1 (minimum performance) to 5 (highest performance). A fixed set of requirements has been defined for each level, with which the carbon management performance of a company and its projects must comply. These requirements are founded on four aspects, each with its own weighting:
The position of a participating supplier on the CO2-Performance Ladder is determined by the highest level to which it meets the requirements. If a participant believes it has reached a certain level, then the evidence is compiled and then submitted to a certifying organisation (e.g. Bureau Veritas or DNV, who are accredited by SKAO, an independent member-funded organisation), who verifies the level on the CO2-Performance Ladder that the supplier has attained. The evidence required includes documents such as: policy documentation, technical reports, management reports, minutes, annual report and communications procedures.
The level of achievement within each level can be described as follows [*4]:
Level 1: The company has identified its energy flows in qualitative terms and has a list of potential options for saving energy and using renewable energy. Internally, the company communicates its policy in relation to energy-saving and renewable energy externally on an ad-hoc basis and is aware of sector and chain-based CO2 reduction initiatives.
Level 2: The company has quantified its energy flows and formulated a qualitative objective for saving energy and using renewable energy. Internally, the company communicates its energy policy on a regular basis and takes a passive role (e.g. membership) in at least one sector and chain-based CO2 reduction initiative. Companies that have achieved level 2 include BTL Nederland and Unit Maintenance and Logistic.
Level 3: The company has an official CO2 emissions inventory that has been drawn up in accordance with the ISO 14064-1(GHG) standard [*5] and which has been verified by an independent organisation. The company has quantitative objectives for its own (scope 1 and 2) CO2 emissions [*6]. It communicates – internally and externally – in relation to its CO2 footprint on a structural basis and actively participates in at least one sector and chain-based CO2 reduction initiative. e.g. the Carbon Disclosure Project Supply Chain Programme [*7]. Companies that have achieved level 3 include ABB Benelux, Boskalis B.V. and International Paint B.V.
Level 4: The company has identified life cycle emissions in outline terms (combined scope 1, 2 and 3 footprint for all products), and chain analyses have been carried out for two relevant chains. The company has quantitative objectives for its chain emissions. The company is in dialogue with relevant parties (government bodies and social organisations) and can demonstrate its role as the instigator of sector and chain initiatives in the field of CO2 reductions. Companies that have achieved level 4 include Global Display Solutions S.p.A, Vialis B.V., Alstom and Prorail itself.
Level 5: The company has a CO2 emissions inventory of its most important suppliers (scope 1 and 2). The company can demonstrate that the objectives for levels 3 and 4 have been attained. The company is publicly committed to a government or NGO CO2 reduction programme (beyond the EU ETS), and is able to demonstrate that it is making a relevant contribution to an innovative CO2 reduction project. Companies that have achieved level 5 include RailCom B.V., Coldmix B.V., and BAM Infratechniek B.V.
During procurement processes, buyer companies (e.g. ProRail in this case) award a virtual financial advantage in the tender evaluation process to certified companies. The higher the level of certification, the greater the advantage. The discount on the tender price awarded by Prorail varies as follows:
Administered by SKAO, the scheme is used by Prorail and Rijkwaterstaat (Dutch Highways agency) and 10 municipalities in the Netherlands as part of their purchasing approach. Other buyers are also considering using the scheme. SKAO estimates that 150 companies are currently certified, and over €3-4 billion worth of assignments have been conducted throughout the scheme since it began in 2005. The majority (101 out of 177) of suppliers have attained Level 3 of the ladder, with many others having achieved Level 4 (18) or 5 (52).
|Requirements on or activities undertaken by the target group||
In order to comply with the scheme (which is undertaken on a voluntary basis), companies are required to obtain certification, in order to receive beneficial treatment in tender evaluation processes. As part of this, companies must submit to a certifier a portfolio of evidence to prove compliance with the criteria of the level for which they are requesting certification (see in Description above); companies on a voluntary basis may also share this portfolio with the administrator (SKAO) of the CO2-Performance Ladder scheme. The scheme requires companies to set targets for innovation for levels 3 and above, within the field of their operations. They are required to set targets in consultation with independent experts.
Participating suppliers must submit a portfolio of evidence to show that they comply with the criteria of the level for which they are applying. This portfolio is independently verified by a CO2-Performance Ladder-certifying organisation (selected by SKAO), such as DNV or Bureau Veritas. Certificates are valued for 3 years, although companies are monitored by the Ladder certifying organisation every year to determine whether they are still making progress against their targets. After the 3 year period, an external audit must be carried out again and new targets must be set. However, suppliers do not have to wait 3 years if they feel they have progressed to a higher Level before that time: suppliers are able to apply at any time for a higher-level assessment in order to climb further up the ladder. The cost of verification will depend on the size of the company. Verification costs could be as low as €10,000 for small companies, or as high as €300,000 for large companies.
|Tools and resources (includes use of external platforms for capturing suppliers' data)||
SKAO offers a helpdesk service, in which it can help direct participating companies towards consultants who can support companies in achieving certification, and can provide clarity into the requirements of the scheme. A list of all companies certified under the scheme can be found on the CO2-Performance Ladder website (in Dutch), which states the level of certification achieved, and provides a platform for companies to list the activities they are undertaking for each aspect of the CO2-Performance Ladder’s requirements.
Impacts, Costs & Benefits
For participating companies, registration fees vary according to turnover. Fees vary from €100 per year for companies with only one employee to €8,000 for companies with a turnover of over €200 million. This funding goes towards the cost of maintaining the SKAO Performance Ladder website, the Helpdesk, the administrative costs of SKAO and business development initiatives. Prorail anticipated that the CO2 Performance Ladder would incur a 0.33% increase in procurement costs to Prorail from choosing suppliers with a high Performance Ladder ranking and possibly higher bid price, however in the end the increase in cost was only 0.1%.
The scheme is relatively recent (inititiated by ProRail in 2005 and taken over by SKAO in 2011) and therefore quantified GHG savings that have occurred via the CO2 Performance Ladder are not yet clear. An independent analysis of the results is ongoing. However, SKAO states that participants on average enact a 2-3% improvement in efficiency year on year. Companies can express this improvement via any metric of their choosing. However, they are required to set targets in consultation with independent experts in order to ensure that they are robust, and ‘SMART’ (Specific, Measurable, Attainable, Relevant, Timely). Some suppliers have enacted an absolute CO2 emissions reduction target, while others have set targets to reduce energy intensity. For companies that are subject to the EU Emissions Trading Scheme, independent experts will expect the company to set targets that go beyond CO2 savings required by that scheme, although there is no formal requirement within the Performance Ladder specifying that savings must be additional to those realised due to EU ETS participation.
Footnotes & References
Created by Prorail in 2005 (operator of the Dutch railway system), the scheme is now administered (since March 2011) by the Independent Foundation for Climate Friendly Procurement and Business (Stichting Klimaatvriendelijk Aanbesteden en Ondernemen, SKAO).[*2]
European Tendering Rules Directive: http://eur-lex.europa.eu/LexUriServ/site/en/oj/2004/l_134/l_13420040430en01140240.pdf[*6]
Scope 1 - Direct GHG emissions are emissions from sources that are owned or controlled by the company. For example, emissions from combustion in owned or controlled boilers, furnaces and vehicles.
Scope 2 - Accounts for GHG emissions from the generation of purchased electricity by the company.[*7]
Carbon Disclosure Project Supply Chain Programme https://www.cdproject.net/en-US/Programmes/Pages/CDP-Supply-Chain.aspx