UTILITIESCONSTRUCTIONENERGYMANUFACTURINGRESOURCES2020 REPORTNET-ZEROGREEN RECOVERYMOBILITYRETAILTHE BUILT ENVIRONMENTHOSPITALITY & LEISUREBUSINESS LEADERSHIPNET-ZERO

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MISSION SEMI-INEVITABLE

A FOREWORD BY: John Elkington Chairman & Chief Pollinator Volans

There are moments in history when things long seen as impossible become not only possible but inevitable. We are in such a time.

This is as true in business and financial markets as it is in our day-to-day lives. So many of us still find it hard to get our brains around what Nassim Nicholas Taleb famously called “Black Swans”, events that can take us exponentially towards disaster. So, the idea that we might now conjure positive exponentials, or “Green Swans”, seems to stray into the realm of miracles.

My favourite explanation of what a modern miracle might be comes from Charles Eisenstein of Yale University. He concludes that transformations of the sort now needed will be seen as miracles. But he has a different take on miracles. Eisenstein’s view: they are events that seem impossible from an old

worldview, an old story, but that become entirely possible within a new story. “A miracle,” he says, “is more than an event: it is an invitation.”

Consider yourself invited. My latest, twentieth book – Green Swans: The Coming Boom In Regenerative Capitalism – investigates areas where modern miracles are urgently required. They include so-called “wicked” problems such as plastics in the ocean, antibiotic resistance, obesity and chronic disease, space debris, species extinction and, sometimes called a “superwicked” problem, the climate emergency.

The book’s first diagram (Fig.1) is one I have used in presentations for several years. My

Covid-19 is a clear signal that we have entered the “Exponential Decade”, but there will be plenty more such disruptions before we –

and businesses that make it through – enter the 2030s.

You could say that we are entering a new age of miracles. But perhaps I should explain. It is human nature to dismiss or ignore what we fail to understand. And we are particularly inclined to do so when confronted with anything that threatens our sense of reality, our hard-won certainties, our identities. Too often, we dismiss ideas or information that cut across our current sense of reality as “crazy”.

assumption has been that the world is headed into a U-bend of historic proportions, well beyond a single, normal recession. Instead, we are in a period where the established macroeconomic and political order goes down the tubes, while new ones begin to surface. As we head deeper into the U-bend, we enter the dark area, a time of maximum confusion, uncertainty fear and anger.

Meanwhile, like an X-ray, Covid-19 has illuminated critical fault lines in our societies, underscoring the lack of transparency in China, the wealth divides in countries as diverse as France and the US, and the different vulnerabilities of people of different ages and in different states of health.

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market shifts, generally catalysed by some combination of Black or Grey Swan challenges and changing paradigms, values, mind-sets, politics, policies, technologies, business models and other key factors. A Green Swan delivers exponential progress in the form of economic, social and environmental wealth creation.

Getting from here to there will be no trivial task, however. Times of disruptive change upend market and political pecking orders, creating social and political shockwaves which can last for decades, even generations.

As covered in more detail throughout this edie report, Green Swans worthy of the

It has also thrown into stark relief the incremental reflexes of politicians at a time when so many of our challenges are going exponential.

And the swans? Well, when Taleb launched the Black Swan concept in 2007, on the threshold of the 2007-9 financial crash, he was very specific about what he meant. A Black Swan, he said, is an event that comes as an immense surprise, has a major impact, and is often poorly understood and rationalised afterwards.

The Green Swan is a symbol of radically better times to come. Green Swans are profound

WE NEED A MUCH MORE SYSTEMATIC FOCUS ON ENSURING OUR ECONOMIC, SOCIAL AND ENVIRONMENTAL SYSTEMS ARE RESILIENT AND – WHERE NECESSARY – THE SUBJECT OF SUSTAINED, EFFECTIVE REGENERATION EFFORTS.

MISSION SEMI-INEVITABLE

Plastics in the ocean – a “wicked” problem for which a modern miracle is urgently required

Source: Volans, 2019

Let go of whatever doesn’t fit with tomorrow’s realities

Embrace uncertainty and discomfort

WE

ARE

HER

E

Stand back and scan emerging trends

Experiment with new economic and political models

Identify opportunities for 10x thinking and solutions

Use the Sustainably Development Goals as a North Star

Engage with perspectives of disruptive innovators

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name will include: the rapid electrification of our mobility and transportation systems; the exponential evolution of machine learning and AI designed to help manage our businesses, supply chains and economies in the evolving Anthropocene; and the emergence of new behaviours, including the growing appetite for plant-based diets. Another example could be the EU’s €1trn Green Deal, designed to deliver an integrated set of economic, social and environmental outcomes in the face of the climate emergency.

These are themes we are investigating in our ongoing Tomorrow’s Capitalism Inquiry.

And it is increasingly clear that creating the necessary conditions and incentives for such innovation requires a radical expansion of the current responsibility frame in which most corporate “sustainability” efforts operate.

Instead, we need a much more systematic focus on ensuring our economic, social and environmental systems are resilient and – where necessary – the subject of sustained, effective regeneration efforts. It is time for us all to step up – or get out of the way. As climate activist Christiana Figueres puts it: “This is the decade – and we are the generation.” l

Coronavirus has created a social and

economic shockwave which could last

for decades, even generations

LIKE AN X-RAY, COVID-19 HAS ILLUMINATED CRITICAL FAULT LINES IN OUR SOCIETIES, UNDERSCORING THE LACK OF TRANSPARENCY IN CHINA, THE

WEALTH DIVIDES IN COUNTRIES AS DIVERSE AS FRANCE AND THE US, AND THE DIFFERENT VULNERABILITIES OF PEOPLE OF DIFFERENT AGES AND IN DIFFERENT

STATES OF HEALTH

John Elkington has been described as the “godfather

of sustainability”. He has co-founded four companies,

including Volans, where he is Chairman and Chief Pollinator.

He is the author of 20 books—the latest, just published by

Fast Company Press, being Green Swans: The Coming

Boom in Regenerative Capitalism. John has served as a

member of more than 70 boards and advisory boards.

MISSION SEMI-INEVITABLE

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Editorial credit: Photo Oz / Shutterstock.com

REPORT CONTENTSTo begin:

To end:

Then, choose your mission:

The Mission Possible 2020 report has been published by edie, the business media brand which provides energy, sustainability and resource efficiency professionals with the practical information, insight and intelligence they need to make their businesses more sustainable.

For more information, please contact edie’s Content Director Luke Nicholls (LukeNicholls@fav-house.com) for content or edie’s Publisher David Griffiths (DavidGriffiths@fav-house.com) for sponsorship opportunities.

May 2020

© Faversham House Group Ltd 2020. This report’s content may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.

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WELCOME TO YOUR MISSION POSSIBLE 2020 REPORT We are in the midst of the biggest global crisis in generations – the social, economic and emotional impacts of which will be felt for years to come. But despite its magnitude, Covid-19 is a mere dress rehearsal for the system shocks that will be seen through the converging crises of climate change, deforestation, biodiversity loss, desertification and acidification of the oceans – if we don’t act now.

Make no mistake: Covid-19 has had a profound impact on all functions within business, and sustainability and energy management are no exception. At the time of this report’s publication (19 May 2020), many edie readers remain furloughed, and associated climate announcements and investments have been delayed or cancelled as organisations look to cut expenses, preserve cash and focus on overcoming the crisis at hand.

Does this make tackling climate change Mission Impossible? Far from it. In fact, there is a growing consensus that we could come out of the Covid-19 crisis more united, stronger-willed and better-equipped to overcome the longstanding crisis of climate change. Of course, the economic paralysis

caused by the pandemic has led to a significant short-term drop in emissions, but to see this as a ‘positive’ is missing the point; it is just delaying things by a few months at most. However, in the medium-to-long-term, there are some reasons for optimism. Here are three:

1. First, the resolute international reaction to the existential threat of Covid-19 serves to highlight just how quickly governments, businesses and citizens can mobilise around critical global issues. Moreover, it has become abundantly clear that the key to overcoming this pandemic is stringent government action, based on science. This is exactly the kind of action we need to address the climate emergency – and, to an extent, we were already seeing

that mobilisation happening. Consider, for example, the tremendous success of the climate strikes and protests of 2019; and the positive corporate and investor momentum that had been building around sustainability and carbon reduction, prior to the Covid -19 outbreak. Tied to this, it could be argued that during the period of significant economic downturn that will inevitably follow the pandemic, cost-cutting sustainability and energy management projects may in fact prove more attractive to businesses and investors than ever before.

2. Second, the emissions reductions caused by restrictions on travel could continue after ‘lockdown’. It is likely that people will work from home more often and skip work trips in the wake of the pandemic, for example.

AcknowledgementsReport writers and contributing partners:John Elkington, Volans; Christiana Figueres, Global Optimism; Pete Statham, Carlsberg; Crisitna Gamboa, WorldGBC; Julie Hirigoyen, UKGBC; Andrew Stephen, The Sustainable Restaurant Association.

A special thank you to the 120+ organisations that have posted pledges onto edie’s Mission Possible Pledge Wall so far; to the 250+ individuals who provided input for the 2020 Business Leadership Survey earlier this year; and to members of edie’s 30 Under 30 Class of 2019 who’s opinions are expressed throughout this report.

