BRUSSELS -- Climate change and the related regulations have strongly influenced the life of some major European companies. Energy efficiency measures are usually the main options pursued and new hires are avoided by retraining or "greening" existing employees, a new study has found.
U.K.-based GHK Consulting, hired by the European Commission, has reviewed the cases of 15 companies, including Enel, Cadbury, Marks and Spencer, Carrefour, Air France-KLM and Virgin Atlantic, examining the ways in which climate change and related policies have influenced them and how they have responded. With the exception of Coca Cola, all are European companies.
The reviewers found that these companies' major moves so far have been aimed at improving energy efficiency. "Energy efficiency is the first thing they look at," said James Medhurst, director at GHK Consulting. Power plants have become more efficient, companies have invested in new fleets of cars, airlines in new planes and transport companies in new trucks. The French retail group Carrefour (495,000 employees) has pledged to shave 20 percent off its energy consumption by 2015.
The researchers found that in internal operations, these companies have taken widespread measures to substitute high-energy-intensity goods and services with services that burn less energy, and that these measures are having immediate effects on suppliers. Externally, the companies have built partnerships for lobbying purposes and in order to manage their responses.
As for jobs, the study shows that climate change policies among the companies reviewed have an impact on skills rather than on actual employment levels. "It's essentially a greening of existing jobs," said Medhurst. The researchers found a widespread need for new skills and a general need for upskilling, which companies are attempting to meet by gearing up the introduction of new training programs.
All companies reviewed, except the energy companies, have environmental training programs, including on climate change and energy-efficiency issues. Some companies also offer specific training for packaging designers, airplane pilots, truck drivers or kiln operators.
Concrete results from new regulations
The companies included in the case studies are anticipating and positioning themselves to sprint ahead of any future climate change policy drivers, such as regulations. "What we have found by and large among these 15 companies is that it's regulation which pushes enterprises to think about climate change and manage their business accordingly," said Medhurst.
In energy and cement, sectors that are heavily regulated and directly affected by the E.U. Emissions Trading Scheme (E.U. ETS), regulation is indeed the main driver influencing companies' responses.
Switzerland-based Holcim (90,000 employees), one of the world's largest producers of cement, told researchers that the E.U. ETS and other market instruments such as the Clean Development Mechanism are key players in driving the company to reduce CO2 emissions.
Holcim said it has achieved a 16.3 percent reduction in net CO2 emissions per ton of cement in 2007 from 1990 by optimizing products and processes, and investing in research and development such as bringing out new types of cement and using alternative fuels.
Holcim has upped its use of alternative fuels in its kilns to 11 percent in 2007 compared with 4 percent in 1990. It also has phased out nearly all inefficient wet kilns and works with architects and construction companies to develop innovative cement products with low carbon footprints, in both production and use phases.
In general, according to the study, the E.U. ETS and the E.U. directive on renewable energies are the strongest regulatory drivers, but there is a perception among companies that increased regulation is likely.
However, factors other than regulations affect the companies' responses to the climate change question, and these factors vary according to sectors.
In some sectors, reputations are the drivers
In the food and drink and retail sectors, for example, corporate social responsibility and reputation, rather than regulation, are the dominant drivers influencing responses to climate change. "In these sectors, most of the companies have strong corporate brands and want to be seen to be 'doing the right thing,' which they see as including taking action on climate change," reads the study. "They see this as important for their relationships with customers, investors and other stakeholders."
The British confectionery company Cadbury (45,000 employees) is committed to reducing its carbon emissions by 50 percent by 2020 and has set new targets in energy, packaging, water and advocacy. It is building on commitments it made in its 2006 corporate social responsibility program, aiming at developing a reliance on renewable energy, reducing carbon-based fuels and using 100 percent recoverable or biodegradable packaging.
At ANCC-COOP (55,450 employees), an Italian consortium of 128 cooperatives selling food and houseware products, the main push behind climate change policy is the company's cooperative vision, promoting a responsible approach to sustainable production, distribution and consumption.
Sustainability and climate change take pride of place in the company's mainstream training program for heads of sales groups. The company also has taken action to reduce packaging and use eco-materials (it has introduced automatic dispensers of detergents and cleaning products: Customers buy one disposable detergent container and refill it without having to purchasing a new container every time). The company also has taken measures to increase energy efficiency in its buildings; promote sustainable products; sell energy-efficient domestic appliances; reduce transport; and engage suppliers in reducing CO2 emissions.
For the transport haulage sector, competitiveness is the dominant factor "as fuel is a major cost in a very low margin business." Companies increasingly see that taking action on climate change is becoming a source of competitive advantage and is important if they wish to maintain leadership positions; being overly dependent on carbon and failing to develop low-carbon products could become a disadvantage.
Flying lighter and helping biofuels take off
Menzies Distribution (4,000 employees), a British wholesale distributor of newspapers and magazines that sees operational costs and CO2 emissions as being two factors "joined at the hip," has implemented an action plan that coordinates technological, training and consciousness-raising measures to quantify and reduce carbon emissions across its operations as well as through the wider supply chain.
The company has trained its drivers extensively in more fuel-efficient driving. Added to technological improvements, this training effort has helped achieve a 13 percent carbon emissions reduction in 2001-2006. Through a full rollout of its action plan, the company is seeking a further reduction of 17 percent by 2011, enabling it to achieve an overall 30 percent reduction over a 10-year period.
Fuel costs also are targeted by airlines, but the study found that corporate responsibility is also important for them, as air transport has come under increasing attack for its carbon impacts, while future inclusion in the E.U. ETS is seen as a major regulatory risk.
Virgin Atlantic has been renewing its fleet and is supporting the development of second-generation biofuels for its aircrafts (in 2008, Virgin Atlantic became the first airline to operate a commercial aircraft on a biofuel blend). The company has trained its pilots in more fuel-efficient procedures for take-off and landing.
At Air France-KLM (105,000 employees), fleet replacement and upgrading have reduced fuel consumption and CO2 emissions by 12 percent over the past six years. According to GHK Consulting's study, the new Boeing 777-300 ER achieves 16 percent CO2 savings, compared with the Boeing 747-400. Airbus 318 achieves 13 percent CO2 savings over the Boeing 737-500.
GHK Consulting found that Air France is scrutinizing all its on-board equipment -- from drinking glasses to crew documentation, cabin fittings and meal service supplies -- to reduce weight. In fall 2009, the airline will be phasing in a brand new seat system on short-haul aircraft, which is 4.5 kilos lighter than the current one. This saving will enable Air France to reduce its annual CO2 emissions by 8,000 tons.