Here are 12 potential green business new year resolutions of varying ambition for your business - pick one and drive it through to get 2012 off to a sustainable start:
Set some really ambitious stretch targets to hit by 2017 and 2022;
Engage employees in a carbon/waste/water reduction programme - ask for ideas and use them;
Instigate a carbon reduction competition between staff teams/sites;
Be kind to cyclists: improve racks, start paying cycle mileage, subsidise cycle purchases, improve site access;
Install/improve teleconferencing facilities;
Radically increase the number of employees working from home;
Work with a supplier to develop a more sustainable supply of raw materials/goods;
Bump up the weight given to sustainability in supplier selection (and tell your suppliers);
Initiate the development of a new, greener product, service and/or product service system;
Delete an unsustainable product line;
Install (more) on-site renewable energy systems;
Invest in more efficient/alternatively fuelled vehicles, subsidise low emission vehicle purchases by staff.
Whether or not you decide to do any of the above, you MUST do the following in 2012 - no excuses!
If going green is a Herculean task in itself, it is one with three massive challenges, just like Cerberus the three headed dog (who looks a bit of a poodle in this classic woodcut, but never mind). Those three slavering jaws that could wreck your efforts are:
1. The Supply Chain
For most organisations, the supply chain is the biggest part of your carbon/ecological footprint. With complex, global chains, it is very hard to trace where materials and components come from. For example, huge number of big brands have black-listed paper giant APP for their destruction of rainforest, but the company hasn't gone bust, so it is almost certain its products are finding their way to the consumer through some circuitous route. Likewise if you want to develop greener products or install greener technologies, you will often find the supply chains are weak - low quality, high prices, low reliability. This will change over time as demand rises, but it is currently a serious brake on progress.
2. Company Culture
It is very telling that at least 80% of my work this year has involved engaging with clients' staff to get their buy-in to sustainability. Without that buy-in - from the boardroom table to the guy sweeping the yard - green programmes will stall. This is where real leadership and hard graft are required - it is not easy. (Don't forget to check out my guide to fostering green behaviour at work.)
3. Consumer Behaviour
Whether you are selling houses, kettles or washing powders, the biggest factor that will determine their environmental impact is how they are used by the consumer (or other end user). Proctor & Gamble may have developed Ariel Excel Gel (aka Tide Coldwater) which will wash clothes at 15°C, but all their work will be in vain if the consumers' dials drift back up to 40°C. A zero carbon house won't be a zero carbon house if the doors are left open in mid-winter with an electric fire blazing in every room. Persuading those people to buy your green product and then use it correctly is a function of marketing, product design and clever messaging.
Big challenges indeed - worthy of a true superhero. Hercules used strength, guile and determination to complete his tasks - virtues required of the successful green business leader, too.
So something has finally been agreed. Governments have agreed to make an agreement by 2015 which will come into force by 2020. Ministers are jubilant. Pressure groups say it is not enough. Plus ça change!
Here's my thoughts:
Global agreements will always suffer from a degree of lowest common denominator - keeping Washington, Beijing, Brussels and New Delhi happy is an almost impossible task;
Agreements, agreements under negotiation, or lack of agreements should not be seen as an excuse for lack of domestic action (are you listening George O?);
That doesn't just go for Governments - there's nothing to stop organisations and individuals acting either;
The main purpose of international agreements should be to put a brake on 'carbon leakage' (ie migration of 'dirty' industries) from one country with high standards to one with lower standards - this is the only risk of a country going it alone;
Governments are best placed to decarbonise through the markets - particularly using their own colossal buying power. If you want industry's attention, make low carbon a prerequisite of doing business - you then stimulate innovation and cut emissions;
Business is better placed to cut carbon than Government. If captains of industry decide they will, say, go zero carbon, you will see a lot of change happen very quickly - they don't have to worry what the Daily Moan will say about it. Supply chains are global, so one big buyer in the West can affect emissions around the world.
So I am neither excited nor depressed by the news from Durban. Those of us working to cut emissions will just keep on doing so!
I was perusing the always excellent ENDS Report the other day and noticed that there were three consecutive articles covering big sustainability ventures by big retailers: John Lewis, Sainsbury's and Boots. Big retail has long had a bad press, often justified, for killing high street diversity, driving down producer incomes and globalised, high carbon supply chains.
