Business guide on carbon emission redution and sustainability

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Overview

Purpose of the Guide: Enables every business whether it is a small, medium or large enterprise, to play a role in addressing climate change. Guide written for senior managers, green teams and general staff.

Why reduce emissions? The Business Case: Risks and Opportunities.

How can businesses reduce their emissions?We propose a six step approach.

What are the solutions? There are many solutions available, ranging from low cost, simple actions such as energy efficiency to cost effective long-term investments.

2Every business has a role to play in addressing climate change.

Why Do We Need to Reduce Emissions?

Greenhouse gas emissions (GHG) in the atmosphere are reaching a critical level. If the increase in emissions continues there is a high risk that this will create catastrophic, or so called ‘runaway’ warming of the planet.

The Intergovernmental Panel on Climate Change (IPCC) estimate that we have ten years in which to stabilise emissions to a maximum of 450 parts per million (they are currently at 430ppm) so as to stabilise global temperatures to a safe level at or below 2 degrees of warming.

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What is the Difference Between Air Pollutants & Greenhouse Gases?

Hong Kong’s air pollution is a local and regional problem caused by air pollutants such as sulphur dioxide (S02), nitrogen dioxide (NO2) and particulates (PM10 and PM 2.5) and Ozone (O3).

Air pollutants tend to have a short lifetime & impacts occur relatively close to emission source.

Air pollutants are defined as such as also those that endanger the health, safety, or welfare of persons.

Important differences between air pollutants and GHGs•The climate change problem refers to a concentration of greenhouse gases: water vapor, carbon dioxide (CO2), methane (CH4), Nitrous Oxide (N2O), chlorofluorocarbons(CFCs). •Greenhouse gases are a global problem whereas air pollutants are more localised.•Greenhouse gases stay in the atmosphere for much greater periods of time. •The impact of greenhouse gases is not easily visualised.

What Does this Mean for Hong Kong?

Air pollution…• Causes poor air quality, which has human health and monetary impacts.According to the Hedley Index, air pollution in Hong Kong cost a total of approximately HK $12.4 billion from 2004 to 2008.

Climate change & Hong Kong • Will bring a warmer and wetter climate, with more frequent extreme weather events. • Mean temperature increase of 4.8 degrees expected by 2100.

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The Business Case. The Risks & Opportunities

Avoids Costs of Reduced Risk &

Stranded Assets

Cost Savings

Improved Energy

Efficiency

Enhanced Reputation and

Leadership

Reduced Risks from

Legislation

Competitive Advantage

Six Reasons Why ReducingEmissions Makes Good

Business Sense

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What Are the Risks for Business?

Every business has a role to play in addressing climate change.

• Companies will need to consider the impact on their business of having to pay for GHG emissions. While this is not an immediate prospect in HK - other countries are moving rapidly towards introducing charges/ penalties for GHG emissions. Companies need to consider- Additional expenditure on infrastructure and other adaptation measures- Increased business interruption in the SAR and the supply chain.- Likelihood of tougher buildings standards - An increase in carbon regulations- Penalties/ charges for greenhouse gas emissions

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The Risks1. From legislation- Tightening regulations around energy efficiency, building standards, waste and emissions are occurring worldwide; it is only a matter of time before Hong Kong gets hit with the same regulations.

2. Costs of physical risk & stranded assets- Costs of damage as a result of extreme weather events, or stranded assets as loans get more expensive because of the higher risk associated with high emission assets.

CLP consider future carbon prices & how and when regulations may

change so as to ensure their business strategies are robust.

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The Opportunities. Less Energy = Cost Savings

Hang Lung Properties has incorporated sustainable design practices into all of their new developments in mainland cities. Through this they achieved a saving of over 25 million kWh and HK$28 million in 2005 to 2008.

3. Energy efficiency- Energy saving initiatives such as building insulation, heat pumps, water chillers, solar heating and efficient appliances substantially reduce the energy consumption in our buildings.

4. Cost savings- According to the Carbon Trust, a 20% cut in energy costs represents the same bottom line benefit as a 5% increase in sales in many businesses.

