Corporate CleanTech: How big business is using clean technologies

Monday, July 12, 2010

18:00 - 21:00

Sainsburys and Royal Mail will reflect on the full range of clean technologies they have installed, are installing and plan to install in the short, medium and long term. From refrigeration to wind turbines. Rob Wylie will give a wider perspective and reflect on the emerging technologies, the growing maturity of more established technologies, the areas of serious uncertainty (not backing the betamax technologies), what corporations are using, the business cases for installing/deploying these technologies and how they might work better with the technology companies. There are some significant strategic decisions here. And this session will be a perfect warm up for our September session on feed-in tariffs.

Speakers

Dr Martin Blake Royal Mail Group plc

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Dr Rob Wylie WHEB Ventures

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Jon Ashford Sainsbury's

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Round Tables

Built Environment

Corporate CleanTech in the Built Environment: how do we do it and who do we trust?

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There were three main areas of conversation:

1. Technology Vs Behavioural Change

The group concluded that training and education had a vital role to play in terms of reducing carbon in the built environment; for example, there needs to be much more interaction with the Facilities Management Team (who run the building) in the design stage of the building; this will help ensure the building is designed for the end-user. The group felt that maintenance costs should be built into the cost of the building to provide a full life-cycle cost of the building. Technology was considered to have an integral place in reducing carbon but it was thought some technology may be too complicated to use (hence the need for more interaction with FM Teams/End Users) and needed to be simplified. It was noted that technology is not always new - we should not reinvent the wheel and should learn from abroad, there are many success stories in continental Europe.

2. Incentives Vs Legislation

The group supported the need for incentives to drive change/reduce carbon but presently saw legislation as the main mechanism to drive the necessary reductions. For example, the CRC has brought the issue of carbon reduction to the attention of many Boards. The group noted that the Built Environment sector wasn't able to bring about the necessary reductions alone and needed to use it's influence wisely; for example, influencing energy suppliers so there are more expensive tariffs in place with higher levels of energy consumption.

3. Barriers Vs Opportunity

It was felt that our sector had a huge opportunity to bring about carbon reductions; to do this, the following was thought to be required:
• 'Red hot' multi-disciplinary teams (training/education)
• Project case studies (to highlight what can be achieved and challenges)
• Roll-out of EPCs & DECs (and normalisation of benchmarks)
• Contractual requirements to include carbon efficiency / introduction of energy performance contracting
• Include carbon performance in employee's job descriptions
• Common measurement & reporting of carbon performance
• An Innovation Centre to showcase best practice and new technology
• An independent body who would act as a technology 'verifier' to enable organisations to trust new technology
• Support for SME's.

Supply Chain

Sustainable supply chain metrics. What end-to-end (Scope 3) KPI’s do you have in place /should you have in place?

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Most organisations have been focusing on improving their own Sustainability e.g. through reducing energy/carbon and waste in their internal operations – the “Scope 1 and 2” from the GHG protocol standard. However a significant number are starting to work with their wider supply chain to reduce risks and costs. Having set objectives, a significant challenge remains – how to measure and track progress across the full “Scope 3” .supply chain.

The table agreed that carbon was being well addressed with the updated GRI Scope 3 protocol, PAS 2050, and the Carbon Disclosure Project supply chain focus. These methods have well-defined carbon footprint KPIs, and leaders in both private and public sectors are using these to set stretching targets for carbon reduction across their supply chain. A good example is Coca-Cola who found that the majority of their emissions were actually in upstream (packaging) and downstream (drinks coolers) and not in their own manufacturing operations, and have therefore increased their focus here. This has led to setting other Sustainability goals and measures including reducing water footprint, increasing the recycled content of packaging, recovery rates on containers after consumption, and removing HFCs from coolers. They agree they do not yet have a comprehensive set of measures, but they are working towards this.

Other leaders have similarly being developing scorecards – and issuing them to their suppliers – good examples being M&S, Walmart, and P&G. The key issue now is standardisation – many suppliers are suffering from “audit fatigue” and complaining about the variety of information being requested by their customers. The good news is that some standard systems are now in use such as Sedex (Ethics) and CDP (for carbon and now water) and new systems such Ecovadis are covering a wide range of measures to enable better risk management and supplier collaboration.

So some Scope 3 KPIs are now in place, with more being developed. This will be an area for much greater attention as governments, corporations, and consumers increasingly demand more information about how Sustainable are the supply chains in which they put their trust.

Stakeholder Engagement

Suppliers as partners

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Our discussion was focused on how to monitor and manage supply chain issues and working with suppliers to improve performance. We talked about the resource intensity of both measuring impacts through things like carbon footprinting and life cycle analysis as well as working with suppliers to continuously raise standards.

