Environmental and ethical market grows to £47bn despite downturn

15 December 2011

The UK market for ethical consumer goods rose almost 9% to £46.8bn in 2010, according to the latest Ethical Consumerism Report published by The Co-operative Group.  Over 10 years, the total ethical market has almost quadrupled from £16.1bn in 2000.

Growth over 2009 was strongest at 18% in eco-transport, driven by green car sales of £846m, and the Green home goods market was heated to 14% growth by sales of energy efficient boilers and micro-generation.  Despite hard economic times for many consumers, ethical food and drink sales rose 5.1% to £6.6bn.  Fairtrade products did best; organic produce slipped 10%, but at £1.5bn is still more than double the market in 2000.

Analysis: Despite the downturn, the Co-op’s reports shows that many consumers are keen to buy more ethical products, from fruit to financial services.  The winners in these markets, companies like Baxi, Toyota and the Co-op themselves have combined greener products with well-designed marketing strategy and excellent execution.  Where can you combine environmental and business skills to increase your sales in these markets?

European Corporate Leaders call for higher carbon price

15 December 2011

The EU Corporate Leaders Group on Climate Change has called on EU politicians to re-calibrate the EU Emission Trading Scheme (ETS) to provide a higher and more stable price for CO2 emissions.  They want the EU to reduce the allowances for the next phase of ETS covering 2013 to 2020, pushing the price up.  And they want future phases of ETS to be better protected against macroeconomic shocks and better aligned with EU climate and energy policy.

Recently, ETS prices have fallen 55% to 6.45 Euros, greatly reducing incentives to reduce emissions.  The underlying reason is the drop in industrial growth.  The letter was signed by companies including Alstom, Deutsche Telekom, Kingfisher, Philips, Shell, Skanska, SSE, Tesco and Unilever.

Analysis: If Durban doesn’t call for action until 2020, why are big companies asking for a higher price for emission permits?  As we've noted before, these corporate leaders recognise that action on climate change is necessary and ultimately inevitable.  This is backed by the EU’s commitment to reduce emissions 20% by 2020, reaffirmed at Durban.  Given that, far-sighted businesses want as smooth a glide path as possible, not waiting to the last moment and then panic action.

What should other companies do?  Even if you are unsure which way things are heading, it makes sense to understand your CO2 emissions so you can manage them if needed.  This isn’t as scary as it sounds.  We can help you use government-approved tools to quantify emissions quickly and cheaply, and this can also identify cost savings.  Contact us for more information.

Stern says Durban delays will double cost of climate change

12 December 2011

Interviewed on BBC Radio 4’s Today programme, Nicholas Stern, the UK’s top climate change economist, estimated that the cost of tackling climate change would rise from 1% to 2% of global GDP.

His original estimate, in the ‘Stern Review on the Economics of Climate Change’ was that holding Greenhouse Gases below 550ppm (parts per million of Carbon Dioxide equivalent) would cost around $800bn a year: 1% of world GDP in 2030.  His 2009 book ‘A Blueprint for a Safer Planet’ noted that updated science showed that 550ppm was a itself a dangerous level with a 99% chance of temperature rises over 2C.  

At the Durban UN Climate Change Conference this week, countries agreed to work towards legal agreements by 2015 and action by 2020.  This eight-year delay will be expensive because CO2 levels continue to rise and CO2 producing infrastructure is still being built.  Stern reckoned it would increase the cost of holding down Greenhouse Gas levels to 2% of world GDP, an extra $800bn a year.

Holding the rise to a safer, but still risky, 500ppm could double that again.  For comparison, the cost of the recent global financial crisis has been estimated between $2 and 12 trillion by the IMF.

Branson launches Capitalism 24902 for responsible business

19 November 2011

If there is someone who understands the value of a brand, it is Richard Branson, founder of the Virgin group.  Throughout his career he has been aware of the impact of his businesses on customers and communities – and how that creates the underpinnings of success.

Recently he has been thinking about the brand image of the whole of capitalism, and how it has been tarnished by the pursuit of short-term profits without sufficient consideration of broader impact.  As a result he has written a new book ‘Screw Business as Usual’ and picked the term ‘Capitalism 24902’ as the name to describe businesses that have this broader responsibility.  (Why 24902?  It's the circumference of the Earth, in miles).

Branson is a master of marketing, so it is no surprise that he has achieved good coverage for the concept, in the Guardian and across social media, although Lucy Kellaway in the FT is more sceptical.

Analysis: Will it catch on?  Here at Red Kite Enterprise and Environment we are big supporters of the concept that profits and responsibility compatible.  In fact we go further: helping our clients increase profits by finding opportunities in environmental issues.  So whether or not the term Capitalism 24902 catches on, the concept underpinning it is sound and will thrive.

