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ADAPTANDPROSPER Leadership in a changing business climate www.obsidianbas.co.uk A discussion of the business response to the opportunities and challenges presented by climate change. A summary of the seminar held by Obsidian Consulting and the British Antarctic Survey on 29th November 2007.


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Obsidian Consulting would like to thank the following organisations for their participation in this study:

Abbey Corrugated packaging Adnams food and drink Agrovista UK Limited agriculture Alexir Packaging Ltd packaging Anson Limited packaging Autoglass service Avro Industries packaging British Antarctic Survey public Birketts Solicitors legal BT utility Cambridge Building Society finance Cambridge Housing Society housing Cambridge University Press media Cambridge Water plc utility CamCon Technology Ltd high tech CBI membership org Celotex Limited construction Ensors Chartered Accountants finance Fluke high tech Go Ape! leisure Headway public Herbert Group high tech Heritable Bank finance Hertfordshire County Council public Hewitsons legal hfx Limited high tech Ipswich Building Society finance John Sisk Limited construction Lignacite construction Marshall of Cambridge (Holdings) Limited logistics Media Managers media MedImmune pharmaceutical Melbourn Scientific pharmaceutical Paperfeel packaging Papworth Trust public Peters Elworthy & Moore finance Pursuit Dynamics plc high tech RBoS / NatWest finance Ryan Insurance finance Safapac Ltd pharmaceutical Saffron Building Society finance Subex-Azure Ltd high tech The Wine Society food and drink Wipak UK Ltd packaging World Transport Agency logistics

ADAPTANDPROSPER

CONTENTS page 3

Overview

LESSONS FROM THE ANTARCTIC page 5

Setting the scene Robert Culshaw, Deputy Director, BAS

page 6

What the Antarctic is telling us Dr John Shears, BAS

page 8

Extreme Management John Pye, BAS

THE BUSINESS RESPONSE page 10

Findings from a survey of senior management of mid-market companies Jonathan Wainwright, Obsidian

page 16

Profit from the changing climate Tom Serpell, Obsidian

page 16

Case study Melbourn Scientific

page 17

Case study Paperfeel

page 18

Case study Cambridge University Press Print Divison

page 19

Case study Cambridge Water

page 20

Managing the change Geoffrey Bray, Obsidian

Q&A Panel Peter Davison, Director of Corporate Affairs, Cambridge University Press James Robertson, Managing Director, Agrovista UK Ltd

OVERVIEW KEY FINDINGS O Customer procurement criteria will

O Staff motivation and enthusiasm can be

be a major driver for the development

important factors behind development

of environmental strategy

of an environmental strategy

O All companies with an environmental

O When asked to choose what would be

strategy had identified new

their biggest motivation for implementing

business opportunities. Companies

an environmental strategy, 69 percent of

mentioned specific contracts

companies questioned said ‘for profit’

O While 84 percent of companies understood the concept of carbon footprint and thought it was ‘advantageous’ to business, only 34 percent knew how to determine it

and the remainder said ‘to alleviate global problems’, although for most there was little to separate these motivations


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ADAPTANDPROSPER LESSONS FROM THE ANTARCTIC

Setting the Scene Robert Culshaw, BAS

Robert Culshaw, Deputy Director of the British Antarctic Survey

Climate change does have local implications. With only 5m of sea level rise Cambridge could become ‘Cambridgeby-the-sea’ which clearly would affect our lives and our businesses

The debate about climate change has moved on, and there is now a much wider acceptance about the science among the general public than there was even a year ago. So we can take as an agreed starting point that the environment is changing, the world is getting warmer, and human beings have enormous influence on that. Climate change does have local implications. With just a 5m rise in sea level, Cambridge could become ‘Cambridge-by-the-sea’ which clearly would affect our lives and our businesses. One of the reasons that the debate has moved on in the last year was the Stern Review, which has had an impact worldwide, not just in the UK. When Sir Nicolas Stern prepared his review for the UK government he summarised not only the science but also, for the first time, attempted to define the economics of climate change – what it would mean for the economies of the world – governments, businesses, and individuals. The topic has been the subject of much debate, but Stern’s essential conclusions have not been challenged – if you’re going to do something about living in a different world, you’d better start now. The key message in the Stern Review is the longer you leave any measures you take, to either minimise or mitigate the risks of climate change, the worse it will get and the more expensive it will become. Stern was primarily interested in governments, but there is clearly a message for companies and other organisations as well. I suggest a key question: How can organisations be strengthened by facing environmental challenges? In other words, seeing the risk and the threat, but trying to turn it into an opportunity. This is where BAS’s experiences can be relevant. BAS faces environmental challenges every day, very directly, at the micro level as well as the macro level. We operate in Antarctica, which is a very hostile environment – the stormiest place on the planet; the coldest; the driest; the windiest; and it’s the highest – we are operating at altitude. This is an environmental challenge for us. It poses us problems and costs us money. But it also teaches us something, and makes us operate in different ways. In our own experience over the last 60 years in Antarctica, we’ve had to adapt a great deal to the physical challenges that we find there, and those challenges themselves are changing as the circumstances of Antarctica change. The work BAS does fits within ‘Next Generation Science for Planet Earth’ – the new strategy for our parent organisation, the Natural Environment Research Council. We have a very simple mission: to undertake a world-class programme of science and sustain for the UK an active and an influential regional presence and a leadership role in Antarctic affairs. A leadership role refers to the Antarctic Treaty, which the UK is a party to, and is a reflection of the need to protect this last wilderness. We’re not doing our science in a closed box, but looking to spread the results as widely as we can, by talking to the media, to business, and to other organisations. The cost of getting it wrong is enormous. The British government estimates that one serious London flood would cost the country £30bn, so it’s worth investing effort into getting our predictions about sea level rise and the conditions in the North Sea, as good as possible. We hope that our advice can help other people to adapt and prosper, whether it’s at the British government level, whether it’s the Antarctic Treaty looking after the whole continent, or whether it is much more specific. And we want to share some of the experiences we’ve had that might be of interest and relevance to companies.


