Economic Considerations for Trade Agreements

The reality for FM suppliers under the new Procurement Act? Sustainability just moved from “nice to have” to “how you win.” Buyers can now award to the Most Advantageous Tender, which means outcomes matter. If you can cut energy, reduce waste, decarbonise fleet routes, and prove it with clean data, you’re in a stronger position than a cheaper bid that cannot evidence impact. What I’m telling FM teams right now… 1)Your Carbon Reduction Plan really counts Central government buyers expect a current CRP for larger contracts, with scopes 1 to 3 and real actions. Make it contract specific. Show how you will reduce emissions on that estate, not just at head office. 2) Expect carbon KPIs in the contract Bids that win will come with measurable outcomes and a plan to track them. Think in intensity terms: • kgCO₂e per cleaning hour • kgCO₂e per square metre maintained • Refrigerant leak rate and phase down plan • EV adoption by route and site • Waste diversion and material circularity If you can’t measure it, you can’t manage it, and you definitely can’ win with it. 3) Data will be visible Performance against key KPIs on larger contracts is published. Claims that are not backed by data will be found out. Build an audit trail now. Align your site logs, CAFM, fleet telematics, waste tickets, energy data, and training records. 4) Social Value must link to the contract Local jobs, skills, and community outcomes are part of the score where they relate to the work. Tie your carbon plan to these outcomes. For example, apprentice-led energy optimisation on the client’s buildings, or local driver training to maximise EV range and cut kWh per job. 5) Supply chains matter! Thirty day payment terms should flow through your subs and so should your data expectations. If your suppliers can’t give you basic emissions info for materials, logistics, or specialist works, fix that during mobilisation or you will miss your KPIs later. FM playbook for the next month: Baseline the contract you want to win. Build a simple model of current energy, fleet and waste, then set intensity metrics. Create a bid ready “carbon pack” for that contract. Site level decarb plan, EV rollout by route, refrigerant management, circular materials, metering and M&V. Client specific reporting. Reports that turn actions into numbers the buyer can read at a glance and find value from. If you want a quick starting point, I have an FM Procurement Act checklist that maps carbon actions to bid questions and contract KPIs. Register for our neutral carbon zone newsletter, it’s in next months release. Adam Hoult, MBA and the team have been hard at work, we’ve got some very exciting developments coming soon… key an eye out! #ProcurementAct #FacilitiesManagement #NetZero

Environmental obligations are no longer just corporate goals — they’re now contract clauses. In Europe, Australia, and Asia, we’re seeing contracts that require carbon footprint reporting, low-emission materials, and adaptive compliance to climate regulations (Eg: new biodiversity net gain requirements in UK or German rules for lifecycle carbon accounting on public works) The tricky part? When climate laws change mid-project, parties disagree on who pays for compliance upgrades. Is it an owner’s risk because it’s their asset? Or a contractor’s risk because they execute the work? In cross-border projects, the answer can differ in every jurisdiction. If climate standards tighten mid-project, who should bear the cost — the owner, the contractor, or both? #constructivecounsel

