Environmental reporting offers the perfect opportunity to set inspiring targets that deliver both cost and environmental benefits - Tom Cumberlege, Consultant at the Carbon Trust, explains how.
It’s time to get your environmental story straight. The signals from the UK government are clear, from October 2013 companies incorporated in the UK and listed on the London Stock Exchange or equivalent in the EEA are now required to report their business’s environmental impact as part of a new structure for narrative reporting. This means that this year a number of businesses will be facing this challenge for the first time, as they come around to producing their latest set of annual reports.
The exercise may seem dull and dry, but developing a vision of a sustainable future is the perfect opportunity to set inspiring targets that deliver both cost and environmental benefits. Having a clear story that staff, business partners and investors understand and relate to helps build trust, reputation and loyalty.
The right vision can give meaning and focus to sustainability efforts and drive change which will not only prepare your business for mandatory carbon reporting which is looming on the horizon for large companies not already caught up by existing regulations, but also deliver cost savings and environmental benefits. Engaging the whole business in the process of calculating and explaining carbon emissions and the rationale behind reducing the environmental impact can give impetus to efficiency schemes which are as good for the bottom-line as they are for the environment.
Forward thinking companies are already experiencing the benefits of creating and embedding a sustainable narrative throughout their organisation. The Carbon Trust has been working with Nationwide since 2010, which as a mutual building society will not be covered by the current reporting legislation, but as an organisation with members, was keen to understand the environmental impact of its activities and take its members on the journey. Part of this process involved the creation of a sustainability narrative to help the building society clearly communicate how and why it is changing for the benefit of its 15 million members and the wider community.
The society has been galvanised by involving every department, from IT to finance and procurement, in examining their activities, helping them see how their departmental decisions affect the overall sustainability of the business. The inclusion of suggestions from grass roots level in the company’s vision, inspired staff and helped them feel that they were being listened to and their ideas taken seriously.
Having collectively produced a clear plan to cut back on carbon emissions and water use, the backing of Nationwide’s Chief Executive and Executive Committee gave each department the mandate to develop policies to help the business reach its goals.
Equally important in these tough economic times, the process has made the business more robust in the face of rising waste and energy costs. Nationwide committed to invest £1 million a year in capital projects to back its green plan, mainly in energy efficiency and lower-carbon energy sources. The building society expects to recoup that investment in less than three years, with savings of nearly £300,000 in energy costs in its first year alone.
Dealings with suppliers have also improved. The environmental vision has helped suppliers understand what is expected of them and how they can help Nationwide achieve its aims through closer collaboration.
Nationwide's procurement department, for example, has built sustainability assessment into its buying process ensuring that it works only with companies that reflect its own responsible environmental values. Suppliers must fill in a questionnaire about their own carbon emissions before they can be listed and that has kicked off a number of collaborative projects.
When Nationwide decided it wanted to start a zero waste initiative to stop sending waste to landfill, for example, it rewrote its waste contract to enshrine that aim but ensured the change would be cost neutral. Staff were able to chip in with ideas for new types of bins or ways to cut out waste, that made the deal work for everyone.
Other projects have brought valuable cost savings. The company developed a database of all its equipment, listing when items will need to be replaced. It now also includes an energy efficiency metric via a risk score, which helps to prioritise investment by replacing inefficient items sooner than in the past.
While the financial benefits are easily understood, Nationwide discovered many other strategic benefits in creating an environmental narrative. The society is owned by its members and the efficiency of the business is important to them; Nationwide is able to show them how its environmental efforts are reducing waste and saving money.
The Society has been growing quickly and this, alongside the implementation of new IT systems, has made reducing carbon emissions a constant challenge. Nationwide’s target is to make sure 2020 emissions are no higher than in 2010. Using narrative reporting, Nationwide is able to go beyond the bare numbers to explain what mitigation actions it is taking to manage that environmental impact and becoming more efficient.
Nationwide is also extending its inspiring vision out to its members by offering innovative new products for customers looking to make a positive environmental impact at home through energy efficient home improvements, helping them to reduce their bills in the longer term. The Green Additional Borrowing allows existing Nationwide mortgage customers, who are looking to make their home more energy efficient, the chance to borrow at a competitive interest rate.
Showing that a business cares about the wider community increases trust and confidence in a company, building a stronger brand. Nationwide found employees felt empowered by roles as 'green champions' or 'recycling ambassadors' making suggestions to improve the way the company is working and importantly seeing those suggestions affecting changes. Its experience is backed up by a number of surveys which show that staff tend to stay longer and feel happier working for companies which are attempting to 'do the right thing.'
Nationwide’s experience shows how looking closely on the carbon impact of a company and attempting to explain how that can be mitigated can provide real business benefits both internally and externally. That's why it's important to get a grip on your environmental story. It’s a mechanism to differentiate a business and improve relationships with all stakeholders both now and for the future.
Review your sustainability reporting in the light of current and future regulatory requirements as well as your corporate objectives with our carbon disclosure audit service.