Pre-Election Special: What role does each party see business playing?

Monday, March 01, 2010

18:00 - 21:15

Round Tables

Built Environment

Does the construction and property sector need government in order to go green?

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For the purposes of this discussion the table made a distinction between central and local government.

Central government:
-A recent Taylor Wessing survey looking at the drivers and barrier to change, identified government as a key driver of change
-It is very important for government to provide clarity about a future policy landscape – this will allow industry to innovate and have confidence to invest
- Targets alone are not enough, they must be backed up by escalating regulatory backstops and other supportive regulation, such as the mandatory roll out of DECS to all non-domestic buildings
- A coherent package of incentives will motivate a certain part of the industry and reward innovators and early adopters, however incentives alone will not create the change required. The oil industry was offered up as an example of an industry which spends huge sums of money on dealing with “compliance” issues, which it would not spend if there were not regulation forcing it to achieve certain minimum standards
- There a several central government departments from whom action is required, and therefore joined-up thinking is critical in order to avoid confusing and inconsistent policy
- “Private finance”: given that many of the banks are now primarily in public hands, there must be some potential to introduce sustainability criteria into conditions for debt financing (on the basis that it is in the public interest)
- The group saw the role of central government primarily as setting out a range of complementary policies which provide the right conditions for market transformation and allow the industry to rise to the recognised, but not insurmountable challenges.

Local government:
Local government has a key role in enforcement at a local level and also in clearly and consistently incorporating sustainability criteria into all of their decision-making and implementation of policy (particularly planning policy).

Supply Chain

Embedded sustainability challenges in products. What is the process for identifying options and workable alternatives?

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The aim of the session was to recognise the different sustainability challenges different industries are facing and the best processes to identify options and opportunities to overcome those challenges.

Challenges within the participants were diverse from preservation of natural resources to child labour, water and carbon efficiency. The table turned into discussing their CO2 challenges within the supply chain.

The PAS 2050 was mentioned as a tool to calculate the CO2 emissions of products across their supply chain, it was discussed the lack of a sustainability tool able to measure not only carbon but the other sustainability factors. It was mentioned that having different methodologies with diverse boundaries was a real challenge. It is important consistency and collaboration within the industry.

Another challenge that was mentioned was communication, how to transmit a clear message to the consumer? It was indicated that consumers don’t have yet a clear understanding on CO2 numbers and what number would represent a good footprint to have.

The main process to recognise sustainability challenges is to understand and be familiar with your products and customers, participants were aware of their challenges but were looking for better tools and government support to overcome them.

Stakeholder Engagement

Suppliers as partners

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“You are what you eat” Jim Sellar, manager, executive board support, at Lucent Technologies

Thank you all for your contributions to the roundtable. Below is a quick summary of some of the points made as part of the session. At the end of this note there are the key steps (or actions that can be taken) that have been added to following the discussion.

• There is a need for explicit leadership on sustainability to bring suppliers on board as partners - good examples include M&S with Stuart Rose and Interface with Ray Anderson
• If you deal more in ideas (e.g. consultancy) rather than physical products (e.g. manufacturer or retailer) it is more difficult to drive this down or up the supply chain
• Need to decide which suppliers you want to develop partnerships with – not all suppliers will necessarily be the ones that you want to partner with (e.g. one of suppliers)
• One way to do this is to develop a segmentation of your suppliers – this could be done in a number of ways e.g.
(i) Where you spend a lot of money
(ii) The risks are to the business of supplier change
(iii) The context for the supplier relationship

• If it is going to be a true partnership you need to understand who owns the savings from the outset - if you as a client realises savings for the supplier will you see any return
• Too much of expectations at the moment for suppliers is merely to meet the minimum target, rather than enabling them to be the best they can
• One way to ensure this is through legislation, but it is much better if you can work through this without legislation
• One approach is to bunch a series of suppliers together to encourage them to collectively improve their performance
• However, you get there you must establish who’s vision you are aiming for – partnerships work best when there is a shared goal, even if there are different motivations for getting there.

Based on the feedback from the session the key steps to developing a strong partnership were added to and developed. Please feel free to add and amend to help refine just what makes a strong partnership...

>Key steps to developing a strong partnership
There is no ‘one-size-fits-all’ approach to working with suppliers to deliver sustainability goals. At some companies, environmental procurement initiatives are comprehensive, with extensive performance criteria and evaluation processes given to all, or most, vendors. At others, the efforts are smaller and more targeted, focusing on packaging, for example, on a specific type of emissions, or on only the largest suppliers.

