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The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term: Company Case Studies Final Report (Volume 1) May 2009 The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term: Company Case Studies Final Report (Volume 1) Date: 29th May 2009 526 Fulham Road, London SW6 5NR Tel: 020 7471 8000; Fax: 020 7736 0784 www.ghkint.com The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term Document Control Document Title The Impacts of Climate Change on European Employment in the Medium-Term Job No. Prepared by Adarsh Varma Checked by Henry Leveson-Gower Date 18/05/09 The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term CONTENTS 1 INTRODUCTION...............................................................................................................................1 2 A SYNTHESIS OF THE FINDNGS FROM THE COMPANY CASE STUDIES ...............................3 3 CASE STUDY 1: ENEL ..................................................................................................................12 4 CASE STUDY 2: STATKRAFT ......................................................................................................19 5 CASE STUDY 3: SWM...................................................................................................................25 6 CASE STUDY 4: HOLCIM..............................................................................................................29 7 CASE STUDY 5: CEMENTA – HEIDELBERG CEMENT GROUP................................................41 8 CASE STUDY 6: COCA-COLA......................................................................................................49 9 CASE STUDY 7: CADBURY..........................................................................................................57 10 CASE STUDY 8: MARKS AND SPENCER .................................................................................66 11 CASE STUDY 9: ANCC-COOP....................................................................................................75 12 CASE STUDY 10: CARREFOUR.................................................................................................83 13 CASE STUDY 11: VINCI ..............................................................................................................93 14 CASE STUDY 12: AIR-FRANCE KLM ......................................................................................107 15 CASE STUDY 13: VIRGIN-ATLANTIC ......................................................................................119 16 CASE STUDY 14: DEUTSCH POST DHL GROUP...................................................................126 17 CASE STUDY 15: MENZIES DISTRIBUTION LTD...................................................................140 4 The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term 1 INTRODUCTION 1.1 Purpose of the Report GHK Consulting was commissioned to produce material for the Restructuring Forum to be held on 22 and 23 June on the impact of climate change on EU employment in the medium term (to 2020). In particular the material comprises: Fifteen company cases studies across a range of sectors examining how businesses are being influenced by, and responding to climate change and related polices, with a summary report pulling out the main lessons (Volume 1); and A literature review in the field of climate change and its impact on employment (Volume 2). This report is Volume 1 and presents 15 detailed company case studies that explore the main climate change drivers affecting companies; the key responses both internally and externally directed; the impacts on company financial performance, jobs and skills; and the future directions and lessons from experience to date. 1.2 Approach to the Selection of the Case Studies The companies studied were selected to cover a range of sectors (see Table 1) with different types of exposure to climate change policy drivers: energy, energy intensive, employment intensive and transport sectors. Table 1: Categories of Sector from which to Select Individual Businesses Criteria for Selection Title and Characteristics of the Category Exemplar Sectors Energy (carbon) Energy Generation and Supply: Sectors Electricity, gas, generating sectors responsible for manufacture and supply of coal, transport energy, subject to policies that restrict or fuels, encourage the types of technologies used and policies that change relative prices between different products Employment Intensity Customer Focus: Sectors employing large Construction, of Sectors (jobs per numbers of people and supplying goods and retailing, tourism unit output) services that are likely to be subject to changing demands as a result of climate change policies, including (but not mainly) as a result of income effects due to higher energy costs Competitive Intensity Energy Intensive: Sectors that are subject to Cement, of Sectors (EU export, high levels of international competition and using chemicals, metals import ratios) high levels of energy, where ‘uneven playing fields’ due to EU climate polices may have a significant effect on costs and competitiveness Vulnerability to Transport: Transport sectors provide products Airlines, Vehicle Climate Policies (risk and services which are likely to be subject to and vehicle assessment) especially focused polices and where the scope component for significant changes in service / product offers producers, Multi- maybe limited modal providers 1 The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term This sectoral typology was suggested by the economic context for assessing restructuring and in particular the analysis based on a review of the literature (Volume 2) as to which sectors were likely to be most sensitive to climate change and related policies. Within these sectors, companies (Table 2) were sought that were leaders in their sector and likely to demonstrate cutting edge practices. This also means that selected companies tended to be those who were generally positive about the climate change agenda and pro- active in responding. The purpose of this selection was to give a picture of future trends and directions. All companies were large ranging from employing 425 to 500,000 full time employees (FTEs), with the majority being very large. They were also based in a range of EU countries with most operating across Europe and many internationally. Table 2: Case Study Companies Sector Company Country Employees Energy SWM Germany 7,000 Enel Italy 85,000 Stratkraft Norway 3,000 Energy intensive - Holcim Switzerland 90,000 Cement Cementa Sweden 425 Energy intensive – Coca-Cola US 90,500 Food and Drink Cadbury UK 45,000 Employment ANCC-COOP Italy 55,450 intensive - Retail M&S UK 75,000 Carrefour France 495,000 Employment Vinci France 164,000 intensive - Construction Transport – Air Virgin Atlantic UK 9,000 Air France KLM France/Holland 105,000 Transport - Haulage Menzies UK 4,000 Deutsch Post - DHL Germany 500,000 The case studies have used interviews with senior company officers and company documentation to explore: the main climate change drivers affecting companies; the key responses both internally and externally directed; the impacts on company financial performance, jobs and skills; and the future directions and lessons from experience to date. The next chapter presents a synthesis of the main findings from the case studies. Following sections present the detail case studies. 2 The Impacts of Climate Change on European Employment and Skills in the Short to Medium-Term 2 A SYNTHESIS OF THE FINDNGS FROM THE COMPANY CASE STUDIES 2.1 Structure of the Synthesis Each case study has a common structure that examines: The main drivers influencing business performance and response The actions taken so far by businesses in response to these drivers The impacts so far on the company and especially on employment and skills The potential implications for the company of continuing climate change The lessons for business more generally that the companies have identified. The synthesis follows this structure. 2.2 Overview of the Findings Table 3 presents a brief overview of findings from the case studies. In brief: Climate change and related policy drivers The man drivers to-date relate to policies rather than the physical effects of climate change or immediate competitive pressures Regulation has been more important than corporate CSR policies except for airlines The actions taken so far by businesses in response to drivers Internally, the major measures taken to-date are those to improve energy efficiency. Measures to substitute goods and services that have high energy intensity have also been widespread, having immediate effects on suppliers Externally, companies have built partnerships to lobby and to manage responses The impacts of climate change policies especially on employment and skills Impacts have tended to be in relation to skills rather than on the actual levels of employment There is a widespread need for new skills and a general need for upskilling, met by substantial activity in the introduction of new training programmes, especially in technical competencies The potential implications for the company of continuing climate change Companies see themselves as anticipating and positioning themselves to be ahead of any future climate change policy drivers No major changes are expected in