Category Archives: energy effeciency

Responsible Business: Jeans & the Circular Economy – Automobiles & the Old Economy

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I was interested to read that several of the world’s leading jean brands have been working with the Ellen MacArthur Foundation to lay down a set of Jean Redesign Guidelines based on circular economy principles.  The new redesigned jeans will enter the shops next year.  The new principles, in addition to focussing on the health, safety, and rights of workers in the fashion industry present minimum requirements for:

  • Recyclability: Jeans made with greater than 98% cellulose fibres, designing out or minimising metal rivets, and all additional materials should be easy to disassemble.
  • Material Health: Jeans fibres sourced from regenerative, organic or transitional farming methods; free of toxic chemicals and conventional electroplating; the banning of techniques such as stone finishing, potassium permanganate, and sandblasting.
  • Durability: Jeans able to withstand a minimum of 30 machine home washes while still meeting minimum quality requirements and have labels with clear information on product care.
  • Traceability: Confirmation of how elements of the guidelines will be made available, compliant companies will be able to use the ‘Jeans Redesign’ logo, and an annual review of the logo annually based on compliance with the reporting requirements.

Participating ‘denim’ organisations in the scheme currently comprise

Brands:  Bestseller, Boyish Jeans, C&A, Gap, H&M Group, HNST, Lee, Mud Jeans, Outerknown, Tommy Hilfiger, and Reformation

Manufacturers:   Arvind Limited, Hirdaramani, Kipas, and Sai-Tex.

The initiative represents an interesting case study of organisations adopting a responsible leadership approach to address unsustainable supply chain practices, build trust and co-operating in advance of any need for governmental regulation.  It also demonstrates how even a long existing product such as your pair of blue jeans can be redesigned to add new value & continued economic growth within an existing industry, and ultimately recycled back into new jeans at their end of use.

In contrast this week, it looks as if the Alliance of Automobile Manufacturers, a political lobbying trade group (motto – Driving Innovation!) representing 12 of the world’s largest car manufacturers (BMW, Fiat Chrysler, Ford, GM, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi, Porsche, Toyota, Volkswagen Group of America and Volvo USA) have been lobbying the Trump administration to rewrite existing laws to lower fuel efficiency and fines for missing emissions targets.

Three interesting issues struck me in this case:

  1. Jaguar Land Rover whose range is almost 80% diesel powered have been lobbying the UK government hard for aid to help switch their range over to electric vehicles and to maintain jobs in the UK, but who seem to aspire to other ethics abroad.
  2. The absence of Honda from the group – who are well on with their fleet conversions towards mileage efficiency, lower air emissions or electric power, and finally
  3. The lobbying groups concern for the harm that non-compliance fines for fuel inefficiency would have on auto manufacturers, workers, and ultimately consumers – as opposed to the harm poor urban air quality already has on innocent members of society – which when last checked also included auto manufacturers, workers, and ultimately consumers!

In the wake of the VW-emission rigging scandal and under President Obama, The US National Highway Traffic Safety Administration (NHTSA) was on track to effectively treble the cost of fines levied against vehicles that did not achieve their claimed mileage efficiency.   In February, the Trump administration broke off talks with California’s clean air regulators, and last Friday, the administration said that NHTSA would be issuing final rules suspending these regulations.  Eighteen US states, including California, have responded by vowing to sue the Trump administration if the vehicle emissions requirement freeze becomes finalized.  Now the Trump administration seems to be trying a different tack by rewriting the rules to lower fines for missing emissions targets.

The two scenarios represent two very different approaches to the challenges that signal whether these companies have a strong enough organisational culture to demonstrate to the marketplace that they are modern responsible businesses and responsible players within their respective marketplaces. 

It has been clear for many years concerning the global impact that cheap non-recyclable clothing and fossil-fuel based power-train automobiles have been having on our world.  The evidence has been there for years, and companies have had time to prepare their responses to the social and environmental challenges faced.  Whilst it looks as if the clothing industry is now actively waking up to the challenge of new economic models and consumer values, the automotive industries within the western world, still reliant on their technologies of the past and unable to effectively manufacture many of the future components of tomorrow’s vehicles , still exhibit a worrying tendency to remain in the past.  

