Directions 2007 - Cutting through the noise of climate change


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Directions 2007 - Cutting through the noise of climate change

  1. 1. Using the monocle Whenever you see this symbol use the monocle from the front cover, hold it up to your eye and reveal a hidden message. Contents 01 Welcome to Directions 2007 02 Tackling climate change – why us? The Rt. Hon. John Gummer, Chairman of Sancroft International and Chairman of the Quality of Life Policy 06 Turning green consumption into mass consump- tion Steve Howard, CEO, The Climate Group 10 Carbon neutrality Fiona Harvey, Environment Correspondent, The Financial Times 14 IS IT ALL TALK? 16 Is it all talk? – salterbaxter’s review of company responses to climate change 24 BEYOND CLIMATE CHANGE 26 Fighting climate change – as well as other chal- lenges to sustainable business Julia Cleverdon, Chief Executive of Business in the Community 30 The panel judges the CR reports from the FT UK 100 companies 46 ANALYSIS 48 Analysis of the FT UK 100 and FT Euro 100 companies 56 About us
  2. 2. 01 Welcome to Directions 2007: Cutting through the noise of the climate change debate. Climate change is unavoidable these days: every time you open a newspaper there is a new angle. Blogs, information sites, dinner party opinions and political standpoints abound. And that’s before you count all the supermarkets’ announcements. So the topic for this year’s Directions was really a one horse race. But the knock-on effect of the debate of carbon offsetting. The noise around climate about climate change going mainstream has change also risks stealing the limelight from actually meant that there is a lot of noise and the broader responsible business agenda. Julia confusion out there – it is hard to see what is Cleverdon from Business in the Community argues Nigel Salter, salterbaxter actually going on. So we decided it was time the case for not getting focused on just one issue. to cut through the noise and try to put into context what effective action looks like. And to give you your ‘fly on the wall’ fix on who’s doing what in corporate responsibility This Directions report isn’t doom and gloom, generally, the panel are back with their thoughts apocalyptic scare stories and chest beating. on this year’s FT UK 100 CR reports. We’ve also Instead it is a slice of real life action, an insight reviewed some of those companies’ actions Lucie Harrild, salterbaxter into what to do to tackle climate change in the on climate change and we’ve analysed the lharrild@sa l way that’s right for you. John Gummer leads a corporate responsibility activities of the rallying call to take action; Steve Howard from FT UK 100 and Euro 100. The Climate Group tells us about the practical Together initiative; and Fiona Harvey from The It’s a bumper crop again so dive in and, if you’d Financial Times guides us through the contentions like to, let us know what you think! DIRECTIONS 2007
  3. 3. Tackling climate change – why us? Al Gore’s film title ‘An Inconvenient Truth’ could not have summed up the situation better. It is only human nature to resist what is not seen as convenient. Rt. Hon. John Gummer Chairman of Sancroft International and Chairman of the Quality of Life Policy Climate change is the biggest physical only works for the UK, but also the rest of the threat to mankind and the UK needs to take world – a one world philosophy. Then decisions a stand. In actual fact we need to play catch made based on that system will have the clarity up with some countries, such as Germany, to cut through that confusion. Involving global who are leading in tackling the climate change politics means the process is slow but agenda. In order to cut emissions by 80% cooperation on a global scale is necessary. in fewer than 50 years there is need for a universal response. The UK needs to wake up and realise we are well placed to lead. Global cooperation has its Climate change is currently the biggest threat challenges but has had its successes. We have – but it is also a symptom of how our society’s played a key role within the EU – without Europe systems are set up wrongly. Increases in wealth there would have been no Kyoto Protocol where and happiness no longer correlate above quite responsibilities were shared amongst those low levels of income. But the key to tackling the most able. And in 1997, when I was Environment issue is to not be overwhelmed by the scale of Secretary, we played a fundamental role in what needs to be achieved – as in wartime, we the ‘Convention on climate change’ meetings. just need to get on with it. Business has received a lot of criticism for It is true that there is a lot of information, not doing enough to combat climate change. opinion and noise on climate change out there However, in some cases businesses are moving – and some confusion. At Sancroft we have been faster than governments. working with a range of businesses and the Carbon Trust on the need for a user friendly and Tesco took a leadership role announcing that universal approach. We need a system that not they are to publish the carbon footprint of their DIRECTIONS 2007
  4. 4. 02_03 products. In the same way BP are driving feel that it is so daunting a task that they give up. towards renewable and alternative forms of Similarly, encouraging consumers to make choices energy with plans to set up the world’s biggest and enabling them to do the right thing is the key. low-carbon power business. Coca-Cola’s approach At the moment people are not clear and it is not to refrigeration and the phasing out of HFCs has made easy enough for them. In the end, they must meant a wholesale change to the way that sector choose but we should be giving them a helping now operates. There is evidence that businesses hand with information and encouragement. are more than ca pable of taking a lead in combating climate change. However, these It is only human nature to resist what is are individual examples and a large number of inconvenient. But consumers can make changes, companies have not yet engaged. Many do not helped by the provision of incentives. For understand their role and have not yet decided example Tesco have saved one billion plastic what their position should be. bags by incentivising customers with loyalty points, encouraging them to reuse. It is also “ It is only human nature to resist what important to focus on measures to improve energy efficiency in homes, linking council tax is inconvenient. But consumers can with energy consumption. We could offer cuts make changes, helped by the provision in stamp duty to homeowners who make their of incentives. ” homes ‘carbon efficient’, the council tax could be reduced for people who recycle more. The Government needs to help them understand what is key is not to impose on people but offer choices. expected of them. Then they must be given time to We should cut the tax on fuel efficient cars deliver. The key is to keep businesses fully involved and increase it on gas-guzzlers. in combating climate change without making them DIRECTIONS 2007