But while all that buying power can be a bad thing, it can also be a force for good. When these big buyers say "jump", suppliers shout "how high?" If they say "we want environmentally friendly products at top quality and competitive prices", they will get them. In the Green Executive we saw how retailers like Marks & Spencer have the power to build whole new supply chains for sustainable materials.
The other twist for the big sheds is, unlike smaller retailers, they suffer from tall poppy syndrome. The fear of damaging their all important brand by being accused of greenwash drives them to do things properly. Similarly they don't want to be seen to fall behind their competitors.
Interestingly at the same time, environmental concern amongst consumers is said to be falling - probably due to short term financial worries.
So with the power and the motivation, there is a strong argument that the sustainability revolution will be driven by shops, rather than shoppers.
One of the key green business challenges is the supply chain. For most businesses 60%+ of their carbon footprint lies in their suppliers. We have now gone way beyond the days of drawing the limit of responsibility around the factory fence - true green businesses have to address the whole supply chain.
But herein lies the challenge. Current supply chains are set up for conventional products and "green" supply chains tend to be weak - single suppliers, hobbyists masquerading as businesspeople, low capacity, high price. If you want to truly transform your business, simply choosing the marginally greener of the available conventional suppliers is not going to get you very far.
The answer is: build the supply chain you need. Easy to say, difficult to do, but here are some ideas taken from contributors to The Green Executive:
• Collaborate to boost demand: Royal Mail claim to have brought commercial hydrogen vans forward by a decade by collaborating with other European postal services;
• Create volume: Marks & Spencer wanted high grade recycled polyester in their school uniforms, but it was expensive due to low volumes. They found by purchasing low grade recycled fibre in bulk for cushion stuffing, they could bring down the price of the high grade material;
• Work with suppliers: go in and help key suppliers provide a better product and service. if you have to, invest in them and beat them into shape;
• Invest in R&D: collaborate with researchers to develop better green solutions;
• Play conventional suppliers off against each other to get the product or service you need;
• Copy InterfaceFLOR who realised that the most sustainable raw material for making new carpets was using old carpets. Can your products become your raw materials?
None of these are simple and many require you to have substantial purchasing power and or investment resources. But building a green supply chain can be, and has been, done.
In sustainability maturity model (above) that sits at the heart of The Green Executive, one of the five key requirements to create a truly green business is the alignment of all processes and procedures to sustainability. This must be the easiest said, hardest to do parts of the whole book.
That's why all of part 3 and much of part 4 are dedicated to this topic - how to get "green" out of the environmental silo and embed it everywhere. And by "everywhere" I mean everywhere: operations, the supply chain, products/services, the entire business model and all the supporting processes like accounting and HR.
One of the trends picked up in the Green Executive is how the cutting edge businesses are going about this. Instead of just creating a green range of products, they are embedding sustainability into their entire product range, deleting those that don't make the grade. Instead of simply adding some green criteria to purchasing decisions, they are building the supply chains they need, discarding suppliers who don't make the grade. In some cases they are redefining the traditional producer/supplier distinction through industrial symbiosis (using other's waste as a raw material) and product takeback (using your own post-use product as raw material), or even the traditional business model through product service systems.
This approach doesn't ask "is X feasible?", but asks "how can we make X feasible?". That's a huge mental shift on both the individual and the organisational level, but to deliver corporate sustainability it's an essential one.
I’ve said it before, and I'll say it again: one of the things I love about the sustainability field is that it is so broad and fast moving that you are constantly learning. This week was full of discovery
On Tuesday I had a meeting with Dan O’Connor of Newcastle University to discuss his (private) venture WARPit – a social-media style reuse portal to allow organisations to trade used furniture etc (check it out here). But our chat about his day job were interesting too:
The Daily Mail’s paranoia knows no bounds. The University’s interesting student bin cam research project to test how a webcam in a student household bin connected to Facebook can affect recycling rates is, in Daily Mail land, a potentially vicious attack on civil liberties by ‘council snoopers’;
Cardboard now has such a scrap value in the UK that gangs are raiding students’ wheelie bins to get their hands on it – theft of metallic items is common when scrap metal prices soar, but I’ve never heard of people stealing cardboard before.
