Sustainability reporting part 2: It's an ongoing process not a goal

(This article originally appeared on the 2DegreesNetwork website.)

If you're a committed environmentalist, it’s likely that the push for continuing improvement in sustainability is welcome. But it's also potentially nerve-wracking. It means that, as a sustainability professional, you can never rest on your laurels, and you may have to go back to your board to reset your targets - perhaps more than once, as definitions of "good enough" evolve.

All this becomes easier once you realize that sustainability isn't an end-goal. In an earlier post we discussed the evolutionary nature of carbon emissions and sustainability reporting and concluded that sustainability is a process and a way of working.

Most companies are not in business to consume resources, generate rubbish or emit pollution. They are in business to deliver a product or service to their customers. Resource consumption, waste generation and pollution result from the way they choose to deliver those products and services. Airlines emit carbon dioxide (CO2) into the atmosphere not because they are in the CO2 production business, but because liquid fossil fuels are affordable and have a very high energy density. Commercial farms release vast quantities of nitrous oxide (N2O), a potent greenhouse gas, not because they are in the N2O production business, but because farmers must fertilise and plough their fields.

So what's the best way to set your targets to reduce waste, resource consumption, and pollution?

Airlines could establish a realistic emission reduction target, set it in stone, and make a series of engineering and operational tweaks to achieve that target. However, they will likely not escape continuing criticism from environmental campaigners, passengers and other stakeholders whose concerns about climate change will only grow as they learn more about this threat. Airlines (and their internal sustainability champions) who view sustainability as a way of working instead of a fixed target may take a different view.

Yes, interim targets are a useful way to achieve quick wins and get buy-in across the company. But a company that is fixated on making their environmental performance 10% better will be blindsided by a competitor that innovates to make their performance 10 times better. For an airline 10X better might mean innovating to create a zero-carbon fuel or a designing a completely different type of aircraft.

Whether literal or metaphorical, 10X better means there is no end in sight: you don't know yet how the company is going to achieve its sustainability goal, or the goal so big and long term that you won't be around anymore when it finally gets there. Either way, it means changing the way you think about sustainability. In fact, it may mean rethinking how your company works, as GE did with its Ecomagination initiative.

Each of your company's sustainability achievements is a vital stepping stone rather than an end-point. That doesn't mean it's easy. Acknowledge the hard work required to attain that goal, and celebrate when you've reached it.

Then use that energy to set off towards the next goal. And enjoy the continuing journey.

Can everyone really be "above average" when it comes to Carbon Management?

When I lived in the States I was a fan of Garrison Keillor’s News from Lake Wobegon. As part of his weekly radio show, Keillor told homespun stories from a small town where “all the women are strong, all the men are good looking, and all the children are above average.”

One of the charms of the show was Keillor’s knack for saying things that sounded reasonable but upon closer inspection were shown to be ridiculous or impossible. In particular, in order for one person to be above average, someone has to be below average! But few people would volunteer for that role.

The “Lake Wobegon effect”, a propensity to overestimate one’s capabilities, manifests itself in many walks of life – intelligence, driving, choosing the fastest lane on the freeway – even carbon management.  When we talk with large companies, the vast majority speak proudly of their climate change initiatives. In reality, there is a significant spread in the depth and breadth of carbon management programmes in the corporate world.

Some companies, mostly consumer facing retailers, are trail blazing when it comes to measuring and reporting their greenhouse gas emissions. These firms have a variety of projects, strategies and engagement programmes underway and they are setting the bar for being above average fairly high. As a Walmart executive commented recently to Fast Company, “This isn’t a project, it’s the company.”

But there are many other businesses that are only taking the first tentative steps in managing their climate change impact, and a handful are doing nothing at all. Clearly, then, not everyone is above average when it comes to carbon management.

Carbon Clear recently analysed the progress that member companies in the FTSE 100 have made measuring, reporting and managing their carbon emissions. This research, which has gained wide press coverage, builds on similar work we carried out last year. This year, however, we have taken a more nuanced view to better evaluate the maturity of companies’ carbon reporting. As a result, we have gone beyond asking whether or not a company reports its carbon footprint to explore how thoroughly it reports and whether it has obtained independent assurance for its claims.

These tougher evaluation criteria allow us to highlight clearer differences in companies’ carbon management strategies.  They reflect the fact that carbon management and sustainability are processes, not end goals, and the definition of “good enough” will continue to evolve.

Our analysis found that the majority of companies that performed well in last year’s rankings continued to perform well in 2012. One reason for this consistent performance may be because leading companies have put in place systems that help embed carbon management within their operations. Having overcome the initial learning curve, they find it easier to continue and advance their programmes.

Another reason is that leading companies are beginning to recognise the business benefits of carbon management. This should not be a surprise. At Carbon Clear, we have found repeatedly that companies that measure their carbon emissions begin to look at their operations in a different way, identifying efficiency and cost saving measures that strengthen their bottom line.

However, even amongst the biggest publicly listed companies in the UK, only a minority have successfully integrated carbon management into their businesses. In fact, the average overall performance score from our analysis is 47%. A start, to be sure, but not good enough given the benefits that come from an integrated carbon management programme.

More specifically, companies tended to score quite well in the measurement, reporting and verification competency area, with an average score of 58%. High scores in this domain may be due in part to the fact that the scoring criteria encompass those areas of carbon management that a company should logically address first.

Companies scored less well in the strategy competency area and in the carbon reduction competency area, with average scores of 42% and 30% respectively.

The strategy competency area focusses on whether companies have evaluated the risks and opportunities that arise from climate change, whether they have an overarching plan to reduce their emissions, and whether there is a senior leader in the company who takes responsibility for driving the strategy forward along a defined timeframe. Establishing a carbon management strategy requires a fairly sophisticated level of engagement by senior management, so it is not overly surprising that the average score in this area is relatively low.

What is more worrying is that companies are not scoring very well in the carbon reduction competency area. This is a concern as carbon reduction is a central feature of an effective carbon management strategy, helping drive cost savings and lower greenhouse gas emissions. Companies that are not driving ambitious reductions through their operations and supply chain are in many instances leaving money on the table.  Even fewer are offsetting their footprint, choosing for now to release greenhouse gases unabated into the atmosphere without any efforts at compensation. Given the urgent need for business leadership on climate change, we need more action in this area.

Engagement activities are one of the main and most visible benefits of comprehensive carbon reporting, so it’s not surprising that companies score quite well in this competency area, with an average score of 52%. Over half of the FTSE 100 demonstrates a commitment to building a platform with which to communicate their activities and establish a dialogue with their stakeholders around climate change and carbon management.

Our in-depth analysis has found that the FTSE 100 is making useful progress on the carbon management journey.  All of the companies we researched are taking some steps to measure and sometimes manage their carbon impact. And there are many more that have progressed further along the carbon maturity curve and achieved higher scores. What is evident from the analysis is that those companies demonstrating true carbon management leadership remain few and far between: there are many companies performing at the average level and not very many that live in Lake Wobegon.

Mandatory Carbon Reporting: From Compliance to Competitive Advantage

Four weeks have passed since the close of DECC's consultation on mandatory greenhouse gas reporting. That means we are now four weeks closer to the anticipated launch of the scheme in April 2013.  Now is not the time to rest easy.  We expect yet another consultation - on the guidance notes for the legislation - sometime in December.

We may have weeks or months to wait before DECC publishes the results of the legislative consultation. However, it would be a mistake for companies to wait until the final legislation is published before taking action. As I noted in a previous post, the original Carbon Reduction Commitment rules were only finalised a month before the legislation came into force.  Firms that fail to prepare in advance will find themselves at a disadvantage when it comes to complying with the new carbon reporting rules.

So what can companies do to get ready?

Many firms that need to report their carbon footprint make the mistake of leaping immediately into the data collection phase without specifying how they plan to use the resultant information.  In many cases, this approach yields a carbon footprint report that fails to generate broader benefits for the company.

We recommend that businesses take a more focused approach if they wish to get long-term value from their carbon reporting efforts.  The first step in this approach  is to determine the correct measurement and reporting strategy to pursue.  The measurement and reporting strategy will help dictate the human and financial resources the firm allocates to the initiative, the software and other data collection systems that will be employed to process the information, and even how the company will be able to communicate its accomplishments.

