Global climate change, rising seas, warming of the earth; and two degrees temperature limit! If you are confused or perhaps just tired of being inundated by all the terminology, jargon and mixed messages associated with climate change, I am afraid I am going to have to introduce you to another familiar favourite – the Carbon Footprint.

This article isn’t intended to facilitate or debate the merits of any of the arguments related to climate change, but rather help you understand how to capitalize upon and extract meaning and value from your business or organisation’s Carbon Footprint.

An annual carbon footprint assessment usually forms part of an organisation’s governance requirements, as such it’s one of the biggest motivation for companies to continue measuring their carbon footprint; the figures are often included in their integrated annual reports. However, as organisations begin realising the benefits of collating a non-financial database as a reference and management tool, this encourages them to assess their footprint year-on-year.

Undertaking an annual carbon footprint assessment provides organisations with a database of non-financial data. This data can then be used to benchmark the company’s performance year-on-year, as well as provide comparative reference against industry standards and competitor’s performance; thereby highlighting inefficiencies within the organisation. Identifying these inefficiencies and implementing projects to reduce them results in direct cost saving opportunities for the business.

Often the largest portion of an organisation’s carbon footprint assessment (especially in South Africa) is electricity consumption. Through the analysis of electrical data; which primarily includes identifying anomalies and benchmarking, inefficiencies can be identified. For example, Terra Firma Solutions calculated the carbon footprint of a large shopping mall located in South Africa and found that it was inefficient when benchmarking its kWh/m2 against industry standards. The mall therefore undertook an energy assessment which led to a lighting retrofit project. It’s worth noting that this mall had only just completed a major renovation two year’s prior which included installation of the lighting that was subsequently retrofitted! A clear indication that the Electrical Services company had not considered the most energy efficient solution but rather the cheapest. If you haven’t read our earlier article, “Is your Electrical Services company designing for efficiency in mind?” read it here.

 

There are unfortunately limited industry specific Carbon Footprint benchmarks available to us, however in South Africa we are able to use SANS (South African National Standards) 204: Energy Efficiency in Buildings; which includes the maximum annual consumption for different building classifications and different climatic zones. For example, the SANS 204 specification for an office building in Johannesburg is 200 kWh/m2 for energy efficiency.  Therefore, by reviewing the Carbon Footprint of your organisation and attributing the amount of CO2 relative to your facilities or organisation in general, you can quickly identify inefficient operations.

A lot of what has been discussed above refers only to electrical energy as it is often the most common portion of the Carbon Footprint that can be identified and addressed, however, it should be remembered that there are various other contributing factors to a Carbon Footprint, including all other fuels utilised by an organisation such as petrol, diesel, gas, coal etc. Even staff and supplier’s activities and fuel consumption plays a role.

A Carbon Footprint is often one of the only non-financial reporting tool an organisation has available to understand its own environmental impact, hence the importance of it identifying where inefficiencies exist.

So who assesses your organisation’s Carbon Footprint? You have two avenues of choice here; first, train someone in your department to undertake this task. This is not to be taken lightly! It requires the recording of annual, non-financial data which can be difficult to find and collate, but also requires detailed analysis to ensure it meets the GHG (Greenhouse Gas) Protocol which is the industry standard. Or you could employ a specialist consultant to help you through this process by conducting the analysis and developing the report for you

After an organisation has completed its carbon footprint it is a good idea that the footprint is externally verified by audit. External verification by an independent, and unbiased third party improves the credibility of your carbon footprint assessment. After verification, you receive a verification statement which proves that your footprint has been audited. The verification statement can additionally be used to meet mandatory and voluntary reporting requirements. You will also receive a verification report which includes recommendations on how to improve your footprint overtime, as well as high-level recommendations on how to reduce your emissions. Hence, verification delves further into your organisation by identifying inefficiencies and promoting cost saving opportunities.

One final consideration; not only can you identify your organisation’s annual Carbon Footprint, but you can also assess a product’s impact on the environment by undertaking a Product Carbon Footprint, often referred to as a Life Cycle Assessment.

A product carbon footprint explores the value chain of a product, including both upstream and downstream activities –from raw material production to end-product (cradle-to-gate) or from raw material production to consumer use and disposal (cradle-to-grave). Including upstream and downstream activities allows an organisation to gain insight into the broader impact of its product(s). Therefore, inefficiencies throughout the value chain are identified and the organisation can work with suppliers to reduce emissions.

There is a great deal more to elaborate on regarding the above, however hopefully this article provides some clarity and insight into what value a Carbon Footprint can bring to your organisation. If you want to find out more about being trained to undertake a Carbon Footprint Assessment for your organisation, have a look at Terra Firma Academy’s training here. If you would like to speak to someone about getting a professional to undertake this for your organisation or perhaps assist in Verifying your Carbon Footprint, please contact us to find out more.

