Approaches to SustainabilityJ Churchman-Davies

Sustainability and Renewable Resources Director

May Gurney Integrated Services

Barriers to sustainability

> Business pressures:– Competing for focus and priority: “I have fires to fight”– Lack of funds– Lack of management resource

> Skills and knowledge:– “We don’t believe in the potential”– “We haven’t got the skills to do this”

> Bolted horses– “If only we’d rented a different building…”

> External policy drivers:– “There’s no proof that this is a problem anyway”– “This isn’t going to happen now”

> Low engagement:– Inertia: “Why should I change?”– Lack of buy-in to corporate goals: “I don’t care anyway”

> Barriers crystallise in any number of ways:– Can’t make meeting, won’t reply, Slow response– Under resourcing– Poor quality information

Solutions

> Solid business cases drive solutions from the top down to local management stakeholders

> Direct financial– Margins– Revenue

> Indirect– Qualification to bid– Bid scoring– Customer acceptance– Stakeholder acceptance

> Also staff knowing that “It’s the right thing to do”

> We utilise a combination of these at May Gurney

Financial business case

> Sustainability is linked to revenues:– Better proofs of performance leading to more credible bids– Understanding of new services that can be taken to existing clients– Understanding of new client drivers which open new markets– UK Renewable power market of £4.5bn by 2020– UK building efficiency retrofit market £7-10bn per year (PWC & GE)

> Sustainability is linked to margins:– Reduced cost of compliance through better management systems– Reduced cost of fines and remedies of failures to comply– New perspectives to reduce wasted energy and supplies– £thousands to the bottom line for every 1% saved in fuel and waste

disposal costs

Fear factor of future costs

Environment and business risk

> Environmental incidents: – Imposes costs from interrupted work, investigations, expediting

solutions, imposing gold-plated solutions – Exposes companies to reputational risk which crystallises into the

business at the bidding stage

> Quote from a bid manager: – “Unlikely to lose us an actual bid but we might drop off a tender shortlist”

Why more sustainability at MG?

> We do see the value!> Sustainability is intrinsic to our values and is

strongly linked to our customer drivers:– Looking after the communities we serve– Delivering efficient solutions– Delivering long term goals for national sustainability

> We have implemented initiatives and gained good recognition

> We are now working to maintain our position and reach the next level

Sustainability and client delight

Stages of customer experience

Zen

Efficient

Functional

Loathing

Run of the mill

“Ugh!”

Not again

STAGE

“I really like this”

“This works very well”

“I hate this.. And I want to leave”

“This works well”

“I didn’t like that” (Single instance)

“I’m not happy with this” (if it occurs more than once)

“I can’t live without this”

“HOW DO YOU FEEL?”

Enjoyable

“Nothing special”

Emotional loyalty

Rational Satisfaction

Source: Gartner Research 10/04

From Vision to Action

> High level:– Our corporate vision and values define our behaviours – Our corporate strategic goals lay out financial and operational

targets

> Cascading through strategy into implementation:– Sustainability Policy defines sustainability goals and behaviours

that align with our values and our strategic corporate goals– Sustainability Strategy lays out the plans and projects which will

deliver the sustainability policy goals– Sustainability improvement projects deliver the sustainability

policy goals either directly or by putting in place systems to enable our operational staff to deliver

Three strategic project themes

> Project 1: Delivery of new sustainability-driven business streams– Cut through complexity and develop a clear process for targeting and

developing sustainable business opportunities.

> Project 2: Delivery of improved sustainable efficiency– Develop practical, actionable projects: governance and management

through to measurement and reporting of operational sustainability.

> Project 3: Developing a robust Environmental Risk Management system– Streamline and further harmonising the existing ISO14001 EMS with the

sustainable efficiency systems.

Efficiency: Governance

> Executive Management Team advised on sustainability policy issues by Sustainability Steering Group

> Adopted recommendations translated into operational policy by SSG for adoption by contracts and group operations

Efficiency: Role of the SSG

> The Sustainability Steering Group also drives change– Develops policy and make it adoptable– Develops best practice that delivers policy goals

> The SSG controls specialist working groups:– Environmental Management Working Group– Transport Energy Working Group– Waste Working Group– Renewables working Group

> Members of the Sustainability Steering Group are the change agents responsible for taking policy and best practice out into divisions

Efficiency: Embedding

> General Standard Operating Procedures define sustainability and environmental management processes

> GSOPs for environmental management define compliance– Contain criteria depending on the scale of the operation concerned

> GSOPs for sustainability specify management systems and detailed processes – Come in after initial environmental compliance work– Use information gathered during compliance work to feed sustainability

management systems which assess savings benefits– Allow managers discretion in terms of how sustainability management

systems are aggregated

Efficiency: At contract level

> First steps comply with environmental management GSOPs and are easy to full-out corrective surveys to drive compliance– Depot Management Plan– Project Environmental Risk Management Plan

> Next steps are to collate outputs from these environmental management surveys under a suitable sustainability management system– Sensible level of aggregation– Depends on customer requirements– Designed to prioritise most cost-effective actions

