Five big companies with impressive climate change initiatives that other companies could learn from
So you’ve put some solar panels on the roof, you’re promoting teleconferencing and switching off the lights. Well done, but we’ve heard it all before.
Here Ethical Corporation’s climate change team profile four strategies from companies in the UK that are taking a step further by making genuine and ambitious carbon reductions. These companies are ready to rethink how they work with suppliers, and even competitors, to bring about wholesale change in their carbon management.
BT: wind-powered communications
The ambitions of most onsite renewable projects pale in comparison with BT’s plan to develop its own wind farms. If it goes ahead, this will be the UK’s largest corporate wind power project outside the energy sector, costing £250m, generating a quarter (or 250MW) of BT’s electricity requirements by 2016 and cutting the business’s CO2 emissions by 500,000 tonnes every year.
The project will help BT meet its aggressive climate change target to cut global greenhouse gas emissions per unit of its contribution to world GDP to 80% below 1997 levels by 2020. At the end of the 2009 financial year, BT had achieved a 43% reduction.
Third-party investors and renewable energy partners will make the major investment and build the wind turbines on or next to BT land across the UK. Any return on investment will be shared between BT and the third party.
BT is understandably cautious about saying what this return might be. There are too many determining factors yet to be sorted out – such as future electricity and carbon prices, availability of finance, viability of the sites, and how it sets up deals with partners. But Chris Goodall, author of the Green Guide for Business, has estimated that BT’s “impressively large plan” could generate a return of £50m a year, or 20% of the original investment, depending on various assumptions.
Generating a commercial return is secondary, says Dr Chris Tuppen, BT’s head of sustainable development and corporate accountability, who has led the telecom company’s sustainability work ever since he wrote its first environmental report in 1992. He says BT’s main aim is to secure future energy supply.
This sort of project is unusual, says Nick Medic from the British Wind Energy Association. But he is confident that it will become a “prominent trend” in the next decade. “This makes a lot of sense for rail and industrial companies or port authorities that have a large energy usage as well as huge land holdings,” he says.
But the future of the BT project, and any corporate renewable investment, could be threatened by the UK government’s carbon reporting regulations. Under the imminent carbon reduction commitment and carbon reporting guidelines, companies cannot claim the only relevant renewable energy subsidy – renewable obligation certificates – if they want to count renewable energy towards reducing their reported emissions.
BT will be keeping a keen eye on the carbon reporting guidance from the UK government due to be published in October. For now, Tuppen says BT remains “comfortable this is the sensible business thing to do”.
Cadbury: sweet common sense
Cadbury’s Guide to Low Carbon Dairy Farming deserves recognition for two reasons. First, the company’s bid to make cuts in a particularly emissions-intensive sector – agriculture – which accounts for 7% of the UK’s greenhouse gas emissions. Second, for the effort to extend carbon management best practice beyond Cadbury’s own operations into the supply chain.
The famous glass and a half of milk that goes into a Cadbury milk chocolate bar is responsible for 60% of the product’s greenhouse gas emissions, according to a carbon audit carried out by the Carbon Trust.
As part of a pilot programme, Cadbury has advised farmers in Wiltshire and Gloucestershire on a range of farm management practices. For example, farmers can increase milk yields and reduce greenhouse gas production by improving herd health and also by reducing the fibre levels and increasing starch in cow feed. Prudent use of fertilisers and reductions in energy consumption on farms also cut emissions.
Cadbury has yet to clarify what emission reductions can be achieved. But research for the UK Department for Environment, Food and Rural Affairs by the Institute of Grassland and Environmental Research and Adas UK, the environmental and agricultural specialist, has estimated that livestock farmers can, for example, achieve 6% nitrous oxide reductions by improving diets and feeding regimes.
More work needs to be done to achieve a full picture of potential methane, carbon dioxide and nitrous oxide reductions, says Jon Moorby, of the Institute of Grassland and Environmental Research at the University of Aberystwyth, who took part in the research.
Cadbury says that if the advice is implemented, farmers will also increase milk yield.