The term Sustainability, and the associated term Sustainable Development, have been used in many broad and differing contexts.

As a result, their meanings and conceptual use have been diluted. In fact, there is not one singular definition of sustainability and different theorists or schools of thought have presented their own versions. The World Commission on the Environment and Development in 1987 (arguably the most commonly cited source) defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. While the definitions vary, ultimately, sustainability must be applied appropriately within each discipline by most effectively incorporating the three pillars of sustainable development within the relevant framework. The three pillars of sustainable development are: Society, Environment and Economy. As such, sustainability for business, or corporate sustainability, has been defined as, “adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future.”

Balance of the three pillars

Fig 1.The three pillars of Sustainable Development: Social, Environmental and Economic

Sustainability and the Triple Bottom Line

The triple bottom line refers to a bottom line that incorporates the three pillars of sustainable development, therefore in addition to measuring profits (economy) it also measures the organizations impact on people (society) and the planet (environment). An organization stands to profit by improving its triple bottom line and ensuring that a sustainability strategy is developed that compliments the goals and objectives of each business area of the organization. Developing a sustainability strategy is a vital initialstageof achieving sustainability as it determines the most effective approach that will be taken by the organization. A sustainability strategist must therefore have a broad range of skills and knowledge in order to achieve this goal.

A new type of thinking is essential if mankind if to survive and move toward higher levels – Albert Einstein.

Corporate sustainability requires a systems-based approach since it integrates the three pillars of sustainability throughout the organization’s operations and it’s planning and measurement systems. Systems based approaches entail “management thinking that emphasizes the interdependence and interactive nature of elements within and external to an organization.” A strategist must therefore have an understanding of the organization in order to know where to apply changes, coupled with substantial external knowledge and skills regarding environmental and social issues and the necessary tools available for overcoming the challenges an organization faces as a result of these issues. A strategist must therefore have technical knowledge to best identify and implement technical solutions necessary for achieving the desired aims. A strategist must understand current practices and encourage behavioural change were necessary; behavioural change can have a significant impact on corporate sustainability and on cost savings, most significantly energy behaviour change and water behaviour change. Behavioural change often involves limited CAPEX, it can yield significant returns and have a meaningful impact on achieving sustainable development.

It is also important for a strategist to grasp and defend the financial business case for sustainable development in order to ensure and maximise positive ROI. Lastly, for sustainable development to show promise the delivery of the strategy must be thorough and of a high quality, thus ensuring approval and successful implementation. This includes applying a clear and defined process with detailed methods and modes of action for implementing the strategy and achieving the desired aims and objectives. It is also important to develop means to monitor and measure progress, thus ensuring that the relevance and effectiveness of the strategy within the organization.

Fig. 2 Sustainability Strategy Hierarchy

Fig. 2 Sustainability Strategy Hierarchy

One of the definitions of environmental sustainability, that of Robert Ayres, emphasises that development should not harm or disturb the delicate balance of natural ecological cycles. Applying this logic to the corporate context, all a strategists’ skills and resources must go towards ensuring that sustainability practices enhance, rather than impede, a business’s existing strategies and activities. In so doing, strategists can help businesses maintain their current stakeholder and enterprise expectations—and go beyond them.

Figure 3 Matrix of Skills and Knowledge for effective Sustainability Strategy

Figure 3 Matrix of Skills and Knowledge for effective Sustainability Strategy

A carbon tax has been mooted for South Africa for some time now and has been delayed on a number of occasions. A focus on greenhouse gas emissions gained momentum since COP15 (Climate Change gathering of world leaders) in 2009. The target that South Africa committed to in 2009 was a national reduction of greenhouse gas emissions by 34% by 2020 and a further 42% by 2025 – this would be a reduction in the anticipated future emissions which were estimated to increase.

As yet, the tax has not been implemented however it seems quite likely that it will come into force 1st of January 2017. This will be the 3rd year that it has been anticipated. Until it gets passed into law, it seems as if a number of organisations are prepared to ‘wait and see’ what the final outcome will be. As I shall explain below, this approach is akin to sticking one’s head in the sand and hoping the ‘problem’ will just go away. Seeing as this is a corporate tax, those directly unaffected don’t really have a sense of what the impact might be. Consider that Eskom is by far the largest greenhouse gas emitter in the country (almost 50%). A R120/tonne tax imposed on Eskom could mean an additional 10c to 12c/kWh which could easily result in a 15% increase in tariffs.

Who do you think is going to foot the bill for their portion of the tax? We all are.