So what questions must the reporting team answer to determine their carbon measurement strategy?  One of the key issues is to understand the types of benefits the company expects to gain from their carbon reporting.  Is the main driver the promise of financial savings that result from better management of corporate resources, or does the business also expect to reap reputational rewards from their carbon disclosure? A logistics business focused on cost savings might go beyond the legislation to collect very fine-grained data on their fleet using a telematics solution, and then drive efficiencies through driver education. Meanwhile, a consumer facing retailer seeking reputational benefits might go beyond the requirements of the legislation in a different way and report voluntarily on a broader range of activities in its supply chain.  Each of these decisions has implications for the types of data a company chooses to collect, and the data collection tools and systems it uses to assemble this information.

Another key consideration in the determination of a company's carbon measurement and reporting strategy is the internal implementation capacity of the business.  Even with the best will in the world, a company that is unable to devote technical, financial and human resources to carbon measurement cannot achieve as much as one with a larger, more experienced team and proportionately greater budget. Understanding your resources, capabilities and limitations can help prevent over-reach and potential underperformance.

What you need, then, is an approach that is tailored to your company.  Carbon Clear has been helping firms determine their carbon measurement and reporting strategy, both in terms of the benefits they can reasonably expect to achieve and in terms of their internal capability to roll out their reporting initiative.

 Among other things, these basic criteria allow us to create a rough snapshot that plots corporate carbon measurement strategies within four quadrants, as shown below:

Carbon Measurement & Reporting Strategy Quadrants

(Copyright Carbon Clear, all rights reserved)

Every business needs a carbon measurement and reporting approach customised to their requirements.  However, we have found that this snapshot helps companies focus on the issues most relevant to their position, while avoiding the one-size-fits-all approach of some solution providers.

Companies that pursue a "Compliance" strategy tend to have limited internal capacity to implement a sophisticated measurement programme and see little reputational benefit from reporting their carbon data (perhaps because they are not consumer-facing a consumer-facing brand or anticipate limited investor pressure for carbon disclosure).  Firms in the "Compliance Quadrant" tend to follow the letter of the law. Their primary objective is to avoid any negative repercussions that result from failure to meet the legislation's requirements.  Financial savings that result from better data and efficiency improvements are secondary. These businesses may use a simple carbon accounting software package or even a spreadsheet tool to calculate their carbon footprint. 

Like their "Compliance" counterparts, firms in the lower-right "Cost Reduction" Quadrant lack strong reputational drivers for developing their footprint measurement and reporting system.  However, their strong internal implementation capability (budget, staff, management systems) means they are better able to use more sophisticated carbon accounting diagnostic tools to identify emissions hot-spots and drive footprint and cost reductions.

The upper-left quadrant, housing Performance Strategy firms, is for companies that face brand or reputational pressure to disclose their carbon performance, but who have limited ability to put in place a sophisticated measurement and reporting system.  These companies may choose to start with a basic carbon footprint report and embark on a programme of continuous improvement, that encompasses ambitious overall reduction targets.  In most cases, these firms will try to capture more and more of their total footprint as their data management capability improves over time.

Companies that stand to gain brand and reputational benefits from carbon measurement and reporting, and that have the internal capability to implement a robust data collection and management programme may find themselves in the "Leadership Strategy" Quadrant. These firms want to use their carbon reporting to demonstrate to stakeholders their commitment to environmental sustainability, achieve a high score at the top of the CDP and carbon maturity league tables, and use their carbon reporting initiative as a vehicle to engage their staff, their customers and, increasingly, their investors.  They may use more sophisticated carbon accounting tools that integrate with their accounting system and capture data for a range of other sustainability indicators at the same time.


Many companies that begin in the "Compliance", "Cost Reduction" or "Performance" quadrants may move to the "Leadership" strategy quadrant as their systems improve and as the broader benefits of carbon reporting and management become evident.  However, it isn't necessary to begin there, and many firms may be comfortable staying where they are. What it shows, however, is that there is no "one-size fits all" approach to carbon reporting.

Choosing the right carbon measurement and reporting strategy is the first step in preparing a fit-for-purpose carbon footprint report.  Getting it right requires a thorough evaluation of your company's business drivers and of your internal resources and capabilities.

These decisions will influence every other aspect of your company's response to Mandatory Carbon Reporting, so it is important to know where you stand.  The good news is that you don't have to wait for DECC to release the final details around the carbon reporting legislation before you determine the right approach.  We have already begun helping companies define carbon reporting strategies that range from compliance to competitive advantage, ensuring that they spend resources wisely and helping identify business benefits.

Going Mainstream

This is interesting:

At Carbon Clear, we've been saying this for years, but nice to see this mantra make the cover of CFO Magazine.  (Hat tip: @greenmondaynews)

Carbon Expo, the Facilities Show and Sustainability Live!

 Event season is well and truly upon us.  In mid-May the Carbon Clear team hits the road to appear at environmental and business conferences and exhibitions across Europe.  Three major events in three weeks and today is the halfway point.

Last week Shefali Modi, the head of our carbon reduction team, gave a talk at the Facilities Show at NEC Birmingham.  The Facilities Show is the biggest facilities management exhibition in the UK.  For a group of professionals who focus everyday on how businesses respond to climate change, this was a can't-miss opportunity.  Addressing the built environment may be our single greatest lever in our efforts to tackle climate change.  From concrete (carbon emissions from cement kilns) and timber (deforestation), to energy and refrigerant use, to the provision of parking and bike storage areas, the decisions we make about buildings and facilities will drive much of our response to climate change.

Shefali spoke about "Carbon Management in Practice" to a packed house as part of the show's 'Sustainable FM Academy'.  Later she participated in a panel debate called "The Great Energy Discussion".  It's always great to reach out to such an important sector, and we look forward to continuing the many conversations that begun during the event.

This week, a team of our best and brightest are exhibiting at Sustainability Live! (the exclamation point is part of the name, but we'd be excited anyway).  Sustainability Live! is the UK's leading water, energy, environmental, land and sustainable business exhibition and we started going years ago.  For us, this is a great opportunity to meet old and new business contacts, learn about the latest developments from other service and product providers in the industry, and of course get everyone excited about the benefits we provide to companies looking to transform their relationship to carbon.

If you're at Sustainability Live! this week you can find us on stand S15.

Next week, from 30th May - 1st June, I'll be in Koln (aka Cologne), Germany with some of my colleagues to attend Carbon Expo 2012.  Carbon Expo is the big daddy of business-focused climate change conferences.  This year it is taking place just down the road (figuratively speaking) and one week after the policy-focused (and controversy-filled) United Nations Bonn Climate Change Conference. The policy decisions resulting from the Bonn Conference will ultimately affect companies that participate in the EU ETS, the evolution of compliance markets in other countries, and the voluntary carbon market.  As a result, I expect some lively discussions at Koln in the wake of that event!

Carbon Clear is a major sponsor of the 2012 State of the Voluntary Carbon Market report, published annually by Ecosystem Marketplace. "The State of" report is the most widely read voluntary carbon market publication and the 2012 edition will be launched at Carbon Expo on May 31.  We'll be there for the side event marking the launch, and will have copies of this important report available on our stand immediately after the launch.

You can find us at Carbon Expo on stand B057.

If you're attending any of these events, be sure to come over and visit us.  If not, you can always contact our team via the Carbon Clear website.

Welcome to the Reality-Based Majority

Reuters (and several other news outlets) reported late last week that 75% of Americans support EPA moves to regulate carbon dioxide as a pollutant, and that 61% would vote for a Presidential candidate who advocated revenue-neutral carbon taxes to reduce greenhouse gas emissions. [Update: the original Yale-George Mason survey report can be found here.]

Interestingly, this support crossed party lines.  84% of Democrats, 77% of independents, and a whopping 67% of Republicans would support efforts to regulate greenhouse gas emissions.

That's pretty amazing.

Before this survey, one might have concluded that most Americans were opposed to climate change regulation, or were at best confused about the issue. After all, President Obama was unable to pass climate change legislation during his first two years in office. However, one would be wrong.  People only have to look out their windows to see that the types of weather events predicted by climate researchers are coming to pass.  Whatever confusion voters might have experienced is giving way to certainty.

These lopsided poll results came through in the face of the vociferous anti-environmental positions taken by many politicians, an organised disinformation campaign conducted by deep-pocketed lobbyists, and less-than-stellar media coverage.  They show that the vast majority of people are able to see through to the real issues.  The Reality-Based Majority knows that:

1. Climate change is real and human activity is the leading cause;
2. It is in our power to reduce greenhouse gas emissions and mitigate climate change impacts;
3. The benefits of taking action vastly outweigh the costs.