Report sponsor:Centrica Business Solutions

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Meanwhile, the climate benefits of a modal shift to online for things like conferences can be huge. So, we could find that this crisis changes our societies in a few simple but highly effective ways which lock-in lower carbon emissions.

3. And third, the ‘standstill’ caused by Covid-19 presents a re-evaluation and re-wiring opportunity which is truly unique. Globally, we now have an opportunity to reflect on lessons from the past and to “Build Back Better” for the future. Take, for instance, the UK Government’s recent announcement of a £2bn package to put cycling and walking “at the heart of” Britain’s post-coronavirus transportation plan – a move which could have a hugely positive impact on air quality across the country. There are similar opportunities to reshape and enhance our economies through the lens of all five Mission Possible campaign pillars of Energy,

Resources, Mobility, The Built Environment, and Business Leadership.

It is this re-evaluation and rewiring opportunity that our Mission Possible 2020 report chooses to focus on. Produced in association with Centrica Business Solutions, this year’s report looks at #MissionPossible and #BuildBackBetter through the lens of net-zero, with sector-specific breakdowns based on six of Britain’s major industries: Utilities, Manufacturing, Construction & The Built Environment, Retail, Hospitality & Leisure, and the Public Sector. As John Elkington noted in that rousing report foreword, “it is time for businesses to step up – or get out of the way”. So, in the pages that follow, you will be informed by our exclusive industry research; you will be encouraged and challenged to think differently through our sector

summaries; and you will be inspired by our selection of real-life case studies and calls to action from members of edie’s various Leaders Clubs.

More than that, this year’s report is an open invitation for you to be a part of the mission; to assess where your business is currently at on its own sustainability journey; to consider how you can best contribute to accelerating that progress (making a Mission Possible Pledge would be a great start); and to use your own knowledge and experience to inspire others – from peers and colleagues to customers and the supply chain – to do the same. Because ultimately, as this report also serves to highlight, our collective ‘mission’ of achieving a sustainable future is still possible in the wake of Covid-19. It all comes down to how we choose to emerge from the pandemic. l

Luke NichollsContent Director

edie

WELCOME

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ACHIEVING MISSION POSSIBLE: OUR SURVEYS SAID...

Over the past 12 months, we’ve been asking our audience about their key drivers, challenges and opportunities on the road to a sustainable future. A total of 134 unique responses were given to 73 individual questions covering the full spectrum of business sustainability and energy management – and the results, which follow, are truly inspiring.

Sustainable Business Leadership Survey 2020

This survey was conducted online via edie.net, between November 2019 and December 2019. The survey, comprising 30 questions, received 81 responses, and was compared with the equivalent survey from November and December 2018, which received 250 responses, so as to reveal year-on-year trends.

The respondent-base primarily consisted of individuals working in in-house sustainability/CSR/environmental management roles (73% of all respondents) along with chief executives (16%). In total, 89% of all respondents were UK-based, and in terms of business size, a combined total of 73% of respondents worked for large (250-999 employees), very large (1,000-

4,999 employees) or extremely large (5,000+ employees) organisations.

All of the UK’s major industries were represented among the respondent base for this survey: construction/the built environment made up 20% of all respondents, the manufacturing and consultancy sectors each represented 10% of respondents. The remaining respondent-base was a relatively even spread of professionals working across the likes of hospitality & leisure, transport & logistics, financial services, IT and the media from around 6 to 8%.

edie Business Energy Barometer 2020

This survey was conducted online via edie.net, between 26 March and 24 April 2020 – it is worth noting that this was the period when ‘lockdown’ had just been initiated in the UK. The survey, comprising 23 questions, received 53 responses. This respondent-base consisted exclusively of in-house energy manager/practitioner, all of whom are based in the UK, and all of whom hold some level of responsibility for managing their organisation’s energy usage.

In terms of business size, 51% of respondents worked for extremely large organisations (more than 5,000 employees). A further 41% worked for either very large (1,000-4,999 employees) or large (250-999 employees) organisations. Almost half of the organisations represented

were operating with an annual budget of £1m+ for energy-related activities in the UK – although it should also be noted that 16% of respondents did not know the answer to that question about budgets.

All of the UK’s major industries were represented among the respondent base, although there was a particular weighting towards the public sector, which made up 38% of all respondents; and manufacturing, which accounted for 22% of respondents. Transport/logistics represented 14% of respondents. The remaining respondent-base were working for organisations across a relatively even spread of industries including retail, banking, media, utilities, and hospitality & leisure.

This section of the report amalgamates the results of two separate surveys

conducted online over the course of 2019/20. The first – our Sustainable Business

Leadership Survey – was conducted before Covid-19

had impacted the UK; and the second – our Business Energy Barometer – was conducted

just after the UK had entered ‘lockdown’.

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Engagement with sustainability and energy: Moving in the right directionFirst, some good news: generally speaking, businesses large and small are ramping up climate action. This was made evident within our Business Leadership Survey, which revealed that 82% of organisations entered 2020 with an increased commitment to take action on sustainability than 12 months prior (Fig.2). Moreover, there was a heightened sense of optimism among businesses at the turn of the decade when it comes to limiting global warming to 1.5C. Last year, less than half of businesses we surveyed (48%) believed that keeping temperatures below 1.5C would be possible; this year, that percentage increased to 61% (Fig. 3). This is significant, and could be put down to the fact that, within 2019, the UK had declared a climate emergency and the Government had duly set out the new net-zero emissions target for 2050.

In addition to this increased optimism and higher ambition, sustainability and energy leaders across the country have achieved significant breakthroughs when it comes to engaging key stakeholders across the business with the work that they do. According to our sustainability leaders, the majority of chief executives (54%) were “very engaged” with sustainability at the beginning of 2020 – this is an increase of 14% on the 2019 figure. Additionally, finance departments are significantly more engaged – some 57% were ranked as being either “very” or “somewhat”

engaged with the sustainability agenda, compared with just 41% a year earlier.

And for our Energy Leaders, based on weighted averages of engagement levels over time, a positive picture can be seen among virtually all key stakeholder groups. The chief executive and corporate board are both seemingly more engaged with energy in 2020 than they were in 2019. Twenty-seven percent of CEOs are “very engaged” with energy use/efficiency as of April 2020, compared with 17% 12 months earlier; meanwhile, 24% of corporate boards were “very engaged”, compared with 21% the year before. And, as with sustainability, there has also been a rise in the levels of engagement with energy among finance departments. Last year, 21% of our Energy Leaders survey respondents claimed that their finance colleagues were “very engaged” with energy use/efficiency – that figure has risen to 32% this year.

The challenges: Short-termism and access to fundingEven before Covid-19 had struck, short-term business mindsets were seen as one of the biggest barriers to driving sustainability forward – despite organisations seeming more committed to and more engaged with sustainable business practices, as mentioned earlier. At the start of the year, our Sustainability Leaders survey asked respondents to cite their top two biggest challenges facing sustainability in 2020

Fig 2. Do you feel your organisation will be more of less committed to taking action on sustainability in 2020 compared with 2019?

Source: edie Sustainable Business Leadership Survey 2020

Source: edie Sustainable Business Leadership Survey 2019 & 2020

Fig 3. In light of the IPCC’s report on the impacts of global warming, do you believe limiting temperatures to 1.5c above pre-industrial levels is still achievable?

My organisation will be more committed to sustainability in 2020 - 82%

My organisation will be less committed to sustainability in 2020 - 0%

I expect there to be no change in my organisation’s level of commitment to sustainability in 2020 - 18%

0%

0%

82%

61%YES

48%YES

18%

39%NO

52%NO

2020

2019

100%

100%

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(Fig. 4), business growth/short-termism topped the list of challenges, selected by 39% of respondents – the same result as last year’s equivalent survey.

And then came Covid-19. As mentioned in this report’s introduction, the pandemic has had a profound impact on corporate sustainability, and has done no favours for the ‘short-termism’ which has plagued sustainability and energy professionals over time. At the beginning of April 2020 – when the UK was a couple of weeks into ‘lockdown’ – edie surveyed exactly 100 sustainability and energy professionals about the immediate impacts of coronavirus on their work. More than half (57%) told us that their organisation was forced to pause or postpone some or all of their planned sustainability/CSR announcements or communications as a direct result of the pandemic. Moreover, 37% of respondents said that investments into sustainability/energy technologies, processes or systems had already been paused due to their organisation shifting its focus onto overcoming the crisis at hand.

This bleak picture is repeated in our Energy Leaders Survey, which was conducted throughout March and April. When asked to list the biggest challenges facing business energy in 2020 (Fig. 5), almost half of respondents (49%) cited funding/access to finance – the top challenge on the list. In last year’s equivalent survey, funding/access to finance was fifth on the list of challenges,

Fig 4. Please rate the level of engagement that each of the following functions within your business currently has with the sustainability function

Not at all engaged with sustainability

Somewhat disengaged

with sustainability

Neither engaged nor disengaged

with sustainability

Somewhat engaged with sustainability

Very engaged with sustainability

Weighted average

Chief executive 3% 5% 8% 30% 54% 3.43

Supply chain / procurement 0% 2% 10% 49% 39% 3.38

Corporate communications 2% 3% 11% 14% 43% 3.36

Corporate board 2% 7% 13% 36% 43% 3.33

Operations 2% 7% 10% 49% 33% 3.23

Marketing 3% 5% 11% 46% 35% 3.23

R&D / Product development 5% 2% 18% 46% 30% 3.18

HR 5% 7% 30% 41% 25% 3.08

Finance 2% 11% 30% 36% 21% 3.07

Legal 7% 7% 34% 34% 18% 2.98

IT 5% 10% 31% 38% 15% 2.95

Source: edie Sustainable Business Leadership Survey 2020

MORE THAN HALF (57%) TOLD US THAT THEIR ORGANISATION WAS FORCED TO PAUSE OR POSTPONE SOME OR ALL OF THEIR PLANNED SUSTAINABILITY/CSR ANNOUNCEMENTS OR COMMUNICATIONS AS A DIRECT RESULT OF THE PANDEMIC.

