Insider Business Club: greener business

Can you make your own supply chain more environmentally friendly?

Gaynor Coley,managing director, Eden Project

We find that our local suppliers, a lot of whom are SMEs, are very interested
in reducing their environmental impact. Waste and packaging is an obvious area,
and we target making them waste neutral. Effectively the waste that they export
has to balance out with the waste that they import, so not only are they
reducing their own packaging, they have pushed that up the supply chain.

Every single order in the Eden Project that is over £5,000 has to have a
triple bottom line form filled in which shows that not only have you looked at
the short term financial costs, you have also looked at the environmental and
social costs.

We do work with other organisations like Forum who actually have the metrics
to go in and attempt to do some detailed measuring but it is often essentially
judgmental. What we try and do is take a snapshot, which we accept is going to
be judgmental and we take that in three month intervals. But we measure this to
the last litre. Actually most people have a pretty good sense about whether they
have improved their environmental impact.

Is there a bottom line benefit for companies in going green?

David Aeron-Thomas, head of metrics, Forum for the Future

Absolutely. Companies wouldn’t be doing it unless there was that direct
benefit. Sometimes it is a bit difficult to see, which is why I think we don’t
have enough companies doing it. Once you start to look at your impact, start to
look at your energy bills, the amount of waste you produce and how much you have
to pay for waste to be carted off, then you wake up to the savings to be made.

There are big venture savings that again depend on the sort of company
involved. It is difficult to generalise because a manufacturing company will
have one profile, and a service industry company will have a different profile.
But, in general, you can find ways to reduce them and you can find ways to save
money.

We would like to see companies making the link between the impact that they
are making on the environment and the impact that the environment has on them
and whether that is reflected in their main stream business and strategy. Things
such as the business review are great because it’s getting companies to take
this into their mainstream reporting.

Does it really matter if companies are environmentally friendly?

Paul Grimes, chief operating officer, FTSE Group

There was a huge amount of interest in climate change and we are introducing
new climate change criteria to the FTSE4Good indices. This is a debate,
discussion, consultation that has gone over a period of 18 months talking to a
wide forum of individuals.

The key thing about the introduction of this criteria is that for the first
time there are going to be performance related criteria included. In the past
what we have had is a structure around policies, about management systems and
about reporting against those.

We are taking it another step forward and raising the bar a little bit more.
This is not regulation but if a company wants to be included within the indices
they need to be able to demonstrate improvements within their performance. A lot
of what we do around the FTSE criteria is ensuring that there is actually
representation and ownership at the most senior level within organisations.

If you look at smaller companies that are part of a supply chain, they can
benefit through being part of that chain and actually get some of their clients
to help educate them.

Is there a lack of government education on environmental issues?

Tim Jenkins, economic adviser, Friends of the Earth

One problem is the motivation and incentives given to companies by the
government and it hasn’t done badly. Straightforward education programmes are
good and you see it in lots of different sorts of areas. One important thing is
to show what the real opportunity is, but also to show there is a cost for doing
the wrong thing as well.

Let me take three examples that show different things. The first is the
landfill tax.We carried out a study two years after it started to see what
impact it had. Not surprisingly those who it impacted heavily on were those who
responded. Other sectors were hit quite hard but it was effective in making them
innovate and become more efficient.

The other thing is the climate change levy. That has now had an impact
because of the energy metrics quoted in the last budget.

But if you look at something like fuel duty then I think you can see that the
government is using it primarily as a revenue raiser. Fuel duty has had an
impact but largely only when the price of oil went up. The government has not
used the revenues to do things like providing incentives whether that is through
tax breaks, or grants, or education.

Chaired by Andrew Sawers, editor of Financial
Director

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