Perspectives in Responsible Sourcing

Carbon Footprinting: Just one aspect of a robust climate change strategy, PART 2

Editor's Note: This is a two-part article by Michael Kelly of KPMG, discussing his firm's climate change strategy.  Part one of the article, which provides details of the KPMG program, appeared last week and is available at http://cscc.typepad.com/responsiblesourcing/2008/06/carbon-footprin.html.

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Some of the challenges

The scope of what we are measuring is not the entirety of our foot print and takes no account of the embedded carbon in our buildings or vehicles. If you really adopt a life cycle costing methodology then you will want to know whether changing a vehicle to a newer more efficient one will reduce your overall carbon footprint or if the carbon cost of producing it outweighs any savings in revenue terms. Likewise measuring the embedded carbon in a building new or old is in the ‘too difficult’ box at the moment. Further scope issues arise in terms of such as commuter travel to work and the impact of suppliers providing the business with goods and services.

As the systems have developed we have added additional dimensions and coupled these with programmes to address behaviour change. For example we previously ran a suggestion scheme with environmentally focused prizes open to all staff, suppliers and clients as well – challenging them to suggest how we might change for the better. Internally our Responsible Consumption programme is now in its fourth year. This looks at all aspects of office life and in recognition of any environmental (and financial) savings shares the benefits with the staff selected charity. All of these programmes need constant refreshment and targeted innovative communication if they are to remain at the front of peoples mind and help embed change.

The Future

It will not be too many years before all of the emerging standards and systems in this area come together and there is a common global standard. This will help us all to understand our own businesses’ performance more clearly and challenge ourselves more robustly to achieve more.

We are due to occupy a new head quarters building currently under construction in Canary Wharf in 2010. At that time we will know whether all of the environmental strategies adopted will operate as planned. It is designed to exceed all current regulations and to be future proofed for the medium term. Our people can now talk about tri-generation as an energy strategy and the benefits or otherwise of a sedum roof. We do not yet know what the market will be for recyclates but by thinking it through now we will be better prepared when that day comes. Increasingly our clients expect it and our people whether potential employees or alumni do so as well. Our current employees are all part of that journey.

Finally it is expected that a global agreement on targets for emission reductions will emerge in Copenhagen before the end of next year. With this the long term framework within which we all operate will have greater certainty and that will support longer term investment decisions. This will drive the environmental technologies market and carbon foot printing will be one of the parameters used in such decision making.

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Michael Kelly is the Head of Corporate Social Responsibility for KPMG Europe. 

Mike leads KPMG’s CSR programme in KPMG Europe and contributes to its developing programme across Europe, Middle East and Africa.

Reporting directly to the Europe Board he is responsible for the policy development and implementation of environmental management and community engagement across all activities of the firm.

Under his direction KPMG has been ranked 1st for Giving Something Back by The Sunday Times for the last two years and 1st for Corporate Social Responsibility by the Financial Times.

Additional activities include Chairman of the Corporate Responsibility Group, main Board member of Business in the Community (BITC) and Director and Trustee of Missionfish – delivering charitable giving capabilities for E-Bay. He is also a Visiting Professor in Finance and Accounting, Strathclyde University, Glasgow Scotland.

He can be reached at michael.kelly@kpmg.co.uk.

Carbon Footprinting: Just one aspect of a robust climate change strategy, PART 1

Editor's Note: This is a two-part article by Michael Kelly of KPMG, discussing his firm's climate change strategy.  Part two of the article, which summarizes of the challenges and future outlook of the KPMG program will appear next week.

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KPMG in the UK has had a pro-active approach to environmental issues for a long time - our environment policy was first placed in the public domain some 8 years ago. This long term commitment to addressing issues of consumption patterns, resource use and of course climate change means that we have been measuring and managing our environmental footprint for a long time before it became fashionable to do so. Our work has influenced investment decisions, particularly around our new Head Quarters building being constructed in Canary Wharf and our management systems; we are still the only professional services firm to have all of its UK offices certified to the International Management Standard ISO 14001.

We do consider it is important to know what our carbon footprint is and how to influence it, however there are a large number of steps to be taken before a professional services firm focuses on the carbon footprint itself. The detail below deals with carbon foot printing but it would be wrong not to flag up the need to take a much more strategic approach to all environmental issues, one aspect of which would be the reporting mechanism and methodologies. If the purpose of measuring the businesses’ carbon foot print is to consider how best to reduce it then that should be part of a wider discussion around the whole environment strategy.