Two trends I can see myself being affected by in the future:

  • Within 10 years effectively ‘hiring’ my clothes from a trusted retailer who will take them back for recycling at their end of life
  • Within 3 years obtaining an electric/hybrid vehicle whose parts and technology primarily originates from the Far East.

At Leading Green, our approach to sustainability in business consulting and training encourages our clients to look closely at their own internal leadership strengths and goals.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

CLIMATE CHANGE – FACT OR FEELIE-FACT

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Fact or Feelie-Fact!

I was addressing a small group of SME business owners this week and we started to discuss the issue of climate change first as a potential business risk for some of their enterprises and supply changes, but also as an opportunity for some of them in how they looked at thier future strategic planning.

During the course of our discussion I was surprised by some of the questions that were asked by the business men and women, and I was reminded by a GP friend who often challenged her patients with the phrase when presented by a medical claim – “Is that a fact or a ‘feelie-fact’ (i.e. it feels like a fact)?”

So after jotting down questions, and a quick bit of research on various websites here is a quick trot through the some of the most asked questions – presented in TRUE or FALSE colours for facts and mythsFEELS .

THE CLIMATE IS ALWAYS CHANGING!

 True

There is natural variability in the Earth’s climate but the current state of climate change  we are experiencing is unusual as the is now a wealth of evidence that verifies it is not exclusively part of a natural cycle.

Natural factors which affect climate include volcanic eruptions, aerosols and phenomena such as El Niño and La Niña (which cause warming and cooling of the Pacific Ocean surface).  Natural climatic variations can lead to periods with little or no warming, both globally and regionally, and other periods with very rapid warming. However, there is an underlying trend of warming that is now almost certainly caused by Man’s activities.

THESE CHANGES ARE ALL DOWN TO THE SUN AND OTHER NATURAL FACTORS!

False

Many factors contribute to climate change.  Only when climate scientists have aggregated all these variable factors together can we explain the size and patterns of climate change that has occurred over the last 100 years or so.

Although it has been common for some people to ask whether the Sun and cosmic rays have been responsible for climate change, measured solar activity has shown no significant change in the last few decades and little evidence to back up this claim.  However there is sufficient evidence to show that global temperatures have continued to rise since the Industrial Revolution, suggesting strongly that the additional greenhouse gases that have been emitted since then have had about 10x the effect on climate as fluctuating changes in solar output.

Much of the relatively small climate variability over the last 1,000 years, before industrialisation, can be explained by changes in solar output and occasional cooling due to major volcanic eruptions. Since industrialisation, however, CO2 has increased significantly and we now know that man-made CO2 is the likely cause of most of the warming over the last 50 years.

CLIMATE SCIENTISTS DON’T REALLY AGREE ABOUT CLIMATE CHANGE

False

The overwhelming majority of climate scientists agree on the fundamentals of climate change — that climate change is happening and has recently been caused by increased greenhouse gases from human activities.

The core climate science from the Intergovernmental Panel on Climate Change (IPCC) was written by 152 scientists from more than 30 countries and reviewed by more than 600 experts. It concluded that most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in man-made greenhouse gas concentrations.

I once asked this question within the context of being astounded by the degree of unity between so many branches of science and scientific professions, especially within those  areas where they commonly fell out!  One of the IPCC experts who had reviewed the data put the answer this way to me:

“It is as if all the religious leaders in the world got together to discuss ‘Is there a God?”

A few days later they appear with a statement that says ‘Yes, there is a God….. and his name is Elvis!” 

 

IT’S POSSIBLE THAT THERE’S NO LINK BETWEEN TEMPERATURE RISE AND CO2

 False

Temperature and CO2 are linked. Studies of ice core layers taken within polar-ice show that in previous centuries and millenia, rises in temperature have been followed by an increase in CO2.  Now, it is a rise in CO2 that is causing the temperature to rise.

