Debbie Giggle reports on the challenges of reducing corporate carbon footprint and the strategies that bring success
The road to low carbon operations is a difficult one. For a start where do you start?
The carbon impacts of a product and its process of manufacture are difficult to assess, and the potential solutions are diverse. Yet a number of companies have already made significant progress. So how have they pulled the disparate strands together into a coherent low carbon strategy?
Proctor and Gamble (P&G) has been analysing low carbon issues across its 300 brands sold in around 130 countries. Its operations are located in over 80 countries and the company employs 138,000 people.
Director of sustainability, Peter White, commented: “Environmental strategy is developed globally by our sustainability leadership council. The members have other functions in addition to this environmental remit and are chosen for the expertise and insight they can bring
to the group.
The company’s involvement in this area can be traced back several decades. The company has been promoting low temperature washing since the 1980s and has measured and reported on the environmental performance of its various plants since 1999. Over the last decade it has reduced its CO2 emissions, energy and water consumption, and disposed waste per unit of production by around 30 per cent. In October 2007 however it announced a revision of its strategy, with stated internal and external goals, to up its game still further.It is a five part strategy, White explained. “Strategy one is to build P&G’s business through sustainability innovations. By 2012 our goal is to generate at least $20 billion in cumulative sales of products that offer reduced environmental impact.”
Surveys carried out by P&G have identified that energy and water used by the consumers of their products are a major percentage of the overall carbon footprint, so innovation is key. P&G has already brought to the market, for example, products such as Ariel Cool Clean, which enables consumers to lower energy usage by washing at lower temperatures. Lowering carbon footprint is closely linked to future product strategy and profitability.
The second part of P&G’s strategy is to continually improve the environmental profiles of its sites. Currently, over 95 per cent of materials that enter P&G plants leave as finished product. More than half of the remaining materials are recycled. Over the next five years the company aims to reduce CO2 emissions, energy and water consumption and disposed waste per unit of production by an additional 10 per cent.The remaining three strategy elements are concerned with social responsibility, engaging employees in sustainable thinking, and working with external stakeholders.But how is the global plant improvement strategy implemented locally?“Each site has an environmental leader who implements strategy and its own set of sustainability KPIs,” explained White. Metrics for monitoring environmental profile have been in place since 1999 and internal audits are used to track progress.
In contrast, at food manufacturer McCain, the low carbon programme is driven largely by the engineering team. Projects are evaluated at grass roots level and put to the board for consideration in a combination of bottom up and top down approaches.
Bill Bartlett, corporate affairs director, explained: “We operate in a competitive marketplace and driving efficiency is essential. Many of the efficiency savings are made possible by introducing sustainable solutions and there is a clear win-win.”Two such projects include a £10 million investment in wind turbines at the company’s Whittlesey plant, and the planned installation of a combined heat and power facility which will run on biogas generated by an on-site water treatment plant digester.
The three 125 metre high wind turbines will power the entire site at certain times of the year, providing up to 60 per cent of the annual electrical power required to operate the plant, reducing greenhouse gases by 15,000 tonnes of carbon dioxide per year. The turbines can produce three megawatts of electricity each, making them the most powerful currently in use in the UK (according to the company) with unused
electricity being sold back to the National Grid.
Other projects have included changes in sourcing of raw materials to reduce food miles, and the introduction of new double-decker trailers and delivery vehicles, which reduce the carbon impact of moving goods. Solar panels used to power the refrigeration units of lorries are also lowering fuel usage.
In cost justification terms, some improvements, such as the wind turbines, have a longer payback period than a straightforward capital project. But environmental impact is a key element of our strategy, alongside the need to drive efficiency, so we are looking for both commercial and environmental paybacks.”
So how does McCain turn strategy into reality?
“We have an established approach called McCain Competitive Edge which is designed to carry out continuous improvement at speed,” said Bartlett. “It uses six sigma and lean principles to put a narrow but deep focus on projects. Typically twelve engineers will focus on a project for three to five days. The aim is to fix the issue immediately. If this can’t be achieved an action plan is drawn up to see the issue dealt with within 30 days.”
This process can be useful for identifying potential projects but, as in the case of the wind turbines, some resulting initiatives involve a much longer timescale and are therefore handled like any other capital investment project. “Once the decision on finance has been passed by the board, a detailed plan is drawn up. We have an excellent engineering team with experience of major capital projects dating back over 40 years often involving bespoke equipment. So we are able to manage projects effectively in-house using tried and tested methods.” Over the last twelve months the company has been working particularly hard, however, at developing its environmental performance metrics.
“We measure all our operational inputs and outputs and these are reported to the board,” Bartlett explained, “but measuring up and downstream impact is more complicated. To begin with we used generic data but we’re slowly replacing this with primary data. It’s complex, but we’ve found we’re good at it. We haven’t brought consultants in to help us, but we are working at an informal level with the Carbon Trust and are using their methodology. There’s no benefit in reinventing the wheel and I understand the Carbon Trust is in discussion with British Standards with a view to making this the accepted national methodology.”A challenge for many companies going forward, however, is how to make the environmental objectives of an organisation meaningful to every member of the workforce.
Is there a danger that companies will confuse employees by having two sets of objectives (continuous improvement KPIs and environmental initiatives) both clamouring for attention at the same time? There is nothing more likely to diffuse energy in the workforce than moving the goalposts. So what solutions have these two companies found to avoid this?
For McCain, the move to incorporate low carbon objectives into its overall continuous improvement strategy has been, in Bartlett’s opinion, a natural progression.
“It’s a new currency,” he said, “but the objective is the same. Driving efficiency has been our way of doing business for decades and the renewable generation projects fit seamlessly within that. Seeing major capital investment at Whittlesey, in addition to our Scarborough site where we are planning a heat recovery system, has also added to employee confidence in the company’s long-term profitability.”
P&G, in common with most large multi-national businesses, is a vision-based business, and has signalled its intention of making sustainability important to individual employees by making it integral to company culture worldwide. Quoted in the company’s 2007 sustainability report, A G Lafley, CEO, said that growth has been sustained throughout the company’s 170 year history “by staying focused on P&G’s purpose: improving consumers’ lives in small but meaningful ways ever day.” In October 2007 the company announced that sustainability is being embedded into P&G’s purpose. Strand four of its strategy is to “inspire and engage P&G employees to build sustainability thinking and practices into their daily work.”
For such a large company, knowledge management is key. Benchmarking is enabling individual sites to compare progress, and a mixture of intranet, virtual teams and global meetings are being used to share and reapply’ best practice. Share and reapply is already a well-established approach within P&G and will help sites to compare product/process knowledge as well as developing a greater understanding of emerging low carbon technologies. The company’s new distribution centre at Amiens, France, for example, has been designed with technologies such as solar panels, a wind turbine and forklift trucks with regenerative motors. This will provide an ideal proving ground to help P&G design and construct the
manufacturing and distribution centres of the future.
And here we uncover the real reason why the journey to low carbon operations is problematic. Not many people have gone before us. Even for a company as large as P&G, there are things to be learnt. But, by managing knowledge and sharing best practice, the road is by no means closed to any of us, however large or small the organisation.