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cited by just 19% of respondents. Similarly, business growth/short-termism has been ranked as the joint-second biggest energy management challenge, cited by 35% of respondents. Last year’s survey saw this ranked sixth in the list of challenges, cited by just 17% of respondents. The sharp rise in both of these challenges further highlights how energy managers are already beginning to feel the pinch as organisations have been forced to cut expenses, preserve cash and focus on overcoming the crisis at hand.

The priorities: Efficiency and carbon reduction key to #BuildBackBetterSo, sustainability and energy managers have had some success in increasing levels of commitment and engagement with their work across the key stakeholder groups – but some of that hard work has seemingly become undone by the sudden and severe impacts of Covid-19, which has forced many businesses to tighten purse strings and focus on the here-and-now. It would be logical to conclude from this that the most viable sustainability and energy projects and initiatives over the period of economic downturn that will inevitably follow the pandemic will be those that are relatively low cost, and can generate a relatively quick return on investment. This conclusion chimes well with the results of both our Sustainability and Energy Leaders surveys, which asked the respective respondents to rank particular areas of sustainability and energy based on priority.

Fig 5. What do you believe will be the biggest challenges for sustainable business in 2020? Please select TWO from the following list:

39%

37%

36%

22%

20%

17%

10%

6%

6%

5%

1%Source: edie Business Energy Barometer 2020

Business growth / short-termism

Engagement and behaviour change

Brexit

Investment and costs

Policy (business energy & environment)

Climate change and extreme weather events

Plastics and resource management

Skills and training

Growing inequalities

National infrastructure and grid

Other

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The overwhelming result from both surveys was that energy efficiency technologies remain the top priority for businesses this year. Our Sustainability Leaders survey (Fig. 6) saw 36% of respondents label energy efficiency and carbon reduction as a “business-critical” priority, on top of 48% of respondents who labelled it a “high priority”. Likewise, our Energy Leaders survey saw energy efficiency technologies cited as a “medium” priority for 27% of respondents, a “high” priority by 38% of respondents, and a “business-critical” priority by 16% of respondents.

What the future of business leadership looks like...The aforementioned sustainability and energy management challenges do not necessarily mean that these areas are being entirely shunned, and it is worth noting that many organisations have in fact placed an increased focus on this area (particularly through the rollout of social sustainability and local sustainable development initiatives) as part of their immediate response to the pandemic. Moreover, cost-cutting sustainability and energy management projects may in fact prove more attractive to businesses and investors than ever before – so long as those projects are pitched and delivered in the right way.

So, in the wake of the pandemic, what will “good business” actually look like? When asked to list the two most important corporate attributes for business leadership (Fig. 7), “having sustainability credentials built into all core products and services” was seen as the most important corporate attribute,

Fig 6. How much of a priority do you expect your business to be placing on each of the following areas of energy and sustainability in 2020?

Not at all a priority

Low priority

Medium priority

High priority

Business- critical priority

Don’t know

Weighted average

Energy efficiency & carbon reduction 0% 0% 5% 48% 36% 0% 4.19

Waste management & resource efficiency 0% 5% 32% 42% 20% 0% 3.78

Renewable energy 3% 12% 22% 34% 27% 2% 3.71

Workplace diversity & inclusion 2% 7% 22% 59% 7% 3% 3.65

Human rights 2% 10% 36% 32% 20% 0% 3.59

Sustainable Development Goals (SDGs) 3% 6% 32% 46% 12% 0% 3.56

Single-use plastics 0% 14% 29% 44% 10% 3% 3.53

Smart technology & innovation 2% 14% 39% 32% 14% 0% 3.42

Green vehicles 10% 19% 27% 34% 8% 2% 3.12

Climate-related financial disclosures (TFCD) 17% 14% 25% 34% 7% 3% 3.00

Water management / efficiency 3% 32% 39% 17% 8% 0% 2.95

‘Smart’ energy solutions (e.g. energy storage, demand-response)

10% 25% 32% 22% 7% 3% 2.86

Source: edie Sustainable Business Leadership Survey 2020

THE OVERWHELMING RESULT FROM BOTH SURVEYS WAS THAT ENERGY EFFICIENCY TECHNOLOGIES REMAIN THE TOP PRIORITY FOR BUSINESSES THIS YEAR.

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just ahead of “full transparency, disclosure and accountability”. Interestingly, this prioritisation of transparency is a significant change from last year’s equivalent survey, which saw it ranked as one of the least important attributes in the list. During this period when trust in government and business is particularly volatile, it is fair to assume that transparency and disclosure will only increase in importance from this point.

From a skills perspective, it is perhaps no surprise that the big three skills and traits that sustainability business leaders believed were critical going into 2019 were the same going into 2020 (Fig.8). Sustainability professionals cited “collaborating, networking and knowledge-sharing” as their most important skill for a second year in a row – cited by 38% of respondents. Second on the list was motivating and empowering others; while communicating, listening and storytelling came in third. The key skills highlighted by energy managers are seemingly unchanged, too: our Energy Leaders survey respondents cited “motivating and empowering others”; “analytics and data management”; and “collaborating, networking and knowledge-sharing” as their three most important skills – the exact same top three as last year’s equivalent survey.

When analysing this question across both surveys, it is perhaps surprising to see the skill of “negotiating and influencing” ranked so

low. In the Sustainability Leaders survey, this was seen as the fourth most important skill; and in the Energy Leaders survey, it was ranked seventh in the list of skills. This jars somewhat with the earlier finding in both surveys that access to funding and short-termism were key challenges to getting projects off the ground. With businesses increasingly cash-strapped in the wake of coronavirus, it will be interesting to see whether negotiating with and influencing senior stakeholders in the business begins to be seen as a more critical skill in years to come. l

Fig 7. When it comes to the future of business leadership, which of the following corporate attributes do you believe to be the most important?

Fig 8. When it comes to the evolution of the sustainability function within business, which of the following skills and traits do you believe to be the most important? Please select two from the following list:

Source: edie Sustainable Business Leadership Survey 2020

Source: edie Sustainable Business Leadership Survey 2020

34%

38%

34%

29%

29%

23%

29%

23%

21%

21%

18%

20%

11%

16%

11%

13%

9%

11%

5%

7%

Sustainability credentials built into all products and services

Collaborating, networking and knowledge-sharing

Full transparency, disclosure and accountability

Motivating and empowering

An alignment between core business values and purpose

Communicating, listening and storytelling

Collaborating with others - even rivals - on sustainability

Negotiating and influencing

Setting ambitious, long-term targets

Innovating and critical thinking

Proactive and effective supply chain management

A genuine passion for the cause

Actively engaging with consumers around sustainability

Business and financial acumen

Effectively communicating and reporting on sustainability throughout the business

Analytical and data management

Advocacy to promote a more sustainable and ethical business environment

Complex problem solving

Investing in innovation / R&D

Deep technical knowledge

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The facts and stats on this page were accurate as of the date of the Mission Possible 2020 report publication (19 May 2020).

ENERGY & CLIMATETHE BUILT ENVIRONMENT

RESOURCES

19 of the 20 warmest years on record have occurred since 2001

68% of the world’s population is expected to live in urban areas by 2050

121 sustainable business pledges have been posted onto the Mission Possible Pledge Wall

Achieving the Sustainable Development Goals (SDGs) could open up an estimated

$12trn in market opportunities

82% of sustainability leaders say their organisation is more committed to sustainability in 2020 than it was in 2018/19

876 companies are taking science-based climate action, with 365 of those having approved science-based targets

100% of buildings must be net-zero carbon by 2050, according to the WorldGBC

Air pollution levels have

dropped by more than 40% in some UK cities during the Covid-19 ‘lockdown’

32% of landfill waste comes from the construction and demolition of buildings

The world is expected to invest around

£69trn in infrastructure between 2016-2030

The country’s greenhouse gas emissions in 2019 were

45% below 1990 levelsGlobal emissions are

expected to fall by 8% in 2020 – the largest annual decrease ever recorded

The UK’s CO2 emissions

fell by 3.9% in 2019

234 companies have now committed to sourcing 100% renewable energy through the RE100 initiative

Every day approximately

8 million pieces of plastic pollution enter our oceans

844 million people lack access to clean water

10,000 items of clothing are sent to landfill every 5 minutes across the world

100% of plastic packaging will be re-usable, recyclable or compostable by 2025, for all members of the UK’s world-leading Plastics Pact

Transitioning to a ‘circular economy’ could increase the UK’s resource productivity by

3% annuallyMOBILITY

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ACHIEVING MISSION POSSIBLE: THE SUSTAINABLE BUSINESS INFOGRAPHIC*

The mission, should we choose to accept it: achieving a low-carbon, resource-efficient business revolution, driven by a scaling up of effort and innovation across all areas of sustainable development. Here are the facts and stats powering Mission Possible in 2020...