Concentrations of CO2 have increased by more than 35% since humanity’s industrialisation phase began, and they are now at their highest for at least 800,000 years.  When natural factors alone are considered, computer models do not reproduce the climate warming we now observe and record.  Only once man-made greenhouse gases are fed back into the equations and computer models do we recreate results that mirror what is happening today in the real world.

THE RECENT WARMING IS DUE TO THE GROWTH OF OUR TOWN AND CITIES

 False

No.  CO2 emissions are causing the climate to warm everywhere around the globe.  Temperatures in our cities are unnaturally high because of the warmth from heating building, heavy traffic, high concentrations of people and the effects of this heat being stored in our buildings, roads and concrete.

The UK Met Office’s observations come from urban and rural areas on land and from the sea, which covers 70% of the Earth.  The Met Office manages data from cities carefully to ensure they do not skew their understanding of climate change.

Changes to how we get and use energy will cost billions and throw millions out of work

False

There are costs to any change, but study after study shows the net effect of conservation, efficiency and less-polluting energy will be more local jobs, cheaper power, and savings in health and improved local air quality (especially in cities).  The costs of severe climate change effects, like catchment flooding and coastal erosion, will be far greater than working to reduce them.

Engineered Technology will solve the problem for us

False

Significant ‘fixes’, like removing CO2 and other greenhouse gases from the atmosphere, are very unlikely because they are not available now and are not an alternative to reducing emissions.

It’s already too late to stop climate change

True

Although some climate change effects are now unavoidable (and are already being experienced within some communities), recent evidence indicate that action needs to start now if we are to limit the peak of global emissions in the next decade and to start bringing a fall in emission levels to well below current levels to avoid some of the worst climate change scenarios.  This is still possible, and can be achieved by collective global action at governmental and societal level, using technologies that are available today.  Putting off action will make it harder and harder to achieve equilibrium, and more difficult and expensive to reduce emissions in future decades, as well as creating higher risks within society to severe climate change.

I can’t possibly make a difference

False

Globally, the three main contributors to greenhouse gas footprints are cars, coal and cows; and those are three areas in which our individual choices can make a future  difference.  Over 40 per cent of CO2 emissions in the UK come directly from central heating systems in our home and from our personal transport choices.

The recent IPCC report suggested that we need to look closely at our consumption of animal products, seeking to reduce them by at least 30%.  The decision to eat less meat and dairy products has been identified as having a bigger impact on greenhouse gas reduction than personally reducing airline flights or buying an electric car.  Beef production compared with peas results in six times more greenhouse gas emissions and the use of 36 times more land.  Reducing food waste is another area where consumer decisions can make a future positive impact on global warming as up  to 30% of food purchased can end up as food waste – the equivalent of throwing over 3 months food shopping into the bin each year!

There is no point in my country acting if other countries don’t!

False

Every reduction in emissions makes a global difference not a local difference by not contributing to risk.  Western countries, especially the US, UK and other European neighbours can make a positive contribution and set a positive example to the rest of the world – if the heavily energy dependent countries of the western world can rise to the challenge successfully, others will follow.   The average Chinese citizen still consumes only 10 to 15 per cent as much energy as the average US citizen, and in its latest renewables report the IEA states that it is China that will continue to dominate global renewable energy growth and that the country is likely to become the largest consumer of renewable energy (surpassing the EU by 2023).

Business as Usual

False

Moreover, there are good economic reasons for individuals, government and especially business leaders to take action now and act together.   The Stern Review, the UK Treasury’s comprehensive analysis of the economics of climate change, estimated that not taking action could cost from 5 to 20% of global GDP every year.  In comparison, reducing emissions to avoid the worst impacts of climate change could cost around 1% of global GDP each year.

 

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At Leading Green, our approach to sustainability in business consulting encourages our clients to look closely at their own internal leadership strengths.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

 

Sources of information:

My thanks to the following website, some of whose content I have incorporated into the text.

IEA – https://www.iea.org/publications/renewables2017/

 UK Met Office:  metoffice.gov.uk/climatechange/guide/quick/doubts.html.

UK Government (Act on CO2 website):  http://actonco2.direct.gov.uk/actonco2/home/climate-change-the-facts/Climate-change-myths-and-misconceptions.html.