  5. 5. The Quality of Life Policy Group, set up by David With these parameters in place business Cameron, which I chair with Zac Goldsmith as my and society will see their role and can make Vice Chairman, outlines the need to be frank and choices based on clear information, avoiding to face up to the real issues, however difficult. the current overload of contradictory It is simply not possible to attempt to tackle information and confusion. climate change unless you address hard issues like transport. We all like cheap flights and we have all The problem is that our pa rty political structure, benefited from them. Nonetheless we also know with an election every four or five years, this is the fastest growing source of emissions and, makes it difficult for the kind of continuous whatever Michael O’Leary may say, we cannot improvement that is necessary. That is exempt air travel if we are to reduce our carbon why we need a Climate Change Committee, footprint. Our proposals are designed to deal with independent from gove r n m e nt, tapping into the problem in the least damaging way. Nearly a the scient i fic knowledge of the Royal Society. quarter of flights from London’s airports go to They would focus on targets and measurement, places that could reasonably be reached by train advising on the best course of action and in a similar timeframe. We therefore propose that allowing business to do what they do best – those flights should be more heavily taxed and innovate to solve the challenge. The committee long haul flights should get priority for the slots at would hold the government accountable and airports. Doing this will mean that no new runways each year undertake an independent audit of will need to be built at Gatwick or Stansted. We also their progress. Not only would the committee want to change the Government’s taxation system keep government and opposition to the task which penalises full planes to one which encourages in hand, it would also stop the current airlines to take the maximum number of passengers. confusion which lack of expertise in gove r n m e nt has created. If we are to create a way of living that one planet can sustain, then the approach also needs to be thought through as a whole. The Quality of Life Policy Group’s re p o rt emphasises the fact that combating climate change creates wealth. “ With these parameters in place business and society will see their role and can make choices based on clear information, avoiding the current overload of contradictory information and confusion. ” The Green Revolution would be as valuable today to Britain as the Industrial Revolution was 200 years ago. Our green products and services will be needed throughout the world and we will have first mover advantage. But we have to move quickly, particularly since the United States has signaled its intention to take global warming seriously. President Bush’s Scientific Advisor publicly stated that there is no argument about the science of climate change, the only issue is about how to counter it. Our report sets out clearly how it can be done. First our ‘One nation’ philosophy needs to be extended to the one world we share. If those less fo rtu n a te are expected to share the responsibility to tackle climate change then it is only fair for them to benefit directly from doing so. Secondly the Gove r n m e nt needs to lead the way and set the parameters for business and consumers. DIRECTIONS 2007
  6. 6. So for us to tackle climate change, and make the truth 04_05 less inconvenient, there are five things the government needs to do – and business and consumers will then have the direction they need to navigate their way through the confusion and choose their path for meeting the challenge of climate change: create policies and systems that can be delivered globally. set out the direction and clear parameters and then the market will deliver. Once public buildings are specified to deliver energy savings it opens the way for big contracts, prices come down and a market is created. Then businesses know how to react. And consumers can make their choices. develop frameworks to prevent distortion but enable innovation and entrepreneurship. Builders are the experts in delivering energy efficiency, they just need to be encouraged to do so. new ways of doing things need help at the beginning. give business and consumers the information and the ability to make sense of the issues and be encouraged to make their choices – but without over prescriptive regulation which can end up distorting the results and the market. DIRECTIONS 2007
  7. 7. Turning green consumption into mass consumption Surely with the current attention and noise around climate change there would be lots of individual action? Actually, no. Consumers believe that solutions are inconvenient, isolated and expensive. Business (and government) needs to address this. That is why the ‘Together’ partnership was formed. Steve Howard CEO, The Climate Group It won’t have escaped anyone’s notice that climate change is now big news in the UK. Not a day goes by without another alarming story or report hitting our TV screens or the front pages of our newspapers. We now have unprecedented levels of awareness and concern on the climate issue. Research conducted last year by The Climate Group shows that an overwhelming 81% of people feel very strongly about climate change or at the very least recognise that it is important. However, as yet, this has not translated into significant individual action. Our research also shows that people feel powerless in the face of such a big problem. They don’t fully understand the issue and hold the belief the solutions are inconvenient and expensive. Above all, consumers don’t want to feel that they are acting alone. They need help (not more lecturing) to overcome these barriers. The way forward was pointed out by a 2006 research report called ‘I will if you will’ which indicated that people were willing to change but only if they were met halfway by government and business, who they perceive as more able to effect change than themselves. This is why, on 23 April of this year, a ground- breaking new partnership was launched in the UK aimed at enabling individual consumers to be more climate friendly. DIRECTIONS 2007
  8. 8. 06_07 DIRECTIONS 2007
  9. 9. ‘Together’ is a coalition of famous brand British Gas recently launched Zero Carbon, name companies and retailers committed to which goes further than any other green tariff making it easier for their customers to take to provide genuine environmental benefits. up low-carbon solutions. Householders signing up to the Zero Carbon tariff will: reduce their household energy carbon Together they aim to help every UK household emissions to zero through Kyoto compliant to reduce their emissions by one tonne, a total offset schemes which will meet the new DEFRA of around 24 million tonnes over the next three requirements; help fund a direct increase in years, more than the combined household investment in renewable energy generated in emissions of Scotland and Wales. the UK; and contribute to the new British Gas green fund, which will invest in developing new B&Q, Barclaycard, British Gas, Marks & Spencer, renewable technologies such as wave power, and 02, National Express, MORE TH>N, BSkyB and oversee a programme to help schools in the UK Tesco have all united behind the campaign and reduce their CO2 emissions. are providing effective ways for people to reduce their impact. The campaign website ( will aggregate the achievements of all the partners For example, Tesco is committed to selling into one CO2 figure that will demonstrate in real 10 million energy efficient light bulbs this year time the power of collective action (50,000 (a five-fold increase on the previous year) and tonnes of CO2 have been reduced since launch, is offering them in-store and online at half price. equivalent to every household in Ipswich saving Marks & Spencer has launched a campaign a tonne or to 18,000 family cars off the road for to persuade their customers to wash at 30°C a year). Users of the site will be encouraged to whenever possible, including changing the undertake certain key actions and show how labels on the majority of their clothing range. they can contribute to their one tonne target. Loft insulation is one of the biggest single The reasons for bringing ‘Together’ to life at improvements that people can make to their this moment in time are compelling – both for home to reduce emissions and B&Q is making the planet and for business. it easy to plan, buy and install insulation – if everyone insulated their lofts to the The environmental case is well established, but recommended level it would save four million it’s important not to become numb to the facts. tonnes of CO2 per year – enough to fill the Atmospheric CO2 concentration, approximately new Wembley stadium 500 times. 280 parts per million (ppm) before the Industrial Revolution, has increased to around 380 ppm today. Each doubling of greenhouse gas concentration raises Earth’s equilibrium temperature by about 3°C. Greenhouse gas
