With climate change climbing the corporate agenda, how important is it for manufacturers to bear the crest of their carbon reduction efforts? While real benefits lie beyond the branding, do companies know exactly what these are and is there a self-promotional motive for displaying a green badge? Becky Done finds out
Visit the website of any big company and it is likely you will find a statement or even a report on its relationship with the environment. For manufacturers, whose work generally involves high energy usage and the production of waste, an environmental policy is becoming increasingly important. Attitudes to the environment have become a way that companies can differentiate themselves from the competition, and attract business from customers and consumers whose buying choices are increasingly motivated by more altruistic factors than pure cost.
Unsubstantiated claims are worth little, however, which is why many firms are seeking to verify their green commitments by using a recognised standard. The purported advantages of this approach include such business benefits as stronger supplier relationships, cost savings and brand enhancement.
But what is the reality of embarking on a project that will prove your carbon reduction credentials to the world?
The Carbon Trust is a private company set up by the UK government in 2001. One of its objectives is to help organisations reduce their carbon emissions.
Two ways in which it can help manufacturers do this are through its Carbon Trust Standard (CTS) and its carbon labelling scheme, run by the Carbon Label Company, a subsidiary of the Carbon Trust.
Hundreds of companies have applied to be assessed for the CTS since it was launched in June 2008. Replacing what was the Energy Efficiency Accreditation Scheme (EEAS), the CTS is the only certification that measures carbon reduction by a revised method of quantitative analysis, which is complemented by a qualitative assessment that examines the carbon reduction policies the company has in place. The whole process is carried out by an accredited consultant, selected by the Carbon Trust to match the needs of the individual firm. Certification is valid for a period of two years, after which the company must be reassessed.
CTS certification will cost the organisation anywhere from £4,000 to a maximum of £12,000 — although existing EEAS certificate holders are eligible to convert for a discount. A pre-assessment is carried out to inform applicants if they are likely to pass, mitigating both disappointment and financial loss.
Initiatives that pay their way
FIS Chemicals in Aberdeen took the decision to seek further accreditation that would build on the BS EN ISO 14001:2004 it has held for many years. “Part of that standard is to look at your energy consumption,” says Lisa Oldman, QHSEE manager for the company, “so last year we decided to go for the EEAS. We achieved accreditation to that scheme in July, just as the CTS became live, so while everything was fresh in our minds we decided to go for that, rather than wait for a couple of years and go for it when our energy efficiency accreditation expired. The reason that we were able to do that is that we have shown continual reduction in our energy consumption over the past five years — part of it is being able to show your figures; your reduction,” she says.
The company has had to drive energy awareness across its operations. “We have objectives in place to try and reduce our energy consumption year-on-year. Last year, we had an energy awareness month which really focused on how much we can save just by doing simple things, such as having our lights on timers,” Oldman explains. “We tried to do as much as we could just through employee awareness. We’ve shown how much companies can reduce their energy consumption just from initiatives like our Switch Off campaign.”
The company is now seeking to further reduce energy usage this year by using an on-site wind turbine. Oldman estimates that with all these measures in place, the company will have recouped the cost of the initial conversion from the EEAS to the CTS by the time re-accreditation comes around. “Energy bills are going up all the time, but we have seen a reduction [in costs],” she says. “Hopefully, by the end of the financial year, we’ll see a drastic cut.”
The environmental achievements of FIS are made all the more impressive by its small workforce; it employs just 13 full-time staff. Indeed, Oldman confirms that having achieved the CTS has made a positive impact on the business: “Our customers are very impressed with what we’ve done with the CTS and with the fact that we are a very small company looking to do business in a more environmental way,” she says.
CTS certification is an instantly recognisable sign that a company is making a continuous, quantifiable reduction in CO2 emissions. But there are many other benefits too, including bottom-line cost savings as a result of changes in energy usage. The required corporate cultural change can, the Carbon Trust says, also lead to greater efficiencies and improved team cohesion.