On Thursday I ran three sessions at the Low Carbon Best Practice Exchange at Olympia in London: Staff Engagement, Greening the Supply Chain and Environmental Strategy. We had some great discussions and here are the points that I took home:
There was quite a debate about the role of environmental champions. Most participants in the engagement session had appointed champions, but there wasn’t a clear consensus of why or whether they were actually making a difference. One participant had actually abandoned champions as they found the idea counterproductive in practice (I intend to explore this in a later blog post);
One participant has an almost real time energy consumption readout along with a traffic light system to show if consumption is low (green), high (amber) or very high (red). This is a nice way of converting data into a form that staff can easily grasp and of course you can tighten the amber and red settings to encourage continual improvement;
There was an anecdote about a company that paid actors to dress as cleaners and go through the office bins, tutting over waste that wasn’t being recycled to embarrass staff members. While such stunts only have a transient impact, I like the creative thinking;
Another anecdote was about a company that deliberately but surreptitiously changed their travel system so staff who want to use short haul air have to pay for the tickets out of their own money then submit a claim. Train tickets are purchased directly by the company, so staff members don't have to tie up their own cash in the process. Crafty, possibly underhand, but why not?;
On green procurement, one participant is using broad sustainability questions at the PQQ stage to determine what best practice in that sector might look like. This is then used to benchmark bidders during the formal tender process;
Many junior staff are desperate to get their managers to take a more strategic approach to sustainability, but the latter have their heads in the sand. We discussed many ways of ‘managing up’, but concluded that eventually top level buy-in is required. I am still strongly of the view that delegating the development of a strategy is an oxymoron and a derogation of responsibility.
One of the main trends I identified in my new book The Green Executive is the shift from 'green' being the exception to it becoming the rule. Examples include:
Redesigning mainstream products to be green as opposed to launching a green range (which is so 1990s);
The killing off of products incompatible with sustainability objectives;
Environmental objectives put into all managers' job descriptions rather than being the sole responsibility of the environmental manager;
A shift in emphasis of the role of green teams from delivering sustainability to facilitating sustainable behaviour in others;
The integration of sustainability strategies into business strategies (and vice versa);
Rebuilding supply chains to deliver sustainable goods and services, de-listing suppliers who don't make the grade;
Showing leadership amongst peers, disassociating themselves from organisations with a regressive attitude to the environment and even calling for stricter environmental legislation.
The implication of this shift is that directors and senior managers must have a good grasp of sustainability issues, how they impact on the core business and the range of solutions available. Which is why I wrote the book!
Two pieces of news caught my eye yesterday: the big news that UK Energy & Climate Change Minister Chris Huhne announced that the UK Government was committing to a 50% reduction in carbon emissions by 2027 - the toughest target set in the world - and some local news that an aluminium smelter and its coal fired power station - both about 15 miles from where I'm sitting - might close due to the Government's new carbon floor price.
There's a big problem here - the aluminium produced by the smelter (and associated carbon emissions) will still be produced somewhere in the world, just not here. The global climate doesn't care where the emissions come from, so there is a strong possibility that the Government's commitment will simply push more industry and emissions overseas. If you don't believe me, figures from Oxford University show that, despite the official Government line for many years, the UK has not been cutting its carbon emissions, but has simply leaked them to other countries while our overall carbon footprint has continued to grow.
If I was a right-wing commentator I would now start harrumphing about the idiocy of carbon emission restrictions, how they're destroying our Great British Industry and how we should drop the whole bally lot. But that's a stupid argument - first of all it ends with The Tragedy of the Commons (ie we all lose through selfishness) and, secondly, in a globalised economy it is our Western consumption levels that drive global emissions and we can't duck responsibility for that.
What we need to do instead is develop a smarter way of dealing with each country's emissions - considering emissions from our consumption as well as our production. A few years ago I explained this to both the then UK climate minister, David Miliband, and the current one, Chris Huhne. Both listened politely, did some mulling on it and acknowledged my point, but I suspect both filed it in the 'too difficult' tray.