  10. 10. 08_09 “ The Climatelatent demand forshows strong evidence of Group’s research products, services and brands that would allow people to reflect their climate change concern in their spending. ” emissions are still rising globally and under It is against this backdrop that companies are ‘business as usual’ trends the Ea rt h’s temperature also now starting to ask, in their branding and is likely to increase by between 2 and 4.5°C by marketing, what are the equivalent opportunities 2100. A rise of 2°C is widely accepted as the that will create new revenues at the same time threshold for unacceptable and unpredictable as achieving environmental objectives? change. Latest findings from the leading international body on climate change, the IPCC, There is a growing belief, demonstrated by the suggest that in order to prevent a 2°C rise the ‘Together’ partner companies, that helping global growth in emissions would need to peak consumers to overcome barriers to individual at around 2015 and decline fairly sharply from action can unlock a significant market opportunity. there to reach the 50% cut required by 2050. By acting in collaboration there is less risk of The business case for action is also clear cut. individual corporate initiatives being seen as ‘one- Many companies are already reducing emissions offs’ and greeted with cynicism about greenwash. in their operations and supply chains because they are finding opportunities to reduce costs In fact, the campaign also benefits from help at the same time as achieving ambitious and backing from a diverse and growing range sustainability goals – for example through of non-commercial organisations – the City improved energy efficiency. Looking beyond of London, the Church of England, DEFRA and operational emissions to the consumer, the the Energy Saving Trust, for example. Based Climate Group’s research shows strong evidence on this message of partnership, ‘Together’ is set of latent demand for products, services and to expand globally and reach a mass audience brands that would allow people to reflect their running into tens of millions of people already. climate change concern in their spending. Instead of trying to argue that one sector is more important than another when it comes “It is against this backdrop that to reducing emissions, it is crucial to understand companies are also now starting to the linkages between government, business and ask, in their branding and marketing, individual action, to avoid a situation where what are the equivalent opportunities each sector passes the buck to another, and that will create new revenues at the to work in collaboration to develop solutions same time as achieving environmental that deliver the win-win outcomes for society. objectives? ” We believe that bit by bit, and acting together, we can tackle climate change. DIRECTIONS 2007
  11. 11. Carbon neutrality Useful – when treated with caution. There is a new phrase about town: ‘going carbon neutral’. More and more businesses are talking about it, but what does it really entail? Carbon offsetting projects are not always as they seem, and businesses must be diligent to avoid good intentions going wrong. Fiona Harvey Environment Correspondent, The Financial Times Treadle pumps in India might seem an odd projects that reduce emissions elsewhere. kind of investment for a bank. It is a way of making up for the damage that a company’s activities cause – of erasing a The pumps, which are worked by foot, are company’s carbon footprint. alternatives to diesel-powered pumps for drawing water from underground to irrigate crops. By using treadle pumps instead of hiring “ Being carbon neutral simply means cancelling out the negative effect of expensive diesel pumps, Indian farmers can save money and water. The pumps also cut one’s greenhouse gas emissions on the the amount of fuel farmers use – and that climate by investing in projects that saves carbon dioxide emissions. reduce emissions elsewhere. ” That is the key reason the Co-operative Bank For any company seeking to go carbon neutral, invests in the pumps, and the reason several there is a three stage process. First, companies other companies also contribute to providing must cut their own emissions as far as possible them. These companies are using the invest m e nt – it could be as simple as turning off lights in pumps as pa rt of their commitment to and computers, or as complex as overhauling becoming ‘carbon neutral’. processes, like installing new equipment or using less materials. An ever-lengthening list of companies are seeking carbon neutral status, ranging from Second, companies can look to buy their credits international banks, retailers and media from ‘green’ sources. A growing number of companies to small enterprises with a handful companies are investing in their own wind turbines of employees. Among the household names and solar panels to cut their future energy bills. that have pledged to become carbon neutral But for companies where this is impossible, buying are HSBC, Marks & Spencer, BSkyB and its environmentally friendly energy means taking parent company News Corporation. A few a green tariff from an electricity supplier, with villages in the UK have also decided to go energy supplied from renewable sources such carbon neutral, and individuals can even as wind or hydroelectricity. seek carbon neutrality for themselves. However, this is not always possible in the UK Being carbon neutral simply means cancelling as not enough renewable energy is produced out the negative effect of one’s greenhouse to satisfy the soaring demand. Most companies gas emissions on the climate by investing in that do not already have a green supply will find DIRECTIONS 2007
  12. 12. 10_11 in “ Companiesneed to be wary offsetting embarking on of a few potential problems before they set out. Some carbon offsetting projects are not what they seem. ” DIRECTIONS 2007
  13. 13. they cannot source one so easily now. But it It’s not just treadle pumps, either. Companies should become easier: the Government is aiming that have already gone carbon neutral have for 20% of the UK’s electricity to come from used a huge variety of projects: solar panels in renewable sources by 2020, so the amount India, wind farms in China, energy efficient light of green electricity available is set to grow. bulbs in Jamaica, hydroelectric power plants The final stage of carbon neutrality is to in eastern Europe, more efficient cooking stoves ‘offset’ a company’s remaining greenhouse in Africa. All of these cut the amount of carbon gas emissions by funding projects that reduce produced where they are used. carbon dioxide elsewhere. As more and more companies, and individuals, This is where the treadle pumps come in. seek to go carbon neutral, the amount of money By funding the purchase of treadle pumps for being raised for projects around the world poor farmers, companies can contribute to the through the sale of carbon credits is growing reduction of emissions in the developing world. quickly – from zero a few years ago to a projected $4bn by 2010. “ A tonne of carbon saved in the Companies embarking on offsetting need developing world is just as valuable in to be wary of a few potential problems before mitigating climate change as a tonne they set out. Some carbon offsetting projects of carbon saved in a rich country. are not what they seem. Cutting carbon in poor countries can also bring additional social benefits, In a wide-ranging investigation of the market, such as improving people’s economic the Financial Times recently found many examples of bad practice. For instance, situation and bringing them technology offsets were being sold from projects to which they would not otherwise that brought no, or questionable, have access. ” environmental benefits. Carbon credits were being sold to companies for many times their real value. The same credits were being sold twice over. And companies that were already profiting from their carbon cutting activities were profiting twice over by selling carbon credits to others wishing to be green. These potential problems should not necessarily deter companies from offsetting. Businesses, after all, have many good and valid reasons for going carbon neutral: the desire to be good corporate citizens, and the knowledge that the Government is increasingly regulating on environmental issues, for instance. Companies can even cut costs in the process by improving their efficiency. And taking on environmental goals is a great way of engaging staff and customers. But in order to avoid the reputational risk of investing in a bad carbon offsetting project, any company taking such a step should carry out proper due diligence on the project first – just as they would for any other investment. DIRECTIONS 2007