As I noted five years ago on this blog, climate change deniers and proponents of doing nothing are in the minority.

So what does all of this bode for companies?

The message is clear: pay attention to the survey results.  True, the survey respondents are voters, and were asked about political issues.  However, these same people are also customers, shareholders, and employees.  In addition, many of them may be activists and protesters.

Customers expect the companies from which they buy to uphold high social and environmental standards.  Shareholders want to know that the companies in which they invest are prepared for the future, and working to avoid reputational and financial risk.  Employees want to feel pride in the companies for which they work, and to feel they are helping to make a difference.  And activists want to know that companies are interested in anticipating their concerns for environmental protection rather than waiting to become a protest target.  If I were in charge of a major (or minor) company, I'd get started sooner rather than later.

At Carbon Clear, we have long encouraged companies to face the climate change challenge head-on and embrace the opportunities that come along with complete carbon management.  The survey results from the U.S. show that, when it comes to climate change, the time is right for more businesses to join the Reality-Based Majority.

Carbon Clear at the Africa Carbon Forum

This week we're at the Africa Carbon Forum in Addis Ababa, Ethiopia, where I'll be speaking at a training session on Programmes of Activities.  And catching up with old friends and associates.

The Africa Carbon Forum, or ACF, brings together government representatives, private investors and carbon project developers, consultants, academics and NGOs.  The goals: share information, identify carbon project opportunities and figure out how to make the carbon markets work for Africa.

Until recently, it could be argued that the carbon markets were not working for Africa.  According to the UN Environment Program, fewer than 3% of all Clean Development Mechanism carbon credit projects were in Africa, and 4% of all carbon credits.  For a region with 14% of the world's population and a disproportionate exposure to climate change impacts, Africa has clearly been under-represented.

Much of the conversation at the last few ACF meetings has been about how Programmes of Activities, or PoAs, can help change this situation.  PoAs allow you to register carbon credit projects that are made up of a number of decentralised activities that can be rolled out over a period of years.  The traditional project approach was suited only for relatively large, standalone activities, like hydroelectric power stations and landfill gas capture schemes.  Those traditional approaches are challenging for projects that provide benefits to poor, widely dispersed rural communities. PoAs are distributing improved cook stoves, water purification systems, or solar-powered lanterns across an entire country.

Since the adoption of Programmes of Activities, the number of new carbon credit projects in Africa has skyrocketed.  That's good news for people across the continent who lack ready access to clean energy services.

But, like traditional projects, these initiatives must be well-managed and rigorously monitored to generate carbon credits with robust environmental integrity.  Thus my session tomorrow morning.  I'll be participating in a training for organisations that want to manage these far-flung PoAs, helping to ensure that they understand the rules laid out by the Clean Development Mechanism.

I'll say more in subsequent posts about the conversations and presentations at this week's conference.

Beyond Compliance: Green Monday and the Rise of Corporate Action

For the past year, Carbon Clear has been a sponsor of Green Monday, a UK-based corporate sustainability networking event. Once a month, 300-500 sustainability professionals and corporate executives get together to share their experiences implementing programmes aimed at making the world a better place.

The topics tackled by this group are ambitious.  Last night we heard from a U.S. company that provides an online platform for peer-to-peer car sharing. Think Zipcar or City Car Club, but scalable to reach every town or village in America.  Members buy fewer cars (reducing overall resource and energy use) because they don't need to have a vehicle sitting in their driveway when they want to get from Point A to Point B. A second sustainability benefit comes because the costs of car ownership become variable rather than fixed costs.  Car owners pay the cost of their vehicle and insurance whether they use it one day a year or every day - which makes the incremental cost to drive an additional mile quite low.  Car share members, by contrast, pay only for what they use, with the result that members drive relatively less and cycle, walk or use public transportation more.

Another Green Monday delegate works for a major pharmaceutical company that is, rather counter-intuitively, investing in sewerage and water supply infrastructure in developing countries. The company's CEO made a committment to provide medicines to treat water-borne diseases at cost, which is a common practice among pharmaceutical firms. Interestingly, the company has since found that it made even better sense to spend their money shoring up local infrastructure to prevent those diseases from occurring in the first place.

A third company is working to get people out of cars and airplanes entirely, by tackling the technical and financial challenges to high quality videoconferencing.  These initiatives and others like them have the potential to save millions of tonnes of carbon emissions and improve the lives of tens of millions of people around the world.

What is striking about the Green Monday discussions is the relatively low profile played by senior government policy makers, and how rarely delegates representing hundreds of major corporations cite government regulation as a spur to action on sustainability.

Governments do have a critical role to play in support of environmental sustainability.  They provide a democratic mechanism for setting local and national priorities, and can ensure that measures that help the environment don't have a disproportionate impact on poorer people.  What is more, governments can correct market failures by putting a price on environmental damage through fines and penalties, cap-and-trade mechanisms, and taxes.  When it comes to climate change and a number of other global challenges, however, market failure has been compounded by policy failure.  Governments around the world have been deadlocked for the past decade over a global agreement to limit greenhouse gas emissions that will replace the Kyoto Protocol when it expires in December 2012.  Despite an urgent need to change course, carbon emissions continue to rise, and a host of natural resources, from water to petroleum and topsoil grow increasingly scarce.

Green Monday and similar initiatives show that we don't have to wait for government regulation before we take action.  Companies can go beyond compliance to deliver solutions that enhance the environment, inspire their staff and customers, and directly or indirectly improve their bottom line. It's encouraging to see more and more business set ambitious sustainability targets and devote corporate resources to achieving them.

Ex-Accenture Chief James Hall Appointed as Carbon Clear Chairman

Following another year of excellent growth and the expansion of our carbon management services, Carbon Clear is pleased to announce the appointment of our first Chairman.

James Hall, who previously held the posts of Managing Partner at Accenture UK and Chief Executive of the UK Identity and Passport Service, will take on the role of Chairman of Carbon Clear from 1st August 2011.

James’ extensive experience of corporate strategy and delivery will help to develop Carbon Clear’s services and guide its fast-growing team of carbon management experts.

Mark Chadwick, CEO of Carbon Clear, said “Carbon Clear has gone from strength to strength this year despite a challenging economy. We’re thrilled to have James Hall on board and believe his broad experience will help us to achieve even better results for our clients.”

James Hall said “Carbon Clear is an ambitious company in a very interesting market – one that is topical given the pressures on companies to demonstrate a responsible approach to their business. I am delighted to have the opportunity to join them as they plan their next stage of growth." 

(Carbon Clear Website)

Carbon Clarity: Another Way to Think About Offsets

As part of my occasional series on increased "Carbon Clarity", I’d like to suggest an approach that may help understand how carbon offsets work. 


I've noted many times before that companies and organisations are going beyond compliance to measure and reduce their greenhouse gas emissions, so let’s start with the organisation’s carbon footprint.

While even the most basic carbon management initiative will include a plan for tackling emissions from the company’s own operations and their purchased energy (Scopes 1 and 2), the main carbon footprint standards don’t explicitly require organisations to measure emissions from suppliers, partners, customers and staff. One – dangerous – way to reduce Scope 1 and 2 emissions is to simply outsource those emission-intensive activities to a third party.  A firm could sell off its delivery fleet and hire a courier company to make deliveries on its behalf.  You can make a causal link between the organisation and these emissions, but they’re caused – and controlled – by someone else.

However, companies that ignore their Scope 3 emissions are missing an important opportunity to engage their stakeholders, or worse, are potentially exposing themselves to reputational risks. in the example above, the firm that hired the delivery company isn’t reducing emissions, it is simply shifting the burden to someone else.  Best practice is to take responsibility for those outsource emissions.  My company Carbon Clear is not alone in making this argument: the BSI’s PAS 2060 carbon neutrality standard requires organizations to include their Scope 3 emissions whenever possible, and the latest revisions to the GHG Protocol are also focused on ways to include more of these third-party emissions.

What happens when a company works to reduce their Scope 3 emissions? Generally speaking, they are promising to devote resources to measuring and reducing part of someone else’s Scope 1 and 2 carbon footprint.  They can then take credit for helping make those reductions happen.

