Dramatically reducing the corporate carbon footprint World Environment Center & Environment Science Center Euan Murray 25 th October 2007

Agenda Introduction to the Carbon Trust How we support companies to drive change Working in supply chain & product footprinting

Introduction to the Carbon Trust Who we are: Independent company, funded by UK Government Our role: Help organisations reduce their carbon emissions and develop commercial low carbon technologies Last year we: Worked with >5,000 companies across UK Identified savings of 4.6 million tCO2 worth £0.5 Billion in cost savings per year

Introduction to the Carbon Trust We align private sector interests with public sector objectives: –Our funding comes mostly from government, but –Most of our board members are from the private sector –In 2006/7 we had a budget of ~£110m and a staff of ~150 We are a company driven by our mission: to speed the transition to a low- carbon economy We are focussed on cost effectiveness - £/tonne CO2 saved now or in future through new technologies –We design and manage public sector-funded programmes, leverage in private sector funds where possible and re-invest our own returns –As a Company Limited by Guarantee we can make profits but do not issue dividends

Agenda Introduction to the Carbon Trust How we support companies to drive change –Our 5 business areas Working in supply chain & product footprinting

We are reducing the technology and market risks of investing in a low carbon economy #1: Insights §Aim: To increase awareness of climate change and the risks and opportunities it presents §Published 6 reports in 2006, e.g. §Allocation & Competitiveness in EU Emissions Trading Scheme §Brand Value at Risk §Aim: To overcome technical barriers and lower investment risk §114 R&D projects §Technology acceleration projects: marine, microCHP, smart-metering, biomass for heat, low-carbon buildings §36 companies in business incubator #2: Innovations

* Made up of a combination of listed and unlisted equity and cash received from sales awaiting re-investment before tax as at March 2006 ** Gross portfolio IRR from date of first investment (July 2002) to 31st March 2006, based on BVCA guidelines and including cash returned §Aim: To fill gaps in the market and make commercial returns §Launched “Connective Energy” §2 new low carbon businesses under development: §Partnerships for Renewables §Insource Energy §Aim: To demonstrate good financial returns from low-carbon investments §Portfolio of 6 investments with a value of £13.0m* against acquisition cost of £6.7m (31% IRR**) §Launching £75m clean-tech fund And we are creating the business case for the low carbon economy #3: Enterprises #4: Investments

#5: Solutions works with companies to manage their carbon footprint Company Regulation Profits Reputation Current threats… Increase Profits Reduce costs through energy management Improve operational effectiveness Develop new products or grow market share Manage risks to fixed assets & supply chains Comply with Regulation Ensure compliance with legislation e.g. EU Emissions Trading, Climate Change Levy, Buildings Directives etc. Enhance Reputation Maximise brand & reputational impact of reducing carbon emissions Engage consumers and other stakeholders …lead to opportunities to.. Through Carbon Management, we help organisations identify current threats and future opportunities

#5: Our Solutions business worked with >5,000 companies last year

We help companies save energy costs and reduce their carbon footprint NPV of Solutions Programme 2005/6 £m Carbon Trust costs Capital investment by companies PV of lifetime energy savings NPV of total cost saving (32) (140) Source: Carbon Trust Impact Assessment 2006; PIU report Feb 2002; Energy White Paper

What is good carbon management? Stage 1: Direct Company Emissions Reduction Stage 2: Supply Chain Emissions Reduction Stage 3 (Optional): Offsetting

Agenda Introduction to the Carbon Trust How we support companies to drive change Working in supply chain & product footprinting

What is the footprint of a product?  Aluminium Production  Sugar farming  Cola production  Packaging  Transportation  Chilled storage  Refrigeration  Can collection  Recycling or disposal Disposal & recycling Consumer use Raw material Product manufacturing Total carbon footprint of the can of cola (illustrative) Supply chain / value chain of a can of cola Distribution & retail

Why the “product view” is key Targets >50% of emissions –Individual carbon footprint of 11 tonnes CO2 p.a. The UN/IPCC, Kyoto Protocol and China The market – consumers and brands

March launch of our work Product Carbon Footprinting Methodology Product Label Standard development & international consultation Defra & BSI British Standards Pilot Development Projects Launch focussed on 4 key things:

Carbon reduction label §Independent measurement §“Reduce or lose” commitment

New Pilot Projects CT testing the draft BSI standard with different products and in different sectors The partners will work with us to reduce their emissions and explore the best way to communicate the results 9 new projects: Aggregate Industries Hard landscaping products Cadbury Schweppes Dairy Milk bars Coca-Cola A still and a sparkling beverage The Co-operative Group Strawberries Halifax Halifax Web Saver Account Kimberly-Clark Andrex and Huggies nappies Marshalls Hard landscaping products Mϋller Dairy Yoghurts Scottish & Newcastle Fosters lager & Bulmer’s cider We will do further pilots throughout the year

Standard Development BSI are leading the work to develop the PAS Standard –Appointed a Steering Group from business, NGO, academics and government –First draft prepared, using the CT methodology as base –First of two consultations commencing shortly –Details on the BSI website: International engagement in consultation is key –Single standard for multi-national companies to use –International expertise –New markets & partners for the Carbon Trust

Making Business Sense of Climate Change QUESTIONS

Backup

Supply chain emissions reductions §Supplier energy efficiency – encouraging them directly §Calculating product carbon footprints – identifying hotspots §Trinity Mirror example

Food miles as a proxy for climate change Walkers 34.5g Cheese & Onion Innocent 250ml Mango & Passion Fruit Total = 75g CO2eTotal = 294g CO2e Potato distribution: <1% Making nitrogen fertiliser: >15% Source: Carbon Trust Low Carbon Supply Chain Pilot, March 2007 Cutting food miles is important to reduce transport impacts BUT Food miles is a poor indicator of the overall impact Local sourcing may increase the footprint of a product Growing & Packing: 23% Raw materials transport: 14% Making the packaging: 30% Smoothie-making: 21% Distribution: 10% Disposal: 2%

The business need is growing Further energy cost savings –e.g. 20% reduction on Boots Shampoo project Historical cost-saving strategy Consumer demand for companies to take action on climate change –Carbon Trust (Oct 2006): 60% of consumers want to buy from companies doing the right thing on climate change Consumer desire for low-carbon products –Globescan for LRQA (March 2007): 60% of UK consumers want companies to provide more PoS information on climate change impacts –77% want independent assurance of company claims on climate change New market strategy

Standard Development BSI are leading the work to develop the PAS Standard –Appointed a Steering Group from business, NGO, academics and government –First draft prepared, using the CT methodology as base –First of two consultations commencing shortly –Details on the BSI website: Food & Grocery sector heavily involved: –2 representatives on the BSI Steering Group –Support from IGD, FDF, BRC and NFU –Lots of members of those organisations Engagement, support and efforts invaluable