Today we launch the Acclaro Energy Programme, and with it comes a series of free guidance that opens up the world of energy management and policy. Today we begin with a jargon busting look at UK energy and carbon compliance.

The energy and carbon industry is so full of reporting acronyms, that sometimes it’s hard to keep up.  July (2018) brought yet another to the doors of the UK corporate world; SECR – Streamlined Energy Carbon Reporting. For the many businesses currently navigating the energy and carbon regulatory regimes, adding another to the mix should not be too difficult to handle. In many instances, reporting requirements utilise the same energy data in a variety of ways to translate into business energy and carbon. But, as new regulations are added, the harder the names roll off the tongue.

Let’s talk a bit about what currently exists.

CCL
Climate Change Levy is first of the two energy taxes targeted towards energy-intensive organisations. Introduced in 2001, the tax is applied to electricity and gas bills for all businesses and public sector organisations that pay the standard rate of VAT. Exempt from CCL are businesses using less than 1,000kWh electricity and less than 4,397kWh gas, per month. No reporting is required by business energy users. CCL seems to be here for the long haul.

MGHG
Mandatory greenhouse gas reporting (MGHG reporting), introduced in 2013, requires all UK quoted companies to publicly report their greenhouse gas emissions on all forms of energy used annually. At present this policy only affects around 1200 companies. The main focus is on transparency of carbon data for carbon management and reduction.

CRC
The Carbon Reduction Commitment Energy Efficiency Scheme, this one doesn’t exactly roll of the tongue, but luckily it is also known as the CRC scheme. CRC is second of the two energy taxes targeted towards large energy-intensive organisations. This tax and reporting mechanism, introduced in 2016, is levied to encourage eligible businesses and public sector organisations to consume energy more efficiently. Over 5000 undertakings report annually to the Environment Agency. The reports cover UK energy use and the purchase of allowances to cover their carbon emissions. The scheme phases cover emissions generated over UK financial year; March 2019 will mark the last phase – the end of the CRC scheme.

ESOS
Energy Savings Opportunity Scheme (ESOS) introduced in 2014; another which seems to be here to stay, is a mandatory reporting regulation that requires non-SME undertakings to audit their energy use. The key word in this scheme is opportunity; the aim is to identify opportunity to save energy and potentially cut related energy costs. However, whilst this scheme requires an element of reporting, the minimal nature of the reporting does not include public disclosure. In fact, unless formally audited, the compliance reports are not reviewed by the regulator, Environment Agency.

SECR
Streamlined Energy and Carbon Reporting framework, as the name suggests is aimed to simplify and bring together elements of the above reporting schemes into one clean process. This framework will be in play from April 2019 with a wider compliance qualification. Similar to MGHG reporting, it will be implemented through disclosure in annual directors reports with Companies House. SECR will replace CRC reporting, with a combination of MGHG and ESOS reporting elements. These changes will add value to robust reporting mechanisms and the opportunity to quantify ESOS outputs with energy efficiency action and carbon management into one streamlined approach.  It is estimated that the number of companies which will be required to comply with SECR will change from the 1,200 covered in MGHG to 11,900. This includes all quoted and large unquoted companies with some exceptions. In other words, many companies complying with ESOS will be scooped up into the SECR framework.

Our team of energy and sustainability experts have extensive experience in navigating the policy landscape and delivering reporting that meets regulatory requirements and business objectives. To find out more about the above reporting mechanisms and how they may affect your business, please get in touch.

The Acclaro Energy Programme helps organisations to adapt for and address the very visible responsibilities that sit within energy efficiency. We’d be happy to assist you in taking action whether mandatory or voluntary to manage risk, reduce cost or enhance business reputation.

Plastic waste pollution: bad resource efficiency

The WWF published its latest Living Planet Report last Tuesday. It’s not just a thorough analysis of global data on biodiversity; it’s also a landmark in how leaders connect abstract, data-heavy sustainability concepts with the drivers that really motivate people. An important theme is that human wellbeing, economic performance, and social development all depend on “the web of life that sustains us all”. It says responding to this is our generation’s greatest challenge and opportunity. But there’s one big problem: the way we use resources is wrong. So how do we improve resource efficiency?

