Innovating in pursuit of environmental sustainability
To attract new business, talent and investment, companies have had to demonstrate their environmental credentials more and more over the past years to wide range of stakeholders including institutional investors, regulators, clients, and employees.
Most large companies have done this by reporting their compliance with regulation. However, some have gone further, and seen the opportunity to make environmental sustainability a business advantage by injecting creativity and innovation into their environmental programmes and integrating those programmes into their business practices.
A report from analyst CDP reports that ‘corporations that are actively managing and planning for climate change secure an 18% higher return on investment (ROI) than companies that aren’t – and 67% higher than companies who refuse to disclose their emissions’.
Reducing carbon footprint can be part of a company’s long-term environmental programme, involving all employees and stakeholders. The advantages of such an approach are many: greater competitiveness, reduced risk, greater “feel-good factor”, better brand awareness and new business opportunities in supporting clients in becoming more sustainable.
A company’s activities generate greenhouse gas (GHG) emissions; reducing them without reducing the company’s activities is one cornerstone of environmental strategy. Reducing starts with reporting; numerous regulatory bodies, at local, European and international level, now require companies to report their GHG emissions.
Reporting reflects a company’s recognition of GHG emissions as a measure of performance.
Improving that performance requires reductions in emissions, driven by
- adoption of Task Force for Climate-related Disclosure (TCFD) reporting standards
- ambitious long-term emissions reduction targets approved by the Science Based Target Initiative (SBTi),
… and enabled by
- Putting an internal price on carbon (GHG emissions)
- Becoming a carbon-neutral company.
Focus on energy
For most companies a significant source of GHG emissions is energy consumption, whether in manufacturing products or servicing offices, factories, warehouses or datacentres. Innovation starts with premises fulfilling high standards for energy performance (such as HQE and BREEAM) but goes further with an energy efficiency strategy that embraces:
- procurement of renewable energy through the energy supplier and power purchase agreements
- generation of renewable energy on-site, where practical
- purchase of renewable energy instruments such as Guarantee of Origin (GO) and International Renewable Energy Certificates (I-REC & REC) for electricity and Green Gas Certificates for gas
The expansion in the number of green power purchase contracts over the last 20 years shows that, like the US tech giants, large European companies are increasingly switching to renewable energy.
Reduce waste; the circular economy
The linear “take, make, dispose” economic model relies on having energy and virgin materials cheaply and easily available, but is reaching its physical limits. By reusing materials a circular economy minimises the amount of resources that must be extracted and maximises the value of products and materials throughout their lifecycles.
Applying the principles of the circular economy could unlock up to EUR 1.8 trillion of value for Europe’s economy. According to The Ellen MacArthur Foundation, business must play a central role in making the systemic changes required to unlock this value:
- Designing waste and pollution out of processes
- Keeping products and materials in use for more than one lifecycle
- Regenerating natural systems by working with clients, partners and supply chain
Reducing GHG emissions and participating in the circular economy require profound changes in the ways in which a company organises itself and operates. To change it must engage its employees in the need for change, and tap their creativity and initiative.
For example, it must
- Inform and engage employees through employee ambassadors, specialists and partner organisations
- Listen to employees, and, where practical, embrace and implement their ideas
- Encourage employees to embed environmental sustainability in their day-to-day work
- Support employee volunteering on environmental projects in the local community
Establishing an Environment Management System (certified to ISO14001) to manage key environmental impacts (such as energy and water consumption, business travel, waste generation, etc.) helps ensure that the effects of the changes are measured and monitored.
Engage the supply chain
Companies rely on their supply chains to deliver their contracts and meet their business objectives. In a globalised economy, a company’s GHG emissions from its supply chain can be as much as four times emissions from its own operations, and so it must engage its supply chain in reducing its GHG emissions as much as its employees.
To do this it can
- adopt a responsible purchasing policy, to promote the purchase of products and services with low environmental impact
- leverage technological developments to reduce its overall environmental impact; for example: using blockchain technology to secure the supply chain
- engage in the circular economy and thereby preserve resources
- prioritise its supplier base on spend and risk for engagement in reducing GHG emissions
- develop an engagement and support plan for suppliers
Companies that weave innovative environmental programmes into the fabric of their organisations can realise these advantages, and go on to support the move on to a “net zero” economy for all.