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ADAPTANDPROSPER LESSONS FROM THE ANTARCTIC

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ADAPTANDPROSPER LESSONS FROM THE ANTARCTIC

What the Antarctic is telling us John Shears, BAS

John Shears, head of BAS Environment and Information Division

Why do we go to Antarctica? A primary driver for us is that Antarctica is a fantastic natural laboratory. It’s one of the most unpolluted regions in the world, and we can do science there that we can’t do anywhere else in the world. For example through ice-core drilling and examining the air bubbles trapped in the ice we have unique information about the atmosphere over the last 650,000 years. This shows that the current global atmospheric concentration of carbon dioxide is about 385ppm – far in excess of anything we’ve had over the last 650,000 years. For me as a scientist, that is a significant and worrying signal and the sort of evidence we provide to help policymakers inform their decisions at the IPCC, and the next International Climate Change Treaty. So what we do is very remote from us in the UK, but is also highly relevant. The ozone hole was discovered by BAS and this has changed people’s thinking. For the first time it was realised that our activities damage the global environment. We use Antarctica as a natural laboratory, but we’re also very clear about our role as stewards. Ironically it was Greenpeace, that made the ‘environment’ rather than science a strategic priority for BAS, when in the early 1980s they decided to make Antarctica a world park. They set up a base in the Antarctic, and we had Greenpeace ships turning up at our research stations, demanding to see what we did with our rubbish, and how we protected the environment. I’d like to say thank you to Greenpeace, because as a result of their activity, BAS decided to employ an Antarctic Environmental Officer and here I am! The Antarctic Treaty was agreed in 1961 and preserves Antarctica as a continent for science and peace, and puts aside territorial claims. After Greenpeace got involved, the treaty nations looked at environmental issues, and agreed the environmental protocol which came into force in 1998. Ice station on skis

FOSSIL BLUFF BEFORE

So what has that meant for BAS? We now do Environmental Impact Assessments for every project we do – from a small field party in a tent to large construction projects. The new Halley VI station will cost in excess of £40m, and we’ll be both building the new station, and taking out the old station – which is no mean feat when you consider that it sits on a floating ice-shelf! Halley VI is often described as a visitor to the Antarctic because we can literally take it away with us. It will be built on skis, so it can be towed away, and we can plug and play the different modules. It’s a station we hope will be very sustainable, and last far longer than the current stations. Porridge tin toilets

FOSSIL BLUFF AFTER

We recycle or remove all solid waste from Antarctica. BAS started as a secret military mission – Operation Tabarin – in 1944 and there are still old bases from the ’40s and ’50s which we’ve had to clear up. For example, at Fossil Bluff, a remote field station built in the early 1960s, the guys would just dump everything – oil drums, food waste, cans. They didn’t have proper toilets so they would use old porridge oats tins. The only way we could get the 50 tons of waste out was with a small twin otter aircraft. You may wonder how we got drums of human waste out – very carefully, is the answer! We also work hard at waste management and disposal. We reuse and recycle about 60% of our waste. We have a portable drum crusher that will fit in the back of one of our aircraft so it can go out to deep-field fuel dumps, crush the drums, reduce the volume and then fly them out.

Carbon dioxide in

Carbon reduction

the atmosphere is

More recently, we’ve been actively looking at how we reduce fuel costs, save energy, and reduce carbon emissions. Fuel is a very big cost for BAS – in 2006-2007, nearly £3.5m was spent on fuel. The vast majority of our emissions come from the ships, which is a real challenge in terms of setting targets, as reducing emissions on ships is incredibly difficult. So we looked at the totality of operations, and decided that we could make significant changes at the stations, making a 20% cut by 2012, but from the ships, we know that 5% would be a challenge.

now at the highest concentration for 650,000 years

all transport

all bases 9%

11%

80%

ll ships hi all

SOURCE

Energy Spend (£/year)

Carbon Emissions (T CO2 /year)

Carbon Offset Cost (£/year @ £10/T CO2)

Bases

£597,000

2,919

£29,188

Ships

£2,363,000

20,765

£207,650

Vehicles & aircraft

£453,000

2,388

£23,878

TOTAL

£3,413,000

26,072

£260,716

1,010

£10,108

Air travel (to/from Antarctica)