Other companies can learn from the collaborative approach Cadbury has taken with its farmers, says Victoria Harris, campaign director at Business in the Community, the UK membership group. “The future of the UK fresh milk supply is in no way secure. But by working with farmers, giving them a good deal and making sure they survive also gives Cadbury a milk supply chain it can depend upon.”
Marks & Spencer: cool customer
Marks & Spencer’s eco-initiative, Plan A, is rightly touted as one of the most comprehensive green drives in global business.
One detail that will play an important part in M&S achieving its target to make all stores carbon-neutral by 2012 is the pledge to phase out HFC gases in supermarket refrigeration.
HFCs have a global warming potential hundreds to thousands of times greater than carbon dioxide and can account for up to a third of a store’s greenhouse gas emissions, says Fionnuala Walravens, global environment campaigner at the Environmental Investigations Agency.
In 2007 M&S and UK supermarkets Asda, Tesco, Somerfield, Waitrose and Sainsbury’s all announced their intention to move away from HFCs. But only M&S has set out a clear programme and timeline to show how it will do this.
The retailer will replace the most harmful HFC gases that are used in 65 of its fridges by 2014. It is also trialing a new, less damaging type of HFC gas (R407a) to replace existing HFC (R404a) gas in in-store fridges by 2012. And from 2010 all new fridges will use CO2 systems that are non-ozone-depleting and have a much lower global warming potential.
The aim is to halve the footprint from refrigerants by 2015, says Bob Arthur, refrigeration technology specialist at M&S. But it will not be an easy battle, he adds.
CO2 fridge systems could cost supermarkets about 20% more than standard HFC equivalents, according to a recent report from the German Federal Environment Agency. However, these costs are expected to decrease considerably as mass production increases.
The other difficulty will be navigating through an industry that is focused on HFCs, says Arthur. “Everything is centred on this, from legislation and technology development to training of engineers. To change will be a big task but we’re determined to do it.”
M&S has set up a programme to train the engineers who install and maintain the new technology. It is also calling on the UK government and the European Union to provide regulatory support to incentivise the move to alternative refrigerants.
“This is a pioneering leap forward and we wholeheartedly give it our support,” Walravens says. The next step for M&S will be to trial climate-friendly refrigerants in distribution centres and transport refrigeration, she says.
Nestlé and United Biscuits: sharing the load
Lorries run empty for almost a quarter of the miles they cover in the UK, according to data from the Department for Transport. But if companies come together to share distribution systems they can reduce empty running to cut fuel costs and slash carbon emissions. Engineering consultant Faber Maunsell estimates that the food industry could cut carbon emissions by 3.8% through transport collaboration.
Food manufacturers and retailers are catching on, largely through the efficient consumer response programme, led by the Institute of Grocery Distribution (IGD).
But the work of Nestlé and United Biscuits takes the concept of supply chain collaboration an important step further by proving that competitors can also work together.
It’s a simple concept. Instead of United Biscuits’ lorries returning empty from delivering goods to a customer in York, in the north of England, back to its distribution centre in the Midlands, they pick up goods from Nestlé’s factory in York and take them to its distribution centre, also in the Midlands.
By creating more efficient round-trips, the two companies have taken 280,000km off the road every year, saved 95,000 litres of fuel and 250 tonnes of carbon dioxide. This equates to a “significant six figure” cost saving, says Richard Hastings, Nestlé’s head of logistics planning, and the only costs to either party were a “few hours of management time to make sure that we’d got a robust solution in place”.
Overcoming commercial sensitivities was a matter of setting some ground rules, says Hastings. Both companies seal trailers before they are picked up to protect the integrity of new products and any financial benefit that is accrued is shared equally.
“Initially marketers were anxious about putting Nestlé products in a United Biscuits livery. But the lorry that United Biscuits was bringing to York was going there anyway,” Hastings says. The cost savings have also helped to sway senior management’s decision, he adds.
“Five years ago, we would never have dreamt that competitors would have been able to make this work,” says Karen Chalmers, efficient consumer response expert at the IGD. “But if you have the vision and the buy-in from the senior team, you can overcome any barriers.”
This is only the beginning, says Richard Ellithorne at the UK Chartered Institute of Logistics and Transport. “The big change will be when an Asda and Sainsbury’s delivery goes out on the same vehicle.”