Consumer demand is an increasing burden on natural resources and habitats – and global population will approach 10 billion by 2050. International development and increased spending is bringing large cars, plentiful diets, and an abundance of waste.

Rising consumption globally is more than the planet can bear, and is straining material and natural resources. That threatens our food, biodiversity, materials, energy, soil, water, and atmosphere. There is a growing scarcity of key materials, such as copper and lead. It’s pushing procurement prices up and limiting their availability in many nations.

Overall, humanity’s Ecological Footprint has almost doubled since 1969, largely attributable to a carbon footprint which has quadrupled since the 1950s. Not everybody has an equal footprint and there are enormous differences between countries, particularly those at different economic and developmental levels. Humanity’s Footprint is around 20.1 billion global hectares (gha), or 2.8 gha per person. However, the Earth’s biocapacity is only 12.2 billion gha, or 1.7 gha per person. That’s an ecological overshoot: people use the equivalent of 1.7 planets to support their activities.

What does overshoot mean?

How can humanity be using the capacity of 1.7 Earths, when there is only one? Just as you can withdraw more money from a bank account than the interest the account generates, it’s possible to harvest renewable resources faster than they regenerate. Agricultural operations destroy tropical forests faster than newly planted forests elsewhere can grow. The global fishing industry and uncontrolled pollution are damaging aquatic ecosystems without allowing enough time for their regeneration. This can only continue for a limited time, as the resources become depleted. Similarly, CO2 emissions exceed the rate at which ecosystems can absorb them, and cannot be fully sequestered on Earth. Ultimately the overuse of resources will lead to a shortage of materials. Unless we can improve resource efficiency, we’ll need to find alternatives or reduce consumption.

Resource Efficiency as a Solution

Businesses of all sizes should consider resource efficiency across their operations. Ultimately, the demand for goods drives the global market that we are all part of. So, businesses should consider not only the goods they consume, but also the products that they produce for consumption.

Mapping major resources can be tough, but it’s an empowering start. Once identified there can be a move towards one of three options:

  1. finding alternatives with a lower impact or ideally a renewable source;
  2. being efficient with the resource which will see marginal gains; or
  3. a total reduction in consumption.

Drivers pushing businesses to do this with carbon and energy already exist. Companies are switching to alternative providers, setting efficiency targets in line with their growth, or they are reducing outright. In many cases, all three can be approached simultaneously. That’s encouraging, but, as the WWF report highlights, there is still a fundamental issue with the way we use resources. Businesses need to consider more and more what they consume and how they can make changes.


Acclaro Avisory runs the Sustainable Facilities Management Index. It considers resource use among a set of ESG criteria to set a sustainability standard for outsourced facilities management.

On Thursday 8 November, the Sustainable Facilities Management Index will launch its 2018 results at the RICS building in Parliament Square. We’ll be hosting speakers from RICS – and we’ll provide a free breakfast. Join us for the free event.

The National Audit Office report on packaging recycling, (published 23rd July 2018) highlights real concerns involving UK waste that is exported overseas for recycling: there is little visibility on what happens with it, and a suspicion that much of it ends up dumped in landfill.

Such exports increased six-fold between 2002 and 2017, as a result of insufficient domestic recycling capacity to meet demand. The majority was exported to China – but as of January 2018, Beijing has banned almost all plastic waste imports. That creates a new challenge: who should we send our waste to now, and can they prove they will recycle it?

The report also reveals that the government does not account for undetected fraud and error in its recycling records. Although official data indicates that 64% of packaging was recycled last year, the figures rely on estimates that are not sufficiently robust, despite the financial incentive for packaging producers to fail to report the volumes of material that enter the market, and for recyclers to overstate the quantities they handle.

The government will have the opportunity to address these concerns when it develops its new strategy for waste and resources, which it expects to do later this year. However consumers should be aware that sending harmful waste to be recycled isn’t always an effective way of eliminating it, and instead look for long-term solutions to cut back on their waste.

As the scandal of the UK’s plastic rubbish being dumped overseas deepens, businesses need to check if their data systems record reliable waste data, and if they store proof that waste contractors verify proper disposal. Smart businesses are saving costs and proving credibility by retaining the value of their materials with circular economy principles.