To achieve these targets we have a sustainable energy engineer, a carbon monitoring and reporting system, and an energy saving and renewables programme. In Cambridge we have a travel plan, and now over a third of staff cycle to work or use public transport. BAS has been accredited with Environmental Management Standard ISO 14001. After much deliberation we found that it was actually a very easy process because we have a track record of environmental protection, and the process fits in well with the BAS way of doing things. We have an environmental policy, and use planning, risk assessments and proper procedures with objectives and targets. Everyone, everyday has to make sure that they do their bit. The key thing for ISO 14001 is continual improvement, and it has helped to cement many of the environmental procedures we had before. It’s a more formalised system but one that operates right across BAS, from our offices in Cambridge, down to our ships, and down to the Antarctic. Sustainable improvement BAS works in the incredible unspoilt wilderness area of Antarctica, which is protected by some of the world’s most stringent environmental legislation. We aim to deliver continuous improvement in our environmental management. We put a lot of effort into minimising waste and reducing our carbon emissions. And our environmental policy fits in with what we want to do as a scientific institute – to do world class science with the minimum environmental impact.


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ADAPTANDPROSPER LESSONS FROM THE ANTARCTIC

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ADAPTANDPROSPER LESSONS FROM THE ANTARCTIC

Extreme Management John Pye, BAS

John Pye, Head of Administration and Logistics Division, BAS

In one Antarctic summer, which is from October/November to March/April, BAS carries out over 70 scientific projects which have to be sorted out in time and space on the other side of the world either for airborne science, marine science, on the bases, or living in the field. Within an annual budget of approximately £40m, BAS performs the functions of a shipping line with two ships, an airline that runs and operates five aircraft, a travel agency that flies 300 people to Antarctica each year, a freighting organisation, and, of course, we are an employer of people – 300 in Cambridge, about 100 on ships, and about 100 contract staff in the Antarctic who can be there for up to 30 months at a time. It’s this puzzle that we have to bring together in ‘Extreme Management’. The starting point is planning and performance. Our operational planning at the detail level has to begin two years ahead. We put this in the context of our vision and a business plan which looks four years ahead. At the board level, we’re bureaucratically light. We use techniques such as the balanced scorecard and a performance indicator system to measure progress. Openess and transparency is very important in an organisation like BAS. With all the risks and dangers involved in working in Antarctica we need to continually improve and develop our safety systems, in an open way that involves our union and staff as much as management. Sound business continuity, business interruption and incident response procedures are all vital. We always have a staff member as an observer at our board meetings, and we publish the outcomes on the website. We have found the methodologies within the quality systems helpful. In addition to ISO 14001, we have accreditation for health and safety, international safety management, and Investors in People. We do these things because we want to improve, and to introduce change at all levels within the organisation we use CAT – a change action team. When a problem is identified we get a cross-section of people at all levels and areas within the organisation and set them off on a journey with some terms of reference and look to them, the practitioners, as well as the more senior management, to come up with solutions. Most of all, Extreme Management is about preparing our people. We’re dealing with a huge cross-section of people which may include: tradesmen, eminent scientists, media people, artists and writers, the whole of the ‘family’ that we take. Working together is one of the main messages as we try to prepare them for going ‘South’. There are a lot of challenges for the individual. This may include: routine and lack of variety; missing family and friends; interpersonal issues with colleagues; ‘SAD’ and ‘the blues’; loss of perspective and fear of ‘the future’. These feelings are intensified as there’s no easy way out. Halley station has a long period of winter darkness lasting for 10 months of the year when there are just 16 people. So you have to prepare those people and try and make sure you get the right ones! We’re the only country who works in Antarctica that doesn’t do psychological testing, but we have had a long-running research programme to see if it could help and at the moment it is very marginal. So we get the right people by being open and using our own experienced people to help us select. For those who work on contract in Antarctica, we’re very pleased that in the last five years, about half the people working on contract are returners. That means that the culture gets handed on easily. We involve people at all stages, take care of their family and friends and use professional and trained support for medical, welfare and counselling needs. We try to use face-to-face contact whenever possible and would use a visiting manager perhaps to try and deal with issues. And most of all, we delegate and we trust, because when people are on the other side of the world it is important for them to know they have the authority to deal with the things you can’t plan.

Openess and transparency is very important, with all the risks involved we have to trust our staff

Our culture – a few years ago we tried to define the characteristics we want to foster, they include: O Positive O Responsible – with safety etc. O Imaginative – finding new and better ways of doing things O Cooperative – culture of give and take O Excellent

Take the initials and you get PRICE. So, ‘are you price-like?’ is now in our lexicon, but we didn’t set out to make this a big deal when we began it. Having defined it we characterised it in the business plan, we made it part of our reward and appraisal mechanism and if you look at our website you’ll find that we expect people to recognise that we’re looking for these characteristics before they come to a selection interview, and must be prepared to discuss their thoughts about them. Antarctica is an extreme and special environment, and there are lots of tips for managing staff both here and ‘South’. For example: O Do the basics right O Know and trust your staff – we need feedback on safety and so many other things, we have

to have a culture where it’s not about blame, it’s open and it’s honest and they know that we trust them O Plan your contact and communications – and stick to it O Visit O Acknowledge often and reward O Keep it personal – don’t forget the families O Adapt to their environment – even in the UK we think about work/life balance and put effort

in to making sure that people take their leave, for instance O Reinforce the culture