  14. 14. 12_13 There are several guides to carbon offsetting available to companies wishing to consider the option: for instance, the Carbon Trust has one, as does F&C Investments. But whichever guide you choose, the key points are always the same: If you are buying offsets through an Demand that the carbon credits you buy intermediary, ask for detailed information on are placed in a registry, which guards exactly where the credits are coming from. against the same credits being sold several times over to different buyers Companies should take care that the by unscrupulous offset intermediaries. credits they buy are additional, which means that they come from projects Consider carefully whether you want which would not have happened without to buy credits from forestry projects. the financing provided by carbon credits. These are numerous, and tend to be the This is important because if a project, cheapest credits, but they are also the such as a wind farm, was financially viable most controversial. Trees, as any schoolchild in any case, buying carbon credits from it knows, absorb carbon dioxide from the air simply enriches the owners and the money as they grow, so forests should be a good could have been better spent elsewhere. way of cutting carbon. But there are problems: it is difficult to tell how much Do not buy any credits that have not been carbon a forest absorbs; the trees can take verified by an independent third party – 70 years to grow, so it takes decades for there are examples where carbon credits the carbon to be reduced; and it is difficult have been sold from non-existent projects, to ensure that, over such a long period, or projects that do not generate the the trees do not die off or get cut down. carbon reductions they claim. In addition, there is some evidence that forests in northern regions may contribute to global warming, absorbing heat that would be deflected by snow cover. “ creditsare examples where carbon There have been sold from non-existent projects, or projects that do not generate the carbon reductions they claim. ” DIRECTIONS 2007
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  17. 17. Is it all talk? 68% of the FT UK 100 talk about climate change to some degree in their corporate communications (73% of the FT Euro 100 do too).* The long-term target set by UK Government is a 60% reduction in CO2 emissions by 2050. 55% of senior executives in a KPMG and YouGov survey expect climate change to impact on their companies strategic development plans and the Carbon Disclosure Project has generated its highest ever response rate this year – 77% of the FT 350 responded. But according to DEFRA’s latest figures, CO2 emissions in the UK for 2006 have risen by 1.25%.** Confusing isn’t it?! So we want to get to the stories behind the percentages, and find out the reality of the corporate response to climate change – aside from all the noise of the climate change debate. We believe their response to this issue should be tailored to their operations – and that makes it hard to sum up with quick numbers the effectiveness of UK plc’s strategy to tackle climate change. But don’t worry, we’re not going to throw masses of conflicting information at you to add to the confusion. Instead we are taking a snapshot to review good practice. The companies voted best CR communicators by our independent panel (see page 30) are reviewed here for their response to climate change and we hope you will find some insights that help define your own strategy. ** according to salterbaxter’s analysis this year, see page 48 for details. ** taken from 2006 figures are provisional and expect to be within 1% of the final figure to be published in January 2008. CO2 is the main greenhouse gas accounting for 85% of the ‘basket’ of greenhouse gas emissions in 2006. Methane and nitrous oxide are the other two main greenhouse gases, and their levels are falling. DIRECTIONS 2007
  18. 18. 16_17 How we did it Key: We have reviewed the companies who are identified as leading communicators by our independent panel. We’ve looked at the companies’ A communications in the public domain, nothing else. We decided to do that because only A = Company is doing well with their efforts transparent and open communication from a to tackle climate change. company on their position and behaviour will cut through the confusion on this issue. We figure that if a company is doing something well in this area they would definitely want B people to know about it. B = Company is working on a response but We considered the effectiveness of the activities there is still lots to do. and communications, and applaud ‘fit for purpose’ – sophisticated programmes for carbon intensive companies and smaller considered programmes for low carbon users. C C = Company has either not fully engaged in the climate And to understand the big picture we checked change debate, or is only just beginning to. the emissions figures to see if the activities are delivering real results. BAE Systems BAE haven’t really grappled with their position on climate change yet, beyond a recognition of the link with energy use, CO2 and greenhouse Emissions status gases. But what does count in their favour is a willingness to publicly discuss that. So it will be interesting to see what develops. Slight drop in CO2 emissions in the UK, but rising in the US C Producers and users of fossil fuel based energy – so high impact, BHP Billiton high risk and high opportunity. BHP Billiton have raised their game this Emissions status year and revised policy and activities: more partnerships; more R&D; increased targets on efficiency. The challenge will be to quantify the 6% reduction in greenhouse gas intensity results. An A rating for the strategy but it’s the performance that is over five years. the real test now. A DIRECTIONS 2007
  19. 19. Is it all talk? British Airways The airline industry is often at the eye of the storm in the climate change debate. BA does communicate about their carbon footprint, Emissions status their emissions and include a piece on the debate in their industry. But they don’t talk about adaptation and they state they aren’t a big CO2 emissions from flights have crept up, contributory factor to climate change without adequately acknowledging though fuel efficiencies improved the airline industry’s reputation. Fuel efficiencies have improved but the actual CO2 emissions from fl i ghts have cre pt up. It’s a B rating but a B minus really. B BSkyB Sky are a leading company on this issue. They have programmes to manage emissions and communications with all stakeholders including Emissions status employees and consumers. Highlights include: a recent TV advert; a competition to upload short films about climate change on their Overall emissions are up (though due to website; events; and roadshows. It will be interesting to see how quickly acquisition), core business emissions are down they can instil the same ethos into acquisition businesses and continue to bring emissions down. A BT A clear strategy (or carbon busting plan), which is accessible and engaging. There are separate information sites with pledges and Emissions status competitions. The tone is straightforward and the commitment to awareness raising is definitely high. This extends to employees too, CO2 emissions dropped but now stabilised a group often overlooked. So an A rating. A Experian A good example of an approach that is fit for purpose. Experian has a clear strategy, convincingly argued, and the CO2 figures are falling. Emissions status They aren’t the most carbon intensive business, but they recognise their responsibilities and are taking action. A good progression would CO2 emissions falling be more engagement with the workforce and the supply chain to roll the message out to a wider audience. A GSK have a comprehensive document on the website which covers GlaxoSmithKline their understanding of their role in tackling climate change, their Emissions status approach and some interesting insights into how they might adapt in a world with a changing climate. A statement in the CR report puts CO2 and equivalent emissions are down for energy climate change into context as one issue amongst many important and production but travel is going up ones for GSK to tackle, showing a measured approach. However, it does seem that GSK is just beginning to tackle this issue following stakeholder pressure, so perhaps more is to come. A DIRECTIONS 2007
