Chapter 6. Environment and sustainability

The environment and sustainability are important considerations to ensure that portfolios, programmes and projects work to protect the natural environment, help combat climate change and create social value by:

• meeting the legal requirements of the Environment Act 2021, the Biodiversity Duty and the Public Services (Social Value) Act 2012, which requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits
• ensuring that impacts on the environment and sustainability are fully considered in making investment decisions and managed through the life cycle
• supporting delivery of the UK’s commitment to achieving the net zero target by 2050 and to the United Nations Sustainable Development Goals set out in the 2030 agenda for sustainable development

The environment and sustainability are fundamental considerations in government policymaking and the delivery of policy objectives through portfolios, programmes and projects. Government work can play a critical role in protecting and enhancing the environment and preserving natural assets, building resilience to biodiversity loss and managing changing climate impacts, or it can have negative impacts on them. Environmental and social impacts are therefore important considerations in investment decisions and in the assessment and delivery of social value within the work of the UK government.

The need to consider the environment and sustainability is also a legal requirement.

The Climate Change Act 2008 sets legally binding greenhouse gas reduction targets and five-yearly carbon budgets to be set by the government. This was updated in 2019 to include the binding ‘net zero’ target, to reduce greenhouse gas emissions by 100% by 2050, compared to 1990 levels. The Act also requires the government to make provision for climate change adaptation, including a 5 yearly government Climate change risk assessment with response measures set out in the National adaptation programme

The Environment Act 2021 sets out a series of measures to ensure that such impacts are properly considered and to steer policy-makers towards opportunities to prevent environmental damage and enhance the environment. This includes specific statutory duties placed on ministers and public servants to consider environmental principles and biodiversity

These requirements are also underpinned by the UK’s various international commitments, including to United Nation’s  Paris Agreement, an internationally-binding treaty on climate change, and to the United Nations Sustainable Development Goals

Plans to meet these statutory targets and international commitments are set out in the 25-year environment plan and the Environmental improvement plan, with monitoring and evaluation supported by the Outcome indicator framework and Natural capital and ecosystem assessment (NCEA), and progress reported on annually, overseen by the Office of Environmental Protection. All government organisations are expected to have regard to these targets and commitments, and to consider them in developing and assessing policy proposals.

Considering the environment and sustainability from the outset supports effective project delivery by:

• supporting optimal design up front and reducing the need to change solution design retrospectively
• supporting realistic costing of work early on, avoiding the need to request extra funding during programme and project life cycles due to scope change
• enabling meaningful evaluation which takes full account of environmental and biodiversity impacts in assessing outcomes, benefits and social value

Environment is usually used to refer to the natural environment and defined under the Environment Act 2021 as including plants, wild animals and other living organisms, their habitats, land (except buildings or other structures), air and water, and the natural systems, cycles and processes through which they interact.

Sustainability is concerned with meeting the present needs without compromising the environment for future generations. It is central to the concept of sustainable development, defined by the United Nations as an approach to development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable development therefore seeks to find a balance between economic development, environmental protection, and social well-being.

Compliance with statutory requirements on environment and sustainability falls within the policy and business responsibilities of government ministers and their accounting officers, as set out in Managing Public Money (requires sign in), and should form part of the governance and management framework for the organisation.

The portfolio director responsible for a portfolio, or the senior responsible owner of a programme or project, is accountable for ensuring that environmental and sustainability considerations are properly considered as part of the planning, control and delivery of the work, in line with statutory requirements and government and organisational policies.

Day-to-day oversight of environmental and sustainability matters is the responsibility of the portfolio, programme or project manager, who might also delegate specific responsibilities to others, for example those involved in planning, business case development, solution design, risk and benefits management, depending on the nature, scale and complexity of the work. Specialist expertise is also often needed, for example to understand and assess particular sustainability and environmental impacts.

Environmental and sustainability requirements should be considered as part of the objectives and outcomes envisaged for the work and documented as part of its scope. This should cover the outcomes for all phases of the work, including development, use and decommissioning or disposal.

Consideration should include, not only how the work might impact on the environment and sustainability, but how climate change and other environmental changes might impact on the solution and how it is to be used. These considerations should then be factored into planning, investment appraisal and risk management throughout the life cycle, to help maximise positive impacts and minimise negative impacts where possible on the environment, and to build resilience and the ability to adapt into solutions where appropriate.

Consideration must include identifying and ensuring compliance with relevant statutory, regulatory and other government requirements throughout the life cycle, including in use and disposal (see 6.6.2 on identifying environmental and sustainability impacts).

If not already covered in organisation-wide policies and procedures, the management of environment and sustainability should be covered in, or referenced from, the respective portfolio, programme or project governance and management framework, aligned to the objectives and outcomes for the work.

