www.mca.org.uk owing concern erniawska z gr iona C F Sponsored by Sponsored By How should business adaptworld? low-carbon a to A A GROWING CONCERN 2 © MANAGEMENT CONSULTANCIES ASSOCIATION, 2007 A GROWING CONCERN Foreword Arup is delighted to be sponsoring this report. Reducing carbon emissions makes good business sense, just as eliminating any form of waste does. As the price of carbon and the cost of emissions rise in the future, organisations will concentrate more time and effort reducing their dependence on fossil fuel. Our economic and environmental needs will converge. But climate change is not just about carbon emissions. While these may be the most visible and in some ways comprehensible symptom of the threat we’re living under, lack of useable land, high quality water and even food are already creating conflict across the world. Indeed, there’s a danger that, in solving the carbon crisis, we create other crises elsewhere. Agricultural land is given over to bio-fuels: we rob Peter to pay Paul. Solving these even more far-reaching and complex problems isn’t something that any one organisation can do but will require the co-operation of many. There is therefore a limit to what the market can achieve by itself: while organisations compete they cannot collaborate. At the same time, what we don’t need is a United Nations of business. We think there’ll be two critical success factors here. First, we need organisations able to identify practical solutions for reducing energy demand and shifting to zero or low-carbon technologies and economies with a long-term view; organisations – like Arup – whose governance and ownership structures are capable of taking a medium to long-term view, balancing today’s economic imperatives with the ability to make investments over decades if required. Secondly, business needs to show more leadership. Economics and environmental needs may be closer together than ever before, but we still need individuals and organisations who are prepared to say that we all have to adapt to living in a more fragile world. That’s what Arup is trying to do: the right thing. David Singleton, Chairman, Global Infrastructure Business, Arup © MANAGEMENT CONSULTANCIES ASSOCIATION, 2007 3 A GROWING CONCERN 4 © MANAGEMENT CONSULTANCIES ASSOCIATION, 2007 A GROWING CONCERN Contents Executive summary 7 Introduction: A changing agenda for business? 8 What’s pushing carbon reduction up the corporate agenda? 12 Putting confidence in capitalism 15 A more fragile future 22 Contributors 26 About the author 27 About the MCA 27 About the sponsor 27 Note on methodology and sample The information in this report was based on a survey of around 200 public sector and business leaders in September 2007, as well as interviews with management consultants and clients. Many of the people surveyed are experts in environmental sustainability and carbon management. A full contributors list is available on p.26. © MANAGEMENT CONSULTANCIES ASSOCIATION, 2007 5 A GROWING CONCERN 6 © MANAGEMENT CONSULTANCIES ASSOCIATION, 2007 A GROWING CONCERN Executive summary Carbon management has gradually been moving up the corporate agenda, driven by a combination of actual and threatened regulation, the anticipated growth in consumer pressure and an underlying desire to cut costs. But actual progress is undermining the ambitious and But climate change is not simply a question of reducing carbon. well-intentioned goals organisations are setting themselves. There Already there are signs that we face a far more fragile future in are many reasons for this – many of which would apply to any which the plentiful supply of natural resources can no longer be substantial programme of change. However, fundamentally, the cost taken for granted, as well as other concerns such as the of pollution is not yet high enough to focus the attention of senior acidification of our oceans, the consequences of which could be managers; reducing carbon emissions is still just one of many things even greater than issues of climate change over time. In this jockeying for funds and commitment. This is not as depressing at it context, the familiar tools of capitalism may be of less help and sounds: by raising the price of pollution (in reality, the cost of carbon), more fundamental change will be required. At the heart of this lies it may be possible to galvanise organisations to pursue economic and the need for greater collaboration between organisations, but that environmental goals with equal determination. will mean over-turning some of our most cherished and respected ways of doing business. © MANAGEMENT CONSULTANCIES ASSOCIATION, 2007 7 A GROWING CONCERN Introduction: A changing agenda for business? Cadbury Schweppes offsetting as a last resort, preferring to concentrate on activities where it can directly make the most impact. Cadbury Schweppes’ environmental programme has been in place for around 15 years. In July 2007, the company launched its “Purple “We don’t have all the answers but by working with others, Goes Green” vision on climate change, setting itself targets of including obtaining advice from experts, we are confident that we cutting its net carbon emissions by 50 percent in absolute terms by will achieve our targets.” 