We discussed some of the difficulties faced by companies in managing their supply chain including:

• Companies tend to measure what they can measure rather than what is important to measure and as part of this conversation it was recognised that there is trade off between asking suppliers generic questions that don’t reach the route of the problem and more costly but effective tailored questions.
• Difficult to work with competitors collaboratively but there are mechanisms e.g. through sedex
• Often monitoring of supply chains can be so time consuming that there is no time to actually take action

In response to these challenges, we discussed a number of positive ways to improve supplier relationships and standards. There is no one simple solution to this question and so we must work with clear messages with suppliers and continue to improve the measurement in conjunction with them. This means trying to create lasting relationships that are mutually beneficial. Specifically, the following points were made:

• Development of recognised protocols from the EU regarding life cycle analysis and product footprinting
• Responsibility should sit with those making procurement decisions day to day and dealing with suppliers, with appropriate reward structures put in place to incentivise the implementation of the company procurement policy
• Labels have a valuable role to play in providing affordable ways of securing supplier reliability and adherence to a set of standards
• Need to create communication and brand value from communicating what you are doing to consumers
• When assessing the financial implications of managing and monitoring the supply chain, companies need to take into account the supply chain and reputational risks of not taking action

Carbon Strategies

How and why to set an internal price for carbon within your organisation

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The theory is once GHG emissions cost money a business will start to manage its impacts. However, why would a business choose to do this in the absence of being told to do so by the government? And if a business does decide to do it, or is mandated to pay a price for each tonne of carbon used, how should it go about doing this? Is it just a cost to be owned by the CFO or can it be used to greater benefit within a company?

Our discussion on this topic began with the group sharing their experiences of carbon prices more generally. The group quickly linked the subject to Carbon Offsets as the most common form of carbon pricing and an example of what a tonne of carbon costs, typically between £5 and £10. An example of using carbon offsets to create an internal carbon fund was cited - a consultancy recently used their business travel carbon footprint multiplied by the price of an offset to create a fund of £250k. Instead of spending this money to make emission reductions in developing countries, £175k was used to replace lighting in their offices saving 274 tonnes of carbon per year. Only 1% of the reductions the money would make if invested into offsets (25 thousand tonnes), however it's claimed the installation will payback in about 3 years, so perhaps a good use of funds. And a demonstration of how pricing carbon can create incentives for companies to investigate and undertake internal emission reductions.

The group knew of very few companies that had set an internal price, but of those that were mentioned prices ranged from £5-£85 per tonne, although most were in the £40-50 range. The conversation then turned to licenses to pollute and the price created by the CRC. In the groups opinion £12 per tonne was considered too low to incentivise significant action on carbon above making the easier and cost effective emission reductions internally.

The group also considered how an internal carbon price could be used inside a business..
• Creating a personal carbon tracking scheme for employees - setting a cap on emissions then creating a financial penalty for using too much and a bonus for reducing emissions.
• Creating a carbon reduction fund internally - either from energy cost savings made or by charging departments for each tonne of carbon they use.
• Using any money returned from the CRC to pay departments and individuals that have contributed to making carbon reductions

Other notable thoughts from the group were;
• It was generally agreed the best way to make a scheme successful is to reward people financially
• Engaging employees in reducing emissions helps to create a positive culture change towards sustainability and improves outcomes
• Including the cost of carbon into business processes would be more applicable for larger organisations

Finance & Corporate Sustainability

SME and mid cap green financing

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The group had a wide-ranging discussion on funding for innovative ‘green’ SMEs, or for SMEs wishing to invest in ‘clean’ or ‘green’ technology. There was a general feeling that these organisations have been squeezed by the recession, the removal of the ability of banks to loan ‘at the local branch’ and the loss of regional business facilitators. Even though there is venture capital funding available it is easy for the large fund managers to overlook SME and mid cap businesses.

In conclusion, the group came up with the following recommendations for companies in this situation:

1. If you are looking to invest in green or clean technologies and require funding, skip the bank. Work with integrators, companies that have worked out the finance and can install the equipment, and then share the cost savings with you.
2. Talk to the Carbon Trust for interest free loans, enhanced capital allowances, or if you are developing a clean or green technology they may be able to support with a venture capital investment.
3. If you are a tenant go to the landlord. If you are the landlord then do as above.
4. If you have a clean or green product (or product ideas) identify an appropriate niche in the market and use it to generate the cash flow yourself, rather than rely on funding from the banks. Monies from customers are far more valuable than money from the bank.
5. Work with members of your supply chain – form partnerships – to do the above, or to reduce the development costs of taking products to the market

I.E. attempt to use as little ‘Finance’ as possible.

