CARBON REDUCTION
Supply chain management
CUTTING EDGE
Doing more with less can help to concentrate minds when it comes to energy and climate change, say consultants Nick Cottam and James Cadman. They explain
how today’s changing priorities are helping to bring supply chains together
I
f you happen to supply healthcare equipment to the NHS you may well be taking a fresh look at its carbon emission reduction efforts. The same could be true if you’re a supplier to the supermarket chain Tesco or to numerous other customer groups – from the automotive sector to tool hire companies. Whatever the politicians failed to achieve in Copenhagen, there appears to be a renewed zeal for less carbon intensive and more energy efficient supply chains. There’s nothing like an economic downturn to make us all feel a bit stingier about the way we use resources. Doing more with less is not only a useful mantra for thrifty recovery, it real- ly can help to concentrate minds when it comes to energy and climate change.
The NHS is a sizeable case in point. Europe’s largest employer spends around £400M a year on energy and, according to the Department of Health’s latest National Innovation Procurement Plan, has a carbon footprint of
18M tonnes on CO2 a year. That’s a lot of car- bon and energy, 60% of which comes from procured goods and services. Add to this the fact that the UK’s Climate Change Act requires the NHS to achieve a 26% reduction in emis- sions by 2020 and it’s perhaps no surprise that NHS Procurement and Defra have been responsible for the development of an energy efficiency assessment tool which can be used by hospitals to assess the energy efficiency and related carbon emissions of new equipment. The tool, which environmental consultants ERM helped to develop, should be a catalyst for another type of conversation along the supply chain. Assuming the equipment does the job, meets health and safety criteria and is sensibly priced, there is a renewed focus on life-cycle running costs – and carbon. In this respect the tool takes the user through a five-step process as part of procurement. You would expect a viable piece of equipment to match up to the competi- tion – if not beat its rivals hands down. It’s not difficult to see why the stakes are get- ting higher. Rising energy costs and energy security have become important issues for busi- ness. Carbon reduction and the wider climate change issue links neatly with energy use and both carbon and energy are becoming differen-
Listening to customers: Tesco has carbon footprinted many of its own brand products
tiators – certainly as part of the sales process, but also among investors and other stakehold- ers who are starting to see the long-term value of more energy efficient operations. As a market leader Tesco has been deter- mined to forge ahead in this as in other areas. Tesco has been working with suppliers – as well as ERM – to carbon footprint a significant number of its own brand products, the message being that here is an issue that isn’t going away. Tesco has also been engaging with customers on this issue with a growing number of them understanding the meaning of the term ‘carbon footprint’ according to latest Tesco consumer research in this area.
From a supplier perspective, energy and car- bon are not only becoming useful product dif- ferentiators, they are also new ways to get close to the customer – and stay there. Late last year the UK tool hire company, Speedy Hire, launched its Green Options (GO) initiative designed to provide its construction industry and other customers with lower carbon, more energy efficient options for tool hire. Again, we have a two way engagement, with customers being offered a greener option and suppliers being encouraged by Speedy to ‘join the club’ to ensure that their products remain attractive options, both for Speedy and for the end user. Whether you are supplying the NHS or
Speedy Hire, there is a pressure and an incen- tive to take the energy/carbon issue on board. Customers are asking questions and there is an incentive to deliver real improvements in ener- gy efficiency to win and keep their business. In Speedy’s case, the company’s CEO, Steve Corcoran, used the launch to invite new suppli- ers with innovative products to join the initia- tive. When that invitation comes from a com- pany with the buying power of Speedy, there’s got to be a very good reason to ignore it. The backdrop to this is part business and part political. Rising energy costs amount to a powerful incentive to be more efficient – wher- ever you happen to be along the supply chain. The carbon issue will directly affect you as a business, through developments like the Carbon Reduction Commitment or through the pressures and inducements rippling their way along the supply chain. In the background are the politicians, setting targets and expecting businesses and the public sector to meet them. Add to this the issue of reputation. Riding on the back of GO, Speedy has announced its own Product Innovation Awards scheme for green products. Build a reputation for innovative low energy, low carbon products and you get a chance to join the club. Ignore the issue, and you might find the business in need of some NHS-style resuscitation.
Sustainab le Business ❘ May 2010 27
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