2020, reducing excess packaging and managing water use in its Fujitsu manufacturing processes. “Absolute targets are more challenging, we’ve promised to reduce our absolute carbon emissions which “In the UK alone, our electricity bill is £10 million a year,” points means that even if we grow as much as we hope to in the future, out Juliet Silvester, Head of Environmental Programmes in the we will still produce less CO2 than we do today - we’re the first UK,“so looking to reduce this made economic as well as food manufacturer in the UK to set this level of absolute targets to environmental sense.” do this,” says Lisa Huggins-Chan, Group CSR Manager, Cadbury Fujitsu’s first step was to look at the simple steps it could take to Schweppes. ‘Relative’ emissions refer to emissions per tonne of increase energy efficiency – monitoring usage more carefully, finished product. In theory this figure should fall as a company uses turning the air-conditioning down when everyone had gone home energy more efficiently and as it makes and sells more product. – something that has already saved the company £750,000 this Purple Goes Green is a global programme involving the entire year. “But this is just the starting point,” says Silvester. “We’re now business, and part of Lisa Huggins-Chan’s role is to provide thought working with the Carbon Trust on its carbon management leadership, benchmarking information and to ensure that the programme. We’ve carried out an initial scoping study and are now targets for lowering carbon emissions are fed into the company’s working on a more comprehensive survey to identify long-term business performance contracts. “We also have to change initiatives. We want to be in a position where we understand our behaviour,” she says,“which we’re trying to do with a combination footprint, what’s included and what’s excluded. Our data-centre of using targets themselves, encouraging employee advocates to accounts for quite a large proportion of our fuel bill and if we grow, help ‘green’ our sites, doing things that get people excited, and then our energy consumption will grow too. We also have a large raising awareness. There have to be a lot of different tracks of number of people who travel a lot and this is something else we work, and, because we’re such a large organisation, with business need to reduce; we have to help our employees understand the units in many parts of the world, people like me at the centre can impact they have as individuals. Finally, we are looking at trying to only ever kick-start and support the process. It’s really our buy our energy from cleaner sources: in the first instance, from businesses that will drive this forward through their actions.” British Energy because of their nuclear component, but we’re also looking to install a wind turbine at our new data centre which we Indeed, the scale and duration of the programme are some of its hope will reduce our fuel bill by 10 percent. The one thing we don’t key challenges. “There were months of planning before the July want to do is offset. Offsetting makes it too easy for organisations launch,” says Lisa,“and this continues today as we work out the to claim they’re carbon-neutral, and to throw money at the detail behind the tracks of work and specific projects around the problem without getting the actual problem fixed. It has world. A programme such as this has to be well-managed and allowed people to jump on the carbon reduction bandwagon executed, and be supported by the people at the top of the but not do as much as they could to resolve the issue. No organisation if it’s to succeed. As we do this, we will continue to organisation can be genuinely carbon-neutral but we can try to maintain that sense of a burning platform.” reduce our fuel consumption.” The company says that it will achieve a 30 percent reduction by “Legislation will lead companies to take more of these types of using energy more efficiently, switching from carbon intense fuels initiative, but Fujitsu has been concerned about its environmental to ‘cleaner’ fuels like natural gas, using renewable energy and a impact for a long time, largely because Japanese customers are range of technologies, and by better building management more clued about this issue than they tend to be in Europe, but systems. They are confident that they’ll be able to work out where also because rising fuel bills affect our bottom line.