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1 of your sustainability strategy Carbon Trust Advisory

2 140bn 48% The market for low-carbon goods and services is set to grow by 5 billion a year to 140 billion by 2015 in the UK 1 The average internal rate of return on energy efficiency investments for large businesses 2 1 BIS. Innovas Solutions, Low Carbon and Environmental Goods and Services: an industry analysis Update for 2008/09 for BIS, March Carbon Trust, The Business of Energy Efficiency, 2010.

Take control of your sustainability strategy 3 Introduction A strategic view Across the economy organisations are grappling with the challenge of planning and implementing strategies to address

3 Take control of your sustainability strategy 3 Introduction A strategic view Across the economy organisations are grappling with the challenge of planning and implementing strategies to address sustainability and climate change. With 10 years experience of advising large businesses, including many of the FTSE 100, Carbon Trust Advisory is helping companies prepare for and embrace these issues. The questions that each business faces are unique, and require a tailored approach. Our experienced business strategy and environmental consultants take an over-arching view of the opportunities and risks emerging as a result of climate change, changing market behaviours and regulation to create and protect sustainable business value. What does this mean? We assess and evaluate the impact of climate change issues on businesses and brands. We develop strategies and action plans that can deliver clear business benefits and opportunities by embracing sustainability. We help companies maximise the efficiency of their and their suppliers use of resources. Our client list includes acknowledged business leaders in this arena, such as BT, Alliance Boots and Mitchells & Butlers. These companies are responding enthusiastically to changing times, and seeing the benefits of putting sustainability at the heart of their corporate strategy. So I present an opportunity to you. An opportunity to change the way you do business. To change the way customers engage with you. To change and secure the future of your organisation. Tom Delay Chief Executive, The Carbon Trust

4 4 Carbon Trust Advisory Seize the opportunity Profit from green growth The large companies leading the way in low carbon are ready to take full advantage of sustainable revenue opportunities. They have strategies in place to protect the value of their business against increasing energy costs, the costs of meeting regulatory requirements, changes in the way their customers perceive brands and products, and the volatile price of resources. Low carbon-focused sectors are already large and growing: Government figures show that the UK s share of the global low carbon market (which employs more than 900,000 people), is worth over 112 billion and is forecast to grow by over 5 billion a year, to over 140 billion by And low carbon aspects of traditional sectors are also growing: in-use efficiency is already a primary purchase consideration for significant market segments and products; consumers are increasingly choosing low carbon products; and competitive pressures and retailer choice editing are marginalizing inefficient and unsustainable products. The stakes are high for the value of your business With such growth potential at stake, you ve probably already taken some steps towards exploring and exploiting these opportunities. And you may well have mitigation plans in place to protect your organisation against future energy and carbon legislation, and price changes and demand shifts. But do your plans give you a distinct and defensible competitive advantage? The Carbon Trust has helped thousands of UK companies capitalise on the green opportunity We help drive green growth, reducing carbon from the economy without reducing the opportunity for growth. As well as working with large, established businesses to help them seize green growth opportunities, we ve worked with entrepreneurs to bring their ideas to market, and designed and commercialised low carbon technologies, products and services. Carbon Trust Advisory is here to put large organisations in control of maximising green opportunities and minimising risks. B&Q s One Planet Home eco-product range accounts for 10.5% of the company s sales, and is set to grow further 3 BIS. Innovas Solutions, Low Carbon and Environmental Goods and Services: an industry analysis Update for 2008/09 for BIS, March 2010.

5 Take control of your sustainability strategy 5 Our approach How we work with business Improving sustainability demands action across the entire value chain. We work with businesses on operational issues, product and service offers, and the impact of their supply chains. To achieve a more sustainable business model, you ll need to take all of these elements into account. Core operations: creating more efficient operations by setting (and achieving) energy and carbon reduction targets, as well as implementing governance, procedural, structural and cultural change. Products and services: understanding and reducing the full-lifecycle impact of existing products and services and tapping into green growth opportunities. Supply chain: influencing sustainable behaviour in suppliers and procuring with sustainability in mind. Working across this wide scope means every project is different and requires a tailored approach, which our experienced strategy and environmental consultants are adept at delivering. In all these areas we tackle the full problem-solving process, from initial diagnostic to strategy development to solution identification and implementation. The specific focus of work, by value chain and problem-solving stage, is an important part of defining our work with each client. Diagnosis Strategy Solution Footprinting organisation; value chain; product Carbon and cost reduction opportunity sizing Market and revenue opportunity assessment Risk analysis Capabilities and process diagnostic Corporate sustainability strategy and target setting Low carbon revenue and growth strategies Business case development and assessment Supply chain strategy and targets Process improvement and change management Internal engagement and governance support External engagement support industry, suppliers, customers Standards, tools and methodology development

