What is a Carbon Reduction Plan (CRP)?

It's one thing knowing how much greenhouse gas your business emits. It's another having a clear plan to reduce those emissions.

Carbon Reduction Plans (CRPs) are becoming increasingly important for businesses seeking government contracts, strengthening supply chain relationships and demonstrating their commitment to sustainability.

While some organisations are legally required to produce a CRP, many others are choosing to develop one voluntarily to prepare for future opportunities and identify ways to reduce emissions and energy costs. We explain the essentials below.

In this article:

• Learn what a Carbon Reduction Plan (CRP) is.
• Understand how a CRP works and which businesses are required to develop one.
• Discover the importance of a CRP as well as benefits for your business.

What is a Carbon Reduction Plan (CRP)?

A Carbon Reduction Plan (CRP) is an annually updated strategic document outlining how a business will reduce greenhouse gas emissions to reach Net Zero targets over time.

This document is a public document, typically available on a company’s website.

A CRP demonstrates a business's commitment to reducing carbon emissions by setting out measurable targets and practical actions over time.

While Streamlined Energy and Carbon Reporting (SECR) reports on past energy usage and emissions, CRP is a forward-looking plan designed to reduce emissions.

Who is required to complete a CRP?

The requirement predominantly affects businesses bidding for certain UK central government contracts worth more than £5 million per year.

If your business intends to bid for these contracts, you will need a CRP.

However, businesses not legally compelled to produce a CRP can still do so if they wish to demonstrate their sustainability credentials or prepare for future growth, strengthen existing tenders and become eligible to bid for larger contracts.

Larger organisations may require businesses in their supply chain to also produce a CRP to comply with their own sustainability requirements.

What should a CRP include?

A Carbon Reduction Plan typically requires the following elements:

1. Current emissions baseline.
2. Disclosure of Scope 1, Scope 2 and relevant Scope 3 emissions (see definitions below).
3. Target date to achieve Net Zero.
4. Practical actions that will reduce emissions over time.
5. Annual review to monitor progress.

Scope 1, 2 and 3 emissions:

• Scope 1: direct emissions from owned assets (e.g. equipment, transport)
• Scope 2: indirect emissions (e.g. purchased electricity, heating)
• Scope 3: value chain emissions (e.g. business travel, employee commuting, waste, plus supply chain and customer transportation and distribution)

Why is a CRP important?

As well as being a requirement for specific government contracts, having a CRP is increasingly important for winning other corporate contracts.

It can also satisfy investors by demonstrating a commitment to addressing environmental concerns.

Many lenders also require a CRP for sustainability-linked loans.

An added benefit of a CRP means businesses can identify opportunities to reduce energy consumption, improve efficiency and lower operating costs.

How we can help

Business energy is confusing. You know you need to stay on top of such a major cost, but that can be difficult while focusing on running your business and serving your customers.

We get it. We can support you.

Troo exists to help businesses like yours make sense of their energy needs, simplify complex information and make smart decisions that lead to real change and reduced costs.

We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.

Book a free energy health check today for practical guidance on your business electricity, gas or water bills.