1.3 million KWh of power was saved by the Bank of East Asia p/a via water cooled chillers installed at their headquarters in Central.

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The Opportunities

5. Climate Leadership mattersCompanies are being ranked on their climate performance and commitment. Climate Counts Company Scorecard recently rated the pharmaceutical sector as the highest performer, outperforming 13 other sectors.

6. Competitive advantage- By responding early to emissions, companies have the opportunity to influence and shape policy development and therefore have more control over the future business environment.

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How Can Businesses Reduce their Emissions?

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First HK company to develop a Climate Change Policy to provide direction on how it can reduce its

emissions, such as through optimising energy use, educating staff and upgrading equipment.

Three key elements of an emissions management strategy: Establish an explicit policy direction for

emissions reduction Assign responsibility and accountability Set out reduction targets and timelines

Step 1. Prepare an Emissions Management Strategy

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Step 2. Measure Energy Use and Emissions

Introduced a company-wide ‘Project Environmental Performance Data Form’ in 2003 to provide monthly

updates on the environmental impact of its transport,

construction, equipment usage and electricity consumption.

The GHG Protocol provides an international standard in accounting for

GHG emissions.

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Set targets that work by ensuring that they are SMART:

SpecificMeasurableAchievableRealisticTime-related

- Benchmark your performance by comparing your operations over time, different departments or your company with other companies.

China Light and Power (CLP) ‘Climate Vision 2050’ includes an aim to achieve a 75% reduction in

the carbon intensity of their generating portfolio by 2050.

Interim targets are set to reduce carbon intensity from 0.84kg carbon

dioxide/KWh (as at June 2007) to 0.8kg by 2010. 0.7kg by 2020 and

0.45kg by 2035.

Step 3. Set Targets and Compare

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- Identify easy wins and implement. These can be low cost and simple actions, but will demonstrate your commitment to emissions reduction.

- Identify energy intensive activities and start reducing immediately

- Identify medium term and long-term actions and commit to doing the most appropriate for your business.

- Establish ‘green’ procurement, including energy efficient equipment, premises and vehicles.

‘Global Responsible Sourcing Initiative’

By 2012, suppliers must make a 20% improvement in their energy efficiency and source 95% of

production from factories with the highest environmental and social

ratings.

Step 4. Implement Initiatives

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Step 5. Offset to Become Carbon Neutral

CX’s Fly Greener programme offers passengers the option of using cash or frequent flyer miles to pay for carbon offsets. Since launch in 2007, they have offset 30,000 tonnes of carbon emissions and invested in wind power generation projects near Shanghai. These wind projects are registered under the Voluntary Carbon Standard.

The world’s first major bank to achieve carbon neutrality since 2005. The bank offsets its remaining emissions through investing in third-party verified projects that generate credible carbon credits from both the compliance and the voluntary markets.

Carbon neutrality is when an organisation cuts/and or offsets its emissions to zero.

Some of the most popular carbon offset projects from a corporate perspective are energy efficiency and wind turbine projects .

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Results on performance should be regularly reported and reporting should include how targets have been met and ways to improve performance in the future.

Installed a building information management system that collects

information on building operations and energy consumption. This

allowed Swire Properties to achieve an estimated energy saving of

3383MWH in 2007, which equates to 2717 tonnes of carbon dioxide.

The trend will be that carbon reporting will become compulsory

In Australia a large number of businesses (are) & will be required to monitor and report their energy use and greenhouse gas emissions. This is particularly relevant to sectors such as commercial buildings and vehicle fleets which were typically below the previous (higher) thresholds.

The UK government recently amended the Climate Change Bill to strongly encourage all UK listed companies to include details of GHG emissions in their annual reports. 17

Step 6. Track Progress, Audit and Report

What Are the Solutions?What options are available for switching to a cleaner and more efficient energy future? How much will it cost? The good news is that many cost-effective solutions exist today and a number of emerging technologies look to deliver more substantial reductions in the future.

Businesses that look for solutions now and seize the opportunities will be the successful companies of the future.

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Where Do HK’s Emissions Come From?

There are many cost-effective solutions for each of these high impact areas.

How is Hong Kong’s energy being used?