Business is way ahead of Government here. About five years ago many, if not most, major companies only considered emissions from within their factory fence (plus those from power stations producing their electricity). Most have now faced up to the fact that their carbon footprint does include that of the suppliers - it was crazy when say Tesco, whose purchasing power is driven by £1 in every 8 we Brits spend, didn't acknowledge responsibility for supply chain emissions. Now Tesco and the other big retail sheds, along with major consumer goods manufacturers like P&G and Unilever, are actively decarbonising their supply chain wherever that supply chain may be - national boundaries are no restriction. Some are looking the other way along the supply chain too and 'choice editing' for the consumer, such as when B&Q stopped selling patio heaters. I suspect the massive buying power of such powerful companies could have more impact than any Government targets.
The fifth of our Green Academy Webinars will be held on 1 June at 14:00 BST. The hour long session will explain why you need to tackle the environmental impact of your supply chain and how to go about it. Contents include:
Don't buy trouble - the case for greening the supply chain;
Basic green procurement techniques;
Engaging with suppliers to find solutions;
Advanced techniques - industrial symbiosis, buying services rather than products, strengthening weak chains.
The webinar costs £45.00 + VAT per person - use the button below to pay by card or Paypal. Contact us to make a BACS payment.
"Gareth's webinars are smart, punchy and thought provoking. His approach shows how sustainability is about achieving commercial advantage and not simply an altruistic gesture. Highly recommended." Graeme Mills, GPM Network Ltd.
"[The webinars] are great value and I would recommend them to both CSR professionals and SME owners." Louise Bateman, GreenWise
"I consider this a must for organisations looking for practical help in improving their sustainability performance." Ted Shann, Wipro
It has been said that design is the engine room of good environmental practice and I couldn't agree more.
Got an inefficient building? Design a new one, or design a brilliant retrofit.
Got a problem with a toxic material in your manufacturing process? Design the need for it out of your product.
Got a problem in your supply chain? Either design that part of your supply chain out of your product, or re-design the supply chain itself.
When I say 'design' here, it doesn't just mean a expensively bespectacled 'creative' staring at a blank sheet of paper on a drawing board. What you might be redesigning is the way you approach problems, the tactics you use and the business environment you work in. Anyone can redesign, and the best person to ask is... everyone. Get creative juices running throughout your organisation and its stakeholders and you might just be surprised what new designs you end up with.
We have seen countless examples where a company has been hung out to dry due to malpractice deep in their supply chain (Apple, BP and Nike spring to mind). This is leading inevitably to tighter and tighter traceability systems - yesterday I met with a tissue paper manufacturer who can boast that, for certain products, if you gave them the barcode, they could tell you down to the acre of forest/plantation where that wood came from.
The driver for this comes, of course, from the brand concerned rather than from the manufacturer. Brand protection is the goalkeeper to green marketing's £50million striker - the less glamourous, but equally important part of the team (I hope someone can add an appropriate soccer-free analogy for our US readers!).
For big corporations, such traceability is essential and can be demanded as a condition of their custom. But what about smaller companies with less buying power? The best answer is to use third party accreditation such as the Forestry Stewardship Council label for wood/paper products, Marine Stewardship Council labels for fish, or the FairTrade labels for food and other products (including gold!) These all have their limitations, and indeed their detractors, but they give some reassurance over and beyond crossing your fingers.
... if you were a paper company and, due to your clearing of rainforest, you suddenly lose a roster of clients including Tesco, Staples, Office Depot, Unilever, Carrefour, Gucci, H&M, Hugo Boss, Volkswagen, Fuji Xerox, Ricoh, Sainsbury's and Marks & Spencer, or,
...if you were a producer of leather in Amazonia and clients like Wal-Mart, Nike, and Timberland threaten to ditch you for the same reason.
What would you do?
The response of the two has been remarkably different - APP, the paper company concerned, is trying a mixture of greenwash and subterfuge to save its skin without stopping the destruction. On the other hand the Amazonian leather producers along with the Brazilian Govt have changed their ways, including a moratorium on forest clearing and introducing transparent certification systems, to keep their clients happy.
Which do you think will be more successful in the long term?
Very interesting article in the Observer yesterday about tax avoidance and the UK Uncut campaign who maintain that the current UK austerity package would be unnecessary if there was a crackdown on tax avoidance. Sir Philip Green, boss of the Arcadia Group which owns Topshop, is attracting particular ire as Arcadia is actually owned by his wife who is resident in Monaco. And, of course, Topshop is a tall poppy - a sit-in in a depot in Basingstoke won't attract much publicity compared to one in an Oxford Street megastore.