Transport accounted for 34% of UK greenhouse gas GHG emissions in 2019

Emissions from airlines could

drop by 38% in 2020 due to travel restrictions

The Tesla Semi electric truck offers £150,000+ in fuel savings over its lifetime, and a two-year payback period

There are 298,000 plug-in cars on UK roads today – up from 3,500 in 201

The UK Government has announced a

£2bn package to create a “new era” for cycling and walking

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NET-ZERO UTILITIES

Britain’s utilities sector has a golden opportunity to position itself at the forefront of the net-zero revolution. With the right support and direction, energy and water providers large and small can deliver transformative systems that radically reduce carbon whilst enabling and empowering their customers to do the same.

As the UK Government’s official advisers the Committee on Climate Change (CCC) concluded in their hugely influential recommendations report last year: the transition to net-zero is necessary, feasible and cost-effective. And these three words absolutely ring true for the utilities industry. Necessary because the energy supply sector is responsible for almost a third of all carbon dioxide (CO2) emissions. Feasible because the same sector was the largest contributor to the decrease in carbon dioxide emissions between 2017 and 2018, thanks to the switch from coal to natural gas and the growth in renewable energy sources. And cost-effective because the price of key net-zero-enabling technologies – primarily renewables and battery storage – are continuing to fall, whilst

the evolution of the demand-response market has opened up exciting new income streams.

But of course, setting a net-zero target is the easy part. Utility businesses now face a number of major hurdles on the road to reduced emissions, many of which will require increased government support, better cross-industry collaboration, and more focus on innovation.

Driving the renewables revolutionAchieving ‘net-zero carbon’ energy by 2050 will only be achievable if this energy is being supplied entirely from low-carbon sources. Thankfully, this is a transformation that is already beginning to take shape among the utilities sector – particularly through

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the switch away from coal-fired power stations towards clean, smart energy systems. The UK is committed to phasing out the use of the coal power by 2025 at the latest and, according to Government data, coal accounted for just 1% of all electricity generated in the UK during the third quarter of 2019 – 17% down on the year before. In fact, National Grid has an ambition to be able to operate a fully zero-emission grid, when weather conditions allow, from 2025, as renewable energy capacity and smart grid functionality continue to increase.

Meanwhile, interconnectors, which allow the UK’s power grid to export renewable energy or import it from a much larger geographic area – such as Norway’s hydro power resources – will be a key catalyst in increasing the share of renewables in our energy mix further. By 2030, National Grid will have at least six interconnectors operating in Britain, through which 90% of electricity imported will be from zero-carbon sources. Positive changes are happening at an industrial supply level, too – the growth in the Corporate Power Purchase Agreement (CPPA) market is a case in point; delivering long-term cost and carbon reductions for corporate end-users and guaranteeing revenue streams for utility companies’ clean energy projects.

Embracing innovationWhile renewable energy is forecast to deliver a large chunk of emissions reductions through to mid-century, there remains a raft of other

ACHIEVING A STATE OF NET-ZERO CARBON BY 2050, IF NOT SOONER, IS POSSIBLE FOR UTILITIES BUSINESSES WHEN IT COMES TO ENERGY GENERATION AND CONSUMPTION – BUT ONLY IF THE INDUSTRY IS SUPPORTED BY THE RIGHT INCENTIVES, FRAMEWORKS AND POLICIES.

In April 2019 – months before the UK Government’s commitment to net-zero emissions by 2050 – the water sector in England voluntarily set a bold target to achieve net-zero carbon emissions by 2030. Under a new Public Interest Commitment coordinated by industry body Water UK, the CEOs of all of the nation’s water suppliers agreed to the commitment, sending out a strong signal across the UK economy.

As part of the Commitment, the water firms have since committed to planting 11 million trees, which will effectively act as ‘carbon sinks’ and improve the natural environment across 6,000 hectares of English land.

Many water firms are now in the process of setting their own respective ‘net-zero’ carbon targets in line with the new strategy. Northumbrian Water leads the sector in this regard, having already committed to become carbon neutral by 2027 by converting all sewage sludge into energy through anaerobic digestion; improving energy efficiency and purchasing zero-carbon electricity.

IN ACTION: The water industry’s pledge to be net-zero carbon by 2030

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In its recommendations report, the CCC claimed that the share of ‘low-carbon’ heating systems – primarily heat pumps, district heating networks and hydrogen-fuelled boilers – would need to increase from around 4.5% today to at least 90% for homes, and 100% for businesses, by the net-zero target year of 2050.

At a policy level, action in this area is supported via the Renewable Heat Incentive (RHI), which provides financial incentives for homes and businesses to shift to ‘renewable’ heat sources (biomass and waste). However, the RHI is due to close in 2021, leaving a crucial policy gap which must be filled. BEIS has pledged to publish “a new roadmap for policy on heat decarbonisation” in 2020, however this may be impacted by Covid-19 and there have been no announcements as yet.

Among the utility businesses themselves, the use of hydrogen as a replacement for natural gas is seen as a vital next step on the road to a net-zero carbon economy, primarily due to the fact that hydrogen produces no CO2 when combusted. Other key technologies include electric heating using heat pumps. By transferring heat from the ground or outside air into buildings, heat pumps are able to operate at very high efficiency levels and they do not give off any emissions locally in the process. And at a local level, a growing number of utilities businesses are investing in or supporting the deployment of district heating systems, or heat networks. These systems connect up a wide range of heat sources – including the likes of hydrogen, electric heat pumps, green gas, waste heat and solar – via a network of insulated pipes for residential and commercial heating uses.

emerging energy technologies and digital enablers that will need to play a part in the utilities sector’s transition to net-zero carbon. One such technology is carbon capture and storage (CCS), which effectively removes CO2 from the exhaust gases of power plants and industrial facilities such as wastewater treatment works.

Another significant shift expected to help the utilities sector on the road to net-zero is that of distributed generation – the creation of localised (i.e. decentralised) energy networks which combine renewables with ‘flexible’ technologies such as battery storage systems, allowing energy to be ‘banked’ when generated but not needed, and released when demand rises. And supporting this shift to decentralised energy is demand-response – which incentivises end-users to reduce or eliminate nonessential energy usage at peak times.

As the above examples serve to highlight, achieving a state of net-zero carbon by 2050, if not sooner, is possible for utilities businesses when it comes to energy generation and consumption – but only if the industry is supported by the right incentives, frameworks and policies which provide the long-term certainty needed to unlock innovation. l

SPOTLIGHT ON: Heat and gas

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NET-ZERO MANUFACTURING

As an energy-intensive industry, manufacturing is some way off reaching net-zero emissions. But progress is being made, and many manufacturers are now moving well beyond the “low-hanging fruit” of energy efficiency to decarbonise through renewable energy, onsite solutions and technological innovations.

Energy technology will be crucial for the manufacturing sector’s net-zero carbon transition. New technologies such as battery storage and solar could “inspire a new industrial revolution” and save the manufacturing sector at least £540m on its energy bills, according to research by Centrica Business Solutions. Moreover, the UK’s productivity could be boosted by as much as £12.9bn, if just half of manufacturing firms took up energy technology improvements such as new heating and lighting systems, solar, and combined heat and power (CHP).

Decentralised, decarbonised energyWhen it comes to taking control of their energy and driving forward net-zero carbon

strategies, manufacturers are beginning to utilise Internet of Things (IoT) software analytics and monitoring technologies to gain real-time energy insights across their sites – down to equipment and process level. A growing number of manufacturers are also embracing the shift to low carbon, low-cost onsite generation and storage technologies, using high efficiency CHP and solar systems. Additionally, some firms in the sector are beginning to embrace power flexibility through Artificial Intelligence (AI) – which gives them even more value from their energy consuming assets, onsite generation and storage.

Moreover, simple changes and upgrades to Building Energy Management Systems

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(BEMS) have been shown to have dramatic effects on manufacturers’ energy usage. The Chartered Institute of Building Services Engineers indicates energy savings of up to 20% through the use of a BEMS alone, when applied correctly.

Beyond energy sourcing and use, sustainable product design is another key aspect of achieving net-zero. A great example of a company championing sustainable design principles to support its net-zero journey is flooring manufacturer Interface. The company’s creation of its ‘Proof-Positive’ carpet tiles shows how it is possible to make a product with the potential to reverse global warming – after the tile is made, there is less carbon dioxide in the atmosphere than if it had not been manufactured in the first place. l

The transportation of goods to-and-from factories up and downstream in the supply chain is a major factor for manufacturers looking to reach net-zero across all Scopes. Heavy goods vehicles and haulage emissions are particularly difficult to convert to zero-carbon, as the market for alternative fuels and electric trucks is still in its infancy – but, it is developing fast.

Nikola Motor Company has already unveiled a new autonomous, hydrogen-powered lorry which is set to roll out across Europe by 2023 – US brewer Anheuser-Busch InBev has ordered 800 zero-emission, hydrogen-electric semi-trucks from the firm. Elsewhere, Tesla is beginning to roll out its own

semi-electric truck, while DAF Trucks is trialling an all-electric model prior to bringing it to market. Volvo and Mercedes-Benz are among a cluster of other vehicle manufacturers developing models.