Below are some common steps to developing a strong partnership:
1. Understand the link: understand that your efforts to educate, screen, evaluate, monitor, or otherwise interact with suppliers on environmental issues is key to your own performance and competitiveness.
2. High-level environmental commitments: make sure you have these commitments, backed by clear, strong mission statements and top management's understanding of the benefits of integrating the environment throughout company operations.
3. Get to know them: Try to gain a better understanding of where your suppliers are at the moment and what the challenges are for your suppliers in helping to deliver against the targets and goal you have as a business.
4. Engage with them as early as possible: work with them as early as possible in the process on your sustainability vision and how you plan to make this into a reality.
5. Listen with both ears open: make sure that you listen to what they have to say and show that you are listening by taking active steps to show it is a two way process – that both sides are working to a common goal
6. Clear and consistent communications. make sure you use a variety of two-way communication vehicles and channels to provide information to -- and get information from -- suppliers
7. Understand the broader picture: try to understand the whole supply chain and what specific differences there might be between markets
8. Use Policy as a carrot rather than a stick: try to incentivise the behaviour you want to see in your suppliers
9. Create communities and learning environments: don’t think that the benefits and information flow can only go one way. Use the relationship between you and the supplier to help develop shared learnings
10. Regular review and clear exit strategy: make sure you regularly review the partnership and make sure there is a clear exit strategy (clear for both sides)

Carbon Strategies

The role of government in successful corporate carbon management strategies

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- Context
There are two aspects of climate change which make it a unique challenge for any national Govt to face

• Its primary impacts are unlikely to be felt by the current adult generation (at least in the UK/Europe)
• It is a truly global issue

- What has the UK Govt done already?
• Legislated – Climate Change Bill, CRC, zero carbon buildings
• Incentivised – 0% loans, Clean Energy Cashback
• Tried to set a price for Carbon – primarily through EU ETS

- Legislation/Putting a price on emissions
All agreed that putting a price on emissions is essential and that that price needs to be high enough to encourage reduction. Setting this price through a framework of legislation is a key role of Govt.
• The carbon price is currently not high enough to drive change. Govt should look at an additional mechanism for keeping the carbon price within limits over a longer timeframe. This will give much sought after stability and enable businesses to factor emissions costs into these investment decisions.
• For many companies carbon cost represents 10% of total energy costs and energy costs are a small proportion of overall business cost. This makes carbon management peripheral for many companies and therefore it does not get enough focus
• CRC – is more a ‘carbon management engagement tool’ than an effective driver of emissions reductions
• The framework should be a combination of carrot and stick policies

- Public/Business Engagement
However, many on the table also believed that setting a price on carbon would not be sufficient on its own to deliver the necessary cuts.
An example of this was that almost 40% of carbon reduction interventions with cost saving or favourable ROIs identified through a consultation/survey process are left unimplemented by corporates. This suggests that cost saving is not the only driver of behavioural change, even within businesses.
The Govt therefore has a broader role than legislating; including understanding these drivers of change, education and engagement of the wider population as well as the business community.

• The table agreed that Govt has to take the lead. Potential areas in which it can do this include;
o A more active role in lobbying the business community
o Public engagement. If the public doesn’t believe in climate change, then eventually politicians will stop leading on it
o A role engaging in the current climate science debate
o Moving away from risk management/’apocalypse’ communications and putting more emphasis on envisioning better, greener, more sustainable future.
o Addressing current increased public cynicism. This is not just cynicism of the science but also contains an element of suspicion around the current mechanisms (taxes, cap and trade) and their use by Govt, Financial institutions to make money/profit.

Thanks to those who attended what was a very interesting and enjoyable round table discussion.
Please feel free to comment on this write up below, or join the Carbon Management Strategies group on Linked in to continue the discussion

Finance & Corporate Sustainability

To what extent and how should finance play a role in promoting sustainability

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Discussion started around the UK governments proposed Pay As You Save building energy efficiency scheme. This is a small scale pilot of 500 households in 5 cities which is being used to inform policy. The savings will be tied to a property in order to allow households to avoid the upfront cost of energy efficiency. The government has invested £4million over 2 years, looking at various payment and delivery routes. From 2014 a commercial scheme will be implemented and the involvement of financiers will be sought.
Pensions were raised as a significant way that consumers can 'talk with their money', in choosing sustainable investments.
Some conversation was had around Alberta oil sands projects and the difficulty for banks in being able to impact this.
The group then talked about potential themes for future Green Monday events. SME financing, CDM financing, risk management and green investment were suggested.