Environmental and sustainability impacts must be identified and assessed as part of investment planning and appraisal, as set out in The Green Book (requires sign in). This includes meeting the various statutory duties established by the Environment Act 2021, which place obligations on ministers and public servants to have regard to the environment, biodiversity and sustainability in making policy.

The Environmental principles policy statement sets out that when making policy, and where relevant, ministers need to consider the:

• integration of environmental principles within policy
• prevention of environmental damage
• rectification at source
• ‘polluter pays’ principle
• precautionary principle

To comply with the principles, public servants are required to consider the impact of a policy changes on the environment, both positive and negative, and to estimate the impacts on emissions, climate change and the net zero commitment, when appraising the costs and benefits of any proposal.

There are also obligations on the biodiversity.

The biodiversity duty requires all public authorities in England to consider what they can do to conserve and enhance biodiversity in England, determine policies and specific objectives for taking action, and then take that action as soon as possible

The biodiversity net gain (BNG) requirement is an approach to development designed to ensure that habitats for wildlife are left in a measurably better state than they were before the development. In England, BNG is mandatory under the Town and Country Planning Act 1990 (as amended by the Environment Act 2021), and developers must deliver a BNG of at least 10%

Policy makers, planners and business case teams must be aware of these requirements when generating options, and in valuing costs and benefits as part of investment appraisal. Further guidance to support appraisal of environmental and biodiversity impacts is provided in the Green Book and its accompanying guidance on climate change and environmental valuation and valuation of energy use and greenhouse gas emissions for appraisal.

The Department for Environment, Food and Rural Affairs also has guidance on Enabling a Natural Capital Approach (ENCA), Assessing environmental impact, Complying with the biodiversity duty and Understanding biodiversity net gain.

Climate change impacts should also be considered, as these can significantly affect the benefits, costs and risks associated with many government policies and can mean that adaptation measures need to be considered as part of planning and investment appraisal.The impacts could be from the realisation of physical risks such as rising temperatures and sea level rise, and the loss of asset value during the transition to net zero, such as fossil fuel infrastructure.

The Green Book and its accompanying guidance, Green Book supplementary guidance: climate change and environmental valuation, provides further guidance.

Where positive and negative impacts on the environment and sustainability are identified, these need to be valued and included within the economic case for investment appraisal.

The Green Book (requires sign in) uses the concept of natural capital to provide an overall framework for appraisal of a wide range of environmental effects and externalities such as air pollution, noise, waste and greenhouse gas emissions. Natural capital includes the ‘stocks’ of elements of nature that have value to society, such as forests, fisheries, rivers, biodiversity, land and minerals, and can be valued in various ways (for example, in terms of use or non-use, market value or non-market value). The Green Book sets out how to determine whether an intervention might impact on natural capital, and how to value them, with guidance on valuation provided in Department for Environment, Food and Rural Affairs’ Enabling a Natural Capital Approach.

In particular, the statutory requirements established by the Climate Change Act 2008 and the Environment Act 2021 (see 6.6.2 on identifying environmental and sustainability impacts) mean that the following should be considered and, where relevant, included in valuation and appraisal.

Advances in technology provide opportunities to drive improved productivity and efficiency, not only in how solutions and assets are designed, built and operated but also to support adaptation to climate change, net zero and environmental gain.

This could be achieved by:

• developing solutions that reduce carbon emissions during manufacture and construction, for example through standardisation and offsite production
• optimising energy use and other impacts during use and disposal
• retrofitting existing buildings to reduce greenhouse gas emissions
• developing net zero pathways for communities

Environment and sustainability considerations should feed into procurement and contract management such as through early market engagement, specifying statutory and other requirements (see Chapter 25: Procurement and contract management).

The Sourcing playbook (requires sign in) sets out how to ensure that the government’s statutory and other commitments to the environment and sustainability are factored into procurement, including:

• meeting applicable requirements of the Environment Act 2021, including to deliver biodiversity net gain, and other potential requirements such as waste reduction and recycling, and air and water quality
• requiring solutions proposed by suppliers to be accompanied by a whole life carbon assessment, to agreed technical specifications, where proportionate and appropriate
• requiring a consistent approach to whole life carbon assessment across contracts on a single programme or project
• including measurable carbon reduction commitments, where relevant and proportionate, in frameworks, contracts and associated specifications
• requiring suppliers bidding for major government contracts to detail their commitment to achieving net zero through publication of a carbon reduction plan.