Acclaro Advisory can provide the expertise to help your organisation achieve this, so please get in touch if you would like to explore your options.

I often find myself advising clients and friends about the benefits of electric vehicles (EVs). With drastically reduced emissions compared with any other car, they are miles ahead in sustainability terms, and have recently become a genuinely viable personal transport option with improved range and expanding charging infrastructure nationwide. I strongly believe in these technological advancements to improve our sustainability as a society, and today I get the keys to my own EV.

Almost everyone I have shared my news with has sung the praises of EVs with me, but they haven’t joined the family yet. There is only one other EV in my reasonably sized social circle, and that is a company-sponsored car rather than a personal investment (not that companies shouldn’t be investing in EVs for their fleets!).

I understand why – they still seem very new, not quite as capable as their fossil-fuel counterparts in mileage, and the idea of ‘charging’ a car does take some getting used to. It is strange to sit in their silence as you drive, and there are so many questions and misunderstandings about them. Our society is not used to this technology, so it makes many people uncomfortable. I guess carbon reduction starts at home.

For my personal circumstances it was a no-brainer. I unfortunately live just too far away to make public transport viable, and although I have used lift-sharing websites to try and reduce my personal impact these websites, much like EVs, are a bit niche so I usually end up commuting alone. Although not as prolific as fuel stations, public EV charging points are increasingly common. There is one outside my local gym, a 2-minute drive from my house, and another at Wokingham Council offices near my workplace – as well as multiple other charge points in between, so it is no less convenient for me to use these as to fill up at a pump.

In hard numbers, commuting in an EV will cut my daily transport emissions by more than half (table 1) which is a huge personal win for me. Although not as carbon-efficient as public transport, EVs come very close, and traveling by car rather than bus & train saves me two hours a day in transit, so for my personal circumstances the trade-off is worthwhile.

TOTAL kg CO2e for:

Diesel: 16.97297

EV: 7.242231

Public Transport: 6.463946

Table 1 kg CO2e emitted per day from commuting: (based on km and Defra 2017 carbon conversion factors) 79 km driven per day or 88 km on public transport

Ultimately, however well EVs do commercially it is the carbon intensity of our electricity production that matters. Right now, that is made up of only 30% renewables, and while that has been increasing it’s a way off being legitimately sustainable. I hope that by using my consumer power to show demand for electric vehicles I will be contributing to a UK in which EVs and future sustainable technology is embraced, and its disruptive power used to reduce our environmental impact.

Connections with both public and private clients would bridge the gap between addressing the lack of infrastructure, a long-term solution and short-term fixes.

Despite significant environmental progress in 2017, this year has started with a significant threat: the waste import ban in China. The ban, which came into effect on the first of January, restricts the imports into China of 24 kinds of recyclable and solid waste and thus has a wide variety of potential consequences. These restrictions have been put in place to protect the Chinese market for recycled plastic by allowing China to use its own recyclable waste.

For two decades the UK waste industry has relied on sending plastics abroad for recycling with up to 500,000 tonnes of plastic shipped to China each year, thus the impact of this ban on UK capacity for managing plastic recyclables, in particular, will be strong.

In the face of this new ban, plastics are already beginning to pile up. Despite this concern, the Environment Secretary Michael Gove has admitted he has “not given it sufficient thought”. With mounting waste and inadequate preparation there are certainly risks. But adaptation could lead to opportunities for organisations from both long-term infrastructure improvements across the UK, but also short-to-medium-term in waste management design.

Despite having warning of this ban from China since summer 2017, short-term solutions have not been considered by the UK government. A fundamental change in the behaviour from government, manufacturing companies and consumers will be necessary in order to assist in the reduction of plastic waste and to create a sustainable long-term solution for waste management. Mary Creagh MP, chair of the Environmental Audit Committee, has warned the ban could mean “a double whammy for council tax payers” if the price of exported waste falls and the cost of UK disposal rises. She has also called on the government to deliver investment to provide more reprocessing facilities “to reuse these valuable materials, create green jobs and prevent plastic and paper pollution.”