  20. 20. 18_19 HSBC HSBC have a high profile on this issue. They were an early adopter and their strategy includes (amongst other things) carbon neutrality, Emissions status a survey on public confidence, engaging Stern as an adviser, a carbon management taskforce and the HSBC Climate Partnership. So their Overall CO2 emissions are going up rating is A but they must be careful: all those initiatives must remain coordinated so as not to contribute to confusion; and performance needs to be addressed. A Imperial Tobacco Imperial recognise climate change as an area for attention and have made some progress but it sounds like they are really getting started in tackling Emissions status it this year. They state they are considering approaches including low carbon technology, renewables and offsetting. They have achieved some CO2 emissions falling energy efficiencies though. So a B rating for now but there should be significant developments in order to keep that rating. B J Sainsbury Sainsbury’s consumer website takes the reader stra i g ht to the CR re p o rt on this subject. Some consumers might find that information a bit Emissions status confusing as it brings together energy, packaging and waste and does n’t talk about what climate change is all about. There are good initiatives CO2 emissions reported to be dropping but would but there isn’t the sense of strategy that ot h e rs get across and this isn’t be good to see figures over time a sector that can shy away from the issue. So the communications feel a bit lukewarm. B Johnson Matthey Johnson Matthey’s approach comes across as a measured response to climate change in line with business needs. Initiatives are apparently in Emissions status place and they note that some of their products have the ability to assist in a transition to a low carbon economy – but on the other hand they CO2 is falling for the second year haven’t included some parts of the business in the climate change strategy (eg transportation and precious metals). And they could engage with a wider range of audiences with the information they have to offer. B Legal & General Legal & General don’t articulate a clear policy on climate change, although they do monitor and report on greenhouse emissions. Emissions status Their disclosure on climate change is low, especially as their SRI business lists it first on the list of engagement topics. There are Overall carbon emissions are increasing slightly objectives for next year so perhaps improvements are on the way. C DIRECTIONS 2007
  21. 21. Is it all talk? Man Group Another early adopter of a carbon neutral strategy, but with clear energy reductions and thought around offsetting. Though not a carbon Emissions status intensive business the strategy is a good example of being thorough and fit for purpose. Working with employees is a large part of the CO2 emissions down approach including workshops, audits, mentors and internal communications. A Marks & Spencer The doyen of the CR communications world, Marks & Spencer’s ‘Plan A’ (because there’s no Plan B) programme has climate change at the top. Emissions status Marks & Spencer’s commitment to tackling climate change is clear and it is being rolled out to customers – labels inform about washing CO2 emissions from energy use are down, clothing at lower temperatures and carbon from air freight. At the but are up from transport other end of the value chain they are working with suppliers, and they partner with the Women’s Institute for more awareness raising. It is definitely an A rating. Continued clear communications are key to avoid A being part of the noise of the climate change debate. National Grid National Grid have made climate change a focus area and publish a clear public position statement. They use the World Resources Institute Emissions status greenhouse gas protocol to break down how they monitor and manage emissions, which is helpful in explaining what they consider is within 35% reduction of greenhouse gas emissions their sphere of control. They also offer smart metering and energy efficiency schemes in US and are conducting a Met office study in the UK. But being such a significant player in the utilities sector, they should engage consumers more. A Reckitt Benckiser Reckitt Benckiser have a vision to make eight billion products carbon neutral in 2006 and 2007. They already tackle lifecycle analysis for Emissions status the production and use of their products. So it’s a bold target and mitigating climate change is high on their list of sustainability Greenhouse gases from manufacturing and priorities. They also pledge to tackle carbon footprint issues with general energy use falling suppliers, employees and customers. However, they could come under fire for using only a forestry project to offset their emissions. If they deliver on their plans an A rating would follow. B Rexam Rexam are overlooking climate change, both in terms of articulating their responsibilities and in grasping an opportunity. They operate Emissions status environmental management systems including resource efficiency, eco efficiency and a mention of the use of alternative energy sources. CO2 constant over three years, but energy savings But this only links to climate change if you know how to read between in parts of the business – a bit unclear the lines. And it is an opportunity for the business to deliver packaging which complements potential customers’ positive product values – something missing from the business to business marketing site. C DIRECTIONS 2007
  22. 22. 20_21 Embarking on a new three year plan including emissions reductions, Rio Tinto new technologies and better communication. They have conducted a Emissions status risk assessment of climate change related losses and operate internal knowledge sharing across regions. One of their videos also tackles the Greenhouse gas equivalent emissions and subject, though perhaps over-simplifies. An A rating for the amount energy use rising going on, but performance is a concern. A Royal & Sun Alliance Royal & Sun Alliance are running a number of initiatives: becoming carbon neutral; eco-insurance pro d u c ts for customers; insurers of Emissions status renewable energy projects; and part of the ‘Toget h e r’ initiative. However, considering they are in insurance and weather-related risks Emissions going down are key to the business you might expect more information on their strategic approach, and for them to include information on their site aimed at intermediaries. So really a B rating. B SAB Miller SAB Miller do recognise their impact on climate change and how the results could affect them – threatening crop and water supply, the raw Emissions status materials for their business. They have programmes in place and are communicating. What isn’t so clear is how effective programmes are Overall CO2 emissions are going up across the global operations. So you are left with the feeling you don’t have the complete picture. B Sage has no information at group level. In the chief executive’s Sage Group statement, the UK business says it’s tackling climate change backed up Emissions status with some information about energy saving initiatives. There is also an objective to measure carbon footprint but no figures are reported. The No exact data although some energy business is a low carbon emitter but the lack of a coordinated approach reduction claims across the group means a C rating. C Scottish Power Climate change is number four out of 12 material issues and Scottish Powe r’s approach seems pragmatic – a significant issue, a challenge, Emissions status with some positive achieve m e nts as well as difficulties. They use a combination of policies and there are signifi cant changes in their energy A rise in CO2, NOx and SO2 in the last year, supply portfolio. But there is something noticeably absent in their though the trend is downwards ‘summary of approach’ docu m e nt: a commitment to engage with customers. So still an A rating but room for improvement. A DIRECTIONS 2007