Communications

Green PR trends for 2010

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For this month’s Green Communications round table, we discussed Green PR Trends for the year ahead.

The group felt that the combination of ‘failure’ in Copenhagen, UEA emails and Glacier-gate has had a negative effect on both the public and business. It was seen as fuel to the fire for conflict loving media; a fire which the publication of CRC Energy Reduction Scheme league tables would only stoke further. We felt the media have an unfulfilled responsibility in the way they interrogate information and that in complex situations they should take more care in distilling information.

The responsibility of big business to weigh into environmental debates was discussed and the overarching conclusion was… it depends.

The table felt that some companies could weigh in more readily whilst others (without sustainability as a core principle) struggled. There was a general consensus that businesses, government, NGOs and the media should all take more responsibility in protecting a body which is sticking its neck out.

Following on from Glacier-gate, the group also discussed this responsibility in relation to scientists. As one participant put it ‘Scientists now occupy the same space as estate agents and politicians’ and in a very ‘Sizzle’ themed remark, ‘it’s the message we need to sell, not the science’.

Finally the table discussed the need to stop talking solely about climate change. It was felt that we could incentivise a low carbon future without doom mongering or the public knowing every single fact in detail. The examples of peak oil and bumble bees where used to demonstrate that a combination of engaging tactics, personal touch points, and positive visions can be the next generation of effective green messaging.

As Ed Milliband often points out, Martin Luther King had a dream, not a nightmare.

CSR Reporting Best Practices

Influencing for Sustainability: How to get CSR to the top of the corporate agenda

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CSR and Sustainability is today a key component of all good corporate strategies, and the management and implementation of policy and action plans is often controlled at board level in the most forward-looking enterprises. Nevertheless, many CSR Directors and Managers report their frustrations when driving commitments, policy and action through the business. Often CSR is wrongly seen as a “nice to have” and not a vital component of the everyway “way of doing business”.

At this month’s CSR and Sustainability Reporting roundtable, we will discuss the above issues and ask – what are the best influencing strategies to put CSR firmly on your corporate agenda, from board level support through to real operational commitment for action?

(i) Who should be your key stakeholders?
(ii) How do your stakeholders define success?
(iii) What’s in it for them?

As an output from the discussion, we will consolidate & draft our “Top 5 Must Do’s to put CSR on the Corporate Map”

Sustainability through ICT

ICT and the CRC Energy Efficiency Scheme: What you don’t know could hurt you

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Sustainability management is no different from any other type of operational or risk management. What is required is a reliable means of collecting lots and lots of data, preferably in real-time, constantly monitoring that data, reporting on it and using the information the data provides to manage down your impacts and risks. Much of modern day risk management is supported by technology (think ERM and ERP systems) in order to effectively manage a business’ operations. You would be hard-pressed to find a large business without an ERP system, so it seems logical for those same large businesses to use I.T. to manage their sustainability impacts. There is near universal agreement that I.T. has a role to play in helping organisations to measure, monitor, report, and manage their sustainability impacts and to enable the rest of the business to operate more sustainably. However, a poll around the table suggested that many organisations, including very large ones, still rely on spreadsheets and manual gathering and reporting to manage their environmental impacts. In other words, there was a gap between intention and action.

Further discussion suggested that many organisations saw this as the beginning of what will be a long journey in the area of sustainability measurement, monitoring, management and reporting, and as such, a high-level snapshot of their major, obvious environmental impacts (e.g. lighting) is sufficient at this stage. But, it was also acknowledged that as time passes and environmental and other related legislation such as the CRC Energy Efficiency Scheme strengthens so will business’ need for a finer, more accurate and deeper understanding of their environmental impacts. It is then that more organisations will increasingly turn to I.T. to help support environmental management.

The table discussion ended with the following points about the role of I.T. in environmental management:

1. The move to a more sustainable business and economy will not happen without technology enablement
2. However, there are so many technology solutions on the market that it is currently very difficult for businesses to pinpoint which ones are fit for purpose. Therefore, businesses need help to identify appropriate carbon management software. To this end, the Carbon Trust Enterprises (the consulting arm of the Carbon Trust) will launch a brand endorsement mark in the summer which will go some way in helping to solve this problem
3. Environmental management will open up new markets for I.T. and software companies. However, uptake of the solutions could be accelerated if government were to take a stronger role in mandating behaviours
4. I.T. should be able to lower the cost of change for a business, so if organisations complete a cost-benefit analysis, the business case for investment in I.T. for environmental management should be strong

Energy Effeciency

Can energy efficiency and the CRC help organisations do ‘business better’?