One constant since the carbon tax was first suggested, is the price of carbon at R120/tonne for Scope 1 emissions (in short, fossil fuel combustion emissions, industrial processes and product use emissions and fugitive emissions) and excluding grid supplied electricity (i.e. Eskom). The one variable that offers some respite to emitters are the tax-free thresholds available for the first phase. The amounts can depend on the nature of the business, but in short, the threshold starts at 60% of the R120/tonne so effectively R48/tonne to start and capped at a 95% tax-free threshold. The second constant is that this tax will be targeted at large emitters (at least to begin with), i.e. entities with a thermal capacity of around 10MW.

To determine what an organisation’s Carbon Tax risk is, a comprehensive Carbon Footprint needs to be undertaken. This is not to be taken lightly as discussed in a previous article, ‘A Carbon Footprint can help you identify inefficiencies, and opportunities within your business.’ however offers an insight into how you can start to reduce your greenhouse gas emissions. Waiting for the tax to come into effect means foregoing the savings that could (should) have been achieved earlier by simply understanding your risk and implementing changes. Some of the changes include switching fuel systems or optimising production equipment (think HFO – Heavy Fuel Oil – boilers) take time and planning. The incentives should not only be to reduce potential carbon tax liability, but to be more efficient and sustainable as a business and improving the working environment.

Regardless of when the carbon tax gets implement, considering the time it takes to implement changes and reduce greenhouse gas emissions, it makes sense to be pro-active and to start preparing before the hammer falls.

Call us to find out how we can help you understand your risk: 021 300 1620 or 011 569 0768.

It is widely understood by that the levels of carbon dioxide (CO2) in our atmosphere are on the rise and that this rise has negative implications for the environment and society. However, the precise levels, or concentrations, of atmospheric CO2 are far less known, and as a result, so is the urgency of the matter.

A 2008 paper co-written by the then-head of the NASA/Goddard Institute for Space Studies, James Hansen, explains that, “if humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and on-going climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm.”

An initial upper safety limit of 350 ppm was consequently set for our planet.

The paper further elaborates that, “If the present overshoot of this target CO2 is not brief; there is a possibility of seeding irreversible catastrophic effects.” This condition was not realised. Not only had the overshoot persisted, but in June 2014 the concentration of CO2 in our atmosphere reached a new high of 401.30 ppm.

The urgency is undeniably clear.

The private sector is responsible for a significant portion of CO2emissions; in South Africa the 40 largest companies emit 20% of the country’s total CO2, and internationally, 90 large companies emit 63% of global CO2emissions. It is clear that the private sector is well positioned to have a meaningful impact on reducing global emissions and benefiting the environment and society. However, the private sector also stands to benefit greatly. This is because there is a strong business case for reducing a company’s emissions that includes significant added value and cost reductions.

The crucial starting point for reducing CO2 emissions is calculating one’s carbon footprint

A carbon footprint is defined as “the total sets of greenhouse gas emissions caused by an organization, event, product or person”. Calculating a company’s carbon footprint—to be used as an accurate carbon baseline—and developing a comprehensive emissions reductions plan, is a fantastic tool that management can use to measure and drive down costs and add significant value throughout the company.

Some of the benefits of an emissions reductions plan include:

  • Cost Reductions: Since CO2 is largely linked to energy-use, reducing emissions means significant energy, operating and production costs savings. There are also reduced costs from less wastage and higher productivity. These sustained cost reductions are significant and can amount to an average of 20% annual reductions in energy/fuels costs. Behavioural change associated with reducing emissions, which have no CAPEX, also account for significant cost reductions.
  • Market differentiation and new business: It has been shown that companies who calculate their footprint and implement emissions reductions plans experienced a 10% annual revenue increase. Achieving credentials, such as ISO14001, and improving a company’s public image by being environmentally responsible, attracts new business.
  • Employee and customer retention: Emissions reductions plans also help retain staff and the current customer base by increasing satisfaction, loyalty and trust. Research shows that up to 92% of employees prefer working for environmentally responsible companies; increased workplace satisfaction means decreased employee turnover and higher productivity.
  • Regulations and Carbon Tax liability: There are important liabilities and risks associates with climate-change and environmental issues, such as, carbon taxes, tariff increases, and climate change-related legislation. South Africa will impose a carbon tax in 2016, emissions reductions plans can help reduce carbon tax associated risk. The primary objective of the South African Carbon Tax is to change future behaviour; as a result, the carbon price will progressively increase over the years. Companies stand to benefit most by taking the necessary emissions reductions actions now before the cost of not doing so weighs heavily on their bottom line.
  • Reputation and Branding: Attaining sustainability credentials enables a broader investment appeal through entering specific markets or indexes such as the JSE Socially Responsible Investment (SRI) Index. Being listed on the JSE SRI benefits companies through; improved stakeholder engagement, investor incentive, reputational benefit, enhanced integrated public reporting and global benchmarking. Other credentials and certifications have been shown to significantly improve an organisations reputation.