  23. 23. Is it all talk? SEGRO SEGRO recognise the importance of climate change, and have some targets in place, but the coverage is low key when you take into account Emissions status their sector and impacts. Their risk assessment does put energy use and emissions as a material issue and there is a rare mention of Incomplete data but CO2 in own offices falling and adaptation – interestingly classed as high risk but low influence. As they renewable energy rising honestly admit that some targets are not met – one of which being communications and awareness – and there has been work done on carbon footprint calculation and renewable energy use, the rating is B. B But there should be more. Shell Interestingly when you first go onto the environment and society pages of Shell’s website, there isn’t a main navigation area for climate change. Emissions status But then there is significant information in the environment section which links to other areas of the site. It is a detailed programme but it Greenhouse gas emissions from operations are can be hard work to find what you want on the website. An A rating but falling but targets give them room to increase as Shell have calculated that their products are responsible for 3.1% of global CO2 emitted from the combustion of fossil fuels – and there are no targets to reduce this – you are left wanting more. A Unilever Unilever has a working group which is trying to tackle the whole range of emissions from product to consumer use. So they give a real Emissions status impression of strategically getting to grips with all levels of their impacts (though they are yet to communicate on how to adapt to CO2 from energy use going down changes caused by the climate). Unilever is also the leader in its sector in the Carbon Disclosure Project. With such prominent brands and a history in bringing corporate responsibility messages to the consumer, they could consider engaging more in this area. A Vodafone Vodafone have an internal communications programme to promote energy efficiency. Their CEO statement suggests that they are in a low Emissions status carbon sector. But on the other hand they do have a huge customer reach which they aren’t working with to raise awareness, and overall Emissions are rising emissions are rising. They do seem to have been working on the network efficiency as their biggest impact. So some positive activity but more needed before it could reach an A grade. B DIRECTIONS 2007
  24. 24. Our top 5 tips 22_23 for your approach to climate change In our review, we saw a pattern emerging – so we’ve put together five things we think companies need to remember when considering their plans to tackle climate change: 01. Adaptation 01 Adaptation – it’s become that strange phenomenon, ‘there’s an elephant in the room’. Companies and communities need to give consideration to how they will adapt in a changing climate. While many companies now frankly admit that climate change is a reality, only a few talk about how they will react to weather change. This might be identifying how operations will change, or how products and services can meet new needs. The lack of consideration for adaptation is both a risk, and a lost opportunity. 02. Awareness raising Awareness raising – some companies with mainstream 02 consumers as a major stakeholder group are having some success. But it’s not widespread and many of the other 03 stakeholder groups are being overlooked. 03. Plain language Plain language – there are companies doing a good job of not skirting around the issue, but others are not clearly articulating their approach, perhaps because they aren’t clear themselves about what it should be. We don’t advocate doom and gloom or scaremongering about the effects of climate change, but companies do need to tell it like it is. 04. Numerous initiatives Numerous initiatives – some companies have a raft of activities which can be achieving a lot, but the challenge is to make sure 04 they don’t end up confusing and just make more noise around 05 climate change. 05. Relevance Relevance – the approach to climate change needs to be right for the company and its sector. It brings together all our top tips: the right initiatives explained in plain language including plans for adaptation, whilst raising people’s awareness. DIRECTIONS 2007
  25. 25. DIRECTIONS 2007
  28. 28. Fighting 20_27 6_27 climate change – as well as other challenges to sustainable business Julia Cleverdon Chief Executive of Business in the Community With corporate attention focused on climate change, some CORRUPTION MISTRUST are asking whether companies should return to the ‘green’ roots of corporate responsibility. Julia Cleverdon argues that companies taking this approach are missing the point. The role of business in tackling climate change the world’s first set-top box with an automatic has been thrust onto centre stage over the standby facility. It has also now engaged ONE WAY COMMUNICATION past 12 months. Sir Nicholas Stern’s Review of employees in eco-schools. BT has taken a the Economics of Climate Change highlighted different angle, working closely with its suppliers the need for businesses to reduce their carbon to produce products that have a lower carbon dioxide emissions to avoid severe economic footprint than their predecessors, so emissions consequences, and the UN’s Intergovernmental savings can be passed on to its customers. Panel on Climate Change (IPCC) emphasised the short time window for action, with These companies are successfully combining emissions needing to peak and decline within the reduction of their environmental footprint the next 20 years. with business benefits, and continuing to create wealth for the UK. And they should This has not gone unnoticed by the corporate be commended and used to inspire other PRIVATE EQUITY MISTRUST world. Out of the 1,000 business leaders that companies, some of whom are only just attended this year’s Prince of Wales’s May Day beginning their climate change journey. Business Summit on Climate Change, nearly two thirds saw climate change as a risk for But to see corporate responsibility their business. What is encouraging, however, just through the lens of climate change is that 90% also saw the opportunities it offered, whether through cost savings, new would be to miss the rich mix of issues market opportunities or as a driver to engage on which business has been making and retain employees’ trust. an impact. It is those companies that truly understand Taking a broader approach those opportunities that are making a real When Business in the Community was formed difference. Take for example BSkyB, winner of 25 years ago in the wake of race riots and social the Man Group International Climate Change unrest in the UK, the purpose of the group of Award 2007. It recognised the consumer desire leading businesses was to work collaboratively for affordable green products and introduced to tackle the key social issues of the day. Since DIRECTIONS 2007