New Scientist: https://www.newscientist.com/article/mg23431310-700-living-with-climate-change-you-can-make-a-difference/

Stern Report: www.hm-treasury.gov.uk/sternreview_index.htm.

Climate UK:  http://climateuk.net/

Climate East Midlands:  http://www.climate-em.org.uk/

Brainstorming with a Property Developer CEO over Energy Efficiency

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About 60% of total energy efficiency investment lies within the property and building construction sector, yet on occasion it seems that 75% of the resistance to building in energy efficiency into new development lies within the C-suite of such companies. This is a hard, pragmatic sector to operate in and risk aversion can be a necessary survival trait as the market fluctuates.

Having grown up around family run property development and estate agency owners  I had been a useful addition to site construction crews on projects as a teenager and subsequently regarded as the black sheep of the family for becoming a corporate environmental manager.  My description of myself as a ‘green businessman’ cut very little ice in their commercial eyes.  Only when I had honed my skills on guiding large infrastructure development through planning systems within the UK power, renewables and water sector did they become interested.  I was now a useful source of advice on EIA, legislation, planning laws and explaining to them why floodplains, ancient woodlands and habitats were being actively protected by communities from their next money-making scheme.

So, this mentoring meeting on sustainability in business with the CEO of a sizeable house building company was following a predictable route.  He was interested in what I had to say, but wary of what I was saying.  His organisation with many others were being bombarded with the ‘sustainability’ message, but few commentators had helped him  drawing linkage to what it meant for him personally and for those actively leading organisations now at the forefront of climate change adaptation hopes.  He was intelligent and strategically far-sighted to understand that the way they operated now had to change, but needed help and more rational reasons to actively jump onto the sustainability wagon.

We agreed that as a ground rule sustainability initiatives had to either add +£1 to the operational profits or save £1 expended in risk.  The core strategy had whatever to add a minimum of +£1 to his balance sheet.

So, we sat down and brainstormed!

First, we addressed the direct benefits of energy efficiency regarding climate change so that we could park that issue first and go on to explore other potential benefits of energy efficiency. We agreed that the building & property development sectors has an important role to play via aggressive efficiency improvements within new build (and existing) as a contributor to limiting the pace of global warming.  As evidence to this we referenced a recent International Energy Agency’s (IEA) market outlook on energy efficiency that claimed that a concerted drive in energy efficiency policies could assist the world in achieving ca 40% of the emission reductions needed without requiring new technology.

We discussed the options open to his company to improve energy efficiency design. There was a lot they could do but the blockage in his mind was just how they could boost financial returns, as any benefit advantage to the buyer was dependent on increased borrowing costs, energy-efficient material costs and added construction time costs to his organisation. These added costs would have to be passed on to the buyer at the detriment of a higher purchase price.  He recognised that the buyer could eventually recover those added costs in lower energy bills, but in risk terms the marketplace still revolved around ‘location, location, location, and mortgage cost.  The only clearly marketable attribute was the attractiveness of a ‘green’ home to his target market – relatively successful, dual income, young and mid-life professionals.  An advantage yes, but unquantifiable in the sellers marketplace or when seeking added capital for a scheme.  Little progress here towards his +£1!

I then turned the discussion over to the evaluation of alternative and more sustainably innovative options to identify added value finance and business model benefits based on added energy efficiency.

Site design and placement

Solardächer 2

Asked if he ever took the alignment of new property’s into account, the answer was ‘No! the priority was housing density and profit return on a site!’.  So we discussed placement for solar efficiency with housing density + return.  Exploring an idea where a development was maximised for the fitting a mass photovoltaic scheme in its design as the site was constructed.  The factory unit or property houses benefitting from the scheme, but ownership of the asset remained with the development company for an initial period before transferring over.  How did he feel about his organisation branching out and becoming an ‘energy company’ exporting into the local grid?  Monetising the potential energy benefit as part of the development return had attraction he agreed:

  • It could reduce the risk profile – for even if the buildings were empty, they still produced capital returns post construction.
  • A house build-carbon reduction-renewables scheme could appeal more to the third-party financier marketplace in the future.
  • Such a scheme could have a predictable return on investment, and the cost in solar installation was still reducing in price.
  • The energy units were reproducible on a scale that potentially made the added installation costs attractive.
  • there was still the option of possible energy efficiency grants.
  • The concept could help in demonstrating lower cost starter homes, and
  • It had a marketable factor for those seeking a mortgage and concerned about rising externalities.