Alongside the electrification of the logistics fleet, there are other measures which can significantly reduce manufacturing transport emissions: behaviour change through fuel efficiency training for drivers, for example, and optimising route planning to increase efficiency. It should also be noted that local sourcing of materials and shifting location represent two other solutions which may mitigate the need to switch to all-electric fleets.

Rolls-Royce, which aims be carbon-neutral by 2030, is taking a ‘whole system’ approach to decarbonising its operations.

First, the firm is seeking to replicate the success of its large-scale rooftop solar arrays in Bristol and Singapore across other locations, and is working to roll out ground and air-source heat pumps across its manufacturing estate. Additionally, after mass installations of LED lighting and investing in more efficient building energy management systems, Rolls-Royce is now focusing on heat and power, as well as life-cycle emissions, to speed up its low-carbon transition.

The board is now also moving to green light programmes with payback times of five years – as long as their carbon reduction impacts are “significant” and go beyond “efficiency gains”. This is due to Rolls Royce’s long-term emissions goals but also an increased demand for corporate climate action from investors, policymakers and consumers alike.

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Panasonic Group is now utilising an array of carbon-cutting technologies as part of an aim to achieve carbon-neutral production across 100% of its factories by 2050.

Reductions have already been achieved by installing onsite wind turbines, switching to 100% procured renewable energy, using carbon offsets which comply with Verified Carbon Standards (VCS), and switching its boilers to energy-saving models.

SPOTLIGHT ON: Manufacturing transport and logistics

IN ACTION: How Rolls-Royce is going beyond the “low-hanging fruit”

IN ACTION: Panasonic’s carbon- neutral drive

INTERFACE’S CREATION OF ITS ‘PROOF-POSITIVE’ CARPET TILES SHOWS HOW IT IS POSSIBLE TO MAKE A PRODUCT WITH THE POTENTIAL TO REVERSE GLOBAL WARMING.

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NET-ZERO: MANUFACTURING

At Carlsberg, we are brewers at heart, focussed on making high quality beer for beer-lovers everywhere. However, making great beer isn’t just about great quality brews. We face global challenges of climate change, water scarcity, and – more relevant than ever – public health. We want to make beer while taking action to tackle these, and challenging the status quo.

We do this by looking beyond our own business and operations, and most importantly collaborating with others to have the greatest impact possible.

We launched our global sustainability plan in 2017 in recognition of that – Together Towards Zero. We have four key ambitions: Zero carbon footprint, Zero water waste, Zero irresponsible drinking and Zero accidents culture.

On the way to zero, we became one of the first businesses to set science-based targets to the more ambitious, 1.5C level, of the Paris Climate Agreement. We’ve invested in the latest innovative technology at our breweries – like a total water recycling plant to take

industry and sector joins in a way not seen since wartime.

At Carlsberg, we’ve experienced first-hand how enormous challenges can inspire innovation and collaboration. My colleagues in breweries around the world have transformed their operations and collaborated with others to help meet the massive demand for much-needed hand sanitiser. Others, including our Northampton brewery in the UK, have donated funds to support their local communities. And the Carlsberg Foundation, our majority shareholder, has committed over £11m to support research into the virus, and the art museums and civil society affected at this time – all aiming to ensure a faster solution and an effective recovery.

We are playing just a small part. And there are many more inspiring examples from across every industry around the world – collaborating for a better tomorrow. We can only hope that once we’re through this, the spirit of innovation and collaboration will continue, so that we can tackle the global challenges we face together, on the way towards zero. l

water use from 2.9hl/hl to just 1.4. We have a team of postdoctoral researchers focused specifically on how to reach zero carbon and zero water waste. We’ve launched and continue to develop innovations in packaging that will transform the way people drink beer. And we’ve made steady progress in transitioning to low-carbon, sustainable energy, with more than half of our total electricity consumption coming from renewables while cutting our emissions by 30% since 2015.

We’re just getting started, but we did not achieve any of this alone. Collaboration is at the centre. And in the 10 years remaining to reach our targets, there will be many more examples to come.

The world today is very different from just a few weeks ago following the outbreak and devastation of the coronavirus pandemic. While it’s too soon to predict its impact on government legislation and regulations towards net-zero, it has demonstrated the incredible pace and scale of progress that can be achieved through collaboration as every

ACHIEVING MISSION POSSIBLE, TOGETHERA viewpoint by Pete Statham, Sustainability Manager, Carlsberg Group & UK

WHILE IT’S TOO SOON TO PREDICT ITS IMPACT ON

GOVERNMENT LEGISLATION AND REGULATIONS TOWARDS NET-ZERO, IT HAS DEMONSTRATED

THE INCREDIBLE PACE AND SCALE OF PROGRESS THAT

CAN BE ACHIEVED THROUGH COLLABORATION AS EVERY

INDUSTRY AND SECTOR JOINS IN A WAY NOT SEEN SINCE

WARTIME.

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NET-ZERO CONSTRUCTION & THE BUILT ENVIRONMENT

With approximately 40% of the UK’s carbon emissions attributable to the built environment, the construction sector represents a huge opportunity for the UK when it come to achieving net-zero emissions.

In 2018, the Government launched the £420m Construction Sector Deal which provides a framework to halve the energy use of new buildings by 2030 across the built environment. The Deal included £170m of funding invested in innovations to enhance resource efficiency, improve energy efficiency and cut greenhouse gas emissions, while shortening construction times – with ministers expecting this investment to be matched by £250m of private sector funding.

So, what are construction firms themselves doing to accelerate the net-zero transition? Many have already begun scaling up renewable energy across their headquarters and back office operations using Corporate PPAs and other contractual agreements.

Some have also been able to reduce energy within the parts of their businesses that use factories and off-site manufacturing – and through the design of buildings which are low-carbon. The sector is also exploring innovations such as offsite modular manufacturing techniques, AI-assisted digital design tools, and smart building management systems to reduce emissions.

The circular economy opportunityAnother key way for the sector to reduce its carbon intensity is to use recycled materials, especially those onsite, and prevent waste leaving sites for landfill. According to Wrap, the construction industry is the biggest consumer of natural resources in the UK, with more than 400 million tonnes of materials

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used across the sector every year, resulting in 100 million tonnes of waste.

Transitioning to net-zero carbon buildings will require an integrated approach when it comes to the assessment of carbon from the construction stages through to the embodied carbon of the building itself and the energy efficiency of the building fabric. Net-zero buildings will also likely utilise onsite renewable energy technologies such as solar PV and ground-source heat pumps. Traditionally, buildings have been constructed to the Building Research Establishment’s BREEAM rating system, with ‘Outstanding’ being the highest level. The BREEAM process includes a complex assessment of various factors, and includes environmental weightings on issues such as materials, land use and ecology, and energy. A building which is “net-zero” for its energy will get the maximum amount of BREEAM credits – 12 – and the body also awards additional credits for being “carbon-negative” under its innovation category.

According to the World Green Building Council (WorldGBC), this enhanced focus on carbon reduction and sustainable building design produces a wide range of benefits – from enhanced wellbeing to reduced fuel poverty, better air quality, and less pressure on healthcare and social services. l

Construction and property development firm Skanska has set a Group target of achieving net-zero carbon emissions by 2045, with a 50% reduction by 2030 (from a 2010 baseline) – without purchasing carbon credits for offsetting.

The pledge covers the company’s existing portfolio of projects, including the Gherkin and the Ministry of Defence’s head offices; its planned and partially completed projects, such as Crossrail, and its entire supply chain.

In a bid to meet the new ambition, Skanska UK will purchase more renewable electricity to be used during its own construction programmes and building operations, while encouraging landlords of facilities it builds but does not manage to do the same. It will also invest more heavily in technologies which minimise the energy use of its buildings, including on-site renewable arrays and low-carbon heating and cooling systems.

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This framework aims to provide clarity on the definition of net-zero carbon buildings in the UK, and provide an overarching framework of consistent principles and metrics.

1. Establish the net-zero carbon scope

The framework sets out the two definitions for net-zero carbon buildings and the approach that should be taken to demonstrate achievement of this status.

The two definitions are:- Net-zero carbon – construction- Net-zero carbon – operational energy

A third definition – net-zero carbon – whole life – is also proposed at a high level, but further work will be needed to develop the detail of this approach.

2. Reduce the construction impacts

This includes a whole life carbon assessment and the embodied carbon

impacts from produce and construction stages should be measured and offset at practical completion.

3. Reduce operation energy use

Reductions in energy demand and consumption should be prioritised over all other measures and in-use energy consumption should be calculated and disclosed annually.

4. Increase renewable energy supply

Onsite renewable energy sources should be prioritised and off-site renewables should demonstrate additionality.

5. Offset any remaining carbon

Any remaining carbon from the construction process and building should be offset using a recognised offsetting framework. The amount of offsets used should be publicly disclosed as well.

IN ACTION: How Skanska is going net-zero by 2045

SPOTLIGHT ON: The UKGBC’s net-zero carbon framework

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With the built environment accounting for 39% of global carbon emissions, a net zero future must include buildings – new and existing – that are healthier and sustainable. The project brings together 26 Green Building Councils (GBCs) from across the world, including our member UK Green Building Council (UKGBC), all of whom are at the forefront of the net zero movement in their markets.

