The Centre for Climate Change Economics and Policy at the University of Leeds has established a three-year project (Climate Change Governance beyond the State) to analyse the role that can be played by companies in delivering the low carbon economy, and the factors that influence the decisions that companies take to reduce their emissions and those of their suppliers, customers and other parties.
One of the central questions of this research is whether and to what extent companies can influence greenhouse gas emissions across their value chains? The importance of this question is illustrated by the UK supermarket sector, whose operational and electricity-related greenhouse gas emissions are estimated to be approximately 1% of the UK's total emissions, but whose value chain-related emissions are estimated to be an order of magnitude higher.
For various reasons – consumer interest, high and volatile energy prices, brand/PR – many of the large supermarkets have started to take action to reduce their greenhouse gas emissions. While the specific actions differ between the companies, they fall into three broad categories:
Reducing embedded emissions by, for example, working directly with suppliers to help reduce their greenhouse gas emissions, supporting the development of product carbon footprinting, and reducing greenhouse gas emissions from transport and logistics.
Providing low emissions products and services. Examples include energy savings lightbulbs, commitments to only sell A-rated electrical appliances, and offering services and products (eg insulation) that contribute to reducing customer greenhouse gas emissions.
Educating consumers through product labelling (eg airfreight labels, carbon footprint information), and providing guidance on the actions that customers can take to reduce their carbon footprints.
The experience to date suggests that these actions can make a material contribution to reducing greenhouse gas emissions. However, five major challenges have emerged:
Companies tend to prefer issues where they can objectively measure before and after performance so that they can report on their performance. This has led to companies focusing on those issues that are amenable to quantification, which may not correspond to the areas where they have the greatest potential to exert influence.
Addressing emissions from the supply chain frequently requires different management skills (and involves different parts of the business) to those required for addressing direct (operational) emissions. For example, acquiring data from suppliers is a very different process to gathering information from facilities owned and operated by the company.
Companies have to satisfy multiple objectives (such as quality, safety and overall environmental impact). There is often a tension between these and the goals of reducing greenhouse gas emissions. To give just one example, while a number of supermarkets have labelled products shipped by air, there are concerns that this may result in customers discriminating against products from developing countries.
There is a tension between individual and the collective interests. For example, consumer information (or the lack thereof) is a well recognised barrier to individual action on climate change, and product labelling has a potentially important role to play in overcoming this barrier. However, the current trend for each retailer or company to develop its own labels and performance measures may actually perpetuate this barrier; while own brand labels may enable customers to differentiate between the climate change impacts of that retailers' products, they do not necessarily allow for meaningful comparisons to be drawn between different retailers' products.
There is a potential conflict between the supermarkets and their suppliers. While both should have an interest in the goals of emissions reductions, it is not clear what the right balance is, or should be, between who provides the resources (eg capital, operational costs such as monitoring, intellectual knowledge) and who reaps the benefits (specifically, how much of any cost savings should retained by supplier and how much should be given to the supermarket through lower prices).
The above comments are not intended as a criticism of the substantial efforts that supermarkets have made to reduce their overall carbon footprints. In fact, the fact that these types of issues are being raised indicate how much progress has been made in such a short period of time. The challenge is for retailers to address these obstacles while continuing to drive greenhouse gas emissions reductions throughout their value chains.
Dr Rory Sullivan and Professor Andy Gouldson are leading the ESRC Centre for Climate Change Economics and Policy project non-state actors and the low carbon economy