Potentially of greater significance to manufacturers is the fact that achieving certification can reduce the cost of compliance. Take as an example the Carbon Reduction Commitment (CRC), due to come into effect in April 2010. The CRC dictates that organisations that exceed target energy consumption levels must purchase carbon allowances from the time the legislation is introduced. But companies that hold a valid CTS certificate for the qualification period will receive an improved ‘league table’ ranking, which translates into a direct financial return. The CRC is different to the EU Emissions Trading Scheme, already underway, which covers emissions from certain energy-intensive industries (see foot of article).
Bedfordshire-based Abbey Corrugated, a leading UK manufacturer of corrugated board, has experienced this improved ‘league table’ rating from having achieved CTS certification: “The Standard will result in the business having a higher ranking in the CRC league table and therefore will have a positive effect on our tariff,” says operations directors Adrian Swindells.
Like FIS Chemicals, Abbey had already achieved EEAS accreditation when it decided to work towards the CTS. It has found its investment of time and money to have paid off: “We did have to commit some time to setting up relative benchmarks and a denominator,” Swindells says. “But overall, we have saved more on reduced energy costs than the costs of implementation. The Standard is a good vehicle for ensuring that your business has the correct policies and procedures in place to maximize energy and Co² reductions — therefore reducing input costs and improving returns.”
Swindells says that achieving certification has also brought about a welcome shift in workplace attitudes towards energy awareness. “Representatives from all levels of the business have been involved for several years, via a Responsible Care group for energy,” he explains. “This group would bring forward ideas on energy reductions from each area of the business. We are now much better on business housekeeping with controlled start ups and shutdowns that help to reduce costs. The Standard marks the achievements of not only the group but the entire workforce, and is a driver for further improvements for years to come.”
As new regulations and other environmental obligations are applied, the incentive to meet certain green standards is set to increase across the supply chain, as firms jostle to fulfill their carbon reduction obligations and maintain their footholds in competitive, cost conscious sectors.
Be seen to be green
The Carbon Trust has also worked with companies to create a Carbon Reduction Label, which displays the carbon footprint of a particular product. The scheme, first piloted by manufacturers including Walkers Crisps and innocent drinks, is carried out in accordance with PAS 2050 – the publicly available specification setting out the requirements for assessing the lifecycle greenhouse gas emissions of products. Companies are able to benchmark the carbon footprint of a particular product they make, and the label is awarded as a ‘symbol of intent’ that they are actively attempting to reduce it. Crucially, it is not obligatory to demonstrate carbon has been cut to display the label, only that the company has made efforts to cut it.
Costs of a carbon labelling project will vary. “The cost of conducting a pilot and having a product analysed varies a great deal,” explains Euan Murray at the Carbon Label Company. “From our experience, factors that influence the costs include the amount and synergy of products to be footprinted, the complexity and size of the supply chain being assessed and the amount of data collection already conducted.” But, just as with the Carbon Trust Standard, the labelling process itself should reveal areas within the business where cost savings can be made. In lean economic times, it can be tempting to reject any ancillary outlay that doesn’t deliver an immediate and meaningful return on investment, but companies will be considering the potential cost savings, and the value that a carbon reduction label could add to a brand.
One manufacturer famous for its branding is innocent drinks. It was one of three pioneers that enlisted the help of the Carbon Trust to calculate the carbon footprint across its supply chain. Following an audit, innocent was able to calculate the carbon emissions of some of its recipes. “Since undertaking the audit we’ve managed to reduce the carbon footprint of our smoothies by 21 per cent,” says innocent drinks’ head of sustainability, Jessica Sansom.
In March 2007, emissions for one of its products, the strawberry and banana smoothie, was calculated to be 282 grams. Innocent was then able to take steps in carbon reduction that, nine months later, resulted in emissions for the same product of 241 grams — a 14.5% reduction.
However, manufacturers should remember that the process is very time-consuming. In addition to the actual calculations, companies need to have their product’s carbon footprint certified against the Trust’s comparability requirements, including PAS 2050, Code of Practice, Comparability Rules and standard secondary data, where appropriate. The initial audit that began the process at innocent revealed many areas where carbon could be reduced throughout the supply chain, which involved in-depth work with the company’s suppliers.