What can one conclude from all of this? What does having to manage in this extreme environment provide? O Emphasis on planning and performance O Focus on people and getting the relationships right – as the UK becomes more of

a knowledge economy than a production economy, this is a challenge we all have, remembering to focus on the individuals and to get the relationship right O Management lessons and practices that work at home and on the other side of the world


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ADAPTANDPROSPER THE BUSINESS RESPONSE

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ADAPTANDPROSPER THE BUSINESS RESPONSE

ADAPT AND PROSPER

THE STUDY

Jonathan Wainwright, Partner, Obsidian Consulting

Fig. 1 It would appear from the data and the discussions held that a substantial majority of leaders see a competitive benefit in developing and implementing an environmental strategy but few have taken significant steps to do so

Senior management from forty-four business leaders were interviewed for the study, by Obsidian Consulting partners, in a series of face-to-face interviews between August and November 2007. A list of these companies, mostly based in the East of England, is provided on page 2. They represent a range of sectors including Agricultural Chemicals; Construction; Drinks; Engineering & Technology; Financial Services; Housing; ICT; Media; Packaging; Professional Services; and Transport. They were asked about: their environmental strategy; motivations for developing such a strategy; the areas of their business on which climate change will have the most impact; reaction of their customers and suppliers; their thoughts on the business opportunities created by environmental change; and their reactions to a series of images.

Fig. 2 An increasing number of organisations in both the private and public sectors are taking environmental issues into account when making procurement decisions

12 11 10 9 8 7 6 5 4

OBSERVATIONS

3

What is your motivation for an environmental strategy?

2 1

unaware of the issue 2% to alleviate global problems

0

30%

68%

for profit

23 of the 44 companies interviewed had an environmental strategy in place, of which two thirds had been motivated by the desire to improve profitability and the remainder said that it was to reduce their environment impacts and alleviate global problems (fig. 1).

Research conducted by Obsidian Consulting August – November 2007

What proportion of your customers, over the next 2 years, will take environmental criteria into consideration when making procurement decisions?

number of companies

What do senior managers of mid market companies consider to be the business opportunities and risks presented by environmental change?

none

hardly any

a few

some

quite a lot

most

all

The majority of those with an environmental policy in place said that it was good for business. 73 percent of these were likely to say that their customers would take environmental criteria into consideration when selecting a supplier, compared to 45 percent without a strategy. Although senior management had initiated strategy, staff at all levels had been involved and their enthusiasm was an important factor in the successful implementation. In discussion, many of the senior managers said that it was staff suggestions and enthusiasm that had driven the environmental policy forward and ensured that it was implemented.


ADAPTANDPROSPER THE BUSINESS RESPONSE

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MOTIVATION

Where have you identified new business opportunities?

Which aspects of your business will be most affected by environmental change?

40% 30% 20%

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w ge aste me nt na ma

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ac ts ntr co ific

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wo mo rkfor tiva ce tio n

i nc mag em e en t ha en

po mar rtu ket nit ies op

ers pli up ws ne

en

erg

ys

avi

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uc ts rod wp ne

im

p pro roce vem ss en t

0

tra

ati

0%

ing

10%

tur

5

50%

fac

10

60%

y

15

70%

erg

20

80%

en

Fig. 4 For many organisations it appears that environmental changes will impact on many aspects of their business. However until a strategy is developed that specifically takes account of environmental issues, there is a tendency to identify one or two areas which appear to be the most important

on

25

number of companies

Fig. 3 Whilst the more ‘traditional’ reasons for taking steps to address environmental issues (e.g. savings on fuel/power costs) continue to be seen as important, more and more organisations are recognising the much wider range of business opportunities

ADAPTANDPROSPER THE BUSINESS RESPONSE

loc

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All organisations with a strategy in place that addresses environmental issues had identified a clear business benefit for the change. These included: image enhancement; requirements of a specific contract (6 companies); market opportunities; process improvement; new products; and workforce motivation (fig. 3). Of the organisations that appeared to have no strategy in place to deal with environmental issues nearly half had not identified a single business benefit for implementing a strategy and only one, a relatively new company, cited a specific contract and new products. This suggests that companies are more likely to invest in an environmental strategy if they can identify from the outset a clear business benefit, even if the stated motivation is to alleviate global environmental issues.

The majority of the companies (69%) that had developed a strategy did so to improve business performance. For these companies, customer demand and rising energy costs were the key drivers (fig. 4). Additionally, many of the companies in the sample had identified a new product or business opportunity. Some felt they needed to get their ‘own house in order’ before they could exploit this and in several cases companies had gained environmental accreditation. A smaller number of businesses said that reducing their environment impact to help alleviate global issues was the greater motivation. As expected these companies were mostly in businesses that are close to the consumer, for example food and drink and public sectors where risk to reputation is particularly important. Where organisations were motivated by ‘global problem’ rather than ‘profit’ the influence of customers was particularly significant. All of those who said that customers would take environmental issues into consideration when making procurement decisions had developed an environmental strategy.