Where do Hong Kong’s emissions come from?

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Hong Kong Buildings Guzzle!

Buildings are responsible for 89% of electricity used (EPD 2006). Most of a building’s energy consumption comes from its operational practices such as cooling, heating and lighting.

Besides energy use, other areas of concern for buildings are the generation of waste, use of construction materials and how they are recycled, water use, discharge and how buildings are integrated with other infrastructure and social systems.

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The Business Case for Green Buildings

The business case for greener buildings is well established. A US study found that certified green buildings cost 1.8% more to design and construct, but yield 20% cost savings over the life of the building.

A significant problem encountered while achieving these benefits include short term decision making, isolated procurement and split incentives - where the party who pays for a more energy efficient building is different to the party who benefits from the saving in energy.

Hong Kong’s Building Environmental Assessment Method (BEAM) provides a systematic, locally relevant approach to including environmental performance in the planning, design, construction, operation, management and marketing of buildings.

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EE = Low Hanging FruitEnergy efficiency is one of the quickest, cheapest, cleanest ways to address reducing emissions.

Energy saving initiatives such as building insulation, heat pumps, solar heating and efficient appliances can substantially reduce the energy consumption of buildings.

Many of these can be installed with little or no cost through building design and good management practices of building operators and occupants.

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No - low cost:- Turn off air con as you leave room- Adjust and maintain existing systems- Set appropriate temperatures (25.5)- Set appropriate dress codes- Use fans- Reduce leakageMedium Cost:- Install insulation, tinted windows &

double glazing etc.- Consider paints, surfaces and planting- Install a building management system

to optimize energy efficiency- Install variable speed drives to enable

pump and fan speeds to be controlled- Follow schemes such as BEAM and

LEED provide guidance on new buildings

High Cost:- Install/retrofit a water cooled chiller

system. These are up to 50% more efficient

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1. Solutions for Space Conditioning

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2. Solutions for LightingNo - low cost:- Turn off lights- Organise office to maximise use of

natural light- Clean light bulbs and fittings - Change lights to more efficient compact

fluorescent lamps (CFLs)- Install sensors to turn off lights when

rooms are nor in use- Use mirror reflectors for twin tube

fluorescent to reduce the number of light bulbs needed

- Set appropriate illumination levels- Change lights to more efficient Light

Emitting Diode (LEDs).

These are not suitable for all locations but are good for building facades, traffic signals and exit signs

Medium Cost:- Install dimming ballast and controls to

control artificial light in relation to the level of natural light

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Immediate, low cost:- Purchase in bulk- Select reusable packaging- Buy only what you need- Reuse and recycle

Medium-term:- Reduce packaging- Develop a waste management system- Develop a water management system- Maintain existing water system- Save waterLong-term:- Extract energy from waste

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4. Solutions for Office EquipmentImmediate, low cost:- Turn equipment off to prevent wasting

energy- Reduce equipment usage, by only

turning on the piece of equipment you need

- Recycle and re-use office equipment whenever possible

- Place equipment near naturally ventilated areas, such as photocopiers that generate heat and put increased pressure on air conditioning units

The Business World is Changing

New business environment

New brand landscape

New consumer culture

Legislation and regulation mean sustainability is more than a “nice to have”

Consumers expects brands to take action on global issues not just on brand issues

Consumers want to know what’s behind your company image

93% of Chinese people would rather buy from companies that are trying to reduce their contribution to global warming (Havas 2008)

85% of Americans would switch to another company's products or services if they found out about a company's poor corporate responsibility (National Geographic Greendex Survey 2008)

New EU legislation on carbon emissions, energy efficiency, waste, recycling and water is out in 2009; other countries will follow soon

New economic environment

In the global economic crisis, everyone is focusing on their bottom line

Environmentally focused companies have performed up to 33% better that their peers in the financial markets (AT Kearney 2009)

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What’s Your Story?

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More Information

We would like to direct you to the online version of the guide found at:

www.climatechangebusinessforum.com

Kindly encourage your colleagues and supply chain contacts to have a look at the guide.

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Thank You. Please contact the CCBF Secretariat if you have any further questions.

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