This sounds a lot like the definition of carbon offsetting.  An offset is a purchased reduction from outside the organisation’s boundaries, used to count against the organisation’s own footprint.  In both cases, the company is paying for a reduction from a source beyond their immediate control.

To be clear, carbon offsets are not exactly the same as Scope 3 emission reductions. The original emissions from, for example, a factory in India were not included in the organisation’s carbon footprint (unless the organisation happens to own or purchase supplies from that factory).  The purchased reductions from switching fuel sources at that factory therefore would not count as a reduction within the Scope 3 footprint; while the reductions are real and would not have happened without that payment, they're outside the footprint.

Nevertheless, the effect on the environment and the message the company sends to stakeholders are the same.  Both offsets and Scope 3 measures are “outsourced” emission reductions.  The company has leveraged resources to make real, measurable cuts outside its organisational boundaries. As a result, the company has made a greater impact in the fight against climate change than it could have with a more inward-focused approach to reducing carbon.


(To the Carbon Clear homepage)

Going Local with 'Home-Grown' Power

This article was originally published on 20 September 2010, in issue 104 of the IEMA journal 'the environmentalist'.


A shift from large-scale energy production overseas to smaller local energy supply and distribution is underway in the UK and US.  In the UK, one of the main drivers for this change has been the establishment of a set of five-year national ‘carbon budgets’ intended to achieve a 34 per cent reduction in greenhouse gas emissions by 2020.

In the US, meanwhile, the overarching driver has been a move towards more secure domestic energy sources, which tend to have more immediate financial benefits and fewer associated environmental and economic risks than imported fossil fuels.

Despite these differing rationales, households, businesses and communities adopting local renewables stand to  reap similar types of benefits:

• reduced fossil fuel consumption and therefore reduced dependence on imported resources;
• improved security of supply and consequently less vulnerability to price shocks;
• more local job creation than with large-scale power plants;
• cleaner energy from renewable sources and less environmental damage, and in particular a reduced carbon footprint; and
• financial benefits to households, companies and other adopters due to reduced electricity bills, government subsidies and feed-in tariffs.

Tipping point
More people are realising that the costs and benefits of renewable energy are not only financial. Indeed, recent events have highlighted the increasing costs of our continued reliance on non-renewable fossil fuels.

This past summer, extreme weather events have occurred across the planet. Temperatures in Moscow reached 40 degrees Celsius for the first time, resulting in thousands dead and widespread forest fires. The heatwave decimated wheat crops and sent global cereal prices soaring. Meanwhile, the Indus River reached its highest level in 110 years causing catastrophic flooding in Pakistan. The misery in Pakistan coincides with major flooding in China, North Korea, Niger, Sudan, Ethiopia and Guatemala.

While no single event can be directly attributed to climate, their occurrence is consistent with the predicted impacts of global warming. The World Bank estimates that developing countries will need between US $70-$100 billion each year to adapt to anticipated climate change impacts on agriculture, infrastructure and human health between now and 2050. When coupled with increasing international competition for limited global petroleum and gas reserves, it becomes abundantly clear that the model for economic development based on fossil fuel consumption is unsustainable.

Betting on renewables price stability
One of the main obstacles to increased use of renewables – high upfront costs despite low to zero cost for the fuel – is increasingly one of the technology’s main attractions. The economics of oil – uncertain and unpredictable – are making renewables a safer bet for many end users. OPEC spot prices spiked in July 2008 at $137.18 per barrel before plunging to $35.48 in January 2009, only to start creeping up to $76.91 by December 2009. This extreme volatility makes it difficult for households, companies and governments to set long-term budgets, and increases financial uncertainty in the midst of a severe economic downturn. For those who can afford the initial investment, renewables can offer the reassurance of long-term price stability needed to plan for the future.

Not only climate change, oil prices and the prospect of dwindling supplies dampened enthusiasm for fossil fuels, but also, in recent months, more immediate environmental and safety risks. The recent BP Deepwater Horizon oil spill was splashed across front pages around the world. This oil spill, surpassing the Exxon Valdez as the worst in US history, ensured increased attention to spills from the coast of Indonesia to the Niger Delta. This negative media attention has helped spur the search for local energy alternatives.

Local power generation – then and now
In the past, electricity generation at the household or building level has generally meant running a diesel or petrol (gasoline) generator. These generators tend to be noisy, polluting, and more expensive than simply buying electricity from an electric utility. As a result, they tend to be kept on standby and used only in emergencies. The recent growth in local generation comes from renewable energy technologies – especially wind, geothermal, biomass, solar thermal and solar photovoltaic (PV).

While small petrol and diesel generators tended to produce more pollution per unit of electricity than utility power plants, most renewable technologies are significantly cleaner, producing (with the exception of biomass) practically zero ambient air pollution at source.

Renewables and regional recovery
Local clean energy is seen as potential source of recovery from the current economic recession. Rebuilding the economy by creating a new energy system is widely predicted to create more jobs. A 2009 report found that renewable energy investments are estimated to generate roughly three times more jobs than an equivalent amount of money spent on fossil fuels.(2)

As Greg Barker, UK Climate Change Minister, commented last month, “Our homes, businesses and communities can become dynamic players in the new energy economy by producing their own green electricity and selling it back into the national grid. New feed-in tariffs – a system of financial incentives to encourage households and communities to produce their own electricity – are at the heart of our efforts to ‘green’ Britain and empower consumers and to create a more local, decentralised energy system.”(3)

While job creation tends to be a lagging economic indicator, the British and American governments have made financial incentives available directly to UK households, companies and other renewable energy adopters  through government subsidies and feed-in tariffs. In the UK, the feed-in-tariff system introduced in April 2010  guarantees a payment of up to £0.42 per kilowatt-hour for renewably generated electricity. A PV installation for a moderately-sized household in London might cost £15,000. Thanks to reduced utility bills and payments from the government feed-in tariff, this investment would produce over the next 20 years a guaranteed annualised return of approximately nine per cent. Few other investments available to households in this economic climate could do as well. Lured by the feed-in-tariff, a number of firms are now offering to provide and install solar panels for free; the firm claims the feed-in-tariff and the property occupant benefits from a lower electricity bill. And as electricity prices are predicted to rise in the near future, the financial benefits only increase.

Planning for renewables
While world leaders from India and China to the US have trumpeted the macroeconomic benefits of renewables, local issues regarding land-use planning can still be a concern. NIMBYism has not gone away, and residents continue to protest against large wind farms ‘in their backyards’. However, the smaller scale and partnership approach employed by local renewables projects can increase acceptance. Moreover, local companies (rather than distant multinationals) are more likely to get community buy-in with ‘home-grown’ and power projects that provide energy at the local level.

“Planning is the big unknown in renewable,” says Ryan Law, founder of Geothermal Engineering Ltd (GEL). “Communities object to mega-projects which supply the whole country, but if people realise they can have a direct stake in local schemes I think this is the key to it. Geothermal is Cornwall’s resource, not a project dumped on the county from outside,” said Law.(4)  After two years of planning with Cornwall County Council, GEL has been granted planning permission to develop the UK’s first commercial geothermal power plant at its Redruth site.

The challenge
The extent to which governments can continue to prop up their economies with large renewable energy  investments remains to be seen. The cost to governments will start to add up quickly as more and more companies and households take advantage of generous tax credits and feed-in tariffs. Most governments have anticipated this issue by gradually reducing the amount the feed-in-tariffs will pay to new adopters in subsequent years.

There are also technical challenges as large numbers of small generators are linked to the grid of electric utilities. While the overall generation from baseline power plants may go down as local power generation rises, utilities will have less control over when and how much electricity will be available, necessitating an investment in additional back-up generation capacity from more expensive power plants. On the positive side, a technical fault or downed power line in one location will not necessarily plunge an entire region into darkness. The more technologically and geographically diverse the local generation systems in place, the less the utilities should need to bring their back-up systems online.

On balance, the benefits appear to outweigh the challenges. There are synergies across the various benefits that extend from the local to the national level via job creation, diversification, and financial savings which could lead to greater spending and investment in the local economies instead of purchasing imported fossil fuels. As we noted in a previous 'Energy and Business' article (‘From credit crisis to carbon crisis’, Issue 68), governments were quick to step in when the global financial system was on the brink of meltdown.

All in all, these investments in renewables should lead to greater energy security and reduced climate change risks in an uncertain world. Given these benefits, local renewables need more – not less – support.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA, CEnv is Managing Director at carbon management company Carbon Clear Limited.