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ADAPTANDPROSPER THE BUSINESS RESPONSE

DRIVERS FOR ENVIRONMENTAL STRATEGY: COMPARISION OF MOTIVATIONS BETWEEN ‘PROFIT’ ORIENTATED AND ‘ALLEVIATE’ STRATEGIES Customers and contracts The influence of the customer was more of a driver for profit-motivated businesses than energy or waste considerations. Two thirds of the organisations that said they would implement an environmental strategy to improve business performance cited customers as an important reason for doing so. Six of the companies interviewed also said that a specific contract had stated that they should have an environmental strategy in place. It is highly possible that procurement policy will drive through environmental strategies in suppliers, especially where companies are seeking environmental accreditation such as ISO14001 which looks at the whole supply chain. Location The majority of the companies questioned said that their location wasn’t an important reason for having an environmental impact. However for the 9 companies that considered it a high priority all said that they had a policy or were in the process of developing one. Cost reduction vs. improving competitive advantage For companies motivated by reducing their environmental impacts, energy, travel and waste were considered the factors that would have the most impact on their businesses. These were also companies where reducing these costs could improve organisational efficiency. Energy, travel and waste were also considered important by companies motivated by ‘profit’ but these organisations were more likely to rank highly factors which would boost their competitiveness, for example customer expectations, product developments and manufacturing processes.

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ADAPTANDPROSPER

Competitive advantage The biggest difference between companies that had a strategy and those that didn’t was their ability to see competitive advantage in implementing a strategy. All the companies with a strategy had identified new business opportunities that would be created. In discussion, some directors revealed that considerable investments had been made in order to implement the strategy and realise these opportunities. These included development of a new product line using bio-plastics to replace dependence on petroleum-based raw materials, construction of a wind turbine on site and appointment of a full-time environmental manager. Process improvement was considered a major benefit. In discussion, managers gave examples of the cost-savings and efficiencies that could be achieved through looking at the entire operation from an environmental perspective. Ironically, rising fuel prices are making investment in environmental measures more cost-efficient. Reduction of reputation risk was also important for companies with a policy, with image enhancement scoring high.

RECOMMENDATIONS This study suggests that companies will most willingly adopt environmental strategies if they identify clear business opportunities for doing so. To assist companies and accelerate the adoption of sound environmental strategies it would be beneficial to: O Encourage businesses to insist their suppliers have an environmental strategy O Standardise metrics for measuring carbon-footprint for commercial organisations O Create industry specific recommendations for different environmental measures ie most cost-

effective ways of reducing fuel usage O Develop methods for measuring process improvement following implementation of

environmental strategy O Stimulate consumer demand for ‘green technologies and processes’

DRIVERS FOR ENVIRONMENTAL STRATEGY: COMPARISON OF COMPANIES WITH AND WITHOUT A STRATEGY Environmental risk Over 60 percent of the companies questioned had included environmental factors in their risk assessment, and this was true even when an environmental strategy wasn’t in place, suggesting that many companies are in the process of adopting a strategy. An obstacle may be lack of metrics for measuring environmental impacts for assessing the relative benefits of different strategies, other than energy costs. Over 80 percent of companies agreed that there was a benefit in assessing their carbon footprint, but only one in three knew how to do this. Where companies understood how to determine their carbon footprint they had implemented a strategy; interestingly a few with a strategy didn’t. The majority of those without a plan thought the carbon footprint was important but didn’t know how to do it. Only one or two of the companies had sought the help of a consultant to determine their carbon footprint. When pushed, some of the companies that had been confident about working out their carbon footprint admitted that they were not able to track it back to primary suppliers. This suggests that standardised metrics are needed for measuring carbon footprints so that different organisations are comparable and that companies are able to review their entire supply chain.

O Innovate new products to enhance sustainable competitive advantage


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ADAPTANDPROSPER THE BUSINESS RESPONSE

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ADAPTANDPROSPER THE BUSINESS RESPONSE

Profit from the changing climate Tom Serpell, Obsidian

Tom Serpell, Obsidian

No one in business can have failed to hear the environmentalists talking about climate change and carbon footprints, but it can feel very tangential to the owner or manager of a mid-sized business when your efforts are focused on trying to run a profitable company. Much of the available information is generated from an environmentalist perspective and frequently directed at consumers rather than the business community. Although the FTSE 100 companies have seen the value of introducing environmental strategies and of communicating these effectively to reduce risk to reputation, mid-market companies in the business-to-business sector are less able to make the investments needed without a strong business imperative.

they have evaluated their carbon footprint effectively will have a strategic benefit. For examples Adnams brewery opened an eco-distribution centre in 2007 with a living roof, lime and hemp walls and rain harvesting facility. It aims to be carbon neutral. For UK companies, a low carbon-footprint may provide a competitive benefit especially if their clients are concerned about environmental impacts. This is particularly true in the print sector. Customers with strong Corporate and Social Responsibility are beginning to insist that corporate brochures are printed ethically. UK printers such as Cambridge University Press that have acquired the environmental quality standard ISO 14001 and that are local to the point of use will have a ‘green advantage’ over cheaper overseas competition.