Terra Firma Solutions has developed numerous emissions strategies that optimise companies’ assets and efficiency goals. This has enabled many companies to increase their profitability and reduce their risks through the accurate measurement and management of the company’s carbon footprint.  These vast and sustained benefits associated with emissions reductions strategies, both within a company and extending across the global environment and society, all begin with taking that one very crucial first step; knowing your carbon footprint.

BEE and the associated transformation challenges in South Africa is a hotly debated (and sometimes contentious) issue between business owners and the nation’s policymakers. The objective of this article is not to debate the merits of either position but rather to understand what the reality is for certain organisations concerning their Skills Development and Training obligations, and how best to maximise the return on their training budget when investing in staff.

It’s unlikely BEE policies are due to end anytime soon, so surely the smartest choice is to utilise them to your organisation’s benefit as best you can, whilst simultaneously uplifting and developing staff so that they, along with their respective communities and the business as a whole benefit.

To put things in perspective, when comparing the recent BBBEE codes to the previous; the old BBBEE codes required a 1% spend of annual payroll on previously disadvantaged individuals. The new codes require a 6% spend of annual payroll, which is a substantial difference. Companies can claim training spending on their staff, along with non-staff (such as community members not employed as part of a CSI project) as delegates. Additional points can be achieved by supporting learners, apprentices or interns as well as helping less-abled previously disadvantaged individuals.  

Another addition to the new BBBEE codes is; the spend and number of learners, interns or apprentices has to be divided by gender into three groups: African, Coloured and Indian, based on provincial or national formulas, which take into consideration the economically active population in the organisation’s operational areas.

In addition to this, specific Learner Programme Matrixes have been added to the codes specifying the category from which training spend can be claimed. Claiming limits of 15% have been added for non-accredited training and informal training. This is to ensure organisations focus spending funds on accredited training and structured learnerships, apprenticeships or internships. In short, the emphasis is being directed towards valuable, accredited training and skills that can be applied to the organisation, thereby both improving operational activity and upskilling the individual.

Training and upskilling is one of the most significant budget items for the South African Treasury – it would be surprising if you lived in South Africa and didn’t have an opinion on our Education system and the recent challenges that have been experienced by schools and Universities!

Education is one of the most important factors for empowering staff and improving your operations. To cite an example from our training division (Terra Firma Academy) would be our Green Your Office course. Develop and upskill your cleaning staff and office manager on how to convert your office into a green office. They would learn about water contamination, water and energy efficiency as well as responsible procurement and recycling. All items that add to any organisation’s operational costs. Your organisation would improve not only its working environment but also its environmental performance.

Another relevant example would be Energy Efficiency Training. Terra Firma Academy offers a variety of energy efficiency courses, building them one atop another. The courses are accredited, and the attendees would learn the quick wins available, along with more complex saving opportunities. All of this type of training spending can be claimed against the Skills Development Levy to which organisations are required to contribute. The organisation would not only benefit from claiming the training spending and achieving more points, but also empower their employee to find operational savings opportunities. These skills are valuable to both business and individual.

Although accreditation is not strictly required to claim Skills Development spending, should you wish to claim over and above the 15% threshold, the courses would have to be facilitated by an accredited training provider and be formally assessed. The course would need to be SETA (Sector Education Training Authority) accredited or offer CPD (Continuing Professional Development) points.  

One of the challenges faced by business is understanding the actual requirements for this BBBEE element and how to maximise the organisation’s spending on the different gender and ethnical groups. Terra Firma Academy can assist in this area and help find ways to upskill employees or external unemployed individual to improve energy and water efficiencies and thereby directly improve an organisation’s environmental performance. If your organisation needs support in maximising their spending on a particular gender or ethnic group, Terra Firma Academy can source bursary candidates for your organisation and collate the correct documentation for the annual BBBEE audit.

Aside from pure training, a bit of lateral thinking can be employed to assist your organisation further in achieving a better BBBEE result by addressing the Supplier and Enterprise Development requirements. A perfect example in addressing the Supplier Development portion would be to offer a third party supplier like your outsourced cleaning company to send their staff on training. This is a great win for you, your supplier and the individual getting trained.

To claim credit for Enterprise Development, consider setting up and hosting an Energy Efficiency Management course for other SMME’s, and then claim the expense pro rata for each Coloured, African or Indian attendee.

So, to summarise, whether you agree with BBBEE policies or not, making the effort to comply or improve your organisation’s ranking means more than just a number to quote on a supplier application or procurement form.

It can have a meaningful impact on your supplier relationship, not to mention improved staff retention and an overall improved work environment!