Ash and Carbon: Reassessing the Risks of Air Travel

This article originally appeared in the 14 June 2010 (issue no. 100) edition of the IEMA journal "the environmentalist".

The eruption in April of a previously unremarkable volcano in Iceland disrupted air travel around the world. The blanket no-fly zone that resulted from the ash cloud over Europe brought chaos to travellers and companies who relied on air travel to get products and people to their destinations. During the initial travel crisis, at least 95,000 flights were cancelled . Even weeks after the event, sporadic restrictions continue to make air travel a guessing  game.

Companies that had contingency plans in place tended to fare better than those that  were solely dependent on travel through the airports. Dutch logistics company TNT was able to mobilise an existing plan to transfer air freight from its air hub at Liège, Belgium to its road hub in the southern Netherlands.

Not everyone was so lucky. Faced with the closure of airports across Europe, people and organisations  scrambled to find ways to get between points A and B. Families boarded ferries and long-distance coaches,
business people turned to trains and videoconferencing facilities, and more than a few intrepid travellers hired cars and taxis for 12-hour drives across the Continent.

Countless others whiled away the time in airports and hotels until flights resumed. Many organisations that commit to reduce their carbon footprint, pledge to address their business travel emissions but struggle to meet
their goals in the face of everyday business requirements. If there is a silver lining to the Eyjafjallajökull  eruption, it has been an increased awareness of travel alternatives on the part of individuals and organisations.
The prolonged transport disruptions and ensuing chaos gave many companies and travellers an opportunity to reassess their transport choices and test some of the alternatives. Now that the dust has started to settle, we can consider the extent to which these experiences will affect their future transport decisions.

How are transport decisions made?

According to a World Trade Organization report, over one-third of global trade by value is transported by air. How do organisations and individuals decide when to travel by air, sea, rail or road?

Transport decisions are usually made as a trade-off between speed, financial cost, and comfort or reliability. An increasing number of organisations are also weighing the environmental impacts of their transport decisions. One of the greatest apparent advantages of air travel over the alternatives is speed. With a cruising speed in excess of 500 miles per hour, aircraft make it possible to deliver products and people anywhere in the world within 24 hours.

This speed comes at a cost, both financially and to the environment. Air freight tends to be more expensive  than shipping products by rail, sea or road, which means that companies tend to use airplanes for lightweight, higher value products like flowers, pharmaceuticals and perishable foodstuffs. Meanwhile, the greenhouse gas emissions for air freight, at around 0.65 kg CO2e per tonne-kilometre, can be over 50 times higher than  surface-based alternatives.

Ships and barges are a popular means of transporting large volumes of cargo where rapid delivery times are not as critical, and ferries are an increasingly attractive option for passenger travel over small bodies of
water like the Irish Sea or the San Francisco Bay. With greenhouse gas emissions as low as 0.01 kg CO2e per tonne-kilometre, cargo freighters are a cost- and carbon-efficient means to transport non-perishable products long distances. With advanced planning, it is possible to transport many otherwise timesensitive
goods overseas by ship instead of by air, lowering air-related emissions and potentially reducing costs.

Rail and road transport occupy a middle ground between ships and aeroplanes. For passenger journeys of a few hundred miles, high-speed rail can be just as time-efficient as short-haul air travel – without the hassle
of airport security and often with greater amenities. For example, Eurostar sources local fresh foods and provides regional cuisine on its train journeys between London, Paris and Brussels. The company’s
offerings are even featured in a magazine for lovers of fine wines, restaurants, and travel. It’s hard to imagine such accolades for a short-haul flight of comparable distance and time.

While passenger rail travel is experiencing a resurgence – at least in Europe – rail freight continues to struggle.
In the US, goods are transported coast-tocoast by truck even though the rail network could carry greater volumes at a lower carbon cost. However, lack of investment in rail has resulted in an antiquated network
with very slow trains. In the UK, meanwhile, a congested rail network that prioritises passenger travel has led to surging road freight levels. Freight trucks have the added advantage of flexibility and convenience
compared to rail, despite generating roughly twice the greenhouse gas emissions per tonne-kilometre. Trucks can provide door-to-door delivery of a wide variety of products and services – a benefit that makes them
indispensable to many corporate customers.

For corporate travellers in the US, fast train travel is limited to the Boston to Washington, DC corridor – and with average speeds of 70 mph even these ‘high-speed’ Amtrak trains are not particularly fast. Beyond this northeast seaboard, passenger travel by train can take twice as long as driving. An investment in high-speed rail is included in pending climate change legislation in the US, where a shift from cars and airplanes is seen as a key element in reducing reliance on imported fossil fuels for transportation.

Alternatives to travel

The sudden closure of airspace in April meant many travellers had to use alternatives they would otherwise not have considered. Many stranded travellers turned to video-calling and other internet teleconferencing solutions. Companies such as Cisco and Hewlett-Packard experienced a surge in business bookings for their
teleconferencing and newer ‘telepresence’ technology and facilities for online meetings. Telepresence is essentially a virtual meeting using large screens and high definition images to simulate face-to-face meetings.

Long-standing habits of travelling for meetings and conferences quickly fell by the wayside, as technological alternatives such as teleconferencing were given a boost. “A market transition is very often marked by a big external event or disruption,” said Fredrik Halvorsen, the chief executive of Norway-based teleconferencing firm Tandberg (just acquired by Cisco). The disruption in air travel was clearly a market opportunity for Cisco which launched a Fly Free programme to provide businesses or governments with stranded key personnel with complimentary use of the company’s telepresence rooms. “As the world (has) seen earthquakes, H1N1 and other disasters, it has really made businesses pause to think how they can use technology to create a
sustainable business model,” Cisco senior vice president of emerging technologies Martin De Beer said.

In the UK, telecommunications company BT is championing the use of teleconferencing solutions as a way for
businesses to make progress on their carbonreduction commitments. With business travel often comprising a third or more of many organisations’ carbon footprints, technology that reduces the need to spend time, money and carbon travelling from place to place appears poised to experience a surge of interest.

Making informed decisions

Individuals and company representatives can use websites, travel agents and freight forwarding companies to get reliable and up-to-date pricing and scheduling information on travel alternatives. As the cost of carbon becomes an increasingly important consideration when choosing to use air, rail, road or sea transport, organisations are asking for tools that allow them to make informed decisions based on the environmental impacts of their transport modes.

For a simple point-to-point journey using one type of vehicle, this type of carbon calculation is relatively simple. Things become more challenging for intermodal transport decisions – for example comparing the cost and carbon emissions from a truck-barge-truck shipment against a rail-truck-air freight shipment. The same
challenges appear when organisations must decide whether to send staff by rail – when they will have to stay several nights in a hotel (with resultant financial and carbon costs) – versus a shorter stay because the journey can be made by plane (assuming no volcanic ash). In anticipation of this need, we have been trialling an online intermodal calculator to compare the emissions impact of complex, multi-mode transport decisions.

Conclusion
The UK Committee on Climate Change has projected that reaching the 80 per cent greenhouse gas emissions reduction target by 2050 will require decarbonising most of the economy and severely restricting any further growth in air transport emissions. If we are to reach these targets, the transition has to begin now. It is our hope that the volcanic ash cloud has spurred people and organisations to begin the process of identifying viable low-carbon alternatives to current travel practices.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA,CEnv is Managing Director at carbon management company Carbon Clear Limited.

What Now for Corporate Carbon Management?

The following article was originally published in the 15 February 2010 issue (Number 92) of the Institute for Environmental Management and Assessment journal 'the environmentalist'.

Much has been written about the lack of a comprehensive global treaty at the December 2009 Climate Change Summit in Copenhagen, but relatively less attention has been focused on some of the positive outcomes.

Government leaders agreed at the summit to work together to limit global average temperature rises to less than 2 degrees Centigrade.  They also agreed a framework for addressing the deforestation that accounts for at least twenty percent of global greenhouse gas emissions.  The Copenhagen Accord negotiated between the Brazil, China, India, South Africa and the United States calls on developed countries to set specific carbon reduction targets for the year 2020, to define specific actions for reaching the targets, and to report on each country’s emissions and actions at least every two years.  It also calls for the USA, United Kingdom and other developed countries to provide new and additional funding in order to help the developing world pay for climate change mitigation, adaptation, technological development, and capacity building.  Taken together, these are important positive steps that take us closer to a low-carbon future.