Carbon footprint – carrot not stick

Localisation rather than globalisation

There is evidence from our research that there are strong business benefits in adopting an environmental strategy but these are not being effectively communicated to organisations. For example carbon footprint is often used as a stick to beat companies into reducing their emissions but turned the other way it can be a powerful incentive to change. Having a low carbon footprint will make a company more attractive as a supplier to Blue Chip clients. Large organisations are beginning to re-evaluate their entire supply-chain with a view to meeting government targets for carbon emissions and partners that can demonstrate

Ironically the trigger for action could be the recent rise in fuel prices. Hermann Hauser, the serial entrepreneur behind Acorn Computers and many more companies, recently predicted that the best thing that could happen to the environment would be for fuel costs to become so expensive that ‘clean technology’ becomes cost-efficient. It would appear that he is right. Feedback from our client base of mid-market companies

CASE STUDY TURNING A RISK INTO A BUSINESS OPPORTUNITY – Paperfeel CASE STUDY NEED FOR MORE METRICS – Melbourn Scientific Mark Hammond, Business Development Director at pharmaceutical analysis company Melbourn Scientific, participated in the research, and he agrees that businesses need more metrics to assess how different measures impact the environment: “We have designed our new laboratories to be more energy and time efficient but it is hard to know what affect this has on our carbon footprint. In truth it could be the car sharing scheme that will have most long term benefit.” Melbourn took the opportunity to radically rethink how its business is structured in order to improve efficiency and reduce environment impacts. Mark explains: “We work in small teams which is difficult in a traditional lab, so we created an open plan design for collaborative working with separate climate controlled rooms. This creates an optimum environment for special projects cost-effectively. “Investment in high throughput equipment cuts time and also reduces amounts of samples and reagents needed, resulting in less waste. Similarly, replacing multiple storage areas with a single store cupboard and inventory means fewer disposable items and a reduction in the amount of glassware to wash.” Mark believes that it is vital to create a culture where people think about sustainability issues and change their behaviours: “Staff now use car sharing and conference calls to reduce travel and encourage clients to use our online

project tracker instead of requesting printed reports. Also we have become corporate sponsors of an environmental project ‘Trees For Life’ and this is helpful in reminding us of the bigger picture. “The overall benefit is that the lab area is more ergonomic. People communicate more effectively which results in less stress, even when working to tight deadlines, and better teamwork. We have been successful in attracting young analysts with energy and enthusiasm to join the company, which has also been reinvigorated.”

Peterborough-based Paperfeel manufactures customised polyethylene film used within the packaging industry for wraps and sacks. The company, faced with a trebling in the price of its basic raw materials, decided that it needed to innovate to survive and as a result has successfully entered a new market. Paperfeel enjoys a niche in the competitive packaging industry as it is able to tailor its product to meet the exact requirements of the customer. This makes its film more expensive to produce but this is outweighed by the benefits to the customer of having high-performance packaging. However the company has been badly hit by the rising price of its petroleum-based raw materials, particularly where larger clients have negotiated fixed price contracts. Paperfeel’s uniqueness is due to the innovation of its founder Geoff Southwell, who saw this as a market opportunity. After talking to customers he realised that they wanted to increase the proportion of the plastic they were using that was derived from sustainable sources. This reduces dependence on oil-based products and brings them in line with environmental legislation. Additionally although biodegradable film is still more expensive it attracts a comparable tax to paper, which is less than for plastic. Geoff then sourced biopolymers that are starch-based and experimented with them to see if they could be used within Paperfeel’s formulations. The result is a new range of compostable and biodegradable films that is generating new

business enquiries from right across all sectors of industry. Other manufacturers are producing compostable films but there is a shortage of non-GM films and so Geoff ensured that his raw materials came from approved sources to create a further market advantage. Geoff also explored other ways that he could help customers reduce costs. Paperfeel produces blown polyethylene, and is able to vary the formulation of the film to meet exact specifications for each application. For example, by reducing density the customer gets more meters of film for the tonne. Through a process of test and trial he has managed to create formulations that meet the requirement for strength and clarity and yet use less raw material.


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TIME FOR ACTION across the East of England has revealed that as energy prices bite into the bottom line, energy saving initiatives are rising up the agenda. The obvious business response is to save energy, to fit thermostats to radiators and make them adjustable to the needs of staff and activities in the workspace, ensure that the lights are only switched on where people need them and reduce the amount of equipment left on stand-by. However, the wider implications are perhaps more interesting, as fuel prices impact the cost of the ‘food mile’ it changes the dynamics of the food supply chain. English apples and potatoes unable to compete with cheaper imports now gain an advantage as the travel costs become a factor in the price to the consumer. Could this provide an incentive for supermarket chains to make purchasing locally the norm rather than the exception? And domestic goods and services will suddenly have a cost benefit over off-shore suppliers and the case for strategic outsourcing to countries like China becomes less clear cut. Rising fuel prices also make bio-fuels more attractive and funding easier for technologies that improve energy efficiency. The westernisation of the Chinese diet is creating demand for wheat at a time when the US harvest is getting poorer and poorer as the grain bowl could become a dustbowl. This has implications for future food security. This may create a dilemma for the agricultural industry in this country, as farmers will be faced with two land use choices – to either grow bio-fuels or food crops.

