Irish companies bet their bottom dollar on the green agenda
Decarbonisation is not only good for the environment, it’s good for the bottom line
COP21: Ireland has the advantage of exploiting renewable energy and not producing fossil fuels. Photograph: John Giles/PA Wire
There are no jobs on a dead planet. David Begg, former general secretary of the Irish Congress of Trade Unions summarised things neatly when recently asked to consider the nebulous crossover of business and environmentalism.
“The future of work is dependent on environmental stability.”
The issue can be a slippery thing to grasp because of traditional, if waning, corporate attitudes that a “green agenda” is bad for the bottom line. Today, more Irish companies (and Irish-based companies) are embracing the concepts of carbon reduction and energy efficiency, if not for their own peace of mind, then for that of their investors and customer base.
As the COP21 summit in Paris approaches, strides are being made in this Irish landscape. The global Conference of Parties (COP) is a confluence of public and private interests on climate change. All too often the marquee announcements and outcomes are political, but the business community is an essential component.
The December event will, for the first time in more than two decades of entrenched UN negotiations, aim to achieve binding agreements on action. Many of the 50,000 participants will be from the corporate world and today there is an entirely different perspective on business and the environment than at the Rio Earth Summit in 1992, the precursor to the first UN Framework on Climate Change (UNFCCC).
Accordingly, latest figures from the Sustainable Energy Authority of Ireland show the carbon content of electricity last year fell to half its 1990 level.
“Outside of governments a lot of businesses are looking at Paris in the sense that the world is changing,” says the authority’s chief executive, Dr Brian Motherway, who believes the days of companies not really engaging are over. “They know change is coming. We need policy to evolve in terms of [energy] price and incentives and disincentives so we can start to change. The call is: let’s get on with it.”
Ireland is advantageously placed as a country that exploits renewable energy and doesn’t produce fossil fuels. “We are at a point where what we don’t have is going out of fashion and what we do have is coming into fashion,” says Motherway. “Paris is going to be, in my view, a much stronger sense that things are going one way and we are getting out of fossil fuels.”
Easier and cheaper
“Five years ago if you were talking about clean energy you were probably a bit ahead of the curve. Now for any company who is looking at it strategically there is a sense of inevitability this is no longer an add-on glossy bit.
“It’s become part of the business strategy cycle. It’s about risk. It’s very much part of the boardroom conversation.”
The private sector’s response to environmental realities can be roughly divided in two parts: the corporate world pulling itself into a new frame of mind and the emergence of nascent industries capitalising on it. Of the latter, new ventures are appearing all the time. Among the recently acclaimed are Climote, which uses remote technology to control home heating.
SELC, based in Co Mayo, produces efficient LED street lighting and recently struck a deal in Florida to use its technology to transfer energy consumption data from individual homes through its network of streetlights to the utilities which, in turn, pay for the service.
Similarly, UrbanVolt, which began trading last April, signed a three-year deal with Bord Gáis Energy to become the LED lighting retrofit provider for 30,000 Irish SMEs. In September it announced intentions to invest €30 million rolling out its energy-efficient system.
Diageo has pounced too. In November it officially opened its new, energy-efficient brewery backed by a €169 million capital investment, becoming one of the world’s most technologically advanced and environmentally sustainable operations.
Often green initiatives are employed somewhere along the commercial chain completely unseen by the consumer. Motherway talks about supermarkets beginning to ask producers what they are doing to be environmentally conscious so they can pass the knowledge onto customers.
“There is a shift in consumer demand. I have talked to people in the agri-sector who say Tesco won’t buy their produce anymore unless they have an energy plan or a sustainability plan,” he said. “They call it different things but basically the supermarkets will want to say the stuff on our shelves is not bad for the environment.”
Environmentalism and consumer behaviour has come a long way since “Save the Wales” tuna boycotts, aerosol disdain and soft-drink cans reinvented with secure ring pulls. Inevitably, as the consumer war is increasingly won (to varying degrees) the remaining frontier is largely corporate. But there is a crossover when companies require the support of the public.
This is particularly true of energy. The academic John FitzGerald, when discussing market prices, pointed to the example of post-Berlin Wall life in the Soviet satellites. “Households were not ready for this,” he wrote of Poland, where old fashioned flat complexes had central heating systems which residents could not individually control. As energy prices drew level with western markets, it became unsustainable until the inevitable installation of individual hot-water meters and improved insulation.