Further requirements are also set out in recent Procurement Policy Notes. PPN 002: Taking account of social value in the award of contracts sets out how to take account of social value in the award of central government contracts using the social value model (see Chapter 25: Procurement and contract management), which includes fighting climate change and effective stewardship of the environment. PPN 06/21: Taking account of carbon reduction plans in the procurement of major government contracts requires carbon reduction plans to be incorporated into procurement assessments, and PPN 01/24: Carbon Reduction Contract Schedule provides contract schedules to incorporate objective setting and monitoring of decarbonisation.

Further guidance on decarbonisation in procuring construction and infrastructure is also available in Promoting net zero carbon and sustainability in construction. This draws on extensive industry research in recent to provide ratings of carbon content in steel, concrete and diesel. Clients and procurement bodies set minimum ratings for the carbon content of these products over time. Use of this approach is recommended by the National Infrastructure and Service Transformation Authority as a means of promoting an outcomes-based approach on decarbonisation in contracts with suppliers.

Particular considerations arise on the environment and sustainability in managing government property. The Government Functional Standard for Property requires management of the whole property life cycle to be directed towards compliance with government policy for the environment, and plans to improve sustainability within defined timescales, designed to:

• achieve net zero carbon emissions for each building or property portfolio, contributing to published government targets
• undertake new developments in a way that uses resources in an efficient and responsible manner, leaving the natural environment in a measurably better state than it was before, including conserving and enhancing biodiversity

Specific requirements are set out in more detail in the Government Functional Standard for Property, and the Net zero estate playbook provides guidance on how government estate managers can plan to achieve targets set by government policy.

Portfolios, programmes and projects should monitor environment and sustainability impacts through the life cycle, and include them in reviewing performance and benefits realisation. Post-project evaluation should take full account of environmental and biodiversity impacts in assessing outcomes, benefits and social value, as set out in The Green Book (requires sign in).

Reporting on environmental and sustainability impacts should also be included within wider organisational reporting as appropriate. This includes reporting on impacts which contribute to the environmental targets set for government departments under the Greening Government Commitments framework.

Government Major Projects Portfolio and reporting environmental targets and sustainability

Programmes and projects in the Government Major Projects Portfolio for reporting on environmental targets and sustainability through the Government Reporting Integration Tool (GRIP) reporting process. These include:

• whole life carbon assessment and reporting against carbon budgets
• climate resilience, natural environment and social value reporting
• social value
• biodiversity net gain (infrastructure programmes and projects only)

Further guidance on reporting is available from the National Infrastructure and Service Transformation Authority.

• Cabinet Office, Procurement policy note 002: Taking account of social value in the award of contracts
• Cabinet Office, Procurement policy note 01/24 carbon reduction contract schedule
• Cabinet Office, Procurement policy note 06/21: Taking account of carbon reduction plans in the procurement of major government contracts
• Department for Environment, Food and Rural Affairs, Assessing environmental impact
• Department for Environment, Food and Rural Affairs, Biodiversity net gain
• Department for Environment, Food and Rural Affairs, Climate Change Risk Assessment and the National Adaptation Programme
• Department for Environment, Food and Rural Affairs, Complying with the biodiversity duty
• Department for Environment, Food and Rural Affairs, Enabling a natural capital approach
• Department for Environment, Food and Rural Affairs, Environmental improvement plan 2025
• Department for Environment, Food and Rural Affairs, Environmental Principles Policy Statement
• Department for Environment, Food and Rural Affairs, Greening Government commitment: 2021 to 2025
• Department for Environment, Food and Rural Affairs, Natural capital and ecosystem assessment (NCEA) programme
• Department for Environment, Food and Rural Affairs, Understanding biodiversity net gain
• Government Commercial Function, Promoting Net Zero Carbon and Sustainability in Construction Guidance Note
• Government Commercial Function, The Sourcing Playbook
• Government Commercial Function, Procurement Policy Note 06/20
• Government Property Function, Government Functional Standard GovS 004: Property
• Government Property Function, Net Zero Estate Playbook
• HM Treasury, Green Book: UK guidance on appraisal
• HM Treasury, Green Book supplementary guidance: climate change and environmental valuation
• HM Treasury, Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal
• HM Treasury, Managing public money
• HM Government, Government Functional Standard GovS 002: Project delivery
• Infrastructure and Projects Authority, Transforming infrastructure performance: roadmap
• National Infrastructure and Service Transformation Authority, Whole life carbon management handbook (requires sign in)
• UK Parliament, Climate Act 2008
• UK Parliament, Environment Act 2021
• UK Parliament, Public Services (Social Value) Act 2012
• UK Parliament, Town and Country Planning Act 1990
• United Nations, Paris Agreement (2015)
• United Nations, Transforming our world: the 2030 agenda for sustainable development (2015)
• United Nations, The Paris Agreement (2015)
• United Nations, A/RES/70/1, Transforming our world: the 2030 agenda for sustainable development (2015)