Organisations generating significant amounts of plastics, including shopping centres and manufacturing facilities have been able to generate a revenue stream from the segregation and selling of the materials to reprocessors. The ban has placed a stop on this practice and will impact upon the revenue being generated. Virgin plastics, those made from non-recycled plastic, fetch over £1000 per tonne, and items made from previously recycled plastic can still turn a profit at up to
£400 per tonne, so the potential financial loss is significant.

The appetite for action on this is clear, and any organisation acting on this puts themselves ahead of the field both commercially and in promoting their successes.

Building on existing momentum, ranging from the tagline for the 2017 BEIS Industrial Strategy “Building a Britain fit for the future” to the outcry after Blue Planet II aired footage of marine pollution – by which Michael Gove was “haunted”. The appetite for action on this is clear, and any organisation acting on this puts themselves ahead of the field both commercially and in promoting their successes.

Facilities management companies may look vulnerable to this issue; however, they are also uniquely positioned to find a circular economy solution. As a pivotal point between their clients – creators of waste – and final waste management points, FM has an opportunity to meaningfully inform the adaptation direction for this and lead on the best practice to build sustainable solutions. The industry possesses revealing data on nuances of waste management from a consumer perspective.

Connections with both public and private clients would bridge the gap between the government addressing the lack of infrastructure in this area, a long-term solution, and those finding the short-term fixes.

The 25 Year Environment Plan, published last week, committed to “zero avoidable plastic waste by 2042” by tackling the production and waste management phases of the plastics lifecycle. Some, including Green Party MP Caroline Lucas and EIA Executive Director Matthew Farrow, have pointed out that the plans are ambitious but vague, and for the moment this document is not legislation and so is largely unprotected. It will be up to the Government to prove it can walk as well as it talks. Inaction in the face of mounting plastic waste will bring innumerate potential risks – many of them we are likely not aware of yet.

Quantifying the unquantifiable in sustainability

Sustainability measurement is important because it enables us to understand the environmental burdens of our actions, set targets to reduce this and monitor our progress in these endeavours. We use a variety of measures: fuel consumption, diversity metrics, waste to landfill, etc. Yet there are markers of sustainability that are not so easily quantified, and for these our measurement, and the subsequent benefits, are significantly limited.

These ‘unquantifiables’ occur across the triple bottom line so impact our understanding of every sustainability theme. Examples include the measurement of collaborations – how do you quantify the benefit of knowledge sharing, cooperation and countless other impacts of collaborative working? Or diversity – the value of having a breadth of experience and perspective on a project?

Where we are now?

The current state of affairs is varied. Certain characteristics, particularly those more closely aligned with the strategic success and profitability of a company, are often clearly measured across sectors with depth of understanding to back up the numbers. However, those areas with less obvious links to traditional ideas of business success have often had less invested in their measurement. This is likely due to the perceptions of those involved: perceived unimportance and lack of understanding in how the metrics fit into the classic corporate landscape, or perceived difficulty of the task leading to deferment.

Benchmarking organisations such as the CDP, DJSI and FTSE4Good rely on quantifications of sustainability. Quite often there are internal processes, such as supplier surveys, which require evidence for ‘scoring’ purposes, but the processes by which a policy or conversation is converted into a ‘score’ on which an organisation is then judged is largely unclear. Neither the processes or evidence are shared with others in their industry or field, so there are silos of potentially good measurements and metrics however no way to access or learn from the best practice.

What are we trying?

Ernst & Young have developed a technique that quantifies sustainability across ESG themes called Sustainable Value Added. This model calculates the CSR benefits of a given action in the ESG and economic outlays of that action and the overall opportunity costs of all actions in the context of general economic landscape in a numerate method of adding gain and subtracting loss/harm. The direct link between sustainability and financials in this method holds potential from which FM sustainability measurement could draw to illustrate the business case of sustainability initiatives. This method would help develop a culture in which the financial benefits of SFM are quantitively represented therefore more recognised and acted on.

The problem with tying ESG ‘unquantifiables’ to their financial metrics is that the true benefits of them may not be as intrinsically linked to their financial benefits as this method assumes. For example, increasing the apprenticeship offering, or gearing it specifically towards disadvantaged groups, not only provides workforce but social mobility within that community. This social mobility, and the other benefits unmentioned, would be unmeasured in the EY method, yet is a key societal gain from the apprenticeship and an important metric for the sustainability offering of that company.

