SUPPLEMENT                      The climate
 MARCH /APRIL 08                 change challenge

Directions Supplement
March	/	April	08

                        Welcome to the March/April edition of Directions Supplemen...
Over	the	past	year	more	attention	has	been	         More	businesses	are	translating	awareness	of	
paid	to	climate	change	t...
simultaneously	with	the	external	launch	of		        Around	a	third	of	respondents	to	the	McKinsey	       “ With the rise o...
How to avoid the pitfalls of disclosing on
climate change? Salterbaxter and Ernst
& Young provide some tips and questions
About us
Lucie Harrild
                                      Salterbaxter advise companies
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Salterbaxter - Directions Supplement - The Climate Change Challenge


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The Climate Change Challenge - Why companies should look out for the pitfalls of not joining up carbon management, internal engagement and external communications

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Salterbaxter - Directions Supplement - The Climate Change Challenge

  1. 1. DIRECTIONS SUPPLEMENT The climate MARCH /APRIL 08 change challenge TRENDS AND ISSUES IN THE WORLD OF CORPORATE REPORTING 15 16 Why companies should look out for the pitfalls of not joining up carbon management, internal engagement and external communications. 8 9
  2. 2. Directions Supplement March / April 08 Welcome to the March/April edition of Directions Supplement. This issue is a special collaboration between salterbaxter and Ernst & Young. Together we take a look at the challenges of making sure climate change communication has real substance. We try to identify what should be going on inside the business and address the external and internal communications issues. We explore the steps that need to be taken internally and highlight the need for real joined up thinking on carbon management, external engagement and internal communications. So does your business have the internal processes and systems in place to justify your rhetoric and help you avoid the traps that lie waiting for you? Lucie Harrild Head of CR Communications Salterbaxter There is no point in reporting your position on climate change and your activities simply to be seen to be doing the right thing. Companies need to understand the impact of climate change on their business, have clear plans to improve performance, understand progress in performance and be able to provide an accurate picture of this performance to stakeholders. Douglas Johnston Director, Corporate Responsibility Services Ernst & Young djohnston2@UK.EY.COM Ernst & Young and salterbaxter are holding a seminar in May to open the topic of this edition up for debate and discussion. If you’d like more information please do get in touch. You can email: or call us on +44 (0)20 7229 5720
  3. 3. Over the past year more attention has been More businesses are translating awareness of paid to climate change than any other corporate climate change into external communications responsibility (CR) issue. According to a recent campaigns. CorporateRegister’s recent report McKinsey survey 70% of executives view shows almost all FT 500 sustainability reporters climate change as an important consideration publish their climate change impacts, a third set for managing corporate reputation and brands. out targets and only 7% assure their data. With 50% confirm it is important to account for the rise of the dreaded ‘greenwash’ term, we climate change in areas such as investment are certain we will see many businesses’ claims “ Businesses stand planning and supply chain management. under careful examination. Disclosure must Businesses now recognise that not addressing match the internal processes a business a much better the issue can have a detrimental effect on has in place. Integrating CR into a business chance of a business. requires the involvement and understanding of employees. Tackling climate change should delivering Step 1 in the right direction – most businesses be approached similarly. against their now understand that something has to be done, they are communicating their stance externally If employees have a clear understanding of targets because and it appears they are incorporating it into what climate change means for the business, employees are managing their corporate reputation. then businesses will be in a better position to deliver on their goals. The McKinsey survey engaged and Communicating externally is part of the process shows few executives have taken action to in tackling climate change, but there are empowered.” tackle climate change. Over 60% of companies, pitfalls for a business simply stating its stance. where respondents consider managing According to the McKinsey survey, 60% of environmental issues to be important, fail to global executives view climate change as define emission targets and 15% show no important to consider within the company’s awareness of whether any targets are even set. overall strategy – but how many are really making climate change part of the overall Employees need to be armed with this business strategy, how they invest in the future, information for the business to be able to risk assessment and the long-term value of the deliver change. One of the FT 100 company business? How many are falling into the trap representatives that we spoke with understood of disclosing externally before having internal this and explained how they launched an processes and communications in place? employee engagement programme Stakeholders’ tolerance thresholds are lowering If this is a key business issue – as many state in dramatically all the time and climate change their