Report: Meeting the challenges of climate change and environmental legislation: lessons from early movers

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The Innovation Observatory report Meeting the challenges of climate change and environmental legislation: lessons from early movers examines the impact of current and forthcoming European environmental legislation for large and small businesses in EU member states, drawing learning points from early-mover enterprises about how best to introduce sustainable changes necessary to respond to this legislation, and what the business benefits are. The 77-page report, authored by industry analysts David Martin and Simon Sherrington:

