Pioneers make the cut

So you’ve put some solar panels on the roof, you’re promoting teleconferencing, and switching off the lights. Well done, but we’ve heard it all before. Here we profile four strategies from companies that are taking a step further by making genuine and ambitious carbon reductions and rethinking how they work with suppliers, and even competitors, to bring about wholesale change.

Natural communications
BT Wind Farms

The ambition of most onsite renewable projects pales in comparison with BT’s plans to develop its own wind farms. If it goes ahead, this will be the UK’s largest corporate wind power project outside the energy sector, costing £250 million, generating a quarter (or 250MW) of BT’s electricity requirements by 2016 and saving the business 500,000 tonnes of CO₂ every year.

Third party investors and renewable energy partners will make the major investment and build the wind turbines on or adjacent to BT land across Britain. Any return on investment will be shared between BT and the third party.

With so many determining factors including future electricity and carbon price, availability of finance, the viability of the sites they choose and the deal they set up with their partners BT won’t give any hint of what this return might be. But Chris Goodall, author of The Green Guide for Business, has estimated that BT’s “impressively large plan” could generate a return of £50 million a year, or 20% of the original investment, depending on various assumptions.

But generating a commercial return is the reserve, says Dr Chris Tuppen, BT’s head of sustainable development. The main ambition is to secure energy supply.

This sort of project is unusual now, says Nick Medic from the British Wind Energy Association. But he is confident it will become a “prominent trend” in the next decade. “This makes a lot of sense for rail and industrial companies or port authorities that have a large energy usage as well as huge land holdings.”

But the future of the BT project, and any corporate renewable investment, could be threatened by the UK government’s carbon reporting regulations. Under the imminent Carbon Reduction Commitment and carbon reporting guidelines, companies cannot claim the only relevant renewable energy subsidy – Renewable Obligation Certificates – if they want to count renewable energy towards reducing their reported emissions.

BT will be keeping a keen eye on the carbon reporting guidance due to be published in October. But at the moment, Tuppen says BT remains “comfortable this is the sensible business thing to do.”

Sweet common sense
Cadbury

Cadbury’s Guide to Low Carbon Dairy Farming deserves recognition not just for its bid to make cuts in a particularly emissions-intensive sector (agriculture is responsible for 7% of the UK's greenhouse gas emissions according to Defra), but also for its effort to extend best practice beyond its own operations into the supply chain.

The famous glass-and-a-half of milk that goes into a Cadbury milk chocolate bar is responsible for 60% of its greenhouse gas emissions, according to the carbon audit carried out by the Carbon Trust.

As part of a pilot programme, Cadbury has advised farmers in Wiltshire and Gloucestershire on a range of farm management practices. For example, farmers can increase milk yields and reduce greenhouse gas (GHG) production by improving herd health and also by reducing the fibre levels and increasing the starch level in cow feed. Prudent use of fertilisers and reductions in energy consumption on farms also bring about emissions reductions.

Cadbury are yet to clarify what GHG reductions can be achieved. But research for Defra by the Institute of Grassland and Environmental Research (IGER) and ADAS UK, the environmental and agricultural specialists, has estimated that livestock farmers can, for example, achieve 6% nitrous oxide reductions by improving diets and feeding regimes.

More work needs to be done to achieve a full picture of potential methane, carbon dioxide and nitrous oxide reductions, says Jon Moorby, of the Institute of Grassland and Environmental Research at the University of Aberystwyth, who took part in the research.

If the advice is implemented, farmers will increase milk yield, Ian Walsh, Cadbury’s head of environment told ClimateChangeCorp.com last year. “So it’s a win for the farmer as well as a win for us.”

Other companies can learn from the collaborative approach Cadbury has taken with its farmers, says Victoria Harris, campaign director at BITC. “The future of the UK fresh milk supply is in no way secure. But by working with farmers, giving them a good deal, and making sure they survive also gives Cadbury a milk supply chain it can depend upon.”

Moorby agrees that any advice that can help farmers navigate the minefield of conflicting arguments around best practice is “no bad thing”. But he hopes advice extends beyond the basics such as optimising milk yields through diet. “There are plenty of things we could be doing on top of just this,” he says, such as using anaerobic digestion technology to turn farm waste into green energy, or breeding cattle to generate better milk yields.