Communications

Stuck in the middle: Discussion on tactics to get middle management fired up on sustainability to achieve real organisational change

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Engaging middle managers is one of the most consistent barriers to action around sustainability. All too often, leadership from senior managers and action from grassroots gets stuck in the ‘treacle layer’ of middle management and fails to bring about wide spread culture change. Our group were keen to understand how they could engage middle managers, share ideas and best practice and reinforce the message that sustainability is an intrinsic part of their job.

We asked the group what they were doing already in terms of engaging their own middle managers. Most utilised external training but still experienced problems. We all agreed that, in some ways, middle managers have the hardest jobs in the business. They’re managing teams, responsible for hitting targets and often lack the time and resource to deal with complex enquiries and conflicting messages.

We then asked the group to brainstorm what barriers middle managers had to acting on sustainability. They identified the following:
• They fail to understand the relevance of sustainability to core business.
• Without mandated KPIs, they have no reason to act.
• They lack time and the resources to act.
• There is a lack of support for those middle managers that may want to act.
• Many middle managers are unclear of what sustainable processes, procedures and visions practically mean for them and their day jobs.
• Many ignore new ways of doing things and will even help their teams to bypass sustainability initiatives.

But, how to overcome these barriers? The final exercise of the evening was to invite the group to create some rules of engagement for middle managers. There’s no magic bullet, but this is what we came up with:
• Find out what sustainability means to them and how it can help them to look good. Then target these ideas when talking to them.
• Ensure that you are measuring results, so that you can give them feedback and let them know how well they are doing.
• Senior leaders must provide clever and compatible messages that appeal to all levels of an organisation, not just other leaders and grassroots.
• Use compatible messages that aren’t full of jargon: don’t label things ‘green’ or talk about ‘carbon’ unless you have to.
• Use praise to highlight good behaviours, rather than nagging and negativity. Make sure good results are rewarded and recognised.
• Create competition by showcasing success. Show what competitors are doing but also what other floors and buildings are doing well.
• Make sure that you’re engaging with managers and listening to them, rather than just telling them what to do.
• Fight your battles at the right time. Engage those that will listen and those that have the most influence first. Others will follow.

What do you think?

CSR Reporting Best Practices

Avoiding Greenwash through Robust CSR and Sustainability Reporting

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The topic of discussion at July’s CSR Reporting Best Practice roundtable was “How to avoid Greenwash through Robust CSR and Sustainability Reporting”.

While many brands and businesses are today investing considerable resources towards working sustainably, there is a reluctance often to communicate strongly on these aspects due to the fear of being labelled with “greenwash”, or of unintentionally over-promising or over-claiming in what is a highly complex and rapidly evolving sphere.

It is in everyone’s interest that brands do communicate their actions and commitments; to raise the collective bar and to increase the business value associated with such initiatives. Conversely, to not do so risks that these actions lose priority and fall down the corporate agenda.

At the roundtable, we widely recognised this dilemma as a very real one in many businesses, with a number of elements to it:

- The relationship between CSR and Marketing Teams is important. This can vary between businesses. In some cases, CSR is a part of Marketing or Communications. In others it can sit with Finance, Supply Chain, R&D, HR or Corporate Relations. The key to success is twofold:
(i) First, make sure that there IS a clear distinction between CSR and Marketing; so that CSR is seen as having a credibility beyond communications, but more importantly so that the skills required for robust CSR management can be developed. These are often “hard” skills including data capture, management and tracking.
(ii) Second, make sure that there are strong relationships between the teams and a good, sharing understanding. The Advertising Standards Agency note that upheld complaints relating to “green” communications are usually either as a result of the data not supporting a claim, or as a result of the claim not matching the data. Mis-understanding of CSR context and data boundaries is most often to blame.
- Focus on the data is a second key aspect. As noted above, CSR expertise can often wrongly be aligned to sets of “soft” skills, such as influencing, empathy, etc. While important motivators, successful CSR communication must be data-based. More and more, leading businesses recognise the requirement not only to have fully certified EMS systems in place, but to work with external verifiers and assurance providers to deliver the level of data transparency and confidence required for effective communication.
- Transparency and Honestly is clearly a requirement, but perhaps not as obvious as it first sounds. Effective and robust communication of CSR actions does not require a “whiter-than-white” background. Often the most impactful communications are based on transparency of issues and the genuine commitment to address them.
- Relationships outside the business is a final key aspect to address. Not just with suppliers and partners, including the noted Verification and Assurance providers, but also with NGOs and other external stakeholders. Listen to what they expect, what they demand and what they want to see businesses doing and saying. Endorsements are useful of course, but in fact the most value comes before this stage – really by understanding the concerns of these important groups, their dynamics and their actions. Communicating in alignment can only amplify key messages.

