The Global View

Sustainability: The big new corporate game-changer

Going “green” needs to be high on every organisation’s agenda, whether it’s by improving IT operations and infrastructure, lowering operating expenses, reducing or avoiding capital expenditures, aligning with corporate green initiatives or by complying with new, complex regulations such as the UK’s Carbon Reduction Commitment (CRC) Energy Efficiency legislation that came into force this April.

For many organisations, it’s not just about the basic aspects of switching off lights and computer screens. It’s about viewing “green” as a game changer — from the enterprise carbon and energy management systems, to the power management solutions, to renewables, to creating, developing and maintaining a corporate sustainability culture, to the cleantech revolution.

C8 Consulting and Kyocera Mita recently invited a number of specialists to consider these issues during a roundtable discussion in London. Among those participating: the BCS, The Chartered Institute for IT, Digital Surface Research, Henley Business School, Microsoft, Cambium, Doxense, Gillamor Stephens, CIPFA, 10:10, Reading Borough Council, IBM, ecoXchange, Carbon Trust, Capgemini and the Crichton Carbon Centre.

Setting the scene, Tony O’Donnell from Cambium LLP, which helps IT and cleantech companies understand and maximise business opportunities created by the shift to more sustainable business models, discussed the CRC scheme and his thoughts on the market opportunity it creates:

“The CRC provides a very powerful and scary medium for organisations to start taking the issue of sustainability more seriously,” he said. “It will act as a channel for adoption of technologies irrespective of whether they are IT or cleantech innovation.”

O’Donnell added, “At the moment, the awareness of the CRC and all of its implications varies greatly, and there’s an awful lot of confusion out there in the market. And because it is such a large, enterprise-wide impact, I don’t think there’s a single organisation that has all the answers. So I think partnership is going to be the order of the day and channels to market are going to be part of the strategy that people will adopt.”

Chris  Francis, who handles government  programmes  at  IBM,  agreed.

“It is clearly a catalyst and has very significant penalty clauses in it,” Francis said. “What’s important, though, is making sure that organisations build compliance  into  their energy management and business processes.”

Organisations, Francis continued, “need to  work  out  what business processes give rise to regulatory liabilities, risks and are potentially unsustainable or inefficient resource operations, and once you know what they are you can transform your business around that. Ultimately that’s our interest, because our sector is aiming to be a net  provider of energy efficiency solutions via displacement technologies, travel substitutions and business optimisation.

It’s also important to have clear monitoring processes upfront to measure how organisations are doing once they have signed up, added Ben Burfoot, sustainability manager in the Chief Executive Directorate at Reading Borough Council.

“Those that are signing up to the Carbon Trust Standard and those that already have things in place,will ultimately have a competitive advantage,” Burfoot said. “You need to focus on getting the monitoring systems right at the very beginning, and if they then find that their carbon emissions are all over the place, it’s going to cause real problems in terms of an organisation’s carbon credits.”

The CRC is likely to have a dramatic effect on British business organisations, said Harry Morrison, general manager of the Carbon Trust, an independent, not-for-profit company set up by the UK government to take the lead on low-carbon technology.

“It totally transforms the landscape for thousands of organisations to take the issue of carbon more seriously,” Morrison said. “I think it totally changes the way they think about carbon. And, in order to comply successfully with the CRC, you are going to have to have a long-term strategy and bring together a number of different people in different departments, such as the legal team, the accountants, senior directors and also the PR team to promote good carbon performance. We’ve already seen some organisations such as Microsoft and Kyocera Mita taking these steps to effectively manage their emissions. There’s some great leadership out there and it’s definitely setting the platform in the longer term.”

Morrison continued, “Looking to the future, though, there is a slight issue as the CRC raises the baseline for corporate performance. All organisations are going to have a serious process of collecting data and thinking about their management procedures and processes. So the challenge is, in order to be a brand leader, what are you going to do next to prove that you are a sustainable organisation in the future?”

That means organisations will have to work to keep ahead of the game, said Tracey Rawling Church, brand and reputation manager at Kyocera Mita, a company focused on optimising document workflow.

“You do have to pay attention,” she said. “Differentiators very quickly do become hygiene factors, so you do need to be constantly aiming well beyond compliance. The issue at the moment is that sustainability strategies are being driven to a greater extent by legislation, and there needs to be a holistic approach to address all of the issues.”