What EU’s carbon tax actually means for India (beyond the headlines) From 1 Jan 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) shifts from paperwork to money. For Indian steel and aluminium exporters, it’s a direct hit to pricing, contracts, and market access. Here’s how it works in real terms An EU buyer importing steel from India must now buy CBAM certificates based on the carbon emissions embedded in that product. The higher the emissions, the higher the cost. That cost doesn’t disappear. In practice, it means: • EU buyers demand 15–22% lower prices to offset the carbon charge • Carbon cost becomes a line item in negotiations, not an afterthought • Contracts start including carbon-linked clauses • Suppliers with higher emissions risk being dropped altogether What this means for India • Export competitiveness takes a hit, especially for carbon-intensive plants • MSMEs face higher compliance and verification costs, raising exit risk from EU markets • Steel made via BF–BOF routes and aluminium using coal-based power will be the most impacted • Exports to the EU could continue to slow as buyers shift to lower-carbon suppliers But there’s a flip side. Indian producers with cleaner energy, scrap-based steel, or efficient plants could turn CBAM into an advantage and win business by being cheaper after carbon or simply switch to Pi Green's Net Zero Machine. Here’s what your EU sale looks like now! You produce steel in Raipur and get an inquiry from a buyer in Germany. They ask for your usual price and your carbon data. You must calculate the actual emissions per tonne of steel from your Raipur plant (fuel used, electricity consumed, production volumes). This data needs to be verified by an approved third party. You send this emissions data to your EU buyer. The buyer then calculates how many CBAM certificates they must purchase to cover your steel’s carbon footprint. Higher emissions = higher cost for them. That’s where the 15–22% price cut comes in. What changes for you as a manufacturer: • Carbon data becomes as important as price and quality • Contracts start including carbon-linked price clauses • High-emission plants face shrinking EU demand • Cleaner plants gain negotiating power In short, CBAM turns carbon into a cost of production, even though the tax is paid in Europe. #CBAM #EUTrade #IndianExports #SteelIndustry #Aluminium #CarbonPricing #GlobalTrade #Manufacturing #ClimatePolicy #TradePolicy #ShreeyaShuklaESG #TheEthicalCapitalist

For retailers, distributors, and contract organizations net-zero is a shared journey not a solo roadmap. Retailers and distributors connect buyers and sellers. Contract organizations manufacture or deliver services to customer specifications. In both models, control over the biggest emissions drivers is limited. Product design, material selection, and upstream suppliers are commonly dictated by customers. Yet those same customers are increasingly asking for science-based targets and credible net-zero pathways. That creates a fundamental tension: ▪️ accountability sits with one party, while many of the key levers sit with another. A real-world example from Thermo Fisher Scientific: 🔹 Fisher Scientific (distributor) depends on customers choosing lower-carbon products and suppliers. Without that demand signal, suppliers have limited incentive to decarbonize and emissions remain largely unchanged. 🔹PPD (contract services) and Patheon (contract manufacturing) rely on customers to embed low-carbon decisions into clinical trial design, drug formulation, and supplier selection. Without those requirements, they can advise but not shift outcomes. The implication is nuanced but important - net-zero progress is highly dependent on customer behavior. So when asked, “What’s your Scope 3 plan?” or “Are you confident in net-zero by 2050?” ▪️ the most honest answer is: it depends—on shared action. If the majority of customers don’t prioritize lower-carbon materials, suppliers, and designs, net-zero becomes infeasible on any meaningful timeline. Retailers, distributors, and contract organizations still have a critical role to play: 🔸 Making carbon data transparent, comparable, and decision-useful 🔸 Curating and promoting lower-carbon products and suppliers 🔸 Actively engaging customers to shape demand, not just respond to it Because in these business models, decarbonization isn’t just an operational challenge. It’s a shared, demand-side transformation.

You’re already disqualified by EU buyers and don’t know it. Picture this. A procurement manager in the Netherlands is reviewing three Indian steel suppliers. Same product quality. Similar pricing. Comparable lead times. Two of them sent independently verified carbon emissions data without being asked. Clean numbers, EU-compliant format, third-party assured. The third hasn't responded to the carbon data request yet. Who do you think gets shortlisted? This is the buyer behaviour shift that most Indian exporters haven't fully registered yet. CBAM hasn't just created a compliance requirement. It has changed what a "good supplier" looks like in the eyes of a European buyer. European companies are themselves under ESG scrutiny. Their investors, regulators, and customers are watching their supply chain emissions. A supplier who can hand over verified carbon data cleanly, without friction, is a supplier who makes the buyer's job easier. That has commercial value now. Indian steel exports to the EU already fell 24% in FY2025 as CBAM reporting began and most firms struggled with compliance. That number isn't only about carbon costs. It's also about friction. Buyers moved to suppliers who made compliance easier for them. The companies that treat carbon data as a strategic asset, not a compliance checkbox, are the ones building stronger EU relationships right now. This is what I mean when I say decarbonization is no longer just an environmental decision. It's a commercial one. If your EU buyer hasn't asked you for carbon data yet, they will. The question is whether you'll be ready when they do, or whether you'll be the third supplier in that room.