To date, however, the pledged commitments from the largest polluting nations do not add up to deliver the level of reductions scientists believe is required to forestall the worst climate change impacts.   Bolder action is required.  Faced with politicians’ unwillingness to commit to more ambitious goals, it is more important than ever for individuals, communities, and organizations to take voluntary action to reduce their own carbon footprints.

Copenhagen – a backdrop for leading companies
The writing is on the wall – the risks of ignoring climate change are high, and if companies wait for multi-lateral treaties before they act, they are likely to miss vast market opportunities for new products and processes designed for a low-carbon economy.

The private sector seems to be getting the message. As we discussed in “Beyond Compliance” (issue 84), leading multi-national companies are not waiting for global treaties to embark on carbon reduction initiatives.  The writing is on the wall – the risks of ignoring climate change are too high, and if companies hold out for multi-lateral treaties, they are likely to miss the vast market opportunities in designing new products and processes for a new low-carbon economy. A wide array of companies used the Copenhagen summit as a backdrop against which to reaffirm their commitment to greenhouse gas reductions and position themselves as low-carbon leaders.

For example, as an official vehicle supplier to the climate summit, the BMW Group provided locally emission-free hydrogen-powered models, models with extra-fuel-efficient diesel engines, and all-electric models vehicles for the talks. Since this past summer, users in Berlin and other cities have been field testing new BMW electric car models as part of a 600-car worldwide trial, evidence of the company’s commitment to remaining a transportation leader in a lower-carbon future.

Low carbon to zero carbon – companies race ahead of governments
Many leading companies not only have a low-carbon plan in place with targets exceeding those discussed at Copenhagen, but are already planning for a zero-carbon future. Northern Europe’s largest utility, Vattenfall AB, with CO2 emissions from electricity and heat production of 82.5 million tonnes in 2008  and 4.7 million retail customers in Denmark, Finland, Germany, the Netherlands, Norway, Poland, Sweden, and the UK, has projections to produce 100% zero-carbon energy by 2050.

Last month [January-ed.], Wal-Mart announced the completion of three more solar power projects in California, as part of its plan to nearly double its solar energy use in California. “The completion of these facilities marks another important step in our drive to become more sustainable and achieve our goal of being supplied 100 percent by renewable energy,” said Kimberly Sentovich, vice president and regional general manager for Wal-Mart.

British Telecom, having already reduced its carbon footprint by 58% in the UK through extensive use of renewable energy, has set a target to achieve an 80% reduction in its carbon intensity worldwide by 2020.  BT is one of the UK's largest purchasers, with an environmental influence that extends well beyond that of its own staff and workplaces.

A similar story is unfolding around the world, as firms realize that reducing their carbon footprint leads to improved financial performance, increased staff and customer satisfaction and a greater commitment to environmental stewardship.

One of the drivers for this emphasis is investor pressure.  The Carbon Disclosure Project (CDP), a not-for-profit organization funded by some of the world’s largest institutional investors, asks listed firms to disclose their carbon footprint, explain their exposure to climate change impacts, and detail the steps they are taking to reduce their greenhouse gas emissions.  Because much of the data submitted to the CDP is made public, companies often find themselves in a race to keep pace with other companies that have responded to the organisation’s queries.

Regulation as backstop
While many companies continue to take further strides in renewable energy and low-carbon initiatives, governments across the globe are not standing still, and the impact of their decisions cannot be ignored. The failure to reach a legally-binding agreement at Copenhagen means that government actions remain uncoordinated, but they still have the potential to impose material business risks for firms that have to date been slow to take action.  At the same time, they continue to raise the bar for firms that want to go beyond compliance.

The European Union’s Emissions Trading Scheme (EU ETS) has stimulated many European utilities and companies to embrace renewable energy technologies, while the associated carbon offset markets have helped fund technologies such as wind and solar in developing countries and emerging economies like China and India.  Since 2005, the EU ETS has served as a much-needed prod for companies, requiring large emitters to measure their footprint and consider the cost of carbon in their planning and investment decisions. 

The French Government, meanwhile, is planning to supplement the EU ETS with a carbon tax on transportation and industry to drive faster reductions.  Large U.S. polluters, anticipating the eventual emergence of a national cap and trade scheme in that country, are postponing or canceling plans for new coal fired power plants.

The UK continues to provide a leading policy framework for greenhouse gas reductions, with measures such as the Carbon Reduction Commitment (see our CRC article in issue 76).  The British Department for Energy and Climate Change estimates that by 2020, the CRC will increase competitiveness by reducing CO2 emissions by 4 millions tonnes each year and by achieving cost savings of about a billion pounds sterling each year. 

Belgian Climate Minister Paul Magnette believes that raising the EU's emissions reduction target from the current 20 percent cut in carbon emission to a 30 percent cut by 2020 could give European firms a "first mover advantage" in the change shift to a green economy – which could lead their peers in India, China and the United States to follow their example.   Not wanting to be left behind, U.S. companies are pushing for stronger government guidance.  On 21 January 2009, more than 80 leading U.S. companies released a letter calling on the government to enact legislation that “will unleash innovation, drive economic growth, boost energy independence and decrease...carbon emissions.”

Conclusion
In October 2009, British Prime Minister Gordon Brown referred to the importance of the Copenhagen Summit by announcing that "there is no Plan B".  Given the promising but limited outcomes, we must hope he was wrong.  We may not be able to rely on government action alone to deliver the emissions cuts we need to stave off the worst impacts of climate change.  Fortunately, companies, organizations and individuals are discovering the benefits of going beyond compliance and taking voluntary action to achieve ambitious greenhouse gas emission reductions.

As Tony Hayward, Chief Executive, BP noted, “It’s dangerous to promise too much too soon… [the Copenhagen meeting] was “just one step on what will be a long journey to a lower carbon world – and that journey will be hard and long.”

This new decade may well usher in a new level of corporate activity and government commitment in tackling climate change - whether this will be enough to deliver the deep carbon reductions that scientists say are required remains to be seen.

Suzy Hodgson, AIEMA is a Principal Consultant and Jamal Gore, MIEMA/ CEnv is Managing Director at carbon managemnet company Carbon Clear Limited.

Beyond Compliance

This article originally appeared in the October 2009 issue (no. 84) of 'the environmentalist', the magazine of the Institute for Environmental Management and Assessement (IEMA).

In the run-up to Copenhagen, governments around the world are proposing carbon reduction targets as part of their negotiating positions. New Zealand has set a preliminary goal to reduce emissions 10 to 20% by 2020; Japan has set a 15% reduction target – albeit from a different baseline. Meanwhile, proposed legislation in the U.S. sets a 17% target by 2020 and the EU has pledged to reduce emissions 20% by that date.

However, many leading global companies have set their own corporate targets for emissions reductions that make these country pledges seem modest and meagre. Wal-Mart’s climate change strategy sets a 20% reduction target by 2012 and Unilever have set a 25% reduction by that same year. British-French rail company Eurostar set a 25% reduction target for 2012, and reached its goal three years ahead of schedule. Meanwhile, supermarket chain Tesco promised a 50% reduction in its footprint by 2020, and Marks and Spencer pledged to go completely carbon neutral by 2012.

In this article, we explore why large companies commit to such ambitious reduction goals, and consider what this means for carbon reduction both at home and abroad.

Why do large companies go beyond compliance?

Companies embark on carbon reduction initiatives in order to exploit opportunities and to manage their risks, including costs, customer retention, regulation and/or exposure to weather and resource variability.

As described in “The end of the low-carbon agenda?” (Issue 72), many companies are attracted to the lower energy and transport bills associated with driving carbon out of the business. Marks & Spencer, for example, originally pledged to spend £200 million on its “Plan A” eco-initiative, but has since found the programme to be cost-neutral and expects the ultimate savings to outweigh its planned investment. In this context, a low-carbon initiative can engage staff in what would otherwise be a traditional cost-reduction exercise.

Multinational companies face more direct risks from climate change. Long supply chains and inefficient suppliers leave firms vulnerable to rising energy prices – especially as governments regulate emissions in transport. Meanwhile, weather-related disruptions – storms, floods, drought, can threaten companies’ “just in time” logistics networks. Climate change risks are increasingly being incorporated into businesses’ planning strategies. As Unilever states, ‘”there will be serious consequences for our business operations, including threats to our agricultural supply chain and the availability of water in some of our markets. The costs of addressing climate change now, while considerable, are likely to be far less than waiting and allowing the problem to get worse.”