6 6 Carbon Trust Advisory Customer projects Our clients have benefited from our wide-ranging consultancy advice. Establishing strategic aspirations We facilitated the development of a sustainability strategy for a leading retail financial services business, working with executives to define the vision and positioning it should take on carbon and environmental issues. We assessed strategic risks and opportunities, specific efficiency opportunities, and medium-term reduction targets for carbon, energy, and waste. The business has adopted all our recommendations and incorporated them into its CSR strategy. Developing carbon targets We integrated carbon footprint data into business planning models for a household name retailer. This enabled the company to develop carbon budgets that respond to changes in underlying business assumptions. Coupled with an up-to-date view of reduction opportunities, this gave the client greater confidence in setting and achieving appropriate carbon reduction targets. Identifying and valuing cost and revenue opportunities On behalf of one of Europe s top data and IT infrastructure providers, we identified an 82 million risk to UK revenues from changing market procurement behaviours. This led directly to carbon reduction recommendations and changes to the customer proposition to retain customers and reduce this risk. Emissions reduction assessments We identified a portfolio of opportunities for a hospitality business with significant property interests. Despite capital constraints, we were able to identify acceptable investments yielding lifetime cost savings of 53 million and a payback of within two years, reducing the business s footprint by 10%. Supply chain and product footprinting We assessed the entire lifecycle emissions of a key product line for a global construction plant and machinery manufacturer. A better understanding of carbon hotspots across the lifecycle created a shift in focus from scope 1 & 2 towards more cost-effective reductions in scope 3. These can now be achieved through product design enhancements, bringing significant cost and emissions savings for our client s customers. Strategic and governance support Carbon Trust experts sit on clients climate change and sustainability governance committees. We act as an independent voice to challenge accepted norms and bring external perspectives and insights from the achievements of other businesses.

1 Take control of your sustainability strategy 7 Case studies Enjoying growth whilst cutting carbon Tracking carbon every step of the way Betting on a low carbon future Aiming to take a lead in the

This work included: Quantifying options for reducing carbon emissions, then advising on the implementation of recommended measures.

7 1 Take control of your sustainability strategy 7 Case studies Enjoying growth whilst cutting carbon Tracking carbon every step of the way Betting on a low carbon future Aiming to take a lead in the hospitality sector, Whitbread appointed us to help put a carbon reduction plan at the heart of its business strategy and to identify immediate measures to save bottom-line costs. This work included: Quantifying options for reducing carbon emissions, then advising on the implementation of recommended measures. Assistance in the launch and promotion of low carbon hotels and restaurants. Engagement in carbon training and coaching for staff. Our work helped Whitbread set a target of a 26% reduction in carbon by 2020 and release 7m per year investment for low carbon operational improvements. Significant benefits have already accrued, with a reduction in its absolute carbon footprint in 2010 despite the opening of 22 hotels, eight restaurants and 148 coffee shops. We are now helping Whitbread develop a low carbon strategy for its construction supply chain. As part of this focus on embedded carbon we are footprinting a core product, the Premier Inn bed. Marks and Spencer plc needed to identify the risks and opportunities greenhouse gas emissions presented to its global supply chain. We developed a groundbreaking approach to analyse the carbon footprint of the full range of food products it sold: Streamlined footprinting analysis covered the supply chain of more than 10,000 products. Data was gathered from major suppliers at important stages of the supply chain. World-first analysis identified major emissions hot-spots and opportunities for reduction. We identified areas where M&S could reduce carbon emissions immediately, as well as identifying the key impact areas where longer-term focus was needed, such as agriculture and food processing. The analysis was a key piece of work in improving supplier engagement on emissions reduction, which allowed M&S to devote time and energy to emission reductions rather than calculating footprints. Leading high street and online bookmaker Ladbrokes turned to us for advice and support when it decided to reassess its response to climate change. We worked with the business s leaders to clarify their aspirations for carbon management, reviewed how these aspirations measured up to the existing position of Ladbrokes and its competitors, and identified what needed to be done to close any gaps. We also analysed the commercial risks that climate change could present, such as an increase in event cancellations, and what could be done to mitigate such risks. Finally, we investigated practical measures to start cutting carbon. This work created the business case for a 21% reduction in energy use that can satisfy the business s normal investment criteria. After board approval this reduction became a formal and public target, to be achieved by 2013.

8 Carbon Trust Advisory +44 (0) While reasonable steps have been taken to ensure that the information contained in this publication is correct, Carbon Trust Advisory Ltd and the Carbon Trust group have not and shall not be deemed to have given any warranties and/or representations as to its accuracy and completeness and accept no liability for any errors or omissions. Any trademarks, service marks or logos used in this publication, and the intellectual property and copyright in it, belong to Carbon Trust Advisory Ltd, the Carbon Trust or a member of the Carbon Trust group. Nothing in this publication shall be construed as granting any licence or right to use or reproduce any of the trademarks, service marks, logos, copyright or any proprietary information in any way without Carbon Trust Advisory Ltd s prior written consent. Carbon Trust Advisory Ltd is registered in England and Wales under Company number Registered Office at: 4th Floor, Dorset House, Stamford Street, London SE1 9NT Printed on 80% recycled paper containing a minimum of 60% de-inked waste fibre. Published in the UK: July The Carbon Trust All rights reserved. CTA002

Building a lower-carbon construction industry Turning good environmental performance into competitive advantage

Building a lower-carbon construction industry Turning good environmental performance into competitive advantage Dominic Burbridge Associate Director Business Advice The Carbon Trust Carbon Trust Advisory