The government's plan to cut greenhouse gas emissions through a new 'carbon floor' has been seen as a stealth tax by some quarters. But that shouldn't mask the profit potential of other low carbon initiatives says Hugh Jones of the Carbon Trust
The government's plan to cut greenhouse gas emissions through a new 'carbon floor' has not been welcomed by all in the manufacturing industry, with many concerned that it will reduce profits, induce staff cuts and force the movement of manufacturing processes abroad. The decision has, however, put the spotlight on sustainable practices in manufacturing and it is spurring change in the industry.
While most manufacturers are now making energy efficiency a priority when developing new projects, there's also a need to look at existing practices. For the latter, manufacturers need to look beyond any short-term disruption and focus on the long-term cost savings and value that sustainability can bring.
Our own research shows large UK businesses are paying out more than £1.6bn too much on energy bills every year because many have not sufficiently addressed energy efficiency. And yet there's plenty of proof to demonstrate that initial investments in energy efficiency measures pay dividends. Heinz, for instance, invested in a new boiler, which is 15% more efficient than the old one. JCB is now projecting savings of £1.5 million after embarking on its own sustainability strategy.
To achieve significant cost savings, the whole organisation must work together. Simple improvements such as limiting the use of lights, heating and air conditioning and turning off electrical items when not in use can lead to noticeable reductions in energy use. Arla Foods is a good example, demonstrating that small actions can make a big difference. By involving employees in its waste audit, it has reduced energy consumption by 16% since 2004.
There can also be broader reputational benefits, particularly for those prepared to interact with customers to understand their attitudes and explore new ways of working together.
Furthermore, by engaging with customers, companies can play a more influential role in reducing emissions across the supply chain, including how their products are consumed as well as developed on the manufacturing floor. This approach empowers businesses to prove that their products are sustainable throughout their lifecycle.
As energy prices remain high and the industry faces the prospect of new legislation to curtail its carbon footprint, sustainability will feature prominently on the boardroom agenda. The question is which companies are prepared to lead the way?