With climate change now a popular concern, companies that voluntarily embark on carbon reduction initiatives are earning a reputation as environmental leaders. The Sunday Times “Best Green Companies” list is widely seen as the benchmark for sustainability leadership in the UK, and a company’s commitment to carbon reductions is one of the main criteria that the newspaper uses to evaluate performance. Companies strive to be on this and other “green lists” because environmental leadership can often translate into increased customer loyalty and sales growth, as well as employee satisfaction.

Anticipating regulatory trends is not a new concept for large corporations. For example, chemical companies have long understood that environmental risk management is essential to their continued profitability.

When the chemical industry launched its Responsible Care code of practice in 1988, only 13% of its practices were required by US government regulation. Four years later, the US government had made 80% of these company-initiated practices a regulatory requirement. Companies that had voluntarily adopted the Responsible Care principles were well placed to comply with the eventual increase of government regulation.

Climate change policy has followed a similar course: despite growing pressure, governments have been relatively slow to adopt emissions reduction targets. Meanwhile, leading companies have seen the advantages of a low-carbon economy. These companies have been steadily measuring, reducing, and offsetting their carbon emissions over the past five years – with telecommunications firm BT launching its carbon reduction initiative back in 1992.

The global supply chain

Unlike utilities and manufacturers, large retailers often have relatively low “direct” or “Scope 1” emissions (emissions from sources under a company’s direct control), and their emissions from purchased electricity and steam are not particularly high. However, these companies maintain extensive supply chains, and influence a carbon footprint that may be 20 to 60 times greater than their direct and energy indirect emissions.

Unilever, for example, reports the carbon footprint from their own factories, offices, laboratories and business travel at approximately four million tonnes of CO2 equivalent per year. Their wider (“other indirect” or “Scope 3”) footprint from sourcing agricultural and chemical raw materials is around ten times larger, and when consumer use and product disposal are included, this footprint can expand to 30 to 60 times greater than their direct emissions. As a result, many companies find that they can achieve more ambitious emissions reductions if they involve their suppliers – and even their customers – in their low-carbon initiatives.

These companies often wield tremendous influence over their suppliers due to their immense purchasing power. Wal-Mart, for example, is the largest single customer of many suppliers around the world. Even Proctor & Gamble, the world’s largest consumer goods maker, counts Wal-Mart as its largest customer. When Wal-Mart asks its suppliers to measure their carbon footprint or identify ways to reduce emissions, they are more likely to get a response than would be a smaller customer. As Marks & Spencer’s Mike Barry puts it, “They know that if they want to want to be pursuing business with us in the future, they have got to come on the journey with us.” To this end, Marks & Spencer has helped its suppliers set up four “green” factories that use significantly less energy and contribute to the firm’s lower carbon footprint.

Not only are these changes pushed up the supply chain, but also down to the end user. After launching their “Plan A” sustainability initiative, Marks & Spencer found that up to 75% of the carbon footprint of their clothing came from washing, drying, and ironing. As a result, the company has begun designing and labelling its clothes for washing at lower temperatures and launched a customer communications campaign.

As described in our article “Counting the Cost of Outsourcing” (Issue 55), many of the emissions from developing countries are attributable to outsourced manufacturing on behalf of Western companies. Indeed, adjusted for exports, China’s carbon footprint is significantly lower than the United States’. 70% of the products sold in Wal-Mart stores are made in China, and the company has supply relationships with 5,000 Chinese enterprises.

What happens when massive Western companies demand that their foreign suppliers go beyond compliance and reduce emissions? It may be too early to tell, but we would expect this supply chain pressure to lead to greater demand for green electricity and energy efficiency improvements at factories in China, India and other developing countries.

There is another source of external emissions reductions that major companies are pursuing: carbon offsets. Carbon offsets are purchased emissions reductions that occur outside an organisation’s boundaries. In this regard, generating measurable reductions by investing in a wind or solar project in China is only one step removed from investing to help an apparel factory in China reduce energy.

Indeed, large corporates in the U.S., U.K. and mainland Europe are embracing carbon offsetting to help them go beyond compliance and achieve net emissions reductions far faster than they could through incremental internal measures. By supporting projects in developing countries that do not have national caps on their carbon emissions, these companies are helping to accelerate the transition to a lower-carbon mode of economic development.

Different paths to a lower-carbon future

It is clearly in large companies’ best interest to announce and pursue ambitious carbon reduction goals. These initiatives can drive significant reductions in thousands of supplier companies in developing countries and provide an incentive for a rapid transition towards lower-emissions practices in those countries.

This ongoing trend raises an interesting possibility. The post-Kyoto climate change negotiations are currently bogged down over the issue of developing country reduction commitments. Developed nations like the U.S. and U.K. argue, correctly, that emissions from China, India and other poorer nations are so large that serious action to fight climate change will be stymied without their active involvement. The developing nations argue, also correctly, that current warming is due to richer nations’ historical emissions and rich countries should demonstrate their own commitment to reduce their footprint before lecturing others.

Wal-Mart, M&S and other companies are showing that it is not either-or. The world economy is so intertwined that actions taken in developed nations can lead to significant emissions reductions overseas. Indeed, while a binding emissions cap would provide the force of law, it is likely that supply chain pressure and demand for offsets will also drive significant cuts.

Major structural change to our carbon-based economy is inevitable as we shift to different ways of meeting our needs while tackling the challenges of climate change. Large corporates have led the way in showing how a commitment at home can lead to a reduced footprint overseas. As pressure mounts on carbon caps in developed countries, we can expect to see it spread into faster action around the world.

Suzy Hodgson, AIEMA, is a principal consultant and Jamal Gore, AIEMA is the managing director at specialist carbon management company, Carbon Clear Limited.

PRESS RELEASE: Total wins 'Environmental Innovation Award 2009'

The following press release features Carbon Clear's fuel card partnership with Total.

Institute of Transport Management, 18 June 2009

TOTAL wins ‘Environmental Innovation Award 2009’

Birmingham 17th June 2009 – Awareness of environmental issues in business and among the general public has reached new heights as a result of a constant barrage of reports and studies into the contribution of human activity to climate change. In the fleet and automotive sectors, companies are facing strong pressure to develop products and systems which reduce emissions at the same time as maintaining high performance and productivity levels. As part of its fleet Awards programme, the Institute of Transport Management (ITM) has been investigating fuel cards as a means of reducing carbon emissions and increasing fleet efficiency. On the basis of information collected by the research team, the Awards Committee is hereby delighted to announce that TOTAL is to be presented with an ITM ‘Environmental Innovation Award 2009’ for its TOTALCARD green product.

The TOTAL Group is a major player in the global petroleum industry and is actively involved in both upstream and downstream operations: oil and gas exploration, development and production, and liquefied natural gas (LNG), plus refining, marketing and the trade and shipping of crude oil and petroleum products. It also produces base chemicals (fertilisers and petrochemicals) and speciality chemicals for both consumer and industrial markets (adhesives, resins, electroplating and rubber processing). The company additionally has interests in coal mining and power generation. On the basis of a clear corporate vision and decisive leadership, the company has grown to become the fourth largest integrated and publicly traded company oil and gas company in the world, able to boast sales of more than £150 billion per year and the second biggest capitalisation in Europe, registering in excess of €130 million.

Its TOTALCARD services help fleet operators to fine tune fleet efficiency through web-based, PIN-protected management systems which operate through a nationwide network. Managers can avail of a thorough yet intelligible analysis of fuel use, including spending, miles per gallon and time of purchase. The system gives managers much greater control over the activities of the fleet, resulting in cost savings as well as a better environmental profile. Indeed, TOTAL is fully committed to exploring the potential for environmentally friendly fuel products, and has recently launched a dedicated green card to assist fleet managers in meeting the latest emissions regulations.

TOTALCARD green enables easy calculation of CO2 emissions, implementation of reduction programmes, access to follow-up reports and carbon offsetting. The emissions calculation is based on fuel expenditure and is available to managers online. Collection of such data forms the background for a three-part CO2 reduction plan: price incentives for advanced fuels which decrease consumption by 3.8 percent; ongoing monitoring of daily expenditure, fuel consumption per vehicle and unusual transactions; comprehensive and practical advice relating to the key principles of investing in advanced fuels and lubricants, vehicle maintenance and driving behaviour. Following implementation of the action plan, managers can access online data on emissions levels, percentages of advanced fuels used and resultant savings. Additional emissions can be offset by the Carbon Clear programme to which TOTAL itself contributes in proportion to the fuel volumes of TOTALCARD green clients.

