Decoupling emissions from economic growth: the Interserve success story
With a number of global reports recently highlighting that national carbon reductions are being achieved while economies are growing, one of Britain's biggest construction firms is proving that sustainability and profitability can also go hand-in-hand for businesses.
The UK is one of 21 nations that have achieved annual greenhouse gas (GHG) emissions reductions while experiencing continued growth in GDP since the turn of the century. Global trends are also supporting the case for sustainability, as figures for 2015 mark the first time that emissions have stalled while economic growth has increased.
Despite these decoupling effects occurring at a global scale, many businesses are still erring on the side of caution, with boardrooms still weighing up the cost associations for sustainability projects with an 'either-or' mindset.
But, as the latest sustainability report from support services and construction company Interserve reveals, those businesses might be missing out on economic gains from investing and placing sustainability “at the heart” of operations.
Highlighting the progress of its SustainAbilities initiative – launched in 2013 – Interserve's report reveals that the Reading-based firm has increased revenue while reducing absolute carbon emissions and company carbon intensity.
The company spent a large part of 2015 growing in size and expanding its influence among various communities. The £1.6m it spent in community engagement - equivalent to 1.4% of its pre-tax profits - was dwarfed by the £864m it spent on small and medium-sized enterprises (SMEs) within its supply chains.
Despite accelerating efforts to expand the business, Interserve also announced a 3.2% fall in carbon emissions last year which, when accounting for company growth, represents a staggering 19% reduction in carbon intensity. The group's sustainability agenda didn’t stop there - construction waste also fell by 21%, and fuel consumption was slashed by 10% across its international operations.
And, with plans to ensure that recycled content in all materials reaches 50% by 2018 and to halve absolute carbon emissions and introduce the circular economy into value chains by 2020, Interserve's sustainability push shows no signs of abating.
At the heart of this sustainability/profitability decoupling drive is Tim Haywood, who is in the very unique position of being a head of sustainability and a finance director. While Haywood is adamant that his role isn’t the main driver in the decoupling effect, he is surprised that more companies haven't adopted a similar approach to sustainability management.
“I’m quite surprised that this is not more common,” Haywood says of his role. “By holding the finance director and sustainability titles, my thinking has personified the company’s.
“For Interserve, it’s all about mainstreaming sustainability and getting the agenda expressed in a language that ordinary business people can understand. As soon as people realise that sustainability is a common agenda that reduces both risks and costs, they see that the business becomes more resilient, which is what all businesses should want to do.”
While his role as finance director has allowed him to embed sustainable projects at the heart of the company, Haywood still has to think about the economic viability of each scheme that he is introduced to.
For Haywood and Interserve, sustainability and battling climate change isn’t about “hugging polar bears”, but rather creating a resilient company that can aid society. Yet, in order for the company to grow in this manner, Haywood has had to adopt a new way of thinking that caters to aspects outside of short-term thinking and investment returns.
“At Interserve, we don’t see the disconnect between finance and sustainability.” Haywood says. “We don’t see sustainability as an added cost as it’s been mainstreamed in our business. You need to start off by saying that growing your business in terms of revenue and improving environmental impacts is not an either or concept. It’s a false choice to say you can only have one or the other.
“If you reduce impacts in a sensible, measured and business orientated manner, then the investment and practices will come with a financial benefit. Businesses need to stop viewing sustainability from a cost association point of view.”
Echoing recommendations laid out in the latest IEMA business framework report, Interserve’s evolution to cater for longer-term thinking has allowed it to negate revenue concerns and implement sustainable projects across the globe that reduces energy costs and emissions at such a drastic measure that the savings are counteracting the initial costs.
Take fuel use as an example: Interserve was able to save 5.7 million litres of fuel in 2015 by implementing a variety of on-site techniques aimed at lowering consumption in both vehicle fleets and electricity generation. With fuel use accounting for 60% of the company’s global emissions, Interserve saved £2.7m by reducing consumption by 10%.
By viewing sustainability as a long-term return rather than a short-term expenditure, Haywood and his team have been able to produce those impressive reductions to both carbon intensity and waste reductions.
But, considering that Interserve’s revamped sustainability agenda only began to take shape in 2013, are these results just the benefits of picking the low-hanging fruit that is common among fledgling sustainability drives?
For Haywood, the answer to that question is nuanced. While Interserve has embedded heating control systems and LED lighting within offices, the company’s role as a global operator means that what is considered as a traditional innovation in one country, may be viewed as revolutionary in another.