While Green is an obvious case of stretching the rules, it's never clear where canny accounting becomes tax avoidance. Like all businesses I employ an accountant who has two main roles - getting all the paperwork together and making sure I'm paying the correct amount of tax. 'Correct' could be interpreted as 'not a penny more than I have to within reason'. And therein, I suppose, lies the rub - the definition of 'within reason'. I wouldn't offshore my business or transferring ownership to minimise tax - easy to say when the issue doesn't arise - but for Green that's clearly OK in his mind.
Similar shades-of-grey arguments lie in a range of corporate social responsibility (CSR) issues. If we offshore functions to, say, Bangalore where salaries are lower, what does that do to the economy of our 'home' country? If we exclude Bangalore, what does that do to the career prospects of burgeoning middle classes of India? Do we want those people to give up software engineering and call centre operations and go back to subsistence farming? But by getting nations to compete against each other for big business, are we encouraging a 'race to the bottom' where the lowest labour and environmental standards win? And, where is 'home' for an transnational corporation anyway?
These are extremely difficult issues. The important thing for a company which trades on its CSR is to have a framework within which decisions relating to such issues can be made. A company with a geographic tradition (dare I suggest Cadbury? or U2?) should consider carefully where they are registered or they will lay themselves wide open to attack. A company whose business model depends on low manufacturing costs (eg high street fashion) should have a strict policy on pay and other working conditions within their supply chain.
If you don't have such a framework, you will be measured against other people's yardstick which will inevitably be tougher than your own. If you are targeted you won't get off the back foot. So set the standard and enforce it. If it works, then raise the bar. Make it work for you and be proud of it.
It's been quite hard to get a real feel for progress at the COP16 climate change negotiations in Cancun this week, but the overall impression has been slow progress on a number of issues and a more reasoned debate over some of the bigger issues. This contrasts starkly with the high stakes game played by national leaders and environmental groups in Copenhagen this time last year - which famously ended with a whimper rather than a bang.
The softly, softly approach has a number of advantages. Minor disputes are not exaggerated by a story-hungry media and can be deftly resolved. Small wins create forward momentum and a positive atmosphere which can help unlock trickier conundrums. Progress can be made without the often destructive interference of either the NGO or libertarian/denial camps, one shrieking the clock is ticking and less than 100% success is failure, the other shrieking that the whole thing is a recipe for economic suicide/communism.
However, I'm still of the view that a world-wide single binding agreement is an impossible ideal. What works in Washington is unlikely to work in Kuala Lumpur and vice versa. There is nothing to stop individual nations cutting their own carbon and shifting to a low carbon economy. Furthermore, the big economies along with their huge corporations, have such global reach that the power to act is actually in relatively few hands. Destructive companies in the primary industries like forestry or oil extraction can only operate if they have customers willing to buy their produce.
Business has the power if they step up to the plate.
If you believe the version of business as portrayed by The Apprentice, then it's an every-man-for-himself, dog-eat-dog, devil-take-the-hindmost kind of world. Which is largely nonsense, as all of us in the real world know (well, most of us...). Business is about relationships and successful business is about trusted relationships, partnerships and collaboration. This is as true in the green business world as anywhere else, and there are many examples of where working with others has delivered mutual benefits:
Businesses working together, often through trade bodies, to develop voluntary agreements such as the UK's Courthald agreement between supermarkets and the food industry to reduce packaging;
Businesses getting together through formal and informal networks to exchange best practice, experience and mutual support;
Businesses working together to generate sufficient demand to bring sustainable technologies to market. The PostEurop consortium believe they have brought forward the production of hydrogen vehicles by a decade in this way;
Businesses working together to use each other's waste as a raw material such as in the industrial symbiosis cluster in Kalundborg, Denmark;
Businesses working with environmental pressure groups to develop solutions to environmental problems such as WWF and Coca-Cola working together on watershed management;
Businesses putting together 'dream teams' of trusted advisors who will challenge them to really deliver.
As always the flip side is true too. If associating with the 'right' people is an opportunity, not cutting ties with the 'wrong' people is a liability. When Apple and Pepsi left the US Chamber of Commerce over the latter's stance on climate change legislation, they sent a clear message out to the whole world.