Finally at the roundtable, we discussed the role that Government can play in helping businesses to feel more comfortable communicating CSR aspects. We focused on two areas:

- Comparability; Customers and stakeholders want to make choices and to compare best-practice. Businesses want to feel that in communicating CSR actions, they will be judged fairly. They do not want to adopt one approach, only for a competitor to take another and “look better”. Nor do they want to be condemned for taking a particular approach when stakeholders expect another. Guidelines and standards such as GRI greatly assist in this space and we feel that Government can do so by providing more clarity and mandating approaches where this will help.
- The Consumer Push. Today there is little evidence except in specific cases, that consumers genuinely “choose green” in mass-markets. B2B communications ARE demanding CSR elements as businesses seek to influence supply chains in pursuit of their own CSR targets, but B2C values these elements less. Only when the “green” choice is also the cost-effective choice will the mass markets move. A consumer visible price for carbon (or water, waste) is highly likely to form a key part of driving this shift. To put CSR at the head of corporate marketing “must haves”, this is a significant action for Government.

Once again, a spirited, enlightening and positive discussion. Many thanks to all participants and please do come along in September when we will look at internal communications: How to get CSR to the Top of the Corporate Agenda.

Technology

The Cleanest Tech - Investing in Renewables and The New Energy Market Opportunities Created by FITs and RHI.

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The table was attended by a range of participants from DEFRA, consultancies, construction professionals, retailers, and academia, which had various interests in renewable energy and the implication of the FITs and RHI schemes. The Feed-In Tariffs (FITs) were introduced in April 2010 to encourage the uptake of small-scale low carbon technologies up to 5MW. The REA campaigned for this measure alongside Friends of the Earth and other organisations. The REA cam¬paigned for FITs because it is more straightforward for electricity con¬sumers than the Renewables Obligation. The FITs will pay electricity consumer for every kilowatt hour of renewable electricity they generate themselves, the amount is dependent on scale and technology. In addition, each sur¬plus kilowatt hour of electricity exported back to the grid will receive a minimum payment of 3p kWh.

A consultation on the renewable heat incentive (RHI) closed in May. This proposed that the RHI will pay a fixed amount per year to those who install renewable heat equipment, such as solar water heating panels, heat pumps or woodfuel boilers. Payments will be made either on the exact amount of heat produced, or on the amount it is anticipated the installation will provide. The scheme is due to start in April 2011 however industry is still waiting a statement from the new coalition government. Government have stated they are committed to increasing the amount of renewable heat in the UK and recognize it is a crucial part of meeting renewables targets, but are currently looking at the RHI proposal and considering the impact of the costs.

The table discussed a range of issues including policy, barriers, and technologies. There was concern about the uncertainty surrounding renewables policy in the UK and the implications this has for investment. The issue of cost was raised but also the economic opportunity from renewable energy through the development of supply chains. The implication of more community involvement in planning decisions might create a further barrier to the deployment of renewables in local areas. A number of participants were interested in community schemes and best practice. There was agreement that smart grids and storage are key future issues that need more research and development.

Sustainability through ICT

IT Vendors : Identifying the major additional changes vendors can make to continue greening their products

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Given the limited time the group concentrated upon in-use energy consumption rather than toxicity or energy 'embedded' in manufacturing. Though we recognised that there was plenty of scope for vendor progress in those areas too.

Conclusions were :
- The EU voluntary Code of Conduct for Data Centres was a step forward although its focus is operators of data centres not equipment vendors and the power efficiency of their equipment.
- There is a real lack of transparency as to what the sources of power were for cloud/hosting providers and that presented a challenge for consumers that wished to procure these services as well as the power-efficiency of the equipment.
- It was felt that IT vendors engaged in a 'lot of greenwashing' in their claims.
- Servers were not designed with power-efficiency foremost in mind and typical 2U and 1U servers are particularly inefficient. for example many Intel Xeon servers are running at 10% or less utilisation because they do not support enough memory to virtualise more servers. This is a design choice not a technology limitation. The Cisco UCS was mentioned as having designed around this limitation by Cisco taking the extreme measure of designing their own chip(s) to increase the memory.
- Blade servers are more efficient due to more sharing between blades but enterprises are reluctant to adopt because blade chassis are proprietary resulting in 'lock-in' when it comes to blade upgrades.

