Corporate sustainability: the big picture

Many leading global companies - including those in Australia and New Zealand - are seriously embracing sustainability practices. Their leaders understand that this approach is not simply a reporting exercise, but that full and transparent disclosure to all stakeholders is crucial for success in today’s competitive market.

These companies are not only integrating sustainability themes into their overall corporate mission, vision and values, but they also are incorporating sustainability directly into their brand and customer value propositions. 

Stay ahead of the curve with CDP

Results from the CDP (formerly known as the Carbon Disclosure Project) survey in 2012 offer evidence that the S&P 500 is making significant advances in terms of transparency and progress on carbon goals, and that this progress is rapidly moving forward.

While many companies have made significant progress in addressing the risks and opportunities presented by environmental and climate change, many of the CDP’s leading Australian-based members - including those listed in the organisation’s Climate Performance Leadership Index (CPLI) - are ahead of the curve regarding incorporating climate change into their enterprise risk management and strategic decision-making.

This broader view of climate change and environmental impact has enabled these companies to lower energy costs, increase productivity and obtain the necessary knowledge needed for development of current and future low-carbon, energy-efficient products and services.

These companies are also taking the physical risks that stem from climate change seriously, especially since there is increasing realisation that an escalation in the frequency and severity of extreme weather events can threaten business continuity with interruptions in power, supply and transportation networks.

The data compiled and reported by CDP has had tremendous impact on current and future business behaviour. It offers insights for executives who are trying to understand why climate change matters, and it allows companies already taking action to track their progress and better inform their critical policy and planning decisions.

Qantas Group focuses on carbon footprint

Qantas is one company that has taken these issues seriously. Fuel optimisation - which represents around 95% of the group’s carbon footprint - is the cornerstone of the airline’s environmental strategy. The airline is committed to emissions reductions, pursuing the commercialisation of sustainable aviation fuel in Australia, investing in more fuel-efficient aircraft and engine technology and process optimisation.

For example, in April 2012, Qantas was the first Australian airline to operate a commercial flight using sustainable aviation fuel (SAF). Along with industry partners, the airline recently conducted a study - Australian Roadmap to Sustainable Aviation - that explores the feasibility of an Australian SAF industry from a policy, technology, environmental, social and economic perspective. Findings estimated the creation of up to 12,000 clean energy jobs, a 17% cut in emissions and a $2bn reduction in the reliance of fuel imports.

The group recently reported that it’s investing in newer, more fuel-efficient aircraft. These investments are being complemented by a focus on technical and process initiatives that improve fuel performance, including, but not limited to:

• collaboration with air traffic management providers to improve airspace usage and implement new procedures;
• engineering initiatives that improve technical performance of aircraft, such as ground power unit and pre-conditioned air implementation, and new aircraft wash techniques; and,
• process optimisation procedures that improve aircraft performance, such as load management and refined scheduling procedures.

The Qantas Group is also committed to reducing its impact of aircraft noise on surrounding communities. It is a leading proponent of GPS-based Smart Tracking, which has been used at Canberra Airport to redesign flight paths to move noise away from residents. This GPS-based navigation technology has also helped improve the airline’s overall operational efficiency.

BHP manages environmental impacts across all phases of business

While Australian-based mining and petroleum company BHP Billiton is headquartered in Melbourne, the world’s largest mining company owns and operates a diverse range of businesses in different countries and ecosystems around the world.

As a global organisation operating in an energy-intensive industry, the company’s leaders actively seek to manage risks associated with climate change. For example, potential physical impacts of climate change on BHP’s operations may include changes in precipitation patterns, increased storm intensities and higher average temperature levels, which may adversely affect productivity and financial performance.

The company’s operations and fossil fuel products are exposed to potential financial risks from regulations to control greenhouse gas (GHG) emissions. BHP strives to continually improve energy and GHG management: its operations with material emissions must implement and maintain Energy and GHG Management Plans. These plans include a five-year forecast and identification, evaluation and implementation of energy-efficiency and GHG-reduction projects. Emissions abatement and energy savings are key considerations in the company’s decision-making and BHP undertakes transparent public reporting of its emissions.

For example, in FY2012, the company’s carbon-based energy intensity and GHG emissions intensity were lower than the FY2006 baseline, by 15 and 16%, resulting in the successful achievement of its FY2012 target of 13 and 6% respectively. This result was primarily driven by the use of hydroelectric power to supply 98% of the electricity needs at the company’s Mozal aluminium smelter in Mozambique. The result also reflects successful implementation of energy-efficiency projects and reductions of fugitive methane emissions.

Additionally, in compliance with the national Energy Efficiency Opportunities (EEO) Act 2006, BHP recently progressed a number of energy-efficiency measures. One example is at its Base Metals Cannington underground mine, in north-west Queensland, which now individually controls the start-up and shutdown of each of the mine’s secondary ventilation fans. The new system allows fans in areas of low or no activity to be individually shut down, saving approximately 100 terajoules of energy per year.

Using big data for corporate sustainability

To efficiently and profitably manage carbon and energy, it means properly managing equipment, processes and people. And, in many cases, changing the way people work has as big an impact on reducing energy and carbon as making equipment improvements and upgrades. Management is now taking advantage of new technologies that allow companies to track energy and carbon as frequently as minute by minute and to collect data from complicated supply chains. This type of data shows where energy is being used unnecessarily - pointing to opportunities to change behaviour to facilitate energy and carbon reductions. Monitoring processes can identify areas for lowering energy use and emissions mitigation.

All of these activities lead to better corporate stewardship, improved profitability, better branding, improved products and more. By using the latest in carbon data standardisation, life cycle assessment services, network design, optimisation and planning systems, executives can integrate environmental practices within their company and supply chain; while at the same time provide investors with a transparent view of their organisation. And, with numerous companies available to assist with carbon collection and reporting, executives are better able to stay aware of the ever-changing rules and regulations governing compliance on a local, federal, national and international level.

More Australian companies are starting to recognise that failure to anticipate and properly prepare for the impacts of climate change may leave them without adequate plans to mitigate damages to their business, develop new products and implement business strategies necessary to respond to changing customer needs.

Failure to successfully execute a proper climate change strategy could risk damaging the attitudes of stakeholders against those who choose not to plan.

The consequences could ultimately affect reputation, as well as damage customer loyalty and overall investor confidence.

*Dr Chet Chaffee is the Director of Sustainability at FirstCarbon Solutions. Previously, Dr Chaffee was an executive vice president at Scientific Certification Systems where he directed over 200 life cycle and sustainability initiatives for General Motors, Home Depot, Unilever and more. He also helped found Boustead Consulting & Associates, a subsidiary of Boustead Consulting, a European life cycle firm. With over 50 technical papers to his credit, Chaffee has provided expert testimony before the US House of Representatives, the US Environmental Protection Agency and the Federal Trade Commission.