Business and the triple bottom line
10 November 2010
A recent forum outlined the benefits of sustainability on the bottom line for companies including global giant GE. In this report forum host CarbonSystems’ Dan Gaffney outlines the key messages.
19 November 2010 – Four speakers. Four sectors. One message: intelligent investment in sustainable business activity is a triple bottom-line winner. That was the key outtake from the second in a series of CarbonSystems thought leadership forums where business leaders shared the challenges and lessons of greening their operations.
Convened this month at WatersEdge on Sydney harbour’s doorstop, 150 executives heard how companies in the property management, wholesale food and technology sectors are realising substantial financial, social and environmental benefits from investing in sustainability.
“GE sees the growing need for cleaner energy, water, transport and cities as the business opportunity of the century,” said Waters, Commercial Director Australia-New Zealand and head of its regional ecomagination effort. “We launched ecomagination in 2005 based on the belief that achieving environmental and operational outcomes makes GE and our customers successful.”
If anyone at the forum doubted the wisdom of this statement they didn’t have to wait long. By any measure, the venture has been an unqualified success. GE’s original US$5 billion clean energy investment achieved US$70 billion in revenues, a 22 per cent reduction in GHG emissions, and cost savings of US$130 million within five years.
Now GE is sinking a further US$10 billion into the program and by 2015 it expects its investment to double its clean tech revenues, halve its energy intensity, reduce its water use by 25 per cent, and inspire similar investments by peers and governments around the world. Its Imagination at Work video channel showcases its efforts to solve some of the world’s toughest challenges.
The company also has an unswerving commitment to its staff, customers and the environment – borne out by its number one ranking on the 2010 Corporate Knights Global 100 most sustainable corporations. This year’s event attracted 3000 companies from 24 nations that were evaluated on how effectively they manage environmental, social, and governance risks and opportunities relative to their industry peers.
GE’s score was bolstered by its industry-leading ratio of sales to waste, strong board gender diversity (almost a quarter of directors are female), doubling its carbon productivity (sales/tonne of total CO2e), cutting total carbon emissions and increasing its sales from $150 billion to $181 billion.
If that wasn’t enough, the company also has major investments in progressing clean energy solutions for distributed energy, green hospitals, green data centres, and sustainable cities. Its sustainable cities program is working with 10 of the world’s leading cities, including Sydney, to address energy, water, health, mobility, buildings and the financing of cleaner precincts where urbanisation is pressuring resources, green space and quality of life – significant, given that cities account for 75 per cent of global GHG emissions, and will see a 40 per cent rise in their collective populations within 20 years.
Commercial property sector
Head of sustainability and national director of real estate management for Colliers International, Simon Cox presented several case studies demonstrating the social, economic and productivity benefits of green buildings in the commercial property sector.
Tenant demand, regulation and compliance reporting are the main drivers for landlords to improve the sustainability profile of their buildings,” said Simon Cox. “However, there is no silver bullet for achieving a greener building with a high NABERS rating.”
Moreover, citing a recent survey, Cox said only a slim majority of commercial tenants (53 per cent) see the strategic value of occupying a green building or are prepared to pay more rent for such premises. Yet improvements in the commercial building sector will be essential if Australia is to achieve its target of achieving a five per cent decline in carbon emissions on 1990 levels by 2020.
The nation’s 21 million sq m of commercial office space is spread across 3900 buildings and accounts for 10 per cent of Australia’s greenhouse gas emissions. For every one-star increase in an office building’s energy rating there is an estimated 15 per cent saving in energy costs per year.
“The key question, as we aim for more sustainable commercial buildings in this country, is whether tenants, owners and building management operators can negotiate shared responsibility for green lease agreements that are financially acceptable,” said Cox.
His comments came within days of a newly-announced federal tax break (costed at up to $1 billion over the life of the scheme) for green building retrofits, and the new Commercial Building Disclosure law requiring most sellers or lessors of Australian office space of 2000 sq m to disclose energy efficiency ratings.
Food retail sector
General Manager of Risk at Metcash Trading, Steve Newton, revealed how one of Australia’s leading distributors of food, liquor, hardware and fast moving consumer goods is adopting a string of sustainability initiatives aimed at offsetting risk and saving the ASX-listed company millions of dollars in the cost of doing business.
For anyone unfamiliar with the company, Metcash is a wholesale supplier of food, groceries and hardware to major retail brands, including IGA, Foodworks, Mitre 10, Campbell’s Wholesale, Cellarbrations and Bottle-O, and its “Sustainability@Retail” program has a suite of sustainability programs and policies addressing customers, suppliers, products and business processes.
Driven by an environmental sustainability team headed by the company’s chief executive, Andrew Reitzer, the program has targets and budgets for each Metcash site and makes environmental care a condition of employment.
Its initiatives include energy performance contracting, sustainable packaging, fair-trade food sourcing, intelligent lighting and store designs, early warning climate event systems, water audit and retrofits, energy monitoring surveys and preferred supplier agreements with solar panel suppliers.
While some sustainability programs are in their planning and early roll out phases, the company’s environmental metrics are heading in the right direction with declines in waste to landfill, water use and carbon emissions.
Business not waiting for a carbon price
While regulation and disclosure regimes such as the Carbon Disclosure Project and the national greenhouse and energy reporting system are turning up the heat on businesses to improve their sustainability behaviour, an increasing majority of Australia’s large, progressive companies are already on board, according to CarbonSystems http://www.globalcarbonsystems.com/index.cfm chief, David Solsky, who concluded the speaking program.
“The forward thinkers in the corporate sector have been saying ‘Let’s get on with it’ for some time,” he said. “Within big business there is a recognition that, irrespective of when we get a carbon price, and what form it takes, we are moving towards a more carbon-constrained economy and there will be upward pressure on energy prices.”
As the head of one of a handful of Australian carbon accounting software companies, Solsky said he had seen a strong upswing in the number of companies introducing energy and carbon accounting software.
CarbonSystems has installed its Energy and Carbon Intelligence System in about 40 of the top 500 organisations in Australia in the past 12 to 18 months. The web-based software captures and collates environmental data, such as energy, fuel, water and carbon emissions, helping companies identify and act to reduce emissions. Solsky said the greatest demand was coming from mid to large manufacturers and miners, with property, distribution and retail also a rapidly growing market.
“I’d estimate that there is 2000 to 2500 mid to large organisations in Australia looking to use technology like ours to get a better handle on the measurement and management of their carbon emissions. The big emerging market has come from companies that are not historically large consumers of energy or emitters but are now caught by the compliance regulations.”
Companies already using the system include AGL, Fortescue Metal Group, Metcash, Spotless Group, Elders and the CSIRO. The national greenhouse and energy reporting system, now in its third year, had provided strong momentum, but there were also hundreds of companies who introduced the technology voluntarily.
“We have a significant number of customers classed as voluntary reporters who want the data for corporate social responsibility or triple bottom line reporting,” said Solsky. “At the end of the day, the ability to accurately and continuously monitor electricity and fuel emissions will have huge cost-saving implications for Australian companies.”
Attending the event was Environment Business Australia chief Fiona Wain, who applauded “companies for clearly demonstrating that sustainability makes and saves money.
“Not only does productivity increase,” Wain observed, “but these companies are positioning themselves, their clients and their supply chain to be competitive in the green economy at the same time as helping to tackle major converging issues of climate change, food and fuel security.”
Dan Gaffney is marketing and communications manager