Therefore vendors should share intellectual property and standardise designs to enable enterprises not to be penalised when making the more ecological choice.
- Storage was another area of concern. Moving storage of general x86 servers towards networked storage was felt to be more power-efficient.

Also, a more rigorous approach to hierarchical tiering of storage between SSD, disk, MAID disks (massive array of idle disks), and tape would be more power-efficient.
- For most enterprises communications equipment was likely to be a small part of their energy footprint.
- No major vendors of cloud services are committing to offset their emissions.
- Only smartbunker was mentioned as a data center operator that was powered by 100% carbon-free power (from Ecotricity).
- Equipment vendors have not placed efficiency and sustainability at the heart of their product designs.

Energy Effeciency

How can we measure and verify CRC energy savings?

Sustainable Transport

Connecting customers and goods. What is sustainable shopping? What are the implications for retailers?

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The supply of goods in our consumer economy involves transport in the supply chain and (often) by the consumer. What can be done to minimise transport carbon? And how can we know what is best

1. Carbon embedded in the products we buy is much more significant than the carbon we release in buying them. But the emissions associated with supply and shopping are still substantial.
• Not buying goods in the first place, especially goods requiring high transport km, would make a difference all round (hence the positive but short-lived(?) impact of the recession)
• Consumer pressure on producers and retailers, leveraging CSR and reputation, can be influential in minimising transport CO2 through the provision of local produce and local transport

2. Out of town shopping centres may reduce supply chain transport CO2 but greatly increases consumer transport CO2. Is this good or bad?
• Products are not always cheaper when you factor in the cost of personal transport (larger car, fuel)
• Lots of normal cars visiting an out-of-town centre may be worse in CO2 terms than supplying the same volume of goods as freight to in-town retailers. But if a consumer would have to visit many towns to get the full range of goods then that would increase CO2.
• Visits to out-of-town centres could in principle be done using lower carbon personal transport (car clubs, low mpg cars) or carbon-efficient public transport if the systems are convenient.

3. Online shopping with home delivery allows producers to operate fewer more efficient distribution centres. Is that more carbon efficient too?
• Have to factor in CO2 generated by the web, including servers, infrastructure and home systems
• CO2 emissions of distribution vehicles are substantial in terms of km travelled and energy for refrigeration. But distributers can use the most efficient vehicles available, and distribution networks are designed to minimise road km
• Missed deliveries are a concern, requiring additional journeys. Flexible delivery times and reliability are important factors

4. The impact of higher fuel prices is likely to be seen in higher prices for imported goods and a preference for local or internet shopping
• Higher prices of goods from around the world will reduce demand and hence also reduce transport km
• Packaging improvements to permit greater densities for transport may also reduce carbon embedded in the packaging

ACTIONS
• Consumer pressure on producers and retailers
• Distributers’ use of efficient vehicles and networks for distribution
• Public transport operators to serve shoppers logistical needs

Corporate Strategies

BP beyond petroleum

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July’s roundtable was a case study discussion on BP. The discussion was started with a question asking the group to name leading companies with sustainability strategies and the following were mentioned: Kingfisher, M&S, WalMart, B&Q, Unliver, Google, Coca Cola, O2, Orange, BT, Sky, Virgin, Shell, HSBC, Nike, Rio Tinto, GE, Siemens, Interface, IBM, Cisco and Dell were all mentioned.

The group discussed BP over the past decade from the launch of the Helios brand in 2000 with “beyond petroleum” to the current crisis in the Gulf of Mexico and the recent expulsion of BP from the Dow Jones Sustainability Index. Views were expressed about where BP went wrong and a discussion ensued contrasting Lord John Browne and Tony Hayward’s leadership styles, priorities and organisational cultures. The failure of both investors and policy makers to reward change was also discussed. Several people thought that BP would not survive the current crisis. However, the table agreed that the only chance for survival was for new leadership to take over as soon as possible and the company getting back on track to delivering on their promise of “beyond petroleum”.

Venue Detail

Bank of America Merrill Lynch: King Edward Hall

King Edward Hall | 2 King Edward Street | London | EC1A 1HQ

Directions

Bank of America's offices are a very short walk from St Paul's tube station (Central Line). Exit the station at Cheapside/Newgate Street. Go past the BT centre, with it on your right-hand side and take the first available right down Edward Street. Continue down this road for 80m and the entrance to the venue is on your left-hand side.

Do not go to the main reception desk at their offices when you arrive. You are looking for an entrance that leads you directly into the King Edward Hall.