ICARB Presentation

© Sustainable Opportunity Solutions Ltd 2013 1

ICARB WORKSHOP: Making Carbon Information Work

For Business

Paul Adderley, 13 March 2013 5th International Conference

Initiative for Carbon Accounting (ICARB)

© Sustainable Opportunity Solutions Ltd 2013

OUTLINE

!   Introduction !  Carbon’s Global Context !  Carbon Information:

–  Internal Business Benefits –  External Business Benefits

!  Table Discussion Topics !  Conclusions: Future is Approaching Fast

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Carbon’s Global Context

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3bn More middle income consumers in CHINDA by 2030

Rise in Energy Costs & Price Volatility

70%

Efficiency Opportunities with at least 10% return

Source: McKinsey Global Institute

1C 100yrs show unprecedented rapid rise in global temperatures for 11,300yrs


Using Carbon Information

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Business Evaluation

5

Businesses respond to clear market signals: opportunities and risks

Impacts Profitability & Cashflow

Focuses Investment with Max ROI to stakeholders


Finding ROI through a Carbon Lens

Carbon Information

Identify Inefficiencies/

exposures

Constraints Create Innovation

Staff Engagement

Enhance Reputation

Supply Chain Pressures

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Internal Business Benefits

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Identifying Inefficiencies

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!  Carbon as measure of inefficiency & cost –  Carbon per tonne of product, hour worked, £ Turnover

(Carbon Intensity)

!  Process Review

Inputs Production/

Service Outputs

Infrastructure/ Energy Needs

Storage Waste Logis-cs

Storage Waste Logis-cs

Processes Packaging


Case Study: Process Efficiency

!  Business Outcomes –  Better Procurement: Right

Quantity, Time and Place –  Use of local suppliers to

reduce logistics –  Reduced waste (stock

damage & obsolescence) –  Reduced travel & time –  Adaptable: Increase

revenue opportunities

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!  Carbon Outcomes –  47.8 TCO2e Saving –  Carbon Intensity reduced by

27% –  48.7 TCO2e vs business as

usual –  Verified by Carbon Trust

Standard –  £27,500 cost savings –  Carbon ROI 16TCO2e /£’000

!  Action by Construction Business –  Closed large warehouse facility to reduce fuel/energy

use & compliance risk


Low Carbon Infrastructure

!  Scottish SME Food Producer (estimates) Reduce Energy Use & maintain Carbon Commitments

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324,000

125,000 LED

LIGHTING

OLD LIGHTING 30 184

£’000/yr

11 67

Carbon (TCO2e)

kWh

33% 10 TCO2e/

£’000

ROI

Life Time Carbon ROI


Renewable Infrastructure

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Actual CAPEX £98,000

Income & Savings £16,000 (FITs Feb 2012)

ROI 16%

Annual Generation 37,131 kWh

On site Use 60% 22,279 kWh

Carbon Savings 19.5 TCO2e

Carbon ROI 5 TCO2e /£’000

Midlothian Manufacturing Business: reduce carbon emissions & exposure energy price volatility


Staff Engagement: Making Carbon Tangible

!  Eco-Driver Training backed up with data

£2.5k Fuel Savings

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Pride in Achievements

Share Benefits

Carbon Savings 5 TCO2e YTD

Carbon ROI

25 TCO2e

1 2 3 4 5 6 7 8

£2.5k Savings

1 2 3 4 5 6 7 8


Carbon ‘Opportunities’ Hierarchy

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Behaviour Monitoring &

Communication

Efficiency Processes

Renewables Infrastructure Incr

ease

in C

apita

l Cos

ts

& R

educ

ing

RO

I


External Business Benefits

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“Baking-In” Reputation !  Growth of Ethical Market - £47bn (2011)

!  Generally Recession Resistant

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Supply Chain: Pass it on

!  Global CEOs expect –  “low carbon” innovation from the supply chain –  suppliers to contribute to a shared agenda (source PwC: Factoring Sustainability into IPO Planning, October 2011)

!  Supply Chain Analysis reaching Scottish SMEs –  Global Companies requesting Carbon Data (Ecodesk) –  Carbon Footprinting of Seed Potatoes Bags!

!  Public Sector Procurement (Reform Bill) –  Drive to increase SME access to public contracts –  No clear signal how carbon will be assessed –  Operational and capital carbon and cost impacts

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Upstream Risks

!  Financial KPIs - Gross Margin, may not highlight supply chain risks

!   Is Carbon KPI a possible identifier of exposure to ? –  Responsiveness: Local vs Global –  Freight costs volatility (air vs surface) –  Climate Disruption –  Opaqueness/lack of transparency in supply chai (data

collection)

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Suggestions Table Discussion

Business Topics 1.  For three business objectives consider how measuring

carbon impacts adds value (or not), and why? 2.  For a production/service process think how carbon

efficiency (CO2e /unit) could be improved? (energy/waste) 3.  What knowledge/expertise is there in your business to

respond to the opportunities/risk in a low carbon economy? Policy Topics 1.  How can public policy encourage carbon measurement &

reporting by SMEs without legislative measures? 2.  Would also setting carbon budgets for public sector

procurement make better decisions ? Discuss.

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The future is approaching fast

!  Can’t manage if we don’t measure.

!  Carbon is a measure of efficiency

!  Carbon KPIs work alongside Financial KPIs

!  Assess supply chain risks

!  Ready to create value in the supply chain

!  Requires adaptive business models

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Carbon reporting is a lever to discover other business benefits & manage risks, not a merely number crunching exercise.

And finally…an Accountant’s View


Further Information:

Email: [email protected]

Web: www.sos4business.uk.com

Tel: 0845 475 1275 / 07917 372573

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ICARB Presentation

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