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Another interesting discussion this month, with the CRC looming it is clear that issues around registering CRC participants is top of mind for everybody.

With a strong attendance by members of the legal sector, the problems of putting boundaries around organisations with complex ownership structures still remain a major issue in terms of planning for and administering the CRC within an organisation.

From the point of view of implementing energy efficiency programmes, CRC organisational boundaries are also a challenge. For example, Group companies may have different energy managers looking after discrete subsidiary companies which could mean co-ordination of energy efficiency programmes is a challenge. Furthermore, different subsidiaries may have existing contractual arrangements with a variety of providers for plant, equipment and services so the supply chain economics could become complicated and lead to ineffective investments.

However, the CRC should be seen as a catalyst to begin a review of the programme management and supply chain for investment into energy efficiency across the whole CRC organisation. Furthermore, it could act as the ‘glue’ for energy managers across very large organisations to collaborate, share best practice and also look at setting up innovation schemes to pilot new technology that may prove it’s worth in future phases of the CRC when they become more affordable.

Embedding this kind of organisational transformation around energy efficiency should then lead to discovering other areas of interest. For example, Energy Managers could look to measure and report where energy efficiency improves the internal environment of buildings, with benefits to employee health, well-being and maintaining levels of comfort.

It has often been said that energy efficiency improvements leads to better employee productivity through improved working environments. Now’s the time, with the CRC, that Energy Managers can prove this to their senior stakeholders and maybe secure further funding in future years, adding a further dimension to business cases on top of financial payback through energy cost savings and CO2 savings. It could be a really interesting area for innovation in the delivery of energy efficiency in businesses.

The idea that Energy Managers could be part of improving the competitiveness of their organisations, not only by reducing energy costs, but also stimulating the workplace through energy efficiency improvements is one to watch for. In fact, one of our roundtable mentioned that this type of consideration is driving energy efficiency investment to positively impact health & safety.

Better business through energy efficiency? It’s happening already.

Sustainable Transport

Public policy and transport sustainability. What should be the role of government?

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All the major parties profess their commitment to controlling climate change, achieving energy security and affordable energy. They all seem to agree that ‘business’ needs to take a leading role by investing in a transformation of UK energy provision and use. A few specific priorities for government were mentioned by the politicians who introduced the Lib Dem and Conservative viewpoints – including support for a UK Green Investment Bank; a floor price for carbon; a higher percentage of ‘green’ taxes as part of a low overall tax burden; a ‘green deal’ for homes and businesses; and support for SMEs.

But what should government - at national, regional and local levels – be doing to help deliver sustainable use of transport within the wider economic situation?

A number of key themes emerged from our round table discussions:

1. Clarity
• Being more ambitious in agenda for sustainable transport
• Being more accountable for sustainability in transport
• Being clear about direction over the next 20 years, including which technologies the government will support, so that businesses can make informed investments e.g. in fleets
• Having long term strategies for towns and cities that take account of local factors e.g. weather
• Having a truly integrated vision for homes, jobs, services and the low carbon transport systems that connect them
• Measuring and communicating the benefits and disbenefits of sustainable transport including health, safety and wellbeing

2. Providing/ maintaining strategic investments
• Continuing to incentivise the drive to effective digital communication because this is a significant factor in minimising the demand for business travel.
• Sharing information on the real benefits and disbenefits of teleworking

3. Funding support for sustainable local and regional development, and for business transformation
• Funding for ‘cycling towns’, following the examples of Cambridge and Bristol where the proportion of commuters cycling is around 18% rather than the national average of 3%
• Converting roads to shared spaces for cars/ pedestrians/ cyclists to reduce speeds and improve consideration
• Supporting transition away from car culture in stages - including ease of walking and use of cycles for short journeys and ease of use of public transport for medium journeys
•Expanding provision of a network of charging points and simple payment processes for electric vehicles to promote take-up by travellers and investment by manufacturers
• Continuing the cycle to work guarantee scheme, and expanding it to other low carbon modes

4. Setting an example
• Avoiding short haul flights
• Using video conferencing
• Using only low carbon vehicles for ministerial transport

Other points from the discussion that are not specific to government:
• Having flexible working hours to smooth peak demands on public transport

ACTIONS
A strong consensus has emerged on the priorities for government, which we can use to challenge the political parties in election debates and in the polling booths.

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