“There are a lot of corporate social responsibility (CSR) initiatives going on and IT initiatives such as managed print services, consolidation, virtualisation, etc., but if you ask these companies if they are doing it for the CRC they probably aren’t and they probably haven’t even heard of it,” added Jonathan Tapp of Capgemini, a firm specialising in consulting, technology and outsourcing services. “A lot of IT directors are starting to do things because they appreciate they make good economic sense whilst allowing them to put a green tick.”

Despite the failure of the Copenhagen Summit last year and the lack of commitment in other countries such as Australia and the US, the UK and Europe are moving forward and taking the lead in sustainability, said Darren Shipard, CEO of Digital Surface Research, which helps buildings lower their carbon emissions and operating costs by directing natural daylight in the interior.

“As a native Australian living in the UK, from my perspective it’s an exciting time to be here at the moment,” Shipard said. “The CRC will bring a few benefits to our sector such as stimulating business for measuring and monitoring suppliers of equipment and consultants. It will stimulate new refurbishment opportunities and, with initiatives such as Threadneedle and Stanhope which aim to turn buildings into energy-efficient and carbon-friendly buildings, it will help give buildings a competitive edge and attract new tenants. The challenge I see with the CRC, though, is around baselining and that the biggest weighting is given to future building energy performance over its past performance. I see a lot of issues arising out of this and I’m not sure the systems and resources are in place to deal with all of those issues.”

The CRC is now making “green” mainstream within organisations and in, particular, the accounting department, added John Maddocks of the public service accounting organisation CIPFA.

“I know this is a generalisation but accountants have typically shied away from anything to do with carbon footprints and sustainability reporting,” Maddocks said. “But, it’s now starting to happen and it’s quite an exciting time as the CRC and carbon emission allowances will become part of financial reporting. Treasury have produced an Exposure Draft on sustainability reporting for central government, which sets out a number of key environmental indicators and draws on the Accounting for Sustainability Connected Reporting Framework. It’s only in draft at the moment, but it might encourage such initiatives throughout the rest of public sector.”

Mike Bonaventura at the Crichton Carbon Centre, added, “One of the things I like about the CRC is that it focuses minds and raises awareness, and it’s very tangible. People intuitively understand the notion of energy efficiency and what it is about, but the CRC just brings it to a much broader audience.”

So there’s plenty of talk about the CRC, the opportunities, the benefits and the challenges. But how are organisations talking “green” and making a move to change culture and drive engagement in their companies?

Pip Errington, CEO at ecoXchange, an eco-business-to-business site, said he believes there are two key reasons for going “green”: either it makes an organisation more efficient or it differentiates a company in the marketplace.

“For a couple of years now we’ve been looking at the new emerging green IT and the new emerging greener way of doing things, and we’ve been attending a lot of business meetings where real business people are extremely confused,” Errington said. “They see the sensible aspect of becoming more efficient and the potential to differentiate from their competitors, and they’re asking the questions like, ‘What’s in it for us?’, ‘Will it help our business?’ and ‘How will this save us money?’

“We’re seeing a lot of customers looking for practical ways to engage not only themselves, but the whole company and their employees. They want to engage staff, take the ‘green-speak’ out of it, and make it sound like common business sense.”

Tracey Rawling Church agreed. For example, she pointed to the development of Kyocera Mita’s new green technology innovation centre in London (where the roundtable was hosted), which was designed as an opportunity for the company to differentiate itself.

“As a sustainable business, you do have the opportunity to influence other organisations in a variety of ways,” she said. “When we developed this new technology innovation centre, we appointed a regular refit company to refurbish it. We gave them a brief to make the building as sustainable as possible within the parameters that it’s an existing building and we are a tenant. The benefit for the refit company of having done this conversion was that they now recognise there’s a market opportunity for them to do sustainable refits.”

She added, “There’s a lot of collaboration going on between a number of organisations at the moment and this is where the future will be in providing solutions which are ultimately more resource efficient.”

Richard Zaltzman at Microsoft agreed. He said companies that are early adopters of sustainable initiatives “will reap the benefits long term.”

Commenting on Microsoft’s own internal green IT initiatives, Darren Strange, who heads Microsoft’s environmental sustainability department, said the initiatives were adopted largely due to customer demand.

