The heat is on, according to Stern

Kevin Radley, FD at LogicaCMG, was already one step ahead when the Stern
report on climate change was published in October. He’d started a trial scheme
to reduce the company’s carbon footprint in April.

By September, the trial had shown it could cut LogicaCMG’s footprint by 38%.
As other FDs were weighing up the implications of the Stern report for their
companies, Radley was rolling out his programme across the company’s 28 offices
and 7,000 staff.

For many companies, Stern’s findings didn’t look too encouraging from a
financial perspective. Sir Nicholas Stern put the annual cost of cutting
three-quarters of global CO2 emissions by 2050 at $300bn (£158bn). As a result,
business leaders have been warning about attempts to place too much of the
financial burden of fighting climate change on business.

Competitive impact
Richard Lambert, director general of the CBI, warned that the government’s
climate change bill, which followed the Stern report, should “not undermine
competitiveness” although he generally welcomed the measure.

David Frost, director general of the British Chambers of Commerce, said: “If
green taxes are to be raised, then it is crucial that they are offset by
reductions elsewhere.”

Martin Temple, director general of the EEF, warned: “The UK cannot solve
these problems alone and it is imperative that the government secures
international agreement to reduce emissions across the globe.”

But as some FDs viewed the extra investment needed to curb emissions with
concern, Radley expects his programme to save the company money. “We are doing
this to save costs and we have been open with our staff about it,” he says.

Four-step plan
Other FDs, says Radley, should start by focusing on four key areas. The first is
to get people to turn off lights and PCs when they’re not in use.

“Leaving your PC on overnight with a screensaver uses enough energy to
microwave 44 meals,” says Radley.

Second, LogicaCMG has started to cut down on staff travel and has switched to
videoconferencing. “We MOT’d our videoconferencing equipment and made sure it
was good enough to be a substitute,” Radley explains.

Radley is also rolling out a higher sign-off for permitted travel. In offices
where the policy has already been implemented, travel is down by half. Radley
says that, in the long run, there could be useful productivity gains from this –
staff will spend more time at desks working rather than sitting in traffic jams
on the M25.

The third element is to cut the amount of printing. Promises of the paperless
office have never materialised, but most companies could use a lot less paper.
LogicaCMG uses on-screen pop-ups and signs on printers to challenge staff
whether they really need to print documents.

By investigating print flows, the company has cut the number of printing
devices by 17% from 780 to 648. And new printers are using 11% less power.
Overall, paper consumption has been cut by 8% since the programme started.

Finally, there is a drive to get staff to recycle more. This is being
achieved by the simple expedient of taking away the bins that used to be under
everybody’s desks. Now they have to separate their rubbish at central points to
make it easier to recycle. The result in one office where this approach was
trialed is a 20% increase in recyclable waste .

Cost savings
These are early days and Radley doesn’t have specific figures on likely cost
savings. “I am pragmatic about this so that we don’t create an industry that is
working to reduce carbon emissions, but is creating costs in its own right,” he
says.

Radley’s simple approach could prove attractive to companies worried about
the impact on international competitiveness of cutting carbon emissions. But
carbon trading – buying carbon credits instead of paying penalties – is curre
ntly less costly for UK companies, points out Jack MacDonald, chief financial
officer of EcoSecurities, a company which trades carbon credits.

“In the EU emissions trading scheme, the penalties are 40 euros a tonne and
the market for carbon credits is currently around 15 euros,” MacDonald says. But
he points out that in 2008, penalties will rise to 100 euros and that will drag
up the cost of carbon credits.

Faced with these extra costs, some energy-intensive industries may suffer
competition from countries that don’t put a price on carbon emissions. But
MacDonald adds: “Negotiations for post-Kyoto are already under way and some of
the larger developing countries that aren’t subject to emissions caps at this
point are likely to be restricted in some way.

“Even if a company were to move operations now to take advantage of the lack
of regulation on CO2, it is likely that regulation will catch up with them at
some point.”