Financial Times report on consulting highlights sustainability

16 November 2011

The Financial Times published its annual Special Report on Consulting, with a feature article on sustainability headlining the fact that “Only business can effect needed transformation”.  It went on to describe how management consultancies must move beyond energy efficiency and use their transformational skills to change the way society operates.

The global market for sustainability consulting was quantified as worth $1bn, with the most important segment being strategy and planning.  The article describes how only giant firms like IBM, GE and Hitachi have the resources and long-term perspective to address sustainability.  Smaller firms (i.e. almost all of them) value the skills of consultants to help them envision how society and business will operate in 5 or 15 years time.  This is the market that Red Kite Enterprise and Environment serves.

Big businesses call for tougher action on climate change

20 October 2011

Leaders of over 200 large companies including eBay, EDF, Philips, Tesco and Unilever have called on governments to act firmly to keep global warming under 2 degrees C at the upcoming UN climate summit in Durban.

The 2C Challenge communiqué, co-ordinated by the Prince of Wales’ Corporate Leaders Group, states, “The scientific and economic evidence remains clear. If we do not act, climate change risks seriously undermining future global prosperity and inflicting significant social, economic and environmental costs on the world. If we take the right steps, we can secure a low carbon‐emission economy that is more resilient, more efficient and less vulnerable to global shocks.”

The group calls for governments to recognise their responsibilities and act in 7 areas, including effective market mechanisms for carbon, incentivising innovation and managing the risks of inevitable climate change.

Analysis: Why are businesses keen to propose measures that will increase regulation?  Partly, as they say in their communiqué, they “believe that the only sustainable future for our companies and for the globe is to build a robust, green, climate‐resilient economy.”  A sceptic might add that businesses that have been very successful in the current environment have most to lose from a massive unpredictable shock to the system.  It is worth pondering why businesses like these are planning ahead several decades, but the politicians they are communicating to often find it harder to take this long-term perspective.

McKinsey publishes survey on sustainability in business

11 October 2011

The survey by consultants McKinsey shows how companies are sustainability thinking to improve business operations and revenue, not just to manage their reputation.  

The rise in the importance of sustainability to top executives is clear: 28% of CEOs now have sustainability in their top 3 priorities, and another 45% have it elsewhere on their priority list.  That translates into practice: 57% have integrated sustainability into strategic planning, and 58% into their operations.  Yet the survey has contradictions too: although only 22% of respondents claim their company is acting to mitigate risk related to climate change, 41% claim to be doing this better than their competitors.

Climate Change expert David Viner joins Red Kite Enterprise and Environment

6 October 2011

Dr David Viner, an expert in the science and business implications of climate change has joined Red Kite as a Principal Consultant.

David has worked for 20 years to expand understanding of climate change, initially at the University of East Anglia where he published several peer-reviewed papers and directed the Masters course.  He contributed to the International Panel on Climate Change (IPCC) as an author and expert reviewer.  Then he moved to the British Council where he developed an international strategy for communicating the science and impacts of climate change, and led the UK’s cultural relations approach.

Red Kite Enterprise and Environment attends Oxford Ecosystem Services summit

30 September 2011

Robin Tucker, one of our founding partners, attended the summit on ‘Advances in Ecosystem Services Science, Policy and Markets’ at Saïd Business School, Oxford.  Marc Ventresca, lecturer in Strategy and Innovation, convened the summit.  Its purpose was to advance investment in value-creating environmental schemes by fostering links between practitioners, academics, businesspeople and investors.

Speakers included:  

• David Galbraith of the Environmental Change Institute, on the risk to ecosystem services in the Amazon from deforestation

• Connie McDermott of the Environmental Change Institute, on Social equity in paid-for ecosystem services

• Andrew Mitchell of the Global Canopy Program on International Policy Advocacy and engaging the Finance Sector’  

• Jan Fehse, Value for Nature, on investments in environmental credits and services

• Forbes Elworthy of investment manager Craigmore Sustainables on how ecosystem service funds can fit into investment strategies, for example Craigmore’s Forestry fund adds investment returns from NZ carbon credits to those from land and timber  

• Frank Hajek of Nature Services Peru on the practical aspects of ecosystem service start-ups.  Nature Services Peru 'make' and sell ecosystem service credits based in Peru’s rainforests

Top Green Companies in the developing world

15 September 2011

News about the rapid economic development in Asia and elsewhere often comes with pictures of giant smokestacks, factories or waste piles.  But recent work by the World Economic Forum and BCG shows that many companies are succeeding economically and environmentally, identifying the ‘top green companies’ in the developing world.  

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