“It didn’t really have anything to do with cost savings and efficiency at the start,” Strange said. “When talking to our customers, though, it was clear it was for them. There was increasing importance on the need to achieve sustainability targets, so we started to look at how we could help and what our software could contribute. At Microsoft, we have a mantra about, ‘Eating your own dog food,’ which means we always use our own stuff on ourselves and improve it before selling it. So we looked at what we were good at and how we could we use our software to strip out energy costs and carbon from our operations. Now we have seen what works, we feel confident to talk to our customers about it too.”

The Carbon Trust Morrison echoed Strange’s comments.

“What will get people excited is, ‘How can I respond to my customers’ demand?’ ” he said. “The sustainability debate seems to be stuck on efficiency and cost savings at the moment, and this isn’t the future of business.”

The sustainability debate also needs to engage staff from the bottom up, added Hannah Sharp of 10:10, a project that aims to unite every sector of society to cut carbon emissions by 10 per cent in 2010.

“10:10 is all about empowering action at the grass roots level and we’ve got a huge following with 2,500 businesses signed up this year,” she said. “In some cases, certain pioneering individuals have managed to persuade their companies to sign up to the campaign and they have managed to concur various levels of management. The swell of enthusiasm, despite CRC commitments, has allowed companies to see real results and cost savings in the actions that individual staff have actioned.”

Richard French from BCS, the chartered institute for IT, noted, “Trying to show people to be active in the right way and verify that they are being green is going to be the main challenge moving forward.”

“The important thing is that we have an overall vision and mission from word ‘Go,’ ” agreed Burfoot. “We produced a climate change strategy which aimed to steer us in the right direction and our overall vision of Reading was to be a low-carbon town. We wanted it to be a place where business can be done which focuses on innovation around that particular agenda. And this is where our DeCREASE initiative was developed. We recognised that we needed something much faster and much bigger than simple energy efficient projects. We needed to collaborate with other organisations.”

On the recruitment end, companies are also making an effort to recruit and invest more in the sustainable sector, said Steve Lavelle at Gillamor Stephens, a European executive recruitment firm in the IT sector.

“We work with a wide range of companies from startups to large corporate, and there’s a huge amount of investment going into (the cleantech) sector right now,” Lavelle said. “The business is quite cyclical and, having been through a major downturn that impacted on the sector massively, it’s definitely now picking up again and it’s becoming a more competitive global marketplace. The talent pool is definitely growing and we’re seeing more people at the early stages of their career wanting to move into really sustainable industries.”

So where to from here, and how can we get businesses to engage in sustainability more?

“It all boils down to priority,” said Lee Schofield of the print management company Doxense. “A lot of companies don’t do the research and don’t figure out what the benefits of having a sustainable strategy are. It’s becoming our job to engage with customers to help them realise those benefits, and it’s only then that it starts to become a priority for them and we can start talking to them about what we can do to help.”

Steve Downing at Henley Business School, added, “Sustainability does imply a paradigm of change. Although eco-efficiency is a wonderful and necessary thing, the shift we are moving towards is understanding the business case for sustainability. It’s about deepening the understanding and accelerating change, and the way we do that is through a community. It’s about collaboration between organisations and building a trusting community of practitioners.

“The vision that we have been market-testing is that companies can help each other by being part of collaborative groupings on projects — be they social, ethical or environmental projects. They can then collaborate over a number of months on various projects and learn from each other, and then use that to change culture and really challenge the business model.”

Downing added, “There are three key reasons why you need to be sustainable: firstly it’s because of legislation; secondly it’s something you want to do as it saves you money; and lastly it’s the right thing to do as it relates to your values.”

And, Morrison, concluded, “in the future, the consumer is going to demand it. They are going to want to do the right thing.”

2 thoughts on “Sustainability: The big new corporate game-changer”

  1. Sustainability is finally starting to gain traction in the largest companies, but SMEs are largely only just starting to cotton on to some of the basic building blocks such as energy efficiency. CRC is helping to reinforce such awareness, and offerings such as interest-free loans from the Carbon Trust raise strong incentives for action, but the business case for wider sustainability actions is still somewhat intangible for smaller businesses. Gains made through sustainability are more appreciable across a wider scale: smaller companies look at individual actions in isolation, see the small gains involved and ask ‘Why bother with this when I can save more/increase profits more by investing in another way?’

    Energy efficiency has finally made a transition from green to hard-nosed business, but sustainability needs to really shout about it’s big corporate successes far louder before it becomes anything more than a trendy hand-waving hippy word to most SME business leaders.

Comments are closed.