1. Carbon FootprintingCompetitive Advantage ?Hugh JonesManaging DirectorCarbon Trust Advisory

2. Our mission is toaccelerate the move toa low carbon economyAdvice FootprintingTechnologyWe advise businesses,We measure andWe help develop andgovernments and thecertify the deploy low carbonpublic sector on their environmental technologies andopportunities in a footprint ofsolutions, fromsustainable, low organisations,energy efficiency tocarbon world products and services renewable power2 3. We live in a resource-constrained world The economic impact - Rising commodity prices, populationgrowth, economic growth will put a strain on businessresource procurement 80% projected rise insteel demand from 2010to 20301 147% increase incommodity prices since20002 Up to 3 billion moremiddle-class consumerswill emerge in the next20 years3Source: Food & Agricultural Organisation of the United Nations[1], [2] & [3] McKinsey Global Institute, Resource Revolution: Meeting the worlds energy, materials, food, and waterneeds. November 20113 4. we live in a resource-constrainedworld The environmental impact August 22 was Earth OvershootDay. This marked the date when humanity exhaustednatures budget for the year. We are nowoperating inoverdraft. For the rest of theyear, we willmaintain ourecological deficit bydrawing down localresource stocks and accumulatingcarbon dioxide inthe atmosphereSource: Global Footprint Network - see http://www.footprintnetwork.org 4 5. The low carbon agenda presents strategicopportunities for companies GROW REVENUE & VALUE HARNESS INTANGIBLESLow carbon designBuild brand value & Corporate reputationdifferentiation through Staff retentioncommunication ofMaximiseenvironmentalthe credentialsupsideNew business modelsShort termLong termMitigateDirect energy costs Exposure to volatilitythe Supply chain energy in energy &downsidecosts commodity pricesRegulatory pressure Security of supply of(e.g. UK mandatoryenergy and materialsreporting Physical damage topremise / stock REDUCE COSTS MANAGE RISKS 5 6. and the majority are still in the relatively earlystages of the journey to sustainability, theirprogress slowed by difficult economic times Low CarbonLaggardsPlayersPioneersMaturityRevenueReputationCost Primary Efficiency DriversRegulation Risk ManagementFocuses mainlyParticipates in Group level lowon compliance voluntary initiatives carbon businesswith regulatory Level of ambition ismodelrequirements Exampleconsidered averageInnovates acrossAttributesMinimal/novs. industry peerswhole value chainactions beyondProcesses in place to to exploitwhat is requireddeliver operational opportunities andAd-hoc staff ledcarbon management gain strategicinitiatives performance advantage 7. Many leaders have undertaken footprinting and Certification at the Product and Service levelWe have certified more than 600 organisations with a combined reduction in carbon emissions of 5.5Mt equivalent to252million in cost savings. More than 27,000 products carry our certification and our Carbon Reduction Label appearson goods worth 3.3billion in annual sales.We facilitate product footprinting through our Footprint Expert TM software tool, with its framework, calculators anddatabase.PepsiCoLG ElectronicsProducts: Assorted single-packet crispsProducts: 47LW5500-ZE LED TVOutcome:Identified that 59% of carbon emissions47LW550T-ZE CINEMA 3D LED TVwere outside their operations and 41% Outcome:gCO2e per hour use in allinside EU countriesReduction:Recertified footprint shows 7% reduction Highlights: Focusing heavily on reducing the poweron 2007 footprint consumptionHighlights: Saved 400,000; reinvested in furthercarbon-saving initiativesUse over 30% less energy compared to conventional models in the same class7 8. while footprinting has also help a number of organisationsunderstand their full environmental impact, and how tacklingthis can create a better businessICT Sector JCB Bord Bia Irish Food BoardDeveloping the worlds first Footprinting of their machinesWe worked with Bord Bia tosector guidance for the GHGuncovered the potential for develop detailed carbon footprintProtocol Product Standard, product innovation focussed onmodels for beef and milk whichworking with 12 leading global ICT increased fuel efficiency, giving were deployed across 30,000companies (including BT, Cisco,JCB an improved customerfarmsFujitsu, HP, Microsoft) and theproposition The resulting carbonWRI, WBCSD and GeSI Reduced cost of ownership footprints are being used to Enables a consistent approachfor customer as a result of provide the farmers withto measuring lifecycle carbonincreased fuel efficiency valuable advice on where toimpacts of ICT products and Increased re-sale value capture cost and carbonservices Superior environmentalsavings Provides a practical methodcredentialsto identify and reduce carbonand costs related to ICT 9. Footprinting the impact of a companys value chain can help unlock value Robust environmental claims Brand Equity Comparability with companies in the same sectorA fact base for cost reduction and revenue enhancement Bottom LineA means to change internal and consumer behaviours A view of your current and future value chain impactsRisk Mitigation A fact base for business prioritisation decisionsOver 100 product and value chain footprinting customer engagements have identifiedbusiness benefits which will in some cases will save over 50 million by 2020, and will reducevalue chain resource dependency by up to 20% through resource efficiency, and potentiallymore through profitable substitution 9 10. A value chain perspective is essential to understandthe complex risks, opportunities and trade offs Illustrative priorities for a snack food & beverage company Water Food ClimateHealthBiodiversitysecuritysecuritysecurity Quantifying Supply ChainImpact assessment ofEmissions and Resource Raw materials Supply Chain Climate ConsumptionChange RisksProduct Water, carbon, biodiversity manufacturing Potato supply security footprints Vegetable oil supply Distribution &retail Healthier product (baked Transport options crisps) vs increased energy and renewable fuel requirement consumption (baking process) Consumer use Liability for packaging recyclingAvoid unintended consequences: Perceived brand responsibility E.g. Optimised packaging - too little Disposal & packaging can increase wastagerecycling rates, which can dramatically increase the footprint 10 11. Footprinting requires a judicious balance of theaccuracy required and investment to support it There is a minimal level of primary data to support your objective:Primary Secondary Quantitydatadata Quality Always balancing cost and benefits Better data, allows better decisions: What is available? How expensive is it to collect more? What is optimal point How do you bring down cost? 12. ContactHugh JonesManaging Director, Carbon Trust Advisory ServicesEmail: hugh.jones@carbontrust.comMobile: (+44) (0)7714-447648www.carbontrust.com/advice12