  29. 29. “ For some businesses and sectors climate change is an absolute priority, but for others there are more pressing and immediate issues PRIVATE EQUITY that they can impact upon. ” MISTRUST then, our network of businesses has grown, A more enterprising and talent as has the range of issues that companies are driven skills base expected to address. In our jubilee year, David The future skills base of the country is critical Grayson, Professor of Corporate Responsibility to our competitiveness as so many of the job at Cranfield, has pulled together a commentary opportunities will increasingly need much higher on Business in the Community’s successes and level qualifications. Upskilling the existing failures in doing this along the way, available workforce, as well as developing a more relevant at and enterprising cu r r i culum for 14-19 year olds is vital. The roll call of companies who have A glance at our Corporate Responsibility Index, illustrated their impact through Business in published in the Sunday Times as ‘Companies the Community’s excellence awards include that Count’ and now in its sixth year, shows the Oracle learning programme, the Deloitte how companies are having an impact across employability initiative and the Esh Group the corporate responsibility spectrum, from co n struction project for 14-16 year olds. We will responsible selling to diversity in the workplace. all need to step up the quality, impact and scale of our business engagement in this area and Taking this broader approach allows I am delighted that Gordon Brown has asked me companies to consider all potential social and as Chief Executive of Business in the Community environmental issues that may impact upon to lead the review on how business-education them and focus on those that are most pressing partnerships can help to achieve world class to them and on which they can make the most educational excellence in the next 10 years. difference. Key to this is realising that every business is different. For some businesses and Winning trust sectors climate change is an absolute priority, Scrutiny of business by the public, media and but for others there are more pressing and shareholders has grown in sophistication. immediate issues that they can impact upon. Companies are no longer taken at face value. They have to back up what they are claiming Recognising the challenges with hard evidence. This is particularly true The three main issues that business will need for the growing number of private equity funds. to consider over the coming years are: the need Business in the Community’s membership for improved skills and a greater social cohesion now covers one in five of the private sector to ensure that the UK remains competitive workforce, and one in five of that same in global markets; the need for transparency workforce is now employed by companies owned across business to regain trust in an increasingly by private equity. With the high stakes and questioning environment; and the need to media coverage involved in the takeovers of integrate corporate responsibility into the these businesses, many questions are being heart of their operations. asked on what these funds are doing to improve the social and environmental impact of their BUSINESS newly acquired businesses. DIRECTIONS 2007
  30. 30. 28_29 The Walker Report on private equity sends a This is not a large company preserve. Masses firm message to owners of those businesses of small to medium sized enterprises also that the key to improving trust is transparency. provide inspiration on how to do this. When Open reporting of impacts and public asked ‘Why are you volunteering in your local benchmarking of performance through tools community?’ a small engineering company in such as Business in the Community’s Corporate the West Midlands replied ‘it is just part of what Responsibility Index will help business to win we do’. Smaller businesses have decision takers over the public, media and investors. That is closer to community need. where the bar needs to be set, and is a key challenge for businesses across sectors. The challenge now is to spread good practice to those companies that Making corporate responsibility part of are just starting on their corporate how business does business In this climate of mistrust, it is important that responsibility journey. Collaboration corporate responsibility activities are not applied is key to this. as ‘lip-gloss’ to core operations. They need to be at the hea rt of the business. To achieve this, Whether through the supply chains of leading companies need clear direction and commitment companies or business networks such as from senior management and their approach Business in the Community and its May Day to corporate responsibility needs to be fully group of companies committed to tackling i ntegrated into their everyday operations. climate change, using the leaders to inspire the laggards will be vital in helping all Some companies stand out as clear examples companies address not only climate change, of this. Marks & Spencer’s ‘Plan A’, named but the wider pressing issues which affect because the company believes there is no Plan our competitiveness and our cohesion. B, sets out how it will tackle the key issues facing it as a business. From how it will reduce waste, to how it will ensure it maintains fair partnerships with suppliers, the Plan recognises corporate responsibility as central to the company’s success. DIRECTIONS 2007
  31. 31. The reporting highs and lows of the top 100 UK companies The panel is on it In last year’s Directions, the panel got under the skin of the top 100 companies in the UK, looking at how effective their corporate responsibility reports were at communicating strategy and activities. Another year has passed and a fresh group of experts are looking at this year’s crop of reports. The attention that climate change has received has really put corporate responsibility in the spotlight. So businesses need to turn up the heat on their communications to withstand the scrutiny. And there is evidence that some are. So this year there are high expectations and the panel are hot on the trail of the companies under analysis. As in previous years the panel were given some basic guidelines but their findings on the good, the bad and the ugly are their own. Rules 1. The assessments should be based on information on company websites or in public reports available up to and including 3 August 2007. 2. The panellists are encouraged to be forthright! 3. The panellist’s decision is final (but please feel free to get in touch with us if you’d like to discuss it). Please note the views expressed are the panellists’ own and not necessarily those of their organisations. Company list taken from the Financial Times, 30 March 2007. DIRECTIONS 2007
  32. 32. The judging panel 30_31 01 02 03 04 05 06 07 08 09 01 Nancy Turrell College and is responsible for corporate communications, working with leading CSR Manager, Nestlé responsibility communications work international brands writing CSR reports and Nancy joined Nestlé UK as CSR Manager in at salterbaxter. websites, and developing social marketing July 2007. Before joining Nestlé she spent campaigns. Adam holds an MSc in the Public five years at Sainsbury’s as CSR Manager. 