“The definition of 'low-hanging fruit' in the UK is very different from the definition in the Middle East,” Haywood says. “The UK is very high up the tree nowadays in regards to technology and everyone has spent the last few decades targeting zero-waste to landfill, working on energy efficient buildings and tackling fleet emissions.
“In the Middle East, the starting point is considerably less mature, and the fruit is much closer to the ground. By introducing UK best practices out there, we can make a much bigger difference. There was no agenda in the Middle East on the environment. The fruit was low-hanging but there was no purpose of actually picking it.”
For Interserve, the imbalance of technological developments between different regions is encapsulated by water use. In 2015, total water consumption fell to 1.7m cubic metres – a 4% reduction on 2014 despite the growth in business.
Just under a third of Interserve’s water use can be found on international sites, and the company utilises the World Resources Institute’s Aqueduct assessment tool to identify water stressed areas in order to implement solutions. One such are is Qatar and the United Arab Emirates (UAE), where Interserve has been able to reduce water use by 1,000 litres a month just by implementing new ‘spin cycle’ laundry equipment.
Interserve has also been able to use technology considered 'low-hanging' in the UK to revolutionise its fuel economy out in the UAE. The company reduced fuel use by 4.3 million litres in the region by utilising solar power, data management systems and energy efficient “cabins”.
Once fully embedded, Interserve is predicting that each cabin will save 24,000kWh per year – saving six tonnes in emissions and around £3,000. When considering the lifecycle of the each cabin, a fully-functioning set of 10 units would generate up to £3m in savings. In order to drive these savings down further, Haywood revealed that communications with the Masdar Institute – a research programme within the UAE - were underway.
In comparison, fuel use in the UK fell by 1.4 million litres, largely through an internal behaviour change push and investing in more modern fleet vehicles. In order to continue reducing fuel use and carbon emissions in the UK Interserve is having to turn to more innovative measures.
“There are a lot of things we’ll be looking at in the future such as offset schemes and carbon sinks,” Haywood says. “On behalf of customers, we manage a large swathe of land in the UK and we think there are carbon storage opportunities to provide the management and ownership with to drive down emissions.
“But in the Middle East we need more of the same. There’s an awful long way to go with legislation to try and make sustainable considerations more feasible. At the moment there are regulatory obstacles to overcome and we need to change the mindset. That’s why we’re working with the MASDAR institute to do so and advance the conversation.”
While there is disparity between the technology available within regions, Interserve is still utilising the more traditional innovations in the UK. LED lighting upgrades and heating systems have also been installed nationwide as part of a compliance process with Energy Saving Opportunities Scheme (ESOS) audits, which Haywood revealed had “added a financial payback” to the technologies.
But, while compliance with data frameworks has streamlined procedures at Interserve, Haywood is warning other companies exploring data management that it can act as a “double-edged sword” that creates the risk of losing sight of company goals.
“We use ESOS frameworks and without this sort of help we would be disadvantaged,” Haywood says. “Sometimes raw data is a great tool and it has already identified at least three substantial water leaks in UK estates which have been pouring money down the drain. But data is a double-edged sword - for the first couple of years we spent so much time in the deep, dark data mines, digging for stuff, that we were in danger of losing sight of why we were doing it in the first place.
“We struggled to keep people motivated while we were doing the painful hard yards of dragging data out of a company that hadn’t done it before, and it was potentially quite counterproductive in terms of sustainable communication. Mercifully we’re over this, but people setting out on this journey need to realise that it’s hard because it’s difficult to measure different things.”
With a company growing at the pace that Interserve is, it is important to be able to keep key environmental footprints in check. But, as the firm grows, so does the number of employees – Interserve's staff numbers have grown by 78,000 across Wales and the Midlands since 2011 – and these employees need to be both motivated and aware of the sustainability practices in order to create optimal efficiency returns.
With more companies turning to data as way to measure how their staff interacts with sustainability agendas, Haywood admits that data provides a great platform to set targets and incentivise staff, as long as the business can keep sight of the core purpose for using the data.
“Once you get to grips with measuring data, it provides a great tool for incentives and target setting in order to motivate people to improve,” he says. “They can’t hide away from the data, which is why it’s great when you finally get it, but painful when you’re trying to understand it.
“You need to have sufficient communications and incentives in place so that people on the ground actually ‘doing the doing’ recognise that this matters and that it deserves their attention. I’d emphasis that just as much as any reduction projects.”