The non-energy benefits (NEBs) of energy-efficient buildings.

It was becoming clear from our session that householder or tenant energy cost savings were not always enough to drive sustainability strategies into the property market.  A robust business case and ROI argument needs to consider additional factors in assigning that +£1 to the developer.

I raised the concept of ‘stranded assets’ as the organisation had a property letting arm within its business portfolio.  What was the risk of these properties decreasing in value or becoming stranded if energy efficiency standards dramatically rose in the future?  The scenario we discussed was a significant shift in Government policy in response to the +1.5oC temperature target.  What would be the impact if this became a hard and fast target in government or global energy policy reaction?

  • Could such changes render ‘bought cheap and done up’ properties a future financial liability?
  • Would investors continue to lend real estate capital for properties they deemed at future risk of becoming stranded liabilities?
  • What strategic criteria should now define a ‘cheap’ property in terms of its energy efficiency or retrofit profile?

These were new questions he hadn’t considered before and needed to be considered as future risk scenario.

Moving on from the risk of stranded assets we agreed that the top non-energy benefit for his organisation would lie in increased asset value within their holding portfolio and within individual buildings within that portfolio.  One obvious advantage was the desirability to rent of individual properties as a reflection of energy efficiency.  Anything that increased the longevity of tenants or reduced the lapse time between losing one tenant and gaining another could have a significant NEB return we agreed.  A financial return that was much greater than the energy cost savings implemented into the fabric of that building originally, if a building remained empty for too long.

If a building provided tenants with a greener, more pleasant place to work/live and which also contributed to operational costs, its desirability and occupation periods enhanced during its life. Within the portfolio, we also agreed that such buildings would have a lower risk exposure to future regulatory energy efficiency challenge and the expense of retrofitting. Thus:

  • increased rentability,
  • lower gap periods and
  • reduced regulatory risks

attached to high performing energy-efficient commercial/residential properties were all NEBs that need to be considered within future business strategies he agreed.

The session had I hoped started to alter the perception of this CEO, over his strategic options and how sustainability could assist in safeguarding the business’s longevity.  It had also raised scenario that could go forward into the boardroom for further debate and consideration.  That was a satisfactory start, because sustainability in business is dependant on industry leaders feeling comfortable in taking the lead on sustainability initiatives in a pro-active manner rather than reacting negatively when the opportunity has passed or when new regulation demand change.

However, the wider strategic impression I was left with after our session was that energy efficiency and investment practices remain unaligned in the UK property marketplace. The buildings sector clearly has a significant role to play in offsetting future carbon releases and in mitigating future carbon use, yet the regulatory energy policy and investment routes remain confusing as to whether they can ultimately drive a +1.5oC climate change future or just contribute locally to energy efficiency.

The regulatory preference over the last decade has clearly been aimed at direct grants and subsidies for home owners.  Whilst successful in general, how much greater would have been its success if it had been aimed at achieving greater standardisation in energy efficiency within the new build developments over the last 10 years?  This may reflect political caution when dealing with the sector or that policymaking is still more comfortable with the small subsidy model as they are easier to administer and communicate out to society.  Yet there is clear evidence that when scaled up, energy efficiency schemes are easily replicable and just as easily scalable.  They also have a verifiable ROI, help offset the switch to a low-carbon economy, low carbon cities & their air quality, and can build employment capacity within the construction service marketplace.

Let us be braver in future as the potential monetary value and benefits of energy efficiency can be just as great to developers, financiers and government as the societal value of a households energy reduction savings!

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At Leading Green, our approach to sustainability in business consulting encourages our clients to look closely at their own internal leadership strengths.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.