Businesses that exploit the challenges of climate change are the ones that will prosper. Now is the time to assess the implications and create a roadmap for responding to them. There are a number of aspects to this: O Develop a better understanding of environmental impacts on your business – carbon

footprint can be a useful tool to identify waste, risks and improvements in the organisation. Also useful as ‘evidence’ for potential customers and partners O Scenario planning – develop a greater understanding of the world in which you are

operating and consider a number of best case and worst case scenarios. What would be the impact on your organisation? How could this be mitigated? What opportunities do these scenarios present? O Revise the business continuity plan – assess the factors that would have the most impact

on business security and assess the likelihood of these happening O Define a unique role for the business in this ‘new world’ – identify competitors and

their positioning, understand the core assets and scarce knowledge your organisation possesses, define the ‘desired future state’ and then create a plan to reach it O Ensure the organisation is able to respond – create effective teams and workgroups;

implement a change strategy within the organisation The research identified a number of companies that had already taken steps along this route: Paperfeel, developers and manufacturers of polyethylene film, are exploring the use of bio-polymers; Cambridge Water who for 180 years have produced a commodity are now investigating ‘productising’ their service to offer three types of product – spring water, drinking water and grey water; Bennett Opie, fruit growers in Kent have for the first time this year sold apricots to Waitrose! Climate change and the government legislation that accompanies it are coming; mitigation may save the planet, adaptation may save the business.

CASE STUDY Cambridge University Press Print Divison Panellist Peter Davison, of Cambridge University Press, printers of the influential Stern Review, explained how they ‘greened’ their operation, becoming more efficient and more profitable. It has also earned ISO 14001, one of only a handful of printers to achieve this accolade and the only UK publisher to do so. “Our major clients expect us to maintain the highest standards, including an impeccable environmental record. We have embraced electronic journal and digital book publishing to enable print on demand to eliminate waste.” The print industry is by necessity a heavy user of paper, but Cambridge University Press ensures that all its paper is sourced from sustainably and responsibly managed forests, and holds FSC (Forest Stewardship Council) and PEFC (Programme for the Endorsement of Forest Certification) chain of custody credentials. The Printing House has also cut the amount of waste it produces by installing an inline shredder. 2000 metres of waste paper a day is saved – enough paper over a year to wrap around the world approximately 29 times. Additionally, 91% of its waste, about 921 tonnes of paper, has been recycled in 2007 so far.

CASE STUDY Cambridge Water Some 90% of the inks used by the Printing House are now vegetable-based, which has substantially reduced the amount of mineral oils required. Alcohol-free processes will make VOCs (volatile organic compounds) emissions into the atmosphere negligible by the end of the year. Investment in low energy presses has reduced noise and heat in the pressroom improving the environment for staff, which is also a major consideration.

The first water supply in Cambridge was in 1325 when Monks of the Franciscan order laid a lead water pipe 1.5 miles from a natural spring to their monastery on what is now the Madingley Road. Water is now supplied to the city by Cambridge Water and, as unlikely as it sounds, the company is due to launch a ‘new’ range of products for its customers in response to the changing environment and market requirements.

Cambridge Water is moving away from selling a utility and instead plans to differentiate its service according to customer need. High quality drinking water will be supplemented by spring water, to provide a local alternative to imported bottled water. In addition farmers and growers will be offered the chance to use a lower grade of water for irrigation and other applications for which drinking water is not required.


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Managing the change Geoffrey Bray, Obsidian

Geoffrey Bray, Managing Partner, Obsidian Consulting

Einstein was once asked, “when you have a good idea how do you make sure you don’t forget it?” His response was, “I don’t know what you are talking about; I’ve only ever had two good ideas in my life.” That well illustrates how things change – totally new ideas are rare and most of us never have one in our lives. What we do is adapt and modify other ideas. It is sometimes referred to as Critical Thinking Ability (or CTA) – taking one idea and using it in a different context and a different way. Often when a suggestion is put forward, you hear, “that wouldn’t work for us because ….” when if a little thought was given the idea could well be adapted successfully to a different situation. ‘The environment’ in its broadest sense is high on many agendas; whether it’s climate change and the pressure to reduce our carbon footprint, more prosaic matters such as the amount of rubbish we generate, or the fact that we are using up irreplaceable resources at ever increasing rates (oil being the most obvious but certainly not the only one). Change is being brought about by these factors, and is happening because of them whether we like it or not. I will examine how to stimulate new thinking and adapt ideas to help organisations prosper from environmental challenges. In looking at how to manage the change, I will look at three areas: FIRSTLY some principles that need to be borne in mind, even if it’s decided to ignore them, when implementing change of any sort. SECONDLY, the leadership implications of change. And THIRDLY, some practical ideas and things that others are doing that you may find useful to adapt. Identify the players At the end of a marathon we can identify four different groups of people. The winner is obvious. Those who don’t win who may well see themselves as losers – in reality they may not have won the race but maybe they achieved their fastest time, just wanted to finish or had a whole range of different ways of judging their performance. Then there are coaches and officials who have information that can be helpful to the athlete and finally the spectators who can influence the performance by the encouragement they give. In a change situation it is useful to think about these four groups. ‘Winners’ are those who feel they will benefit personally or who think that what is being done is right for the organisation. ‘Losers’ are those people who see the changes as having a detrimental effect, and their concerns must be recognised. ‘Information and Power Holders’ are those who in the roles they hold and the information they have can be critical to a change. And the ‘Influencers’ are those who by their personality can affect the outcome either for good or ill. This very simplistic model can be useful in planning a change. Another thing to consider is at what stage do you involve others in the process? Involve them too early and you will waste a lot of time in discussion; involve them too late and you will have to spend time letting them catch up as well as countering objections that may not have come up if tackled earlier. So the time when you involve different people needs to be carefully considered. Leadership implications There is a story about a new theme park that was being opened by the Disney Organisation. It was shortly after old Walt died and his son and the other Directors were in a high building overlooking the whole site. One of them turned to Walt junior and said, “It’s a pity your Dad couldn’t be here to see it.” To which young Walt replied, “He did see it, that’s why we’re here.” Leaders need to know where they are going and what is important to them and then, to do

