The UK has been one of the most proactive countries in tackling business emissions and climate change and the CRC Energy Efficiency Scheme is one of the latest innovative policy developments. The CRC widens the scope of businesses that are directly covered by emissions trading regulation and targets demand side efficiency in large non-energy intensive businesses. Not only does the CRC put a price on carbon, it also aims to drive change through increasing public scrutiny of corporate emissions through the league table.
However, the CRC league table, published for the first time in November, has been criticised by some as inaccurate, with arguments that the table is unrepresentative as it only takes into account advanced metering and early action certification. In addition some have complained that disclosure of 'early action' is voluntary, leading to misleading rankings. Others have objected to the level of administrative burden. So what was the purpose of the league table and how will it affect UK businesses going forward?
The Carbon Trust regards the first CRC Performance League Table as an important initial snapshot of corporate performance, which provides useful insight on baseline emissions levels and on the actions taken by business to manage their emissions in advance of the CRC scheme. While the first table may only include basic emissions and early action data, subsequent ranking will become more insightful as it will provide an effective measure of emissions reduction progress through comparisons with previous results. These year on year comparisons will reward those companies with long term emissions reduction programmes that are fully embedded within their strategy and operations.
Advice for next year
A corporate carbon strategy shouldn't be just about the CRC. Indeed many of the top performers began their carbon reduction process without the incentive of the CRC - they already understood the business case for carbon reduction. This case is driven by both cost savings, and also the opportunity for companies to position themselves for the move to a low-carbon economy - with their customers, investors and employees. These benefits have been well understood by companies that have worked with the Carbon Trust. To date, we have helped our customers save around 29.5 million tonnes of carbon and around £2.6 billion in energy costs. And some of the pioneers are starting to go further still, pursuing green growth revenue opportunities in their business plans.
Within the context of a wider carbon management strategy there are two key actions which will determine 2012 league table performance. The first action is to focus on emissions reductions - even with 4 months to go to the end of the CRC year there is still time to make a difference, particularly over the winter when so much energy is still wasted through sub-optimal business equipment or practices. The second is to ensure your company maximises its 'early action' points. The 20% of league table points based on certification to the Carbon Trust Standard are still available to any company that achieves a valid certificate by the 31st March 2012.
Approximately 90% of the top 100 companies listed in the CRC are Carbon Trust Standard bearers - including Manchester United, CenterParcs, the Department of Energy and Climate Change, and energy regulator Ofgem - and this is no coincidence. At the heart of the Carbon Trust Standard is the necessity for organisations to measure, manage and reduce their carbon emissions, and provide a commitment to ongoing carbon reduction. The certification process, and independent scrutiny, provided by the Carbon Trust Standard ensures that businesses have an accurate picture of their emissions performance - invaluable for regulatory compliance, but also for engaging customers and employees.
Alongside initial steps to reduce carbon and comply with regulation such as the CRC, companies should also be looking further ahead, using this compliance exercise to energise their broader sustainability initiatives, including their strategy, product design and supply chain footprint. Developing an in-depth carbon strategy to improve efficiencies and meet the demand for sustainable products, services and practices will enable businesses at first to understand, and then to manage, the risk to both cost control and revenue growth from in-built dependencies on energy and carbon in their supply chains or in their end products. Ultimately the most successful ones will surpass their competitors in this highly competitive field, building both profits and brand.
For example, Carbon Trust Advisory customer Whitbread is taking a lead in the hospitality sector by making bold but achievable commitments to promote sustainability across its hotels, restaurants and coffee shops. It predicts energy and carbon annual savings this year of over £1.8 million relative to sales growth with the completion of smart utility metering at all of Whitbread's Premier Inn hotels.
Environmental considerations, from carbon emissions to resource scarcity, are increasingly part of mainstream business thinking, but many companies have yet to fully capitalise on this by putting the environment at the heart of their business strategy. With the added incentive of the CRC, there is an even stronger business case for all organisations to realise green opportunities, banking the energy savings as well as the brand and environmental benefits. Now is the time for ambitious businesses to take leadership positions in their sectors and supply chains, as outstanding environmental performance will reap financial, operational and strategic dividends.