Following the audit the company also increased the recycled content of its bottles, which reached 100% in September 2007.
In recognition that the labelling process is several steps on a long road, innocent does not include the label on its packaging. “We want to be sure that it is meaningful to consumers before we go ahead [and use the label],” says Sansom. “For us, working with the Carbon Trust was not about getting a symbol on pack that we can use as part of our marketing. It was about setting ourselves a genuine measure that we can use to improve our environmental performance across all areas of our business, and sharing this information with our consumers.”
Carbon labelling is still in its infancy, so it is too early to measure its influence on consumers. But buyers’ attitudes towards energy efficiency are certainly shifting. For example, when buying white goods such as fridge freezers, consumers are now looking for A and A* ratings. By law, the European Community Energy Label must be displayed on all new household appliances displayed for sale, hire or hire purchase. This label informs the buyer of how efficient the product is by displaying how much electricity the product uses in kWh, rating the appliance from A to G.
The Carbon Trust is working towards footprinting projects in the US, China and Continental Europe, and Murray says the company would welcome the introduction of a single, recognisable Carbon Reduction Label worldwide: “The PAS 2050 was developed as an international standard and is freely available for download in every country. The consultation process to develop the standard included more than 1,000 different stakeholders from around the world. It was also informed by the 20 pilot projects run by the Carbon Trust; every one of these looked at products which had an international supply chain.
“Looking ahead,” says Murray, “the Carbon Trust will participate in both the GHG Protocol’s Supply Chain Initiative, run by the World Resources Institute and the World Business Council on Sustainable Development, and any future ISO developments. In this way, the PAS 2050 and the thinking behind its development will play a significant role as a foundation document for any future international product emission standards. We are therefore confident that it can and will be adopted internationally.”
As environmental labelling is relatively new, opportunities still abound for companies to position themselves as industry leaders and pioneers who are forward-thinking and prepared to invest for the greater good of society. It is possible that those organisations which take part in such initiatives early on will be better equipped to meet future carbon targets, and benefit from a competitive advantage.
If your company is thinking of investing time, money and effort into carbon reduction initiatives, you could well be placing yourselves ahead of the game.
Case Study: Walkers Crisps
Part of PepsiCo, Walkers Crisps was the first company in the world to display the Carbon Trust’s carbon reduction label on a consumer product, having worked with the Carbon Trust since 2001 and having measured the carbon generated in the manufacture of its products since 2005.
“We took the step because we were confident that introducing the reduction label to one of the UK’s biggest consumer brands would raise consumers’ awareness of the link between carbon emissions and the products they buy, set a new benchmark for transparency on environmental performance, and give a clear goal for our business — and our suppliers — to aim for,” a spokesperson from Walkers explained.
The company kept its customers in mind when introducing the label: “With growing consumer demand to know more about the ‘carbon cost’ of the goods that they buy and what companies are doing to reduce it, we decided to display the results on pack, to enable consumers to see our clear commitment to reduce carbon,” says Walkers. “[Our] research shows that the label and the commitment to reduce has a positive impact on how consumers perceive a brand and their likelihood of buying it — although this was not our motivation in introducing the label.”
The project has also helped Walkers to realise bottom-line benefits as a result of improving its energy and water usage efficiency. The company also advises that collaborating with suppliers can deliver further benefits: “Close working relationships with external partners are essential. Since the end of 2007, we have brought together our key suppliers through a series of sustainability summits, and become a founder member of the Carbon Disclosure Project’s Supply Chain Collaboration. This gave us the opportunity to look at common risks and opportunities, and to share learning and carbon minimisation approaches. We are now in a position to reduce our combined carbon footprint.
“Ultimately,” Walkers concludes, “the long term objective is that more products will display the carbon reduction label, so that more companies step up their efforts to reduce their carbon emissions.”