public reporting, the quality of data needs disclosures which are seen as simply PR will no to increase significantly before it can be used longer meet the requirements for transparent to support business decision making. and open communications. Developing and executing a successful strategy to address If disclosing details of climate performance and “Climate disclosures key programmes is to deliver value to business, the issues arising from climate change will be companies need to develop much greater must be accurate dependent on having a clear grasp of the company’s exposure. This means making it a confidence in the clarity and integrity of their and they must carbon data. Put bluntly, the question has to be: priority to take control of the ways in which clearly reflect both information about climate change exposure Why disclose something if you’re not is identified, gathered and reported. sure you can believe in it yourself? the reasons why Companies are beginning to examine the an organisation Methodologies to estimate and report data carbon intensity of their activities and seeking often set out a hierarchy of measurement considers it to be to measure this. Whilst this is commendable, options which vary in complexity and accuracy. important and the preparation of a carbon footprint rarely Many first time carbon baselines use a lowest considers where key risks and opportunities common denominator approach to generate principal activities presented by the climate agenda are likely a number. The first step for any organisation in place to manage to be; how changes to policies or consumer has to be to examine the methods used for sentiment may impact on a company’s ability generating data for its most significant sources performance.” to do business; and how to maximise the of emissions. Major emission sources are likely benefits of projects to reduce carbon intensity. to be where there is greatest exposure to risks To date emphasis has been less on the from the climate agenda and where there are accuracy and consistency of carbon baseline likely to be the greatest opportunities for data and more on simply disclosing. Limited improvement. Building confidence in the data investment in the controls needed to provide from these sources can then allow greater confidence in carbon data means that confidence when making decisions about the quality of this information varies from investments, regulatory dialogue and risk reasonable within a small handful of management controls. companies to poor.
  4. 4. simultaneously with the external launch of Around a third of respondents to the McKinsey “ With the rise of the their climate strategy. The main aim was to survey said their companies place more empower their most important stakeholder emphasis on climate change than any other dreaded ‘greenwash’ group – their own employees. Feedback was issue. Unfortunately, it seems that many are term once again, encouraged and it generated a 95% positive not effectively engaging with their employees. response rate. Suggestions and comments For example, one person explained to us that we are certain we were then integrated into the strategy and internal communications on CR issues were will see many objectives. Another person stated reducing essential to carrying through their business resource use was imperative to the business. strategy – but they did not have anything in business’ claims Raising awareness of energy efficiency place for climate change. Although disclosing under careful amongst employees, for example, would externally, they had not yet formalised their internal approach. So businesses need to examination. empower them with knowledge and enhance the service to customers. Because of these apply a joined up approach to tackling climate Disclosure must change and realise the importance of communication initiatives these businesses employee understanding. match the internal stand a better chance of delivering against targets. processes a business Salterbaxter suggest internal communications Employees, as members of the public, are should be a step ahead of any external has in place.” inundated with information. Businesses are disclosure. On the positive, we now see more able to help bring clarity to the current debate of our clients appreciating the importance by improving their understanding of the impact of avoiding the pitfall of addressing climate of climate change. Following a recent Channel 4 change through external communications programme, one business found from staff alone. One of the people we spoke with had feedback that 5% of its employees were still found value in the use of interactivity on their questioning whether climate change was an intranet. Our research also showed 6 of the 30 issue. ‘Moving Consumers from Green Interest FT 100 people we spoke with were reluctant to to Green Action,’ a study conducted by Insight discuss any internal processes or communications Research Group, found consumers were willing they may have had in place. But if you are to do more if they understood how ‘green’ engaging with your employees to take your actions could help the environment and benefit strategy forward, be proud of it – it’s more than them personally. just one step forward towards meeting those carbon targets! This is not just a one-off exercise. Climate individual projects, it is difficult to establish “If disclosing data will be affected by many things: changes in meaningful targets and to monitor and report the business such as disposals and acquisitions; progress against them. details of climate changes in the methods used for generating the Carbon disclosure is now a fact of life. However, performance and data such as the emission factors and improved methods for gathering input data; changes in it’s important that it is not simply seen as a key programmes energy sources; and actual activities targeted ‘tick in box’ or PR. Climate disclosures must is to deliver value at improving environmental performance. be accurate and they must clearly reflect both the reasons why an organisation considers it to business, It is important that measurement systems to be important and the principal activities in companies need allow for tracking changes in the business to place to manage performance. It is important enable isolation of the relative contribution of that management understand the accuracy to develop much each of these factors to overall carbon data. levels and potential risks in the data and that greater confidence readers understand the confidence levels in Only systems which can clearly examine the the data and can therefore view the data in in the clarity and relative contribution of various factors to movements in carbon data can be used to an appropriate light. ‘Ball park’ green house integrity of their gas data will provide readers with a sense clearly demonstrate improvements in of scale of the issue for the organisation, carbon data.” performance. It is no longer enough to present but are not useful in managing issues or absolute data and discuss a reduction as an disclosing progress. Companies should invest improvement in performance. Such movements in measurement processes which support need explanation relative to all possible factors aggregation of company level data and to identify the actual improvement made. also allow for tracking of performance of There is pressure to back up a commitment individual projects. to tackling climate change with clear targets These investments should give the confidence to demonstrate progress and there are certain necessary to make proper decisions on a questions that organisations should be asking company’s approach to climate change, themselves before disclosing on targets. build meaningful targets, track progress in Without carefully designed measurement improvement activities and disclose programmes processes allowing both aggregation at a to external stakeholders with confidence. company level and performance tracking of
  5. 5. How to avoid the pitfalls of disclosing on climate change? Salterbaxter and Ernst & Young provide some tips and questions your business should ask itself before communicating externally. The communication steps to take to get up the ladder… 1. As members of the public, employees are inundated with information so businesses have a responsibility to bring clarity to the debate around climate change and help their employees understand what they can do – not only at work, but also at home. 2. If employees have a clear understanding of what climate change means for the business they are in a better position to deliver on their goals. 3. The return of the ‘greenwash’ criticism surrounding climate change means, to be taken seriously, disclosure must match internal processes – internally and externally. 4. There will always be sceptics but robust information and a clear commitment can only help. …and a few questions your business should ask itself before disclosing targets. 1. Do we have enough certainty in our baseline when setting targets to know we are being realistic with what we can achieve? And should it be absolute or allow flexibility for changes in our business? 2. How much of the ‘low hanging fruit’ have we already realised and what investments will we need to make to achieve these targets? 3. How will we measure progress in our improvement projects, are our current measurement systems sufficiently detailed or will we need to make changes to these? 4. Do we have sufficient detail of existing climate programmes in place across our businesses and do we know the likely impact of these activities on our overall climate performance? 5. Are our targets ambitious enough to demonstrate a real commitment to driving down the carbon intensity of our business?
  6. 6. About us Contact: Lucie Harrild Salterbaxter advise companies Tel: +44 (0)20 7229 5720 on branding, corporate Pavan Athwal responsibility, corporate reporting Tel: +44 (0)20 7229 5720 and employee engagement. The Directions Supplements support our main Directions We name companies, re-invent companies, report and are produced re-position companies and re-brand companies. every two months. The main Directions report is We help companies communicate with published each year and is now regarded as the UK’s shareholders and their employees and we advise most comprehensive analysis them on how to address corporate responsibility. of the trends and issues in CR communications. If you We create brands, complete company want a copy, call us on the number below or email communications programmes and global guidelines. We design, build and manage websites, e-commerce sites and all things interactive. We develop climate change campaigns and bring sustainability to life. In short we apply creative thinking to the big issues that businesses have to address in order to improve performance. Our clients are extremely varied and include FTSE 100 and Euro 100 companies; some of the world’s most exclusive brands; independent, 202 Kensington Church Street entrepreneurial businesses; world leading London W8 4DP educational establishments; law firms; private Tel +44 (0)20 7229 5720 Fax +44 (0)20 7229 5721 equity firms and media companies. This supplement is printed on Think Bright and is supplied by Howard Smith. It is an FSC (Forest Stewardship Council) certified material and is 100% recyclable. Printed by CTD, an ISO 14001 certified and FSC accredited company. TT-COC-2142 ©1996 Forest Stewardship Council A.C