Environmental reform and efficiency is often a synergy of commercial and consumer needs. In Ireland, this scenario has played out particularly visibly in wind energy. When SSE Airtricity successfully undertook its wind-farm project in Moycullen, outside Galway, it did so by engaging with locals.
“This is not about arriving when the turbines are going up,” managing director Stephen Wheeler recently said of a scheme which compared more favourably with controversial equivalents in other parts of the country. “It really means going and talking to locals, being clear about our plans. Ultimately this is about keeping the lights on: this is about having an infrastructure in place that supports and enables the transition from having a heavy-carbon to a low-carbon system.”
Set up 15 years ago, the CDP “serves” 822 investment organisations responsible for $95 trillion (€90 trillion) in assets, all of whom are concerned about environmental credentials. In 2015, 28 Irish companies reported their carbon emission status, up from 23 the year before. There are also more than 170 multinationals who report their emissions from Ireland.
“Companies have made considerable progress in recent years, whether by adopting an internal carbon price, investing in low-carbon energy or by setting long-term emissions reduction targets in line with climate science,” Paul Dickinson, executive chairman wrote in the 2015 report.
“Investors . . . use CDP data to help guide investment decisions. Many investors are critically assessing the climate risk in their portfolios, leading to select divestment from more carbon-intensive energy stocks or, in some cases, from the entire fossil fuel complex.”
The bigger Irish-registered companies in the CDP report include Accenture, AIB, C&C and Shire. But, warns CDP Ireland Network chairman Brian O’Kennedy, “much work still needs to be done, with only a third of the top 30 Irish publicly quoted companies reporting, a figure well below the global average.”
Similar words of caution appear elsewhere. Ahead of the COP21, there are those who believe Irish business and industry could be doing more – particularly with crucial systemic supports.
Oisín Coghlan of Friends of the Earth makes the point that standards are one thing but enforcement is another. “[We] welcome all initiatives that genuinely reduce emissions and push actions on climate change, but as the Volkswagen scandal shows, it’s vital that it provides a proper regulatory framework,” he says. “You can’t leave it to companies themselves, even those that seem so prestigious.”
Perhaps not surprisingly, Eamon Ryan, Green Party leader and former minister for energy and natural resources believes a similar lynchpin should be provided at policy level. “I think Irish business is waiting for the political signal that we are serious about this. As soon as they get that we will take off,” he says, referring to the raising of standards in business and construction in particular.
On the latter issue, the Isec-listed Kingspan appears to be making significant progress and the principal regulation it adheres to is its own.
The building materials company was recently placed on the CDP “A List”, among just 113 companies.
In the case of Kingspan, this means impressive targets such as achieving a 100 per cent procurement rate for renewable electricity (target net zero energy) by 2020, and they are well on course.
Again, this is no moral or conscientious epiphany: it is good business, and that is the most compelling message that can ultimately alter the course of global commerce.
Mark Harris, divisional sustainability director, explains the three strands to its strategy are securing energy efficiency, generating their own energy via wind, solar thermal and biomass technologies, and purchasing renewable energy.
“[The CDP report] was a big driver from our point of view but what the CDP also does is it demonstrates to the wider stakeholder community, particularly our customers, what we are doing,” he says.
“It’s a very powerful message to the marketplace. It’s all about payback at the end of the day. Obviously we are a commercial business and we invest in energy efficiency because it pays back.”
Ultimately, strategising for carbon reduction is nothing new to the business world and many are looking to Paris simply to cast it in stone.
Appealing philosophyUnlocking Opportunity: The business case for taking climate action in Ireland.
As a solution it says several components are important to carbon reduction, including a better exchange of user and financial data on the electricity grid; wind power; zero energy buildings; the low-carbon production of food, and easier access to investment capital for such initiatives.
“Decarbonisation,” the report states, will create “tens of thousands of jobs, driving competitiveness and exports, efficiency and productivity gains, innovation, supply chain, development, energy security, health benefits, fuel-poverty alleviation, boosting tax revenues and regional development”.
The dominant analytical approach that “decarbonisation must cost” requires rethinking and as an incentive list, it’s difficult to argue with. If the environment’s troubles are capitalism’s opportunities, there appears to be few reasons left to fight the inevitable. Particularly when it’s all good for business.