CorpComms Magazine

An incredible 96 percent of UK consumers now know about climate change and 28 percent are very concerned about its effects, according to a recent study by London-based Lippincott Mercer. With such a strong message coming from their customers, companies can no longer afford to ignore the issue.

'Climate change used to be an environmental issue and something that only the environmental press was interested in,' observes Laurel Green, group climate change executive at mining giant Rio Tinto. 'Now there is a lot more engagement from a broader cross-section of the country, and people are slowly moving away from a simplistic approach to the topic.' The issue reached a tipping point this autumn with the release of the Stern report and former US vice president Al Gore's documentary An Inconvenient Truth. Both warn that disastrous consequences will result from the earth's rising temperature and have pushed the climate change debate to the forefront of media and public interest.

'Historically there has been an overall agreement that climate change is happening but no consensus on how best to tackle it,' observes Nick Monger-Godfrey, head of corporate social responsibility at Waitrose. 'But with the release of the Stern report, the media has started to bring consistency and consensus in terms of what businesses need to do to deal with climate change.'

In his 600-page report, economist Nicholas Stern estimates that climate change could cost the global economy up to £3.67tn and displace up to 200 mn people unless a drastic 60 percent

reduction in carbon emissions is reached by 2050. In An Inconvenient Truth, Gore draws similar conclusions about the catastrophic effects of global warming and the need to dramatically

curb greenhouse gases (GHGs). The former presidential candidate has now been tapped by the UK government to come up with strategies for GHG reduction.

Topping the agenda

Response to global warming is moving up the corporate agenda across all sectors as more companies realise the link between climate response and reputation. Eighty percent of FTSE 100

companies identify climate change as a business risk, according to the CarbonNeutral Company. Wal-Mart chief executive Lee Scott recently made waves by announcing his commitment to

reducing GHG emissions across the company's 5,000 stores by  investing $500 mn annually in environmental technologies. And in September, Virgin head Richard Branson made headlines

by pledging £1.6 bn to tackle climate change over the next ten years.

InterContinental Hotels has responded by hiring David Jerome, former head of corporate responsibility at InBev, to come up with its climate change strategy. The company already

has some energy efficiency projects, including a deep-water air conditioning system that cools its Fiji hotel, but in terms of measuring GHG emissions, it's starting from scratch. 'The way we want to respond initially is to make sure we are doing the CR [corporate responsibility] before the PR,' says Jerome, senior vice president of corporate services and corporate responsibility at InterContinental. 'We really want to be the kind of company you trust to do business with over time.'

Nailing 'the CR before the PR' is definitely the right approach to communicating on this topic, agrees Green. 'We have been working on climate change for over ten years now and we don't really promote what we do by making a big splash,' she says. 'We take action and then we tell people what we are doing. We want to deliver on our promises and focus on our track record.'

The heat is on

For some industries, responding to climate change provides a competitive edge and boosts brand reputation. 'The retail sector, for instance, is choosing climate response as a means of competitive differentiation,' observes Abyd Karmali, managing director of London-based consultancy ICF International.

UK supermarkets are in heavy competition to be perceived as the greenest grocer. The race kicked off last spring when Tesco announced a ten-point plan to improve its green status, including a £100 mn investment in green technologies and a customer reward scheme for recycling carrier bags. Other grocers such as J Sainsbury, Waitrose and Marks & Spencer had already been working on energy efficiency, carbon reduction and recycling for years, but Tesco's big splash put more pressure on these companies to promote their green credentials.

For food retailers, responding to climate change is a way to build customer loyalty and brand value. 'We do a lot of stakeholder consultation through focus groups, online surveys and talking

to informed groups,' says Monger-Godfrey. 'We see that customers are very concerned with CSR, and that is synonymous with climate change.'

Waitrose has been measuring its carbon footprint since 1999 and has set a target to make a 10 percent reduction in its absolute emissions by 2010 based on its 2001 trading pattern. Its plan includes sourcing local food and investing £11 mn a year in new refrigeration over the next

five years. The company also recently introduced Euro 4 engines, which emit

76 percent less nitrous oxides and 96 percent less soot than other engines, into some of its delivery vehicles. 'There is a lot of opportunity within our industry to improve our emissions baseline through general good housekeeping and practice,' says Monger-Godfrey. 'It makes commercial sense to use less energy; there is a correlation between carbon emissions and business costs.'

Making the link

Despite corporate efforts to reduce carbon emissions, the general public isn't really aware of what individual companies are doing to tackle the problem. 'Some customers may know we are supporters of the Kyoto protocol and are a member of the Corporate Leaders Group on Climate

Change, but they would not know about companies' individual management of

emissions,' says Monger-Godfrey.