We need buyers and suppliers to collaborate. But what does that look like in practice? I love this example of how Dell and Vodafone cut Scope 3 emissions by simply talking about laptop chargers: So some years ago, Vodafone was buying huge volumes of laptops from Dell on a regular basis. Then one day, as part of their Scope 3 disclosure, Vodafone asks Dell to share their carbon data. Then the Vodafone sustainability person comes to the Dell sustainability person, asking if they have any ideas about how to reduce their Category 3.1 (Purchased Goods and Services) emissions. And the Dell person came back a little while later, saying, “Yes actually there is something we could do. Every time you buy laptops from us, we send an ad-hoc shipment of individually boxed laptops with the full packaging and new chargers…” “How about if we deliver in bulk, in a more structured way that would be more efficient, and we don’t include new chargers with every laptop?” (Sure enough, their offices were chock full of unused chargers all over the place. Totally unnecessary as they are compatible and can be reused.) So the guys at Vodafone said, “Perfect, let’s do that.” And it became a successful collaborative emissions reduction initiative. Now, the thing is that in the normal account management relationship, the sales people a were not necessarily incentivised to make suggestions like that. That collaboration only came about because of a brief window of opportunity when the sustainability people at the two companies were talking about their Scope 3 disclosure. That’s one of the reasons why disclosure and supplier engagement are so powerful. In the end it is barely even a sustainability example - it is just basic common sense. We need more initiatives like this. But even more, we need to embed systems where coming up with collaborative initiatives like this is incentivised as a normal part of the buyer-supplier relationship.

As I talk to sustainability leads across Europe, one thing is clear: the era of the "transactional offset" is over. We are seeing a 𝐦𝐚𝐬𝐬𝐢𝐯𝐞 𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐚𝐥 𝐬𝐡𝐢𝐟𝐭 𝐭𝐨𝐰𝐚𝐫𝐝 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜, 𝐥𝐨𝐧𝐠-𝐭𝐞𝐫𝐦 𝐜𝐚𝐫𝐛𝐨𝐧 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨𝐬 𝐰𝐢𝐭𝐡 𝐫𝐞𝐦𝐨𝐯𝐚𝐥𝐬 playing a key role. While carbon avoidance remains a critical tool for immediate climate impact, the market is rapidly bracing for the "removal mandate." Why you might want to evolve procurement strategy: ✅The CDR Transition (SBTi & Oxford Principles) Best practice now dictates a gradual shift from avoidance to permanent removals. SBTi’s 2035 mandate requires residual emissions to be addressed exclusively through carbon dioxide removals. The race for high-permanence credits like direct air capture and biochar has officially begun. ✅ The CRCF “future-proofing” requirement The EU Carbon Removal Certification Framework will be the first EU-wide, voluntary carbon removal certification system for the quantification and verification of certain types of removals. If your developers don't align with these criteria now, your credits may be ineligible for future EU compliance. ✅ Supply and demand As companies look to neutralise residual emissions, global removal market capacity must grow up 180x by 2050 to meet this demand. Prices are predicted to rise as more companies want to neutralise residual emissions. 𝐒𝐨 𝐰𝐡𝐚𝐭 𝐝𝐨 𝐲𝐨𝐮 𝐝𝐨? Smart buyers are getting ahead of these market changes by shifting away from spot-buying and toward long-term procurement. Investing in removals now means you can lock in both prices and supply towards your future compliance needs and net zero goals. Wondering how to build your carbon removal portfolio now to mitigate future operational costs? We’ve included a procurement checklist in our latest Carbon Market Buyer’s Guide 👇 https://lnkd.in/dcZH_jWb And if you’re navigating specific regulations or the shift to removals, send me a message and we can have a chat!