5 minute read • published in partnership with Ørsted
Sustain and gain: Protecting profits through sustainable practices
Back in October 2016, the Food & Drink Federation (FDF) launched their Ambition 2025: Shaping sustainable value chains* initiative. The FDF represent the largest manufacturing sector in the UK and the intention behind the initiative is to increase sustainable practices across that sector, as well as raising awareness of the need to protect natural resources. The Ambition 2025 initiative was widely adopted by FDF members, and for very good reason: sustainable practices don’t just have a positive environmental impact, they also have the power to provide resilience and longevity to businesses that invest in them. Ørsted explore the importance of carbon reduction and why improving energy efficiency, adopting sustainable energy practices and cutting energy costs are all aims which complement each other.
We only need to look as far as the RE100 for evidence of the difference sustainable sourcing can make. With a specific focus on renewable electricity commitments, RE100 members consistently outperform their peers in terms of net profit and earnings. Their sustainable energy practices are usually only one part of a wider sustainability strategy that has helped them to lower risk, raise productivity, attract new talent and build brand equity. It’s an interesting prospect for manufacturers looking to maintain growth, despite financial pressures or skills gaps.
The importance of carbon reduction
It seems fair to conclude then that sustainability has become a business imperative – but what exactly do we mean by sustainability? The answer to this question might seem obvious: anything which sustains business operations. Increasingly, this is tied to conserving resources – in anything from packaging to transport – and to reducing waste. It is also now inextricably linked to ethical practices and the need to demonstrate an environmental conscience.
Carbon reduction is key to the FDF’s initiative. The clean energy goal outlined by Ambition 2025 is to achieve a 55% absolute reduction in CO2 emissions by 2025, against the 1990 baseline. (The FDF has also set a longer-term ambition, to achieve an 80% reduction by 2050 in line with the UK targets defined by the Climate Change Act).
For food and drink manufacturers, progress in carbon reduction to date has been driven by several factors, including fuel switching, industry rationalisation, and investment in new energy efficient equipment and low carbon technology. The FDF say that delivering further reductions will become more challenging and will require greater focus on new technology, process design and low carbon energy sources. These are messages which will no doubt resonate across the entire manufacturing industry. Many businesses are already acting upon the realisation that the next round of carbon reductions will only be achieved through a renewed focus on energy strategy, as an integral part of broader business strategy. Organisations will require a willingness to think beyond the usual energy efficiency measures, a more agile approach to daily processes, and the technology in place to enable more flexibility in energy consumption patterns. It will take vision and effort but for those who make the commitment to carbon reduction, the pay-off will be worthwhile; positive and measurable carbon reduction action is increasingly required by supply chain partners and expected by investors, stakeholders and consumers alike. It’s also crucial to ensuring a better energy future for us all: if we are to maintain an efficient energy infrastructure, long term stability of supply and affordable energy to fuel our manufacturing processes, businesses of all sizes have a crucial role to play.
Business confidence and energy management
Alongside their 2025 initiative, the FDF also produce a regular Confidence Survey report. The latest publication from 2018 suggest that resilience in the food and drink sector remains high but that confidence has fallen. While several factors were considered likely to impact confidence among businesses, including stockpiling for Brexit and increased wage costs, 63% of all respondents cited increased energy costs as a key perceived threat to manufacturer profitability.
So, here’s the good news: improving energy efficiency, adopting sustainable energy practices and cutting energy costs are all aims which complement each other and help businesses protect their profitability. As we’ve mentioned above, choosing low carbon power can also boost business resilience in a range of different ways: by positively impacting talent retention, helping organisations fulfil their CSR ambitions, and ensuring environmental targets and regulatory obligations can be met.
All of this may be more easily attainable with the help of an energy industry partner. Thanks to a broadening range of services from energy businesses, manufacturers who want to embrace a more sustainable approach can gain the confidence to do so by seeking advice or funding assistance from a partner whose values align with their own. Even those with an internal energy management team in place may sometimes need a little outside help to make sure they are taking the right steps to suit their individual business needs. For some, the best next step may be making a commitment to sourcing 100% renewable electricity from a trusted source, for others it could be optimising how energy assets are used on site; no two businesses will take exactly the same steps in the same way.
At Ørsted, we want to make those next steps as easy as possible. Our 100% renewable electricity offering is supported by Renewable Energy Guarantee of Origin (REGO) certificates. This provides the visibility and evidence to report zero scope 2 carbon emissions in Greenhouse Gas reporting, while supporting participation in sustainability programmes such as the RE100 and Carbon Disclosure Project. In addition, our unique, smart tools help businesses take a more flexible approach to energy consumption, so optimising energy use across all sites.
For those already in the position to make a longer-term commitment, our corporate PPA allows businesses to invest in specific wind farm projects. This provides several benefits including the ability to secure longer term budget certainty on electricity bills and the ability to send a clear and definitive message about their commitment to renewable energy. By choosing projects in specific locations, businesses can also raise brand awareness in those areas and demonstrate their dedication to local communities.
However large a stride your business is ready to take, it’s important to start taking it now. Set goals for measurable and positive action towards sustainability that fit with your stakeholder expectations and business strategy. Doing so will protect your profits as well as the planet.