Calculating our carbon footprint

The carbon footprint for KPMG is reported to the Board regularly and in a form that enables all Board members to quickly identify where our environmental impact is lightest and broken down geographically as well as by sources of carbon. The engagement at Board level means that the discussions on specific environmental strategies are grounded in the reality of the business strategies and integrated into decision making – rather than an add on or after thought. It takes a cross-functional team to put together the numbers for the Board and the role of the CSR function in the process is that of ‘collator’ of information rather than ‘owners’. This has two explicit benefits; the individual functions and disciplines own their aspect of the carbon footprint of the Firm and the decisions on actions to mitigate or adapt are made as business decisions by those with the ability to make them happen – which is not the role of the CSR function.

Carbon Management

The first decision to be made is what is to be measured; this might seem obvious but there are no global standards in this area, they are under development but there is guidance from National Government as well as the EU and specific industry and sector standards. The boundaries of responsibility and the existence or otherwise of measurement systems generally dictate what is to be measured. For instance the carbon foot print of the supply chain is not something that is generally captured by existing management information systems but the expenditure on business travel is.

For KPMG the first cut in 2001 included energy in buildings we occupy as well as business travel by car. The energy data, gas, electricity and oil, was needed as part of a broader project to look at the efficiency gains of procuring these goods from a single supplier rather than simply measuring for measurement’s sake. At that time the UK Government was introducing the climate change levy and as part of our broader approach our electricity tender asked for the comparative pricing from sourcing electricity from renewable sources. We did find that the information most valued by potential suppliers was our ability to forecast when and how much energy we would be drawing from the grid; rather than simply the financial size of the contract. Our own use of that data allowed us to benchmark comparable buildings and look for further efficiencies in the way in which the buildings were run as well as consider specific investments We now have a Utilities Steering Group (which includes water management) chaired by our European Head of Facilities and including attendance by two key suppliers who address all aspects of our performance. This ranges from the changing needs of the IT Functions through to the comfort of our people at work. We know that a well managed office environment supports our people and poor conditions impact on efficiency and productivity as well as increasing our environmental impacts.

The taxation authorities' guidance around mileage allowances and the alignment with the carbon emissions of the vehicle mean that it is quite a simple exercise to map financial spend across to the carbon load from this mode of travel. It is also a very good time to promote car sharing for environmental, economic and societal reasons. None of our clients would expect a team of 4 to arrive on site in 4 separate cars nor would it in any way add to the strength of the client relationship. Additionally by incentivising drivers to take passengers we have avoided between 600,000 and 800,000 miles of travel a month.

Since that first iteration we have worked across the different business functions so that now we can report on our impact from air travel and the carbon equivalent emissions from the waste we send to landfill. This latter aspect is frequently overlooked but is a significant proportion of the foot print for any office based service business.

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Michael Kelly is the Head of Corporate Social Responsibility for KPMG Europe. 

Mike leads KPMG’s CSR programme in KPMG Europe and contributes to its developing programme across Europe, Middle East and Africa.

Reporting directly to the Europe Board he is responsible for the policy development and implementation of environmental management and community engagement across all activities of the firm.

Under his direction KPMG has been ranked 1st for Giving Something Back by The Sunday Times for the last two years and 1st for Corporate Social Responsibility by the Financial Times.

Additional activities include Chairman of the Corporate Responsibility Group, main Board member of Business in the Community (BITC) and Director and Trustee of Missionfish – delivering charitable giving capabilities for E-Bay. He is also a Visiting Professor in Finance and Accounting, Strathclyde University, Glasgow Scotland.

He can be reached at michael.kelly@kpmg.co.uk.

Event Summary: 2008 Ethos Conference, Sao Paulo, Brazil

As many of you know, the Ethos Conference is one of the largest CSR events in Latin America.  This year, STR Responsible Sourcing (formerly CSCC) was able to send one of our research associates, Rishi Arora, to the event to take in the activities and discourse.  We recorded an interview with Rishi where he talks about what is hot in the Latin American CSR world based on his time at the conference.  We now share this experience with you, in case you were not able to make to Sao Paulo yourself.

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