Carbon economy hots up

The gloves are coming off. Carbon now means big business, and the consultancy world heavyweights are shaping up to help companies handle 'just another variable', says Rob Bell

Carbon's arrival with a crash and a bang on the agendas of large corporates worldwide finally means that environmental issues are well and truly centre stage for the first time, no matter how much chatter about corporate social responsibility has taken place in recent years.

The noise around carbon mitigation has also attracted the attention of the consultancy world's apex predators, with the likes of KPMG and PricewaterhouseCoopers sniffing around the environmental arena looking to offer high-end services to their multinational clients.

Lines are also blurring in the environmental sector, with ERM clearly making a move towards a more management-focused offering, alongside WSP Environmental and others offering more strategic advice; while the smaller, technically focused, UK-only consultancies continue to offer more traditional services around measuring end-of-pipe impacts and implementing site environmental management systems.

But, while some might see this as a threat, most of the major environmental consultancies have welcomed the entry into their market of large accountancy practices, seeing it as an opportunity to further raise the profile and credibility of the sector. And of course, if it drives up prices, no one is going to complain.

WSP's Tim Clare says: "The large accountancy practices are now building teams that are very interested in the carbon side of things, which they see as providing opportunities within their more strategic approach to consultancy."

KPMG, for one, has made just such a move, with the launch of a multi-disciplinary Carbon Advisory Group. It claims to:
  • Provide insight and strategies to help companies understand and manage the many business implications of climate change
  • Develop strategies to embrace planned and likely changes in environmental regulation
  • Invest wisely in energy efficiency, renewable energy and trusted carbon offset and trading schemes
  • Help clients make sense of the confusing and at times inconsistent approaches being taking to carbon measurement, and accounting and helping them choose appropriate ways to report on their activities
Lead partner Richard Sharman says: "If you're looking at technical issues, such as the energy efficiency of buildings, then purely environmental consultancies are a good place to start. But to take a really holistic approach to climate change you need experts with a very wide range of skills taking in logistics, supply chain issues, procurement, etc - and unfortunately environmental consultants can't advise on deals, taxation, financing, and can't necessarily help with the wider regulatory environment.

"So for us climate change is clearly an area where we can assist our clients, particularly as we have global professional services skills in auditing and taxation, and a global presence, which is essential for many of our clients, who have complex, global operations."

The group's strength is in drawing on KPMG's skills in auditing, taxation and advisory services, as Sharman explains: "It's a broad issue that requires a broad solution," he says. "Our view is that climate change is no different from any other business issue in that our clients need to totally understand how it affects their company then plan and execute a response.

"It's also important that they see it as a real economic issue and understand that they're going to have to demonstrate to regulators and stakeholders how they are implementing their plans to reduce their climate change impacts."

The group contains experts in fields as diverse as carbon auditing, supply chain management and investigation of offsetting schemes, offering clients completely linked services around a four-stage approach: plan, measure, manage and report.

KPMG warns that planning for the "uncertain future" a carbon-constrained economy will bring is not easy, with regulation untested, a range of sometimes conflicting protocols and standards, emerging technologies, fluctuations in the carbon market and dodgy offsetting schemes.

Trevor Wiles manages the forensic side of the group focusing on fraud and investigation services around off setting providers and schemes. Wiles says: "In the carbon-offsetting arena, there have been a large number of stories in the media around the integrity of offsetting schemes. And, with the number of cowboys out there, it can be very difficult for companies looking to offset to work out who they can trust.

"We're not against companies making the carbon-neutral claim: it can be valid if very carefully calculated and verified. It's just a very difficult claim to make. Companies are buying carbon reduction credits that are worthless, or not what they claim on the tin. For example, a lot of these schemes are based around forestry, where you pay a certain amount and trees are planted and maintained on your behalf. But what they don't tell you is that it takes 20 years for a tree to sequester the carbon emitted in just one two-hour flight."

And with KPMG research this year finding that only 49% of executives claim to fully understand the business implications of climate change, the company is offering "integrity due diligence" investigating the provenance, management, reputation and operations of carbon reduction partners such as offsetting providers.

Wiles says: "We say to our clients, 'Take a very close look before you go public.'"
Global reach and a strong background in business transformation also means the Carbon Advisory Group can work with clients to improve carbon efficiency in the supply chain, a key issue for retailers and the food and drink sector, and essential for many companies if they are to take meaningful action on wider climate change impacts.

Tim Jones, who heads up the carbon efficient supply chain management within the group, says: "Companies are looking to become more energy efficient in their supply chain and procurement as part of their wider carbon footprint.

"There are large companies wanting help with understanding the full complexity of carbon management, but no one offering end-to-end services to help support change across their business models, which is where KPMG has seen an opportunity to provide services across the board.

"So we're helping to put together carbon strategies, implement emissions reduction projects, working with companies' supply chain, carrying out footprinting, advising on niche firms to assist with offsetting etc. And, if a company is going to change their business model, we can help them, because that's what we do from day to day."

For Jones, whose expertise is in business transformation, carbon is "just another variable driving change in business models". However, he believes KPMG's global operations and skills in helping businesses change means the company is uniquely placed to provide services above and beyond those within the reach of traditional environmental consultancies.

This means the Carbon Advisory Group can examine "almost audit" - the operations of suppliers the length of a client's supply chain; looking into everything from greener logistics to manufacturing site impacts, alongside other corporate social responsibility related concerns such as labour conditions and safety.

"We're seeing a lot of interest in carbon-efficient logistics," Jones says.

"Traditionally, analysis of transport systems was about driver speed and safety, and cost. But now we're seeing carbon introduced as a variable.

"Carbon is turning up on procurement checklists, particularly in the retail sector, with food and drink having been an early adopter."

The breadth of the KPMG offering is demonstrated by some of the other services offered within the Carbon Advisory Group banner. Sharman says: "If you're really going to reduce carbon emissions, then you need to move beyond energy efficiency towards looking at carbon in your supply chain, and areas such as acquisitions and divestments, or financing renewable energy.

"Some companies are already on the journey, others have still not started, but all will need help with raising financing for renewables or investment in green products; advise on divestments of carbon-intensive businesses if needed; or ensuring the environmental performance of cleaner businesses; assurance; auditing; reporting; setting up management systems; and making sure they have accurate carbon footprint data."

KPMG's multi-disciplinary approach to climate change mitigation consultancy reflects the broad range of actions in every part of a business necessary to make claims of addressing greenhouse gas emissions or achieving carbon neutrality anything near a reality.

As Sharman says: "If a company is going to tackle climate change, then it's going to need advisors that understand the regulatory environment, the technical aspects of climate change and energy use, and can help with effective measurement of emissions alongside planning for mitigation."

Rob Bell is a freelance journalist

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