Most organisations still see 'environment' as an internal affair - all about walking around their factory with clipboards sorting out a little energy efficiency here and some waste minimisation there. There's nothing wrong with this, but to really grasp the nettle and become a green business, you have got to look up and down your supply chain.
You are part of others' carbon footprint and other organisations are part of yours. Take Apple as an example: 38% of their average product's carbon footprint is in the supply chain and 59% is from retail, use and disposal. Apple directly control just 3% of all the carbon directly - you get similar results for almost any other sector.
This makes the process of going green much more difficult that most realise. Supply chains have evolved to deliver the nuts and bolts for mainstream products, not green alternatives and as a result green materials and components are often expensive and of poor quality in comparison. Likewise, it is increasingly difficult to predict consumer behaviour - who would have seen the success of Twitter five years ago and the demand it has created to constantly be in touch?
The answer is to be both smart and proactive. Supply chains can be transformed by creating demand - usually through working with others to create that demand - or by buying up potential green suppliers and transforming them. Consumer behaviour can be influenced by making green behaviour easier and more desirable than non-green behaviour.
None of this is easy - and that challenge is attracting many very clever people. The green economy is just the same as the mainstream economy - the smart guys thrive.
What do Apple and BP have in common? Both are taking hits for something that's happened in their supply chain - BP for the gulf oil spill disaster, Apple for a series of suicides at a key supplier.
The responsibility in BP's case is pretty straightforward. The company selected the location of the drilling, appointed the contractors and signed the cheque. They should be offering the world a big mea culpa, but instead they appear to be trying to play down the seriousness of the spill when there are allegations that despite the technical difficulty of drilling at those water depths, a cheaper drill casing was used and safety warnings were ignored. This is the antithesis of corporate responsibility. Responsibility means that you do your utmost to do things right, and, if and when they go wrong, you hold your hands up.
In Apple's case, it really is a case of tall poppy syndrome. Many other big electronics names including Sony, Dell and Motorola use Foxconn - the biggest contract electronics manufacturer in the word - but they're not Apple and they haven't launched the world's most desirable electronic gizmo in recent weeks. So Apple gets it in the neck while the others keep their heads down. In truth, the responsibility to improve working conditions at Foxconn lies with all these manufacturers and their combined buying power should be sufficient to make whatever demands they please.
Apple have been hit by this before - when Greenpeace attacked them for their general environmental performance, so they should know what's coming. The same thing goes for other big brands - Nike, Coca Cola et al - if you stand out above the crowd, then the media, NGOs and public will hold you responsible for the sins of the multitude. The only sensible response is to use attacks and potential attacks as a spur and redouble efforts to clean up your supply chains, eradicating social and environmental issues before they hit the headlines. The kind of complacency that we have seen in BP will be fatal for any business trying to be green.
When I do workshops with either professional or student engineers, I always emphasise the need to take a systems approach to design. If you optimise component by component then you will only get incremental improvements, but if you consider the whole system, you can let benefits accrue like a snowball rolling down a hill. For example if you design a process plant with short, fat, straight pipes to reduce friction, you can reduce the size of pumps required to move things around which cuts both capital and operational costs. Likewise if you design a highly thermal efficient building, you can order a smaller heating system.
The same principle applies to your supply chain. Say 60% of your carbon footprint is in the supply chain and 20% from electricity generation and 20% from on-site activities. If you want to cut that footprint by 80% by 2050, it looks like a tall order. But if the supply chain and electricity provider manage to cut their own footprint by, say, 50%, then you're half way there without lifting a finger! So rather than simply trying to optimise your own performance, you may want to directly engage with your supply chain. Walkers Crisps famously found that their suppliers were storing potatoes in a humid environment because Walkers were paying them by wet weight. This not only consumed energy at the warehouses, but it meant that the crisps required more energy to fry (to drive off that water). Now the company buys by dry weight, the humidification systems have been switched off and the frying requires less fuel. Systems thinking = wins all around.
So, always bear the big picture in mind, and allow the benefits to snowball.
This is the latest of a series of tips extracted from the forthcoming Green Business Bible e-book:
Work with your suppliers to match specification to your needs - this can reduce waste and energy consumption at both ends. I have given the example before of Walkers' Crisps who found that their potato suppliers were keeping their product hydrated (requiring energy) which was not only unnecessary but required even more energy to fry than if they had simply done nothing.
