Carbon reduction champions

Industrial emissionsBy Aoife Brophy Haney and Michael Pollitt, Electricity Policy Research Group, University of Cambridge

26 January 2011

Climate change poses risks and offers opportunities for all businesses in the UK. Those which partner with outside organisations such as NGOs tend to have more effective climate strategies than others. Partnership overcomes some of the barriers to action. It also encourages the spread of best practice in carbon reduction, harnessing the power of the private sector to tackle a problem that affects society as a whole.

In the UK, the policy landscape for large public and commercial organisations is changing fast. The latest development is the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) which came into force in April 2010. The scheme requires all participants to collect and report detailed energy and carbon emissions data. Data reporting will be standardized and mandatory.

Large retailers will be participants in the CRC. As the link between producers and consumers of goods, retailers have the potential to influence decisions on production, distribution, purchasing and even waste disposal. Although retailers’ direct retail emissions are small at just over two per cent of the UK total, retailers (including shops, wholesalers and garages) are connected to a much larger share of emissions indirectly. Emissions from purchased electricity bring the sector’s total share to over 6 per cent. Emissions through the upstream and downstream impact of the goods and services retailed are approximately 30 times a retailer’s direct emissions. So the potential for retailers to influence total emissions by changing supplier and consumer behaviour is enormous.

There are several features of climate strategies that distinguish the retail leaders from the rest. Long-term strategies are the preserve of a small minority today, and yet are essential if retailers are to contribute to ambitious UK targets. John Lewis is one of the few with specific plans beyond the next five-year period. But the commitment of senior management to carbon reduction is growing. The CEOs of M&S and Tesco, for instance, lead their firms’ climate strategy. Leading companies recognise that engaging with employees, customers and suppliers improves implementation. Energy champion schemes are used by companies such as M&S, Kingfisher, HMV and Alliance Boots to encourage awareness of climate and energy issues among employees.

Retailers that partner with NGOs, academic groups or consulting firms tend to be leaders in climate response. The exact impact of partnership depends on how engaged the retailer is, but also on the menu of options provided by partner organisations. Forum for the Future, a sustainable development charity, has a partnership with John Lewis that requires the commitment of senior management for a minimum of three years. It includes bespoke strategic advice but also involvement in sustainable development issues more generally. For John Lewis this meant helping to develop a sustainable construction framework for the retail sector. Tesco has a similar level of engagement with the Sustainable Consumption Institute at the University of Manchester, where the focus is on national and international retail sustainability issues.

Tackling climate change effectively will require cooperation from governments, individuals and all sectors of the economy. In this new environment the way businesses differentiate themselves will create innovations to reduce emissions and save energy across the economy.

From the ESRC magazine Britain in 2011