What next?

In order to fully understand our progress when improving sustainability, we must be confident in our measurement of it. There is a clear appetite for quantitative measurement of sustainability in corporations – especially when these metrics are tied to financials. Companies are already judged on their performance and quantified in their brand, so the knowledge must exist; but barriers also exist that create silos of this knowledge. Making quantifiable sense of qualitative data is inherently difficult, but knowledge sharing and a commitment to improvement can make a vast difference in improving our measurement capabilities.

Both client and provider must invest in a long-term relationship to truly harness the potential of timely and specialist support.

While environmental requirements on companies – due diligence, transparency and performance progress – have increased over the last decade, environmental team sizes have rarely recovered from the contraction experienced during the recession. Beyond the sheer weight of the environmental workload, CR managers are increasingly finding that the diversity of skills needed to satisfy the requirements is rare to find contained solely within one team. Outsourcing some or all of the environmental functions is becoming more popular. But to be truly effective, long-term relationships are needed.

The sole “environment manager” within large corporates in the late 1990s – often tasked with an array of activities including health and safety, supply chain management, environmental management, social impact management, communications (if the company engaged in this), quality and community giving – began to be replaced in the early 2000s by a larger team, with more specialised roles.

Even so, the increasing external reporting requirements on large corporates – including the various rankings and the need to produce a complete CR report each year – effectively shut down progress on performance for around three months each year unless data collection and copywriting was outsourced, as well as verification. CDP, DJSI, FTSE4Good and GRI amongst others led to a fundamental shift by connecting the investment and fund bodies with environmental performance data. As reporting requirements became stringent – and a clearer picture of ‘best practice’ more prescribed – some companies struggled to keep up with the new imperatives, now with the additional impetus of potential investor sanctions. Additionally, stand-alone research pieces were commonly commissioned from consultancies, often focussed on a defined issue affecting strategy and frequently inspired by the latest ranking requirements.

Compliance and due diligence obligations also increased over this period, led initially by regulatory pressures and financial penalties, particularly in the US. Overall, outsourced support in this period tended to be piecemeal, with providers called on occasionally on a task-by-task-basis and changed frequently, without investment in a long-term relationship or a deep understanding of the company culture.

As reporting requirements became stringent – and a clearer picture of ‘best practice’ more prescribed – some companies struggled to keep up with the new imperatives,

The economic turmoil of the past decade saw environmental teams cut and a retrenchment in Government policy globally on green issues – but emerging from this came incentives for companies to promote their environmental and social credentials directly – particularly to a new generation more interested in social value, hungry for transparency and well acquainted with the new tools with which that need could be satisfied.

What does this mean for today and the future? Certainly, we can expect that the need for transparency will continue to play a stronger role in environmental progress than compliance alone. For a generation well-schooled in sustainability matters and sceptical of regulatory effectiveness, environmental performance inherently includes aspects of social value, well-being, and value chain impacts.

The skill sets required to deliver this change are becoming more complex requiring a mixture of change management, data analysis, strategic insight, in-depth and targeted two way communications, and operational management. The reporting calendar is still a huge influence, meaning different skills sets continue to be emphasised at different times of the year.

Outsourced environmental teams can provide the right kind of technical support for the time of the year, and give a pool of specialist skills to be dipped in to when necessary. To truly harness the power of an outsourced team – to truly have a ‘team’ – the provider needs to be able to invest in a long-term relationship with the client and become well-versed in the company culture, with their own internal network. Only then can they work semiautonomously, and ensure their work becomes business-as-usual within the client company rather than the dreaded report-gathering-dust-on-a-shelf.

Conclusion

Outsourcing isn’t for everyone and shouldn’t be seen as a panacea to achieve higher rankings scores and deliver better results – the outsourced parties still need to work within the bounds of the strategic direction that can ultimately only be set by the company. If a company is willing to invest in a long-term relationship and truly immerses the provider within the day-today running, an outsourced team can become an invaluable pool of insight and workforce in the face of shifting priorities and constrained resources.