Announcing the Award to TOTAL, ITM Media and PR Director Mr. Patrick Sheedy said: ‘TOTAL has been successful with the ITM Awards programme in the past, winning fuel card titles since the start of the decade. With its latest product, TOTAL tackles the environmental issue head-on through a dedicated green fuel card. Considering the increase in the burden of emissions regulation on businesses today together with public pressure to improve green credentials, fleet companies really do need a helping hand to reduce CO2 output. Having thoroughly examined the fuel cards currently on the market, the Institute is confident that the strongest environmental offering comes from TOTAL, with its TOTALCARD green. This latest fuel card from TOTAL will be a hugely useful tool for fleet managers who must watch emissions at the same time as keeping an eye on the bottom line. It also underlines TOTAL’s dedication towards ensuring a healthy energy future for the planet.”

Mr. Sheedy concludes: “I congratulate TOTAL on winning this Award and hope that other businesses in the transport industry will pay heed and model their own environmental policies on those of TOTAL. I look forward to witnessing the development of further pioneering products and services from TOTAL in the near future.”

(Carbon Clear homepage)

More Hot Summers - More Air Conditioning?

(This article was originally published in issue number 80 (June 2009) of the IEMA journal the environmentalist.)

One of the main challenges in the fight against climate change is dealing with unexpected feedback effects. In many cases, a warming globe creates impacts that lead to even more warming. In this article, we explore the feedbacks between climate change and building heating and cooling systems, and discuss some of the options available to environment managers.

The Met Office has predicted a sweltering summer for 2009. According to the UK’s Chief Meteorologist, “….we can expect times when temperatures will be above 30°C, something we hardly saw at all last year.”

Hot summers are becoming more common as climate change takes hold. While summers in 2007 and 2008 were cooler in many northern latitude countries, the summer of 2003 was the hottest in Europe for at least five centuries and in the UK, six out of the seven warmest years since 1659 have occurred since 1990.

And it’s not just a European phenomenon - eight of the past ten summers in the USA have been warmer than the average for the 20th century.

Climate Change and Building Energy

These hot summers have energy implications: according to Government figures, the USA's residential energy demand was approximately 10 percent higher than what would have occurred under average climate conditions for the season, and it is likely that in the UK, electricity consumption will rise as a result of an increase in air conditioning. Since most of our electricity in both countries comes from fossil fuels, increasing air conditioner use makes it more difficult to meet challenging emissions reduction targets.

In the USA 65% of commercial buildings have air conditioning, compared to 27% in Europe, although a higher percentage of buildings constructed after 1991 rely on air conditioning. One rule of thumb is that a 2°C temperature increase translates into a 25% rise in air conditioning loads. If summers continue to get hotter, will the UK adopt the Continental tradition of afternoon siestas to deal with the heat, or follow the USA’s heavy reliance on round the clock air conditioning?

An indication of what might lie in store for the UK can be gained from looking at air conditioning trends in New England. Historically, electricity demand was greater during the region’s snowy winters due to heating demands and a greater reliance on electric heaters. In summer demand would drop as residents relied on windows and fans to keep cool. But around 2000, peak electric loads shifted to the summer due to the increased use of- and the perceived need for-air conditioning. Now, even in northern New England, peak load has shifted to the summer due to more regular use of air conditioning, and a switch away from electricity for winter heating.

Making matters worse are the unpredictable shoulder seasons of autumn and spring. Lag-times in heating and cooling mean gas-fired heating systems may be competing with air conditioners in those months where cool mornings transition into warm afternoons. Simultaneous heating and cooling is not uncommon, especially in small and mid-size buildings which do not have active management and may not have been properly commissioned. Increasingly variable weather during these seasons due to climate change may mean even greater energy consumption.

Can these trends in increased summer electricity demand be reversed, or will our hotter summers continue to be accompanied by a rise in air conditioning and the related emissions from electricity production? Can we take action to break this positive feedback loop?

Small buildings and air conditioning use

Historically, smaller buildings had a single boiler and thermostat. Now even modest buildings of 4,000 square feet (372 square meters) typically include heating, air conditioning and ventilation systems and automated controls with numerous control devices. These systems are generally design/build – meaning the same firm that designs them, installs them. This approach may result in a lack of independence and transparency in the set up and deployment of the building controls.

Typical problems in small retail and office premises can include:

• Lack of documentation (i.e., no sequence of operation or controls wiring diagrams)
• Comfort problems (intermittent overheating in the winter or overcooling in summer)
• Loss of original intent as subsequent contractors modify the system with limited understanding of existing functionality (e.g., programmable thermostats not set properly for use)

This problem of proper commissioning and air conditioning use can be illustrated in an ongoing project evaluating a 4,200 square foot (380 sq meter) office building in northern New England. A review of the monthly consumption of purchased electricity showed that this building’s electricity usage was 40% higher in August than in January due to air conditioning use even though 2007 was not a particularly hot summer in New England The annual electricity usage amounted to 31,850 KWh causing almost one tonne of CO2e emissions . This indicated an average electricity energy intensity of 8.5 kWh per square foot. Regional best practice indicates an average electricity energy intensity of half this amount, 4.12 kWh per square foot. . Optimization of controls could reduce the building’s electricity usage by at least 15% overall - in this case, cutting annual greenhouse emissions by approximately 150 kg of CO2e.

The Heating Ventilation and Air Conditioning (HVAC) systems of small and mid-size commercial buildings typically do not work as effectively and as efficiently as they might. The deficiencies can result from a lack of expertise in control system diagnostics and operations in the staff and in contractors who typically are on site to perform routine maintenance. In particular, smaller buildings and companies often cannot afford to maintain a facilities manager or employee with facilities management expertise.

These results are not unique to the US. A pilot study in the UK evaluated 20 retail premises for temperature and relative humidity. The results showed that higher summer thermostat settings could improve both thermal comfort and the energy efficiency of air conditioning units. However, despite increased energy costs and the public’s mounting concern over climate change, few UK retail outlets have any plan for managing air conditioning use.

These deficiencies lead to on-going costs, lost personnel time due to comfort problems, increased operating costs as contractors are brought on site to address comfort issues, energy waste, and avoidable carbon emissions.

The building as a system

While proper operational control of energy use is often the starting point for making cost-effective improvements and reducing carbon emissions, it is also helpful to recognize a building as a dynamic system – with energy consumption influenced by its site and orientation, building envelope micro-climate, occupant behaviour and landscaping and the surrounding vegetation.

For example, ground soil and groundwater are both warmer in the winter and cooler in the summer than ambient air temperature. Ground source pumps use these temperature differentials to pre-cool incoming air and reduce the energy requirement of air conditioners in summer, and do the reverse in winter.

Construction materials can play an important role: masonry has a higher thermal mass than glass and steel, and therefore maintains a more even temperature. The lag time between heating and cooling can be used to maintain interior temperatures and reduce air conditioning loads.

Building occupants can be motivated to reduce internal heat gains in the summer by ensuring lights, computers, printers and other electrical equipment is turned off when not in use. Meanwhile staff can be encouraged not to overcool buildings simply because air conditioning is available – many companies are already encouraging casual wear on hotter days to reduce cooling requirements.

Landscaping can provide a shade canopy in the summer, lock up carbon through photosynthesis, and reduce ambient temperatures through evapo-transpiration. Broad-leaf deciduous trees in particular have canopies which reduce passive solar gain in the summer while allowing it when needed in the winter.

This type of holistic view is easier for new-builds, where such considerations can be factored in at the planning stage. Options for cost-effective improvements are more limited with existing buildings. However renovation does present real opportunities to improve the building envelope to manage heat flow. Natural ventilation can be improved by considering the placement of internal partition walls that do not impede cross ventilation, and windows can be retrofitted to make better use of nighttime cooling to lower cooling requirements during the day.

Conclusion

Nearly every human activity has an effect on the climate. Buildings occupy a critical role in modern society, and climate feedbacks threaten to amplify their impact. However, with careful planning, we may be able to break the link between buildings and global warming.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore AIEMA is Managing Director at specialist carbon management company Carbon Clear Limited.