Efficiency: Prioritising, planning

-£310.0

-£260.0

-£210.0

-£160.0

-£110.0

-£60.0

-£10.0

£40.0

£90.0

0 2,000 4,000 6,000 8,000 10,000 12,000

Annual GHG Abatement (Tonnes)

Cos

t(+

)/In

com

e(-)

per

Ton

ne o

f CO

2 A

bate

d

Paper bags -₤1/T3700T, 7% IRR

PIR installat ion - ₤73/tonne, 732 tonnes, 64% IRR

Carbon Cost of 25 Euros per t onne abat ed

Plastic bags -₤5,786/T648T, 95% IRRAerodyna

mic t railer -₤258/T250T, 125% IRR

BEM S -₤66/tonne3115 tonnes, 50% IRR

Car f leet -₤63/tonne99 tonnes, 16% IRR

Electric logist ics. -₤62/tonne, 197 T, 18% IRR

Light ing upgrade. -₤21/T, 614T, 15% IRR

Biodiesel fuel ₤16/T, 557T, 0% IRR

Efficiency: Make planning easy

> Template-based sustainability management system– Drives continuous improvement in ISO14001 EMS– Makes implementing sustainable efficiency simple for the non-skilled

manager

> Compliant with GSOPS

> Compliant with efficiency policies from SSG, signed off by Executive Management Team– Drives certain “no brainers”

> Supported by best practice guidance and business cases developed by the SSG

Implementation control

> Activity overseen by Sustainability Steering Group– Based on RAG status oversight of projects in strategy

> Progress checked through leading and lagging indicators> Monthly board report

CO2 Tonnes/£million Revenue Against Baseline of Previous FY

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Apr-1

0Ju

n-10

Aug-1

0Oct-

10Dec

-10

Feb-11

Apr-1

1Ju

n-11

Aug-1

1Oct-

11Dec

-11

Month

% In

crea

se/D

ecre

ase

Vs

FY20

09-2

010

Bas

elin

e

US

HS

ES

RS

Group

Supply chain issues

Supply chain influences:

> Supply chain imposes costs and impacts – Embedded at the point of purchase– Which arise during use phase– Which are required for safe disposal

> Include:– Poor data provision which requires rectification– Excess embedded energy, water and wasted material costs– Excess packaging at goods inward – Poor energy or water efficiency in use– Low process yield in use– Toxic by-products or scrap– Difficult to recycle end of life waste

Example for May Gurney:

Upstream

> Is the material suitable?

– What is the cost structure?

– What are its life cycle impacts?

– Is it consistent?– Can it be

recycled?

With us

> What is the process?

– Skills and training

– Risks– Energy

implications– Waste arisings

Downstream

> How can waste systems best cope?

– Geographical– Technical

capability– HSE risks– Permitting– Data– Assurance

Strategic focus

> Risks to value come when:– Elements of your supply chain can pass through costs– There are alternatives to your product form– Your sector is not politically or economically significant

> Opportunities come when:– You can identify and react to drivers before they become mainstream.– You can redesign your systems and break down barriers– You can align your drivers with those of partner organisations

> Key issues:– How to cost-effectively identify rapid changes and their direction– How to not get bogged down in the complexity

Integrating with strategy

> Organisational strategy dictates the business model and the degree to which change can be resourced:– Availability of financial resources to invest in change– Availability of management time to guide investment and change

> Supply chain sustainability is a new area:– Higher risks associated with decisions outside of firm’s control.– Risks associated with disturbance to existing relationships.– Difficulties associated with perceived change and interference with

established and successful practices

> Response is to research and identify lowest risk big wins– Build business cases based on priorities – IRR, risk– Especially where sustainability links with other savings

Progressive approach

> Step 1: Optimise position and build capacity: – Internal sustainability management with additional product focus– Understand your internal potential, plan, act and build capacity

> Step 2: Understand supply chain partners:– Understand their local drivers and distinctions– Understand how they see and experience you– Construct a clear map and investigation plan

> Step 3: Add detail, decide strategy and plan:– Understand what drives the whole chain – end delivery drivers– Understand relative gains/losses for each partner and priority– Approach and actions for engaging with partners

> Step 4: Implement supply chain engagement plan:– Starting from big easy wins and move upwards in complexity

A thought in summary

> Best practice advice was always to employ a financial system to manage CO2 and other sustainability data

> The ideal is to integrate procurement system with financial system and operational activity recording: – Seamless provision of data at the point of purchase– Data itself fed into the suppliers procurement system from its suppliers– Use of internal activity factors to apportion quantities– Rich data sets for providing to partners

> Wouldn’t life be simple– Less measurement and more analysis and action!

Avoid perverse incentives?

A packaging firm solved a marketing problem for a new customer: – If people shared more mints, Nestle would sell

more. But messy, pocket-soiled packets are not attractive

– RPC originated the concept of a hygienic plastic pocket dispenser for mints.

– Increased packaging from 1.5g of paper to 7g of plastic and the carbon footprint rose by 450%.

– Became a premium product and revenues rose– RPC won awards and made a fortune.

Thank you

jchurchman-davies@maygurney.co.uk