New study: CO₂ Performance Ladder linked to measurable reductions in local CO₂ emissions from construction tenders

A new study by the Utrecht University Centre for Public Procurement (UUCePP) shows a clear association between the use of the CO₂ Performance Ladder in public construction tenders and lower CO₂ emissions at the municipal level. The research — carried out as part of an EU project funded by the IKEA Foundation — combined public procurement data and the SKAO database of certified organisations with ODIAC satellite data on CO₂ emissions.

Clear link between the Ladder and lower emissions

The analysis shows that tenders applying the CO₂ Performance Ladder correlate with lower CO₂ emissions at the locations where projects are delivered. In this study, results are linked to the location of the project site rather than that of the contracting authority. Contracts issued by national, provincial or other public bodies are included whenever the work takes place within a municipality’s boundaries. This means the findings reflect all tenders implemented locally, not only those procured by municipalities.

The strongest effect is observed in contracts awarded to Level 5-certified companies (version 3.1), with reductions of up to –1.6 tonnes of CO₂ per km² within two years.Due to the research methodology, these results represent associations rather than proven causal effects.

These effects are strongest in densely populated, high-emission municipalities and in the construction sector, where project activities directly affect local emissions. The reductions increase during the execution phase of projects, which aligns with typical construction timelines and the requirements associated with Level 5 certification.

The researchers note that this measured effect should be viewed as a minimum estimate; the actual impact is likely higher, as emissions that fall outside municipal boundaries are not captured by the satellite data.

Scalable climate impact when applied more widely

The study also provides a national-level projection, illustrating the potential impact at scale. A 10-percentage-point increase in the contract value awarded to Level 5-certified companies in the construction sector could deliver:

• 310,000 tonnes of CO₂ reduction in year one,
• 370,000 tonnes in year two,
• 340,000 tonnes in year three.

Taken together, the first three years could show a cumulative association of around 1.02 million tonnes of lower mean CO₂ emissions. This total is equivalent to removing around 476,000 passenger cars from the road for a full year or shutting down a small coal-fired power plant unit for 10-12 months.

This represents 0.25–0.30% of Dutch annual emissions (2022). Using the average EU ETS auction price to arrive at a monetary estimate, this equates to a market value of €23–27 million per year.

Ladder outperforms general CO₂-related goals

A striking conclusion is that general CO₂-related references in tenders – such as references to CO₂ or emission reductions – do not produce measurable reductions, in contrast to the demonstrable decreases associated with the structured and verifiable approach of the CO₂ Performance Ladder. This supports earlier findings that the Ladder — particularly at Level 5 — encourages concrete, emission-reducing measures by contractors. The fact that level 5 addresses scope 3 emissions is identified as an important reason why increased reductions are associated with this level.

Reaffirmation of the effectiveness of the Ladder as a management system

The research further shows that the more contracts awarded to level 5 certified firms, the greater the CO₂ reductions in the two years following contract award. This suggests that certified firms are more likely to implement emission-reducing measures and to keep working on lowering emissions throughout project execution. These findings reaffirm earlier research on the effectiveness of the Ladder as a management system, showing additional reductions linked to its use and indicating that certified organisations reduce emissions at twice the rate of non-certified firms. The study concludes that firm-level certification is the more consistent driver of near-term local climate impact, implying that procurement should focus on encouraging structural carbon reduction through long-term certification on the CO₂ Performance Ladder as an energy and carbon management system.

As lead researcher Jihwan Ryu explains:

The researchers also highlight the need for further research to build on the systemic correlations observed.

Recommendations for contracting authorities

The researchers recommend that contracting authorities:

1. Place greater emphasis on encouraging contractors to achieve Level 5 certification (Step 2/3 in version 4.0), as organisations certified at the highest level deliver the most substantial and consistent emission reductions, including scope 3 emissions.
2. Account for a delay in impact in their monitoring of Ladder projects, as most reductions become visible one to two years after contract award.
3. Target the use of the Ladder on the most material and high-impact procurement categories in terms of CO₂ reduction — such as construction — where direct local emissions can be most effectively addressed.
4. Use the Ladder strategically to stimulate their suppliers to get certified at organisation level: certified organisations, particularly at level 5 are more likely to implement CO₂-reduction measures in tendered contracts.

Conclusion

The study shows that sustainable public procurement through the CO₂ Performance Ladder can deliver meaningful climate impact – within the limits of the associations identified in the data – when applied in the right context and with certified, high-performing contractors. The findings confirm that the Ladder is not only an effective management system, but also a powerful procurement tool that leads to measurable reductions in CO₂ emissions.

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