By enabling solutions for new buildings and refurbishment of existing ones, these GBCs are mainstreaming net zero buildings. They do this by developing a range of innovative resources including net zero certification schemes, frameworks, tools and training materials, and importantly by advocating for visionary policies. At the beginning of this crucial decade of collective climate action, we stand ready to support businesses and governments to undertake the change needed.

WorldGBC’s Net Zero Carbon Buildings Commitment (the Commitment) promotes and inspires leadership across businesses and organisations, cities, states, and regions to achieve net zero carbon buildings at scale.

Signatories to the Commitment have pledged to take urgent action to ensure their portfolios of buildings operate at net zero carbon by 2030 and advocate for all buildings to be net zero by 2050.

The Commitment is unique in positioning energy efficiency as a central component to achieving decarbonisation across building portfolios, in addition to generating and procuring renewable energy to meet reduced energy demand. This represents the most cost-effective, best practice approach to ensuring buildings are fit for purpose and ensuring a healthy and better future for all.

In addition to addressing operational carbon, UKGBC and WorldGBC endorse a whole life carbon approach to total decarbonisation of the building and construction industry, that addresses emissions from materials and construction. WorldGBC’s Bringing Embodied Carbon Upfront report sets a roadmap for achieving this vision, and to certify that the full impact of a building’s life cycle – including building maintenance and upgrades – is well understood and ensures a comprehensive response by our sector. l

BUILDING A NET-ZERO FUTURE, TOGETHER

Viewpoint by Cristina Gamboa Chief Executive, World Green Building Council

Viewpoint by Julie Hirigoyen Chief Executive, UK Green Building Council

NET-ZERO: CONSTRUCTION & THE BUILT ENVIRONMENT

With well over 100 organisations involved in its creation, the UKGBC’s landmark 2019 report, Net Zero Carbon Buildings: A Framework Definition, galvanised the UK construction and property industry around a common set of principles for net zero.

Since then, parts of the industry and client organisations, including the NHS, have looked at developing new buildings using the principles in the net zero framework, whilst some existing building owners have used the framework to verify their portfolios as achieving a net zero balance.

Now, momentum around UKGBC’s Advancing Net Zero programme is continuing to grow, despite the impact of coronavirus on the sector. This year, the team plans to deliver a cost evaluation study for new net zero buildings, and develop guidance on renewable energy procurement and offsetting.

We know that targeting net zero must be an important focal point for a green recovery from coronavirus. If we are to truly ‘build back better’, businesses and governments must recognise investments in net zero buildings

as an opportunity to recover from one crisis whilst tackling another.

When it comes to addressing the direct emissions of their activities, UKGBC member organisations have led the way by signing the Net Zero Carbon Buildings Commitment, pledging all building areas under their direct control will be net zero in operation by 2030. For leading built environment businesses, this commitment is about practicing what they preach on net zero. But for it to truly make a difference, we need major occupiers, including banks, professional services firms, retailers – just about any asset owner or tenant you can think of – to sign up too.

Client-demand from corporate occupiers for net zero buildings will be vital to stimulating the market and encouraging the delivery of net zero buildings at scale. If you work in sustainability or energy management, think about how signing up to the Net Zero Carbon Buildings Commitment should form a central plank of your organisation’s roadmap to net zero carbon. l

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NET-ZERO RETAIL

The challenge for retail is significant: supplier manufacturing, warehouses, factories, logistics (both national and international), offices, and the retail spaces themselves all emit a significant amount of carbon. Meanwhile, the sector produces a relatively large amount of waste and uses a significant proportion of the world’s resources in order to sell food and drinks, clothing, technology, and other such products and services.

Complex supply chains can make it additionally difficult to accelerate sustainability progress across the retail sector. But many retailers have begun to take these energy and resource challenges head on, and positive results are already being seen.

Following the UK Government’s announcement of a net-zero target by 2050, many retailers moved quickly; partnering with property landlords, rival retailers, trade associations and other key stakeholders to develop ambitious net-zero strategies which cover Scope 1, 2 and 3 emissions.

The potential benefits of making the net-zero transition are vast: research from Carbon Trust revealed that the top 40 retail

destinations consume around £40m worth of energy every year – with the top 15 centres alone emitting 5.5MtCO2 annually. It also found that using 25% less energy could result in £4.1bn-worth of overall savings across the retail sector by 2050.

Onsite solutions and supplier engagementThe good news is that improvements are being seen across the sector. Several retail property specialists have already focused on purchasing 100% renewable energy for their shopping centres – and even gone beyond net-zero. One such example is Hammerson, which has launched a “net-positive” ambition, and has purchased 100% renewable energy across its portfolio

Property developer Landsec has set up a fashion take-back scheme at one of the UK’s largest shopping centres in a bid to encourage consumers to divert used textiles from landfill.

The firm has rolled out recycling collection points for used and unwanted clothes at its Westgate shopping centre in Oxford with all collected garments being sent for either reuse or recycling based on their condition.

Called ‘Spring Clean, Think Green’, the take-back points are also playing host to educational activities which teach shoppers about the impact recycling clothes can have on the environment and economy. In order to ensure the project is accessible to consumers, clothing from any brand will be accepted.

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IN ACTION: Landsec’s textile take-back scheme to combat fast-fashion

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wherever it has been possible to do so. Power Purchase Agreements with new renewable energy projects local to shopping centres can also offer an environmentally beneficial and lucrative opportunity for retailers.

This brings into play another opportunity: the potential to combine energy assets – such as battery storage and air-source heat pumps – in a way that delivers a ‘net-zero’ emissions retail store. This combined approach has been well illustrated by home improvement retailer Kingfisher at one of its Screwfix stores in Peterborough. This project proved that, by using a variety of technologies and focusing on improving energy efficiency measures and improving the building fabric, building emissions can be driven down to a ‘net-zero’ level.

Outside of the retail spaces themselves, energy management across the supply chain is a key focus when it comes to reducing Scope 3 emissions. Numerous retailers have already introduced contractual obligations on sustainability among their suppliers, and scaling these up to net-zero levels is the logical next step for many. When it comes to reaching these goals, the key word is collaboration. The coming together of various stakeholders, including large-scale corporates across the food and beverage and apparel sectors, will be critical when it comes to reducing global emissions and enhancing environmental and social sustainability. Additionally, the consumer-facing element of retail means that visible action with complete transparency can have a positive brand impact. l

NET-ZERO: RETAIL

THE COMING TOGETHER OF VARIOUS STAKEHOLDERS, INCLUDING LARGE-SCALE CORPORATES ACROSS THE FOOD AND BEVERAGE AND APPAREL SECTORS, WILL BE CRITICAL WHEN IT COMES TO REDUCING GLOBAL EMISSIONS AND ENHANCING ENVIRONMENTAL AND SOCIAL SUSTAINABILITY.

When it comes to retail emissions, resource efficiency and circularity are something of a missed opportunity, especially as recent government policy has focused more on transportation, heating and power to buildings. But how products are made – and the embodied emissions within them – plays a critical factor in the net-zero carbon transition.

Making supply chains more efficient, using fewer raw materials and using less water/produce can all have a profound impact on a retailer’s carbon footprint. Additionally, making products that last longer – as well as being reusable – can drastically lower emissions.

Research by Green Alliance has suggested potential savings of 6.09MtC02e in the fourth and fifth carbon budgets (2023-2032) for clothing and textiles; 16.36MtC02e for electronics and appliances in the same period; and 24.12MtC02e for food and drink. As part of this assessment, Green Alliance also predicts that it is possible to save approximately 8.93MtC02e through a reduction in material inputs through design optimisation, and another 47.91MtC02e by substituting high-carbon materials with lower-carbon alternatives. In the electronics and appliances space, an increase in the reuse of products can account for up to a third of the potential carbon savings. But currently, 38% of used UK electronics end up in landfill, according to figures from Wrap.

The world’s largest online retailer has set an ongoing target of achieving carbon neutrality for all its global shipments, starting with a 2030 ambition of making half of its shipments net-zero.

Amazon has confirmed that it will invest in EV research and development and expand its EV delivery fleet as it strives to achieve ‘shipment zero’. The company will also invest in low-carbon maritime and aviation technologies, including biofuels for jet planes, while paying for carbon credits to offset the remainder of its transport-related emissions.

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SPOTLIGHT ON: Retail’s resource revolution

IN ACTION: Amazon targets carbon-neutral shipments by 2030

Editorial credit: Sundry Photography / Shutterstock.com

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NET-ZERO HOSPITALITY & LEISURE

Despite being severely impacted by Covid-19, restaurants, hotels and pubs must look to #BuildBackBetter by continuing the drive towards net-zero and going beyond offering great products and services to create an offer that is truly environmentally and socially sustainable– which, in turn, will appeal to an increasingly climate-conscious consumer base.

At the time of this report’s publication (19 May 2020), hospitality and leisure in the UK remains at a standstill, after being forced to close from 20th March. The Government has said that pubs, restaurants and other so-called “higher-risk businesses and public places” must remain closed until the beginning of July at the earliest. Approximately 2.4 million people working across the broader hospitality sector have been furloughed, and industry experts are anticipating that this once growing sector could lose £1.1bn in turnover and 15,800 jobs as a result of the pandemic.