05 Angela McClowry Understanding of Environmental Change from Nancy read Business and Italian at Environment Analyst, British Energy UCL. Before working in communications University College London. consultancies, Adam was a pollution Angela is an Environment Analyst with a campaigner for Friends of the Earth. particular fo cus on CSR policy for industrial 02 Stuart Poore and commercial electricity supplier, British Director of CR, Virgin Media Energy. Her background is in environmental 08 Stephanie Maier management and she worked previously for a Head of Research, EIRIS Stu a rt is Director of Corporate Responsibility at Virgin Media where he leads on the social, large agribusiness investment management Stephanie is Head of Research at EIRIS, enviro n m e ntal and ethical dimensions of the company in her native Australia. a leading global provider of independent company’s reputation management. Prior to research into the social, environmental and joining Virgin Media, Stu a rt looked after CR 06 Andrew Vickerman other ethical performance of companies. at QinetiQ having previously worked in public Global Head of Communications & Stephanie works on developing new affairs and environmental campaigning at External Relations, Rio Tinto, London research products and approaches, recently WWF-UK. launching the new climate change criteria. Andrew has overall responsibility for media, She has researched and written on the corporate communications, public affairs, 03 Cindy Cahill engagement approach to SRI and was a corporate social responsibility and community Head of CR, Deloitte member of the Indicators Working Group relations. He has a BA, MA and PhD from Cindy is Partner responsible for Corporate developing the new GRI sustainability Cambridge University. Prior to joining Rio Responsibility and Sustainability Services Tinto he worked as a deve l o p m e nt economist reporting guidelines (G3). at Deloitte UK. In addition to providing CR and as a consultant for international services to a number of Deloitte’s largest organisations, including the World Bank. 09 Stefan Reichenbach clients, Cindy is also responsible for leading In his current role Andrew played a leading Head of Environment Markets, Reuters Deloitte’s internal CR programme. She is a role in the Global Mining Initiative, a mining Stefan is Head of Environmental Markets at member of the Deloitte Global CR executive industry exercise focused on addressing the Reuters. Under Stefan’s leadership, Reuters and has helped a number of member firms contribution of the industry to the transition has emerged as a leading business media to develop their CR practices. to sustainable development. company for the environmental finance sector. Stefan introduced innovative online 04 Lucie Harrild 07 Adam Garfunkel initiatives that inform the global carbon Head of CR communications, salterbaxter Independent CSR Communications market and bring the market’s buyers Lucie has a background in corporate Consultant and sellers together. Stefan holds an MA and consumer communications, SRI and Adam is an independent CSR communications in Economics from Cambridge University CR consultancy. She holds an MSc in consultant. He has more than 10 years’ and an MSc in Environmental Change & Environmental Technology from Imperial experience in ethical business Management from the University of Oxford. DIRECTIONS 2007
  33. 33. The FT UK 100 sectors Sectors Page Sectors Page Aerospace & Defence 32 Household Goods 39 Banks 33 Life Insurance 39 Beverages 33 Media 40 Chemicals 34 Mining 40 Construction & General Industries 34 Mobile Comms 41 Electricity 35 Nonlife Insurance 41 Fixed Line Telecoms 35 Oil & Gas 42 Food & Drug Retailers 36 Real Estate 42 Food Producers 36 Software & Computer Services 43 Gas, Water & Multi-utilities 37 Support Services 43 General Financial 37 Tobacco 44 General Retailers 38 Travel & Leisure 44 Health, Pharma & Biotech and Healthcare Equipment & Services 38 Environment, health and safety (EHS) have own performance data and also by using typically been the focus of aerospace and benchmark data, comparing themselves to more defence reports, primarily due to the heavy pollution intensive sectors. industrial nature of activities – manufacturing aircraft parts and military equipment. Comprehensive reporting on the key challenges This year was no exception, with extensive faced by defence related activities remained a reporting on EHS activities from both challenge for re p o rts. Whilst BAE’s was the only Rolls-Royce and Smiths Group. report that detailed issues raised by stakeholders throughout the year, it failed to discuss them Aerospace Climate change was also a common theme for in the necessary depth, brushing over issues & Defence: reports and was broached through discussions such as recent Saudi-related accusations. of ‘innovation’. Companies reported on Future challenges will include reporting more BAE Systems technological advancements in avionics systems transparently and thoroughly on their human Rolls-Royce Group and engine design that promise to deliver rights position, product stewardship, supply Smiths Group improved energy efficiency and fuel savings chain and lobbying activities. So the winner, for aircraft, whilst others reported on the latest based solely on the limited stakeholder Panellist: developments with products such as ‘green’ lead engagement, is BAE. Cindy Cahill free bullets. Some of this may be due to the Deloitte demands of buyers such as Boeing and Airbus; meanwhile others have criticised it as being purely And the winner is: ‘greenwash’. Re p o rts used emissions data to back BAE Systems up environmental performance, both using their DIRECTIONS 2007
  34. 34. 32_33 Banks continue to invest significantly in their agenda. Alliance & Leicester’s ‘Right to Rea d ’ CR profiles. The responsibility of helping to programme and RBS’ ‘Face2Face with Finance’ tackle climate change is now a clear priority deserve special mention in this regard. for the sector with each of the ‘big 5’ jostling for position and differentiation. HSBC remain Each of the companies reviewed appear to place clear leaders, especially in view of their a strong emphasis on employee well-being, Climate Partnership with environmental NGOs. creating a sense that these are very nice places Banks to work. This is backed up with a raft of hard- On the customer side, the issue of responsible hitting metrics on diversity and opportunity that Alliance & Leicester lending takes top billing although one wonders undoubtedly differentiate this sector as ‘people- Barclays whether these companies are ducking some oriented’. Refreshingly, HSBC also give the issue HBOS uncomfortable truths. Beyond pledging to of executive remuneration and accusations of HSBC share data on vulnerable borrowers, our big ‘fat-cattery’ some fairly ‘up-front’ treatment. lending institutions are less than convincing Lloyds TSB in their claims to be meaningfully addressing Northern Rock soaring and distressing levels of personal debt. And the winner is: Royal Bank of Scotland HSBC Standard Chartered E l sewhere, big sums of money are being ploughed into building co m m u n i ty invest m e nt – Panellist: HBOS give £8m annually to their Foundation, Stuart Poore for example – alongside some impress i ve and Virgin Media m eaningful co ntributions to the education The companies in this sector are experienced SAB Miller and Scottish & Newcastle both reporters. Diageo’s report sets up a clear use video on their website to articulate their vision of the business reinforcing that sense approach, a great way to hold the interest of the of confidence from the beginning. And their viewer/reader. However Scottish & Newcastle’s marketing activities around the responsible actual report is less engaging, though quite drinking message show they are integrating proficient. Being an 85 page document, it is CR into other communications – and it will be on the long side. The winner is SAB Miller, for Beverages: interesting to see where they take that in the good presentation of information online and in future. However the relative achievements print, plus using features like video to get the Diageo across global operations are a little harder to message across. But actually it is very close SABMiller get a sense of. Overall the report can be a bit in this sector. Scottish & Newcastle dense to read and breaking information up * note, due to publication dates SAB Miller’s re p o rt is a more would be helpful. recent version Panellist: SAB Miller’s* is also a heavyweight report, Lucie Harrild though not as bad as those 100 page tomes And the winner is: salterbaxter of years gone by. Its focus is more towards SAB Miller sustainability and it reports on 10 quite specific key issues giving a clear sense of direction. SAB Miller’s web information is straightforward to navigate too, and it gives a fast insight into the business and what it wants to communicate. DIRECTIONS 2007