Lippincott Mercer's study shows that even climate-conscious consumers have little knowledge of corporate carbon emissions targets. 'They can talk about the ice melting and the sea rising, but

they can't talk about carbon emissions,' explains Simon Glynn, senior partner with Lippincott Mercer.

Consumers also struggle to associate corporate brands with climate action, so while they may be willing to buy climate-responsible products, they don't know how to identify them. A major stumbling block is the lack of an accurate yardstick to compare corporate actions. 'It is difficult for someone in the media to discern the difference between individual companies' responses,

and consumers have even greater challenges,' says Karmali. 'There is very little in the realm of public disclosure requirements, and that poses a problem for anyone trying to verify and compare.'

The current gold standard for disclosure on carbon emissions is provided by the Carbon Disclosure Project (CDP), an investor consortium that collects GHG emissions disclosures

from around 2,100 companies. 'CDP brings some clarity to the whole reporting format, as do other external parties in comparing companies' efforts,' comments Jonathan Shopley, CEO of the CarbonNeutral Company, which works with issuers to reduce and offset CO2 emissions. 'Still, these factors are almost impossible to compare because people use different protocols and there are all kinds of complications like splitting emissions for a jointly held company.'

This lack of consensus around reporting emissions presents both challenges and opportunities for companies trying to communicate their efforts in this area. 'What we do know is that benchmarking and accurate measures of carbon emissions are key,' says Shopley. 'Setting targets that are meaningful to the climate change challenge and then communicating those to

staff, customers and supply chain partners in a way that changes behaviour and reports a company's commitment is crucial.' The global warming brand BSkyB has taken this approach in launching a major campaign to educate staff and customers on reducing their own carbon

footprints.

In May, the broadcaster became the first media company to achieve carbon neutral status by reducing and offsetting its emissions. Around this time, BSkyB rolled out its Bigger Picture

environmental brand and began positioning itself as a climate change resource for customers and employees. 'This response is driven by an opportunity to influence consumer behaviour and have a deeper relationship with consumers on an issue they are concerned about,' says Ben Stimson, group head of corporate responsibility at BSkyB.

Customers can log on to BSkyB's Bigger Picture web site and learn how to calculate their own carbon footprint and offset personal emissions. Employees can sign up for a carbon credit card that allows them to earn points and collect prizes for actions that reduce emissions, like riding their bike to work or video conferencing instead of travelling. The company has also negotiated discounts for employees wanting to buy hybrid cars and offers £1,000 toward the purchase.

In developing its environmental brand and campaign, Stimson says BSkyB took care to maintain its optimistic ethos. 'The brand doesn't say 'green' anywhere, because there is a real danger with communicating that message,' he explains. 'You may be seen as being too 'tree-hugging' or as asking people to give something up.'

The Bigger Picture message is seen as fitting with Sky's image as a lifestyle-oriented entertainment company while still communicating its stance on climate change. The response to BSkyB's efforts has been strong; 10 percent of its staff signed up for carbon credit cards within

two days of the programme's launch, for example. 'Employees are proud to feel that this organisation is tapping into something that is clearly of concern,' says Stimson. 'And because we have done this in a way that links to our brand, it creates a buzz around the company.'

On the consumer side, Stimson says it's too early to measure, but BSkyB is now carrying out interviews with customers about carbon reduction and plans to use some of these in upcoming ads.

The next step

Experts agree that what is needed to take climate change communications to the next level is a long-term plan for government regulation of carbon emissions. 'There needs to be long-term government policy on climate change because one challenge we have is making sure our investments are based on sound economic principles,' says Monger-Godfrey.

Until there is a solid framework for climate response, all communications will be based on individual companies' assumptions rather than global standards. This complicates forecasting as well as the measurement of efforts over time. 'We are trying to track value creation, but it's difficult as this is a long-term issue,' says Green.

Further government guidance is likely under the UK government's long-awaited Climate Change Bill, which sets out a plan to cut carbon emissions by 60 percent compared to 1990 levels by 2050. The government is also considering extending mandatory carbon caps beyond the most

polluting industries to low-energy-intensive industries such as hotel chains and food retailers.

Once the value of reducing carbon emissions is more widely recognised across sectors, climate change could reach a critical mass in terms of consumer response. 'I fully expect to see

a tipping point for low-emission products,' says Karmali. 'We could have a situation like we had with dolphin-friendly tuna or unleaded petrol, where there is suddenly huge demand.'

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