Critical Thinking Ability allows leaders to adapt ideas for the environmental agenda

things on a continuous basis that reinforce the messages they want to get across. If leaders pay lip-service to something they don’t believe in people will soon see that. Consequently, whatever a leader’s message might be about the changes that are being driven by environmental issues, it must be something they believe is important. Fortunately, there are a lot of different angles in the environmental agenda, and unless a leader is totally devoid of CTA (in which case one wonders why they are a leader) it should not be too hard to identify something they believe in strongly. Leaders need a clear and simple message about the changes that environmental considerations will bring about in their organisations. Support for change In a Mori poll of the general public in 2006, 48% strongly disagreed and 27% tended to disagree with the statement “Too much fuss is made about climate change.” In other words 75% of the population believe that climate change is not being treated too seriously. But what about behaviour? Bjorn Lomborg, a Professor at the Copenhagen Business School, is a controversial figure when it comes to environmental matters. However his contention, that while individuals express concern about the environment they do little to change the ways that they live, has a strong ring of truth about it. Whilst in our personal lives we may make small gestures, we are generally unwilling to make the bigger changes to our way of life that might make a bigger difference – we still buy cars and drive more, we take more holidays and fly abroad more often, we replace computers and buy gadgets regularly etc. And it is this dichotomy between beliefs and behaviour that should make changes driven by environmental matters much easier to implement than other changes. People may not be able to make the changes themselves but they are highly likely to be in favour of someone else doing something – in this case the organisation they work for.

PRACTICAL IDEAS: WHAT CAN AN ORGANISATION DO? In any change situation there are a number of factors that have been shown to have a significant positive impact and those brought about by environmental change are no different. Have a clear, consistent message – research has shown that in a negotiation situation the parties that are most consistent in their behaviour are likely to end up overall with the best results. Consistency does not guarantee success but it makes it more likely. In a change situation there are always people who will wait and see if the change is meant and a lack of consistency or a wavering in the message will make implementation much harder Use ‘credible enthusiasts’ – it is important to make good use of the people in your organisation who are enthusiastic and credible. Be careful who you use – some enthusiasts can turn sympathetic people off. The survey carried out by Obsidian revealed that a number of organisations had set up teams with the specific brief of identifying environmental steps that could be taken. This was found to tap into some really good ideas. The learning points include: Have a number of different approaches – These will keep the changes needed at the forefront of people’s minds but in ways that are seen as interesting but, more importantly, don’t take up too much time. For example, in Obsidian I have a strong belief that the values we have developed for our company are a very important part of how we should operate. Consequently at most of our monthly Team Meetings we have a short session when we do something to embed these values in our minds. It may be asking people to say what they have seen others do in the last month that support our values, it may be asking people what they have done or are proposing to do in the coming months that will be evidence that our values are important and are an integral part of our business strategy.


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Encourage people with examples of what others have been doing – our survey revealed a number of practical measures that companies had introduced, including: O The paperless office. One company has a specific target of becoming a paperless office by

April 2008 and is well on the way to achieving it. O Working from home – whilst this may well have been driven initially by a purely cost and

efficiency agenda many organisations now see it in a environmental light. Managing people in these situations raises a range of other issues but ‘managing remotely’ is something both BAS and Obsidian are very familiar with. O Travel – one company is now charging clients less for service visits which can be

combined with visits to other clients in the same area. Another organisation is making it easier for people to arrange travel by train by having someone who is responsible for making such arrangements rather than leaving it to individuals to find their way around the systems. O Design – one company focuses their design on reducing the disposal costs of their

products when they come to the end of their life. O Priorities – other organisations are looking at what they do in environmental terms and are

assessing whether their resources would be better used in other areas.

SUMMARY The three areas I have briefly considered are ‘the principles’, ‘leadership’ and ‘practical ideas’ required to manage the change. BAS has considerable practical experience of dealing with environmental regulations and challenges that are more onerous than most of us are ever likely to face, and we in Obsidian do a great deal of work in helping organisations clarify what they want to achieve and developing ways they can implement change. If you want to find out more please do not hesitate to contact us.

Use ‘credible’ enthusiasts to keep sympathetic people on board

British Antarctic Survey and Obsidian Consulting explaining how climate change provides business opportunities as well as risks left to right Geoffrey Bray, Managing partner, Obsidian Consulting James Robertson, Managing director, Agrovista UK Ltd John Pye, Head of administration, British Antartic Survey (BAS) Tom Serpell and Jonathan Wainwright, Partners, Obsidian Robert Culshaw, Deputy director, BAS John Shears, Head of information and environment, BAS


www.antarctica.ac.uk

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For further information please contact: Obsidian Consulting on 01799 543707 or email enquiries@obsidian.co.uk Obsidian Consulting LLP, The Maltings, Station Road, Newport, CB11 3PL www.obsidian.co.uk


BAS report