Cool customer
Marks & Spencer

In 2007, Marks & Spencer launched Plan A, its grand eco-plan, which included a target to make all stores carbon neutral by 2012.

One initiative that will play an important part in achieving this goal is its pledge to phase out HFC gases in supermarket refrigeration. HFCs have a global warming potential (GWP) hundreds to thousands of times greater than carbon dioxide and can account for up to a third of a store’s greenhouse gas emissions, says Fionnuala Walravens, EIA global environment campaigner.

In 2007 M&S, Asda, Tesco, Somerfield, Waitrose and Sainsbury’s all announced their intention to move away from HFCs. But only M&S has set out a clear programme and timeline around how it will do this.

The chain will replace the most harmful HCFC gases that are used in 65 of its fridges by 2014. They are also trialling a new, less damaging type of HFC gas (R407a) to replace existing HFC (R404a) gas in in-store fridges by 2012. And from 2010 all new fridges will use eco-friendly CO₂ systems that are non-ozone depleting and have a GWP of 1.

The aim is to halve the footprint from refrigerants by 2015, says Bob Arthur, refrigeration technology specialist at Marks & Spencer. But it will not be an easy battle, he adds.

CO₂ supermarket fridge systems could cost around 20% more than standard HFC equivalents, according to a recent report from the German Federal Environment Agency (UBA). However, these costs are expected to decrease considerably as mass production increases.

The other difficulty will be navigating an industry that is focused on HFCs, says Arthur. “Everything is centered around this, from legislation and technology development to training of engineers. To change will be a big task but were determined to do it.”

M&S have set up a programme to train the engineers who install and maintain the new technology. They are also calling on government and the EU to provide regulatory support to incentivise the move to alternative refrigerants.

“This is a pioneering leap forward and we wholeheartedly give it our support,” says Walravens. The next step will be for more supermarkets to take their lead and for
M&S to trial climate-friendly refrigerants in distribution centres and transport refrigeration, she says.

Sharing the load
Nestlé and United Biscuits

Lorries run empty for almost a quarter of the miles they cover in the UK, according to data from the Department for Transport. But if companies come together to share distribution systems they can reduce empty running to cut fuel costs and slash carbon emissions. Engineering consultant Faber Maunsell estimated that the food industry could achieve 3.8% carbon emissions savings through transport collaboration.

Food manufacturers and retailers are catching on, largely as a result of the Efficient Consumer Response (ECR) programme, led by the Institute of Grocery Distribution (IGD).

But the work competed by Nestlé and United Biscuits, takes the concept of supply chain collaboration one important step further by proving that competitors can also work together.

It’s a simple concept. Instead of United Biscuits’ lorries returning empty from delivering goods to a customer in York back to its distribution centre in the Midlands, they pick up goods from Nestlé’s factory in York and take them to its distribution centre (DC), also in the Midlands.

By creating more efficient round trips, the two companies have taken 280,000 kilometres off the road every year, saved 95,000 litres of fuel and 250 tonnes of carbon dioxide. This equates to a “significant six figure” cost saving, says Richard Hastings, Nestlé head of logistics planning, and the only costs to either party were a “few hours of management time to make sure that we'd got a robust solution in place."

Overcoming commercial sensitivities was a matter of setting some ground rules, says Hastings. Both companies seal trailers before they are picked up to protect the integrity of new products and any financial benefit that is accrued is shared equally.

“Initially marketers were anxious about putting Nestlé products in a United Biscuits livery. But the lorry that United Biscuits was bringing to York was going there anyway,” he argues. The cost savings have also helped to sway senior management’s decision, he adds.

“Five years ago, we would never have dreamt that competitors would have been able to make this work,” says Karen Chalmers, ECR expert at the IGD. “But if you have the vision and the buy-in from the senior team, you can overcome any barriers.”

But this is still just the beginning, says Richard Ellithorne at the UK Chartered Institute of Logistics and Transport. “The biggest change will be when an Asda, or Sainsbury’s store delivery goes out on the same vehicle.”