Being seen to be green
Published : May 2007
Tackling climate change is no longer a simple matter of social responsibility. Colin Chinery reports on how the best big firms are addressing the green agenda
If you see a bandwagon it’s too late. Not here though. Marks & Spencer announces a carbon neutral zero-waste five year plan, Nissan focuses on a 100km to three litres of fuel car, the Bishop of London says holiday flights are sinful, and Richard Branson puts up £12.8 million for the first person to come up with a way of scrubbing greenhouse gases out of the atmosphere.
Pink Floyd saw it first, and increasingly, unstoppably, green is the colour and climate change potentially the biggest business and investment issue we face.
Writing in Barclays Capital’s Equity-Gilt Study, Tim Bond says: “The world has simultaneously discovered that the supply of energy may not match future demand and that the type of energy currently supplied is incompatible with survival.”
And another new report, this from Lehman Brothers, warns that companies that do not respond quickly and effectively to climate change and economic environments face extinction.
Yet despite forewarnings and the high profile positioning of M&S, Nissan, BT and others, British big business performance is inconsistent. The annual reports of four out of five of the first 100 companies in the FTSE All Share, says the Environment Agency, have failed to disclose environmental performance in accordance with Government guidelines.
And the quality of reporting is often rudimentary. “Too few qualified disclosures to make meaningful comparisons between the environmental performance of companies,” says the Agency’s chief executive Barbara Young.
Belinda Howell, CEO of Greenstone Carbon Management, advisor to FTSE 100 and 250-type companies from financial services to manufacturing, agrees. “There’s a dearth of reporting to any kind of international standard on carbon footprint. The scope of what companies should be doing to measure that footprint is being defined very differently and in a way that makes comparisons impossible. They are not playing to the same rules.”
Even so, ethical index FTSE4Good has found common global denominators. And out of 898 companies with a high or medium operational impact on climate change, it identified 255 who must meet the criteria within two years or lose their place in the index. While some companies are working very hard to reduce their carbon footprint, “incredibly” some are failing badly and letting their pollution levels rise, says Craig Morrison, head of business ethics at Glasgow Caledonian University and a FTSE4Good committee member.
“We will give companies time for change but after that they will be removed from the index if they do not show that they are making improvements.”
Adrian Henriques, independent corporate business advisor and Professor of Accountability at Middlesex University agrees. “It’s very patchy. One or two companies are doing a fairly systematic job; most companies are doing a very much poorer job. There are several reasons for that and one is that there are some technical difficulties that need to be overcome, and there’s also the matter of the boundary responsibility which a company should assume.
“You would be very hard put to find an executive of almost any company who doesn’t recognise that global warming and carbon is a problem, but how much time and attention they put into it is another matter.”
FTSE4Good has just raised its environmental criteria to include for the first time CO2 emissions and climate change. Compliance terms vary in rigour from medium impact companies to high, with those in aerospace, oil and gas, automotive and coal carrying the heaviest obligations.
Among the unfazed is Nissan UK of Sunderland. With a long background of environmental management systems, it became in 1998 the first Nissan manufacturing facility outside Japan to win the ISO14001 environmental management certification.
“Since then, environmental objectives have been set annually, monitored and reported through an Environmental Management Committee at the plant,” says Graham Bagley, senior engineer, Nissan, Sunderland. “A quantified target is assigned for each objective and measured monthly. If any shortfall is identified, a catch back plan will be implemented.
“The plant’s environmental process has included objectives such as the reduction of materials, water and energy, a reduction in the amount of waste sent to landfill and improvements to recycling on site. And this global attitude to ‘waste’ reduction will continue in the future, with further improvements rolled out across site.”
Among high points of its new world-wide Green Programme 2010: a car running 100km on three litres of petrol (projected for a 2010 launch), accelerated development of plug-in hybrid technology, and CO2 reductions a key management performance indicator.
“Our focus in manufacturing has been on the continual improvement of our environmental performance,” says Nissan executive vice president Tadao Takahashi. “Our new environmental plan takes that performance to the ultimate goal of zero waste in our manufacturing process.”
On High Street UK meantime, Marks & Spencer has launched a comparable 100-point, £200 million five year plan. Its centerpiece – to become ‘carbon neutral’ by 2012 – a commitment that would be the equivalent of taking 100,000 cars off the road.
M&S aims to stop sending waste to landfill sites by that date, increase the amount of food sourced locally and regionally, increase the use of recycled materials and end the need for consumers to throw away any of its products or packaging.
Also targeted: a 25 per cent improvement in energy efficiency, all stores powered by renewable energy and trialing a technology called anaerobic digestion, which enables electricity to be produced from food waste.
M&S is also committed to doubling the amount of food sourced locally over the next 12 months, minimise the amount of food imported by air, use biofuels in half its lorry fleet, reduce packaging by 25 per cent, and start selling polyester clothing made only from recycled plastic bottles. “A deliberately ambitious and, in some areas, difficult plan,” says M&S chief executive Stuart Rose, “but doing anything less is not an option.”
And as Rose was raising the high street’s ethical stakes, BT – like Nissan a climate change trail-blazer – was renewing the world’s largest green energy contract and pledging to slash its carbon emissions by 80 per cent over the next nine years.
BT accounts for 0.7 per cent of Britain’s electricity consumption, set its first green targets in 1992, and estimates its environmental policies are already saving it £100 million a year. Key components: a continuous drive for low carbon transport – its 35,000 fleet is one of Britain’s biggest – a pro-active staff culture, value chain procurement policies, and – appropriately – ICT facilitated flexible working.
“The idea that ICT is a form of transport is one that we really believe in,” says BT’s new head of climate change, Donna Young. “Broadband has enabled us to allow 70 per cent of our workforce to work flexibly. In 1984 we had 300 working from home – very innovative then – now it’s over 12,500 full-time.”
Despite fears to the contrary, Young says research shows productivity tends to increase. “For example, I start work at the same time I would otherwise be leaving for the office, and finish when I would normally get home. So effectively the company is getting a further two hours out of me.”
To companies that take a somewhat relaxed view of climate change issues, Belinda Howell warns: “Watch out. Companies that are not awake to the risks and failing to look for the emerging business opportunities will not be the companies of the future.”
So on what should boardrooms and executives that are alive to the challenges and opportunities be focusing?
“Measure first, monitor performance, reduce the carbon footprint, monetize the cost savings,” says Howell. “Then choose to either re-invest those cost savings in maybe further technology kit to further reduce carbon footprint, or behavioural programmes to further reduce footprint through changes in behaviour. But not many companies are re-investing in further savings or offset, seeing it instead as a cost.”
“The first thing to be understood,” says Donna Young, “is that increasingly these days customers are buying from ethical companies. So boardrooms have got to look at the opportunities in their sector and ask themselves ‘where can I grow more, where am I at risk if I don’t do this?’ For most companies it is a matter of enlightened self interest.
“To do this you have got to understand how you can grow out of it and how – if you don’t do something – you might lose out of it. Secondly; they must understand their carbon footprint and then reduce it. And they must do that before they can do anything else. “BT has been doing this since 1992, but in general companies are now just at the beginning of this journey and if they try to do too much they will fail. They need to focus on how they can cut their carbon emissions and at the same time create opportunities for themselves.”
What can be measured can be managed? “Exactly. It’s absolutely at the centre of it, that and having an audit trail back so they really are doing things that have a big impact as opposed to saying a lot of things and thinking they are doing it. Audit trail and measurement are absolutely critical.”