So, over the coming months, it is very understandable that the primary focus of all hospitality and leisure businesses will be to simply stay afloat and be ready to re-open

safely when allowed to do so. But for the sustainability and energy managers working across the sector, the extreme operational and strategic challenges caused by Covid-19 could present some re-evaluation and re-wiring opportunities across all five Mission Possible campaign pillars of Energy, Resources, Mobility, The Built Environment, and Business Leadership.

Refurbishment opportunity First, the opportunity to drive energy efficiency remains just as big as it was pre-pandemic. And in fact, during the period of significant economic downturn that will inevitably follow the pandemic, cost-cutting sustainability and energy management projects may in fact prove more attractive to hospitality firms than ever before.

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In fact, annual energy costs for the hospitality sector are in excess of £1.3bn, resulting in emissions of 8mtCO2e every year, according to one report from Carbon Trust. That report also reveals that a hospitality business can typically achieve a 10% or more reduction in energy use by implementing some simple efficiency measures. Technology upgrades and simple improvements could therefore directly increase revenue and profitability after Covid-19, without the need to increase sales. This is especially relevant to the hospitality sector specifically, as businesses in this sector will typically look to refurbish premises on a regular basis – these refurbishments represent a significant opportunity for energy savings.

Heating, for example, can account for a significant chunk of energy use in non-domestic buildings. Maintaining appropriate temperatures and optimising heating equipment and controls such as boilers, thermostats and air conditioning units (if required) can all bring about significant savings on the road to net-zero. The Carbon Trust report claims that around two thirds of heat from a typical hospitality building is lost through the building fabric (walls, floors and ceilings). “It therefore makes good sense to make improvements in this area during a major refurbishment project, and/or prior to replacing or upgrading any existing heating system”, the report says. Similarly, lighting energy costs can be reduced by up to 50% by implementing

OCCUPANCY-LINKED SENSORS AND BUILDING CONTROLS AND SUB-METERS COULD DELIVER SOME QUICK AND RELATIVELY CHEAP

‘WINS’ ACROSS THE SECTOR.

Editorial credit: nrqemi / Shutterstock.com

Restaurants and foodservice businesses have taken big steps when it comes to so-called “last-mile” deliveries, in which fast food and takeaway outlets have traditionally often used petrol and diesel vehicles to ensure customers receive their meals swiftly. But with increasing concern about the emissions and poor air quality caused by traditional vehicles, firms are shifting towards low or no-emissions transportation. Electric-assisted cargo bikes, scooters, and electric vans by both large-scale delivery firms – Just Eat and Uber Eats – as well as independent food outlets, are all becoming the norm.

In one standout move, food delivery service Deliveroo recently partnered with electric moped rental firm Elmovo to launch a zero-emission scooter hire scheme for its London-based riders. Under the scheme, riders across central London are able to rent a fully electric scooter for an hourly rate of £1.83, provided that they commit to a minimum of six hours of rental time. Each of the scooters has a 75-mile range and a top speed of 30mph – specifications which Elmovo claims make them ideal for short-distance, inner-city deliveries.

The delivery of produce to hospitality and leisure businesses is another issue that firms have been trying to address. Restaurants have tried to achieve this through the local sourcing of ingredients, including on-site gardens, as well as working with the community to cut emissions by removing road miles from food and drink products. Additionally, certification schemes and sourcing within national boundaries without internal aviation also reduces the footprint.

SPOTLIGHT ON: Hospitality’s last-mile deliveries

Annual energy costs for the hospitality sector are in excess of £1.3b, resulting in emissions of 8mtCO2e every year

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better lighting controls and transitioning to LEDs – the cost of which has fallen significantly in recent years. Elsewhere, occupancy-linked sensors and building controls and sub-meters could deliver some quick and relatively cheap ‘wins’ across the sector.

As well as driving energy efficiency, switching to renewable energy can offer hospitality businesses a wide range of benefits including lower energy bills, energy price stability and security of supply, and the possibility of selling electricity back to the grid at a premium. A prime example of a company that has made such a transition is Whitbread, which is now powered by 100% renewable sources across its hotels, restaurants, and coffee shops through a deal with SSE covering all of the firm’s purchased electricity. More than 99% of Whitbread’s total electricity use is purchased, with the remainder generated through on-site solar PV systems. These PV systems together generate more than 1,326MWh of power each year, saving an average of 6,132 tonnes of CO2 for Whitbread. Taking this a step further, the group last year become the first UK hotelier to install a battery storage unit at a hotel, after fitting a 100kW device at its Edinburgh Park Premier Inn location. The battery is expected to save Whitbread £20,000 per year on energy costs alone, and it effectively allows the site to avoid increased peak-time energy costs and generate revenue by offering energy demand-response services to the National Grid (by being paid in exchange for taking power off the grid).

Food waste managementAnother hotelier worth mentioning here is InterContinental Hotels Group, which has reduced the carbon footprint through its “Green Engage” programme. The firm has implemented more efficient HVAC systems which use 60-80% less energy. Elsewhere, leisure business Merlin Entertainments recently switched to 100% renewable electricity across its 32 venues nationwide, including at theme parks such as Thorpe Park, Alton Towers and Chessington World of Adventures along with landmarks like the London Eye. Meanwhile, high street coffee giant Starbucks recently signed up to the Climate Group’s RE100 programme in a bid to source 100% renewable energy.

Aside from energy focussed solutions, AccorHotels stands out as a hospitality business which has taken the lead on the net-zero transition across a variety of areas. The hotelier recently installed food gardens at 1,000 of its 4,500 properties to cut emissions from food transportation and reduce its food waste output, as part of its Plant 21 sustainability strategy. The fit out of the gardens – which includes Novotel hotels in Canary Wharf, Paddington and Waterloo – has allowed for a reduction in food waste of 30% alongside boosting traceability, overall footprint and transparency within the supply chain. l

When it comes to achieving net-zero emissions, plastics represents a major conundrum. Polypropylene – the type of plastic typically used to make plastic straws – generates 1.55tCO2e for every 2,000 pounds of material produced. Interestingly, though, general mixed paper generates 8.48tCO2e for every 2,000 pounds of material produced. In light of this, simply removing straws – or only offering reusable alternatives – might be the best option in a net-zero world.

SPOTLIGHT ON: Straws: Paper, plastic, or neither?

NET-ZERO: HOSPITALITY & LEISURE

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Before the coronavirus pandemic tragically changed the conversation, there was an encouraging level of consensus across government, business and civil society that time was up for prevarication on climate action.

Although protesters, weather, responsible business and government policy might all reasonably take some credit for this, it was the IPCC which laid the foundations for this shift, with the unusually urgent language of its 2018 special report. This brought the net-zero agenda to a mainstream global audience, with its conclusion that in order to limit warming to 1.5C with no or limited overshoot, net global CO2 emissions need to fall by 45% from 2010 levels by 2030 and reach net-zero by 2050.

The clarity of this call to action has inspired a welter of commitments from UK cities (see London, Edinburgh, Bristol, Reading, Exeter) sectors (see the UK water industry) and businesses (see Sky, Microsoft, IKEA as well as 500 B-corps). What is striking about all of the plans associated with these commitments is the consistency with which they focus on

ultimately fails to help create the changes we need in the food system.

To address this, Food Made Good will be launching Net Zero Restaurants this year as a sector initiative to make food service net-zero by 2030. At the heart of the initiative is the Net Zero Restaurant Protocol which provides a peer approved calculation methodology, suggested mitigation activity and guidance on allocation of a variable diner compensation cost. This calculation methodology addresses the crucial issue of food’s value chain emissions which we know from our collaboration with WRI’s Cool Food Pledge can dwarf Scope 1 and 2 emissions. Our research indicates that, for an average restaurant, the Scope 1 and 2 emissions per diner will be around 1.15kgCO2e, while the Scope 3 emissions can range from 0.1kgCO2e for those choosing the vegetarian option to 7.5kgCO2e for a beef menu option.

Mitigation activity focuses on the priority areas and opportunities identified both in our own work, modelling behavioural nudges toward more climate friendly

canteens in workplaces and universities for the EU funded Su-eatable project, and from international research on the impact of diet shift, food waste management and avoided deforestation.

The compensation guidance provides a process for how to translate total restaurant emissions into a voluntary compensation charge per diner, that varies according to the menu item chosen. This is an exciting step towards what is effectively a voluntary carbon tax that we expect to amount to between 1p and 45p per diner, depending on menu choice.

We anticipate that there will be voices raised in resistance to this and appreciate that it may feel like a step too far as the sector tries to get back on its feet after being decimated during the lockdown. On the other hand, will there ever be a better opportunity to take stock and “Re-open Right”? It is only through mechanisms like this that we can start to bring the carbon cost of food out of the shadows and make it visible to the diner. And by doing so, we can help create not just a net-zero restaurant sector but a net-zero food sector. l

decarbonising heat, power and transport and almost completely ignore food. The food system is responsible for around 30% of greenhouse gases, both in the UK and internationally, and it is self-evident that as cities and nations strive for net-zero, they will have to engage with the challenge of a net-zero food system.

