Recruitment agencies, even small ones, need to start reporting on and reducing their carbon emissions to meet supply chain requirements and safeguard future contracts, warns a former recruiter who has become a certified consultant in the carbon industry.

The spotlight has previously been on the big polluters with regards to carbon reporting. Oil & gas, manufacturing, construction, large multinationals… Since 1 April 2019, UK organisations of a certain size and turnover (annual turnover of £36m plus, a £18m balance sheet total and/or 250 employees) have had to report on their energy use and carbon emissions. Smaller, less profitable companies with low emission levels have been exempt, allowing many recruitment agencies off the hook.

But that is starting to change as big companies and government agencies are now looking to reduce their carbon footprint by getting suppliers to reduce theirs. In June 2021, the

UK government released PPN 06/21, its Procurement Policy Notice (PPN), stating that all suppliers bidding for public sector contracts would have to demonstrate their commitment to achieving net-zero carbon emissions by 2050, in line with the government’s own targets.

This means that when bidding for or renewing contracts, all big recruitment groups and managed service provider businesses will be taking a close look at their supply chain to see how green it is; small operators that are non-compliant could lose out. Currently, there’s a £5m cap in England, with contracts beneath that cap being exempt. That is predicted to change in April 2024, when the cap will either be reduced or eliminated altogether, bringing it in line with the devolved countries.

Mark Bull (pictured), formerly CEO at Randstad UK and now a franchise partner at the carbon consultancy Auditel, thinks the big recruitment agencies know this is coming and will be ready, but that smaller agencies are largely unprepared, with most not even having a baseline report as yet.

“Because recruitment is a professional services business and falls into the low emitters category, recruitment hasn’t seen itself as an industry that needs to get involved with this,” he says. “There’s a lack of awareness that they will need to do this but it’s coming down the supply chain.”

As the focus switches to supply chains, Bull says there is a strong commercial risk for recruitment agencies that don’t take this seriously and don’t start addressing their emissions in time. “Take an organisation like the NHS, which many recruitment agencies work with. It is estimated that it accounts for 4-5% of the UK’s greenhouse gas emissions and 62% of NHS England emissions come from their supply chain. Its biggest gain in reducing its carbon footprint is to push it down the supply chain.”

As a result, the NHS is on a mission to address supply chain emissions to achieve first neutrality, then net zero.

Bull says organisations that aren’t reporting on their carbon emissions are already losing out on contracts. He knows of a mid-sized building contractor tendering for a government agency house building project that was struck off in the initial stages because it didn’t have any carbon reporting in place.

It won’t be long, he says, until this starts happening more regularly, which is why recruitment agencies must act now. Producing a carbon footprint doesn’t generally take long but implementing the subsequent action points might be a more long-term process. “For example, if you have 50 cars on the fleet for your recruiters, your biggest reduction might be to switch to EVs, but that isn’t something that can happen overnight,” says Bull. “Or you might want to increase your use of renewable energy for electricity, again something that doesn’t happen overnight.”

Data centre emissions are another area to consider as they chew up huge amounts of energy.

The main thing, says Bull, is to get started – having the report and a plan is usually sufficient to reassure those further up the supply chain that emissions are being addressed.

As well as the commercial aspect, Bull suggests, recruiters need to think about carbon accounting from the perspective of the future workforce. Recruitment is largely populated by a younger demographic, people for whom environmental considerations are very important. Younger generations increasingly expect their employer to demonstrate strong ethical, environmental values, so carbon accounting could be a make or break factor for them.