Four ways to create real business value by addressing climate change
BITC member Carbon Clear's chief executive Mark Chadwick outlines why acknowledging and acting on climate change has evolved from mitigation practices to capturing holistic business opportunities.
Addressing climate change is no longer only about mitigating the negative impacts a changing climate might have on your business. Last year, Carbon Clear’s annual Sustainability Reporting Performance of the FTSE 100 report, which assesses how well the UK’s 100 largest companies manage their environmental impacts and identifies trends and leadership in environmental sustainability, found that 72% more companies assess the opportunities presented by a changing Climate than the previous year. The 2017 report, released on the 26th September, has shown that this trend is continuing to increase.
Through the research we have seen examples of businesses who have gained real benefit from embedding environmental stewardship into their business strategy and created genuine business value. Here are some of the lessons we’ve learnt.
1. Real-term financial savings through streamlining efficiencies
Like many people, Marks & Spencer’s Plan A comes to mind when asked about noteworthy corporate responsibility strategies, and rightly so. Through measures such as installing more energy efficient technology, decreasing transportation miles and reduce packaging, Marks & Spencer has saved over £750 million in Plan A’s ten-year history.
Energy consumption and transportation are often a company’s two largest greenhouse gas emission sources. They are also important cost centres in some industries with annual bills totalling hundreds of thousands or even millions of pounds.
Getting to grips with these gives businesses a fresh perspective for understanding and tackling costs and climate change. Our clients have benefited from 20% savings on energy costs in the first year of an energy management programme from quick-win behaviour change and efficiency measures. Revamped company travel policies that focus on the vehicle fleet and business flights can yield similar first-year savings.
2. Creating new opportunities through innovation
Companies that develop new technologies, products or processes make it easier for their customers to purchase more sustainably and demonstrate that they are committed to tackling climate change. Innovative companies stand to benefit from the shift to a low-carbon economy.
In our 2014 Sustainability Reporting Performance of the FTSE 100 research, we identified Unilever as a leading example of how to influence consumer behaviour and drive innovation. The company has a range of initiatives to encourage and incentivise their customers to choose sustainable products. For example, Unilever uses behavioural insights from their Research and Development to reduce carbon emissions. In laundry, a study observed that people consistently use more washing detergent than they need. Unilever identified an opportunity to reduce packaging by creating concentrated detergents with smaller caps, making it easier for people to use the correct amount. The result is less plastic packaging and product wastage, and fewer lorries needed to transport the bottles. The social value generated from the value chain also brings cost benefits to Unilever.
3. Attracting the best and brightest talent – and keeping them
According to a study by MSLGroup (“The Future of Business Citizenship”), 74% of millennials would like their prospective place of work to be committed to protecting the environment. Crucial to the success of any recruitment drive aimed at attracting the brightest talent is to demonstrate a clear commitment to environmental stewardship.
When Carbon Clear conducted a staff survey on attitudes to climate change on behalf of a client, managers were surprised at the enthusiastic response from employees. Individuals increasingly expect their employers to demonstrate good environmental behaviour through a well-structured programme that harnesses employee knowledge, helps individuals reduce their own emissions, and reports results on a regular basis.
Employee engagement in climate change initiatives are a two-way street. Companies that involve their employees in their programmes tend to generate better ideas and implement them more effectively. It is the front-line employees who have day to day knowledge of company facilities, logistics operations, procurement systems and more.
4. Building a responsible brand image
Sustainability has become yet another way for businesses to stand out from their competitors. Our annual research into the sustainability reporting performance of the FTSE 100 shows more and more large companies taking managing climate change risk seriously. This is true especially in the highly competitive retail sectors, with firms such as Tesco and Kingfisher developing increasingly sophisticated programmes to tackle their climate change impact.
In Apple’s recent keynote speech, special attention was paid to how the tech giant’s new products are manufactured with ‘care and concern for the environment’. For Apple, arguably one of the best known global brands in the world, to acknowledge that their products are free from harmful materials and use low carbon production methods at such a key event is evidence that building a responsible brand image is important to Apple’s customer base.
These examples highlight that climate change need not be a barrier to businesses. Those companies that are prepared to take steps to address its consequences and provide the solutions we need to switch to a low-carbon economy stand to prosper. But often understanding of how and why addressing climate change can provide tangible business benefits is limited outside of sustainability departments. Persuading Financial Directors, CEOs, HR Directors and Marketing Directors of the benefits of embracing a low-carbon economy can be a challenge. In partnership with Business in the Community we are running a webinar on ‘An introduction to Climate Change and how it will affect your business’ on Tuesday 19 September. I would encourage you to get your colleagues to sign up, to help them understand better both climate change and the importance it has for business.
Mark Chadwick founded Carbon Clear 12 years ago, after a career in the Internet industry. He brings to Carbon Clear a passion for contributing to the climate change solution, strong business management experience, and an enthusiasm for supporting clients in the development of their sustainability programmes. At Carbon Clear, Mark is responsible for overall business strategy, as well as advising many of our largest clients.
Carbon Clear are releasing the 2017 Sustainability Reporting Performance of the FTSE 100 on the 26th of September. Sign up to our newsletter to receive a copy of the report once its released.
Mark Chadwick is chief executive at Carbon ClearBusiness in the Community