At the Sustainable Restaurant Association, our focus since 2010 has been on the food service sector, delivering the Food Made Good program across our 11,000 member sites to highlight all of the many sustainability issues in food. One of the factors that motivated us to launch a decade ago was a desire to cut through the confusion and inconsistency around the idea of sustainable food and to define and bring clarity to what sustainability meant for food service. Today, we see the same need in terms of net-zero. While net-zero is an attractively simple concept in theory, it can become increasingly complex once applied in practice and that complexity has resulted in inconsistency in approach, deliver and associated claims. This deters restaurants from participating, confuses diners and

HOW HOSPITALITY CAN “RE-OPEN RIGHT” ON THE ROAD TO NET-ZERO A viewpoint by Simon Heppner, Co-Founder, Sustainable Restaurant Association

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FOR AN AVERAGE RESTAURANT, THE SCOPE 1 AND 2 EMISSIONS PER DINER WILL BE AROUND 1.15KGCO2E,

WHILE THE SCOPE 3 EMISSIONS CAN RANGE FROM 0.1KGCO2E FOR THOSE CHOOSING THE VEGETARIAN

OPTION TO 7.5KGCO2E FOR A BEEF MENU OPTION.

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MOBILITYRETAILTHE BUILT ENVIRONMENTHOSPITALITY & LEISUREBUSINESS LEADERSHIPPUBLIC SECTORNET-ZEROUTILITIESCONSTRUCTIONENERGYMANUFACTURINGRESOURCESFOOD & DRINKGREEN RECOVERY

NET-ZERO PUBLIC SECTOR

Encompassing central and local government, the public sector arguably has the most important role to play when it comes to advancing net-zero policies and adopting a leadership stance on sustainability. But for the public sector organisations themselves, access to funding is limited and regulations are tight – making the net-zero transition additionally complex.

To date, much of the public sector’s decarbonisation focus has revolved around energy and resource efficiency, perhaps due to these approaches being relatively low-cost with a relatively quick return on investment. Carbon reduction from smart energy systems and building energy management systems, for instance, have been popular choices for many public sector bodies. Additionally, behavioural change is consistently highlighted as a key factor in driving forward climate action by energy managers working across the sector.

The heritage element of many public sector institutions means that it is challenging to reduce energy and improve efficiency

through the fabric alone – especially the buildings which have listed status. But “softer” opportunities to cut carbon such as insulation, improved heating systems, and changes to lighting, as well as behavioural change of occupants, can make dramatic improvements in energy use and assist in overall decarbonisation. One good example is central government departments, such as the Cabinet Office. More efficient heating pumps, energy efficient lighting such as T5 lamps and LED equivalents, lighting controls and detectors, a lighting management system, smart data loggers for gas, electric and water, voltage optimisation and behavioural change for turning off lighting have all assisted on

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the Office’s journey to an 11% reduction in energy use across the past decade. A total of 13 government departments are now on-track to hit their energy reduction targets – although this leaves nine which look set to miss their respective goals.

Local government has undertaken similar projects across its energy use and property estate to decarbonise. Additionally, councils have used funding pots, such as the Industrial Strategy Challenge Fund, to trial a £40m smart grid solution and a £41m battery project. Oxfordshire County Council’s energy superhub will include a transmission-connected 50MW lithium ion and redox-flow hybrid battery systems as well as a network of 320 ground-source heat pumps. The electricity and energy from the facility will be used to heat and power around 300 social homes, with Cloud software and Artificial Intelligence (AI) set to be used to help the facility optimise demand and supply. It is estimated that each property powered by the hub will see a 25% reduction

in its annual energy demand. The smart grid solution will see 90 small-scale low-carbon energy projects connected under a distribution system operator approach to form a local energy marketplace.

Councils can also be a key driver in the development of decarbonisation of heat networks and through using local communities to decentralise and democratise energy usage in order to fulfil the overall carbon reduction targets across local areas. The public sector has also invested in development of its own renewable energy assets. For example, West Sussex County Council’s energy strategy includes the ownership and operation of two solar farms, including a 5MW facility on a former airfield, which generates enough power for 1,500 homes and £13.8m in Feed-in Tariffs and electricity sales over its lifetime. The council also has a 7.4MW solar farm with the first publicly-owned facility to include on-site batteries that are used to store surplus energy and release to the grid during peak periods. l

Oxford City Council and Oxfordshire County Council have published proposals on a zero-emission zone (ZEZ) for a city centre, which could be rolled out to a small part of the city by December this year.

The two councils have issued final draft proposals for a ZEZ that will aim to reduce air pollution levels, improve the health and wellbeing of residents and respond to the declaration of a climate emergency.

The new proposals focus on an interim “Red Zone” which will cover a small area of the city centre and will introduce charges for older, more polluting vehicles. The councils will then create a “Green Zone” covering the rest of the city centre in 2021/22, which will offer discounted charges for vehicles which comply with the London Ultra Low Emission Zone standards.

Read the full story >

IN ACTION: Oxford City’s zero-emissions zone

The National Health Service (NHS) and its network of Trusts – which have of course been at the centre of the nation’s Coronavirus response and recovery, have their own opportunities to accelerate climate action as we emerge from the pandemic – especially as NHS acute Trusts spend around £500m on energy each year. Considering the financial challenges of the NHS, action at a host of hospital sites has been positive to date. For instance, Scarborough Hospital’s new low-carbon energy centre, which includes a CHP unit, is set to deliver savings of more than £9m and reduce almost 32,000tCO2e. Oxford University Hospitals, meanwhile, has benefited from a finance procurement system that partnered the Trust with companies that could replace aging heat and power infrastructure with a CHP system that would generate economic savings.

The Environmental Audit Committee has urged Public Health England to accelerate action even further, and set ambitious short-term targets aimed at aligning the NHS with the UK’s net-zero goal – particularly across the areas of buildings, transport and fluorinated gases. The NHS has reduced its carbon footprint by only 18.5% since 2007, putting it off-track to meeting its 2020 target of a 34% reduction within the same timeframe, as laid out in the original 2008 Climate Change Act.

SPOTLIGHT ON: The NHS, Covid-19 and net-zero carbon

Editorial credit: Gary L Hider / Shutterstock.com

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Climate change is the greatest existential threat facing people and the planet in the long term, and we must maintain momentum towards delivering net zero by 2050.

By focusing on a sustainable recovery, we believe it will help businesses to save cash and carbon, as well as create new green jobs that will provide an essential boost to the economy and communities overall.

We are urging all businesses to focus their efforts on how they can cut costs through energy efficiency measures. We are also encouraging governments and private investors to focus on green stimulus and sustainable investment. We believe this will offer the win win solution we so desperately need: reboot the economy and keep climate action on track.

Making financial and environmental gains As we emerge from the crisis businesses will be redoubling their focus on cost management and operational efficiency; energy sustainability can support these goals. By aligning carbon reduction with recovery planning, businesses can gain both financially and environmentally.

With a low-carbon future both desperately needed and inevitable, there is a realisation within boardrooms of both the risks and the opportunities that this brings. By embedding sustainable energy into business strategy, it promotes long term resilience, as well as opening up commercial opportunities linked to being an enabler of the low carbon economy.

The strong link between commercial success and environmental responsibility is evidenced by the inspirational sustainable business success stories featured in this report. It’s heartening to see that The Mission Possible pledges show a groundswell of support to build back better and greener.

Simplifying the steps to energy sustainabilityWhile the route to net-zero might feel long and

hard, it can be broken down into manageable steps along the energy pathway. In the short term, organisations can prioritise measures that deliver rapid cost and carbon savings.

Energy efficiency is the starting point for any energy pathway, but many organisations have already deployed quick win measures. Internet of Things (IoT) technology enables organisations to see beyond metered data and gain visibility of energy usage at equipment level. This opens up hidden opportunities to generate energy savings and rectify operational issues.

Innovation in digital technology is providing affordable opportunities to fast track energy sustainability. For example, falling costs of solar and battery technologies offer opportunities to self-generate and store renewable power at scale. By using stored power to avoid peak time costs and raise income from flexibility, costs are minimised, while also providing protection from power outages. As businesses transition to electric vehicles, these assets can be integrated into on-site charging infrastructure.

Artificial Intelligence (AI) is enabling the aggregation of distributed energy assets to

create Virtual Power Plants. This provides new opportunities to increase flexibility revenues by helping to balance the grid as it incorporates more renewables.

‘Walking the talk’ on sustainabilityCentrica is committed to enabling the low carbon future and we have set goals to support this, known as our 2030 Responsible Business Ambitions.

Our ambitions include our aim to be net zero by 2050. In support of this, we’re deploying green innovation across our global estate and electric vehicle fleet, with the aim of reducing our internal emissions by 35% in the ten years to 2025.

With over 90% of our emissions as a business coming from our customers, a key aim is to help them run their world in ever more sustainable ways. Here our aim is to help our customers reduce their emissions by 25% by 2030.

We’ll do this through direct action such as supporting energy efficiency and optimisation solutions, and low carbon product innovation. Also, through indirect action, such as lobbying for low carbon policies.

There are colossal challenges facing businesses as they re-build in the aftermath of COVID-19, but we believe that a focus on green recovery will have the best outcome for the economy, society and the environment in the future.

HOW ENERGY SUSTAINABILITY CAN SPUR BUSINESS RECOVERY AND GROWTH

See how Centrica Business Solutions can support your energy sustainability www.centricabusinesssolutions.com

AN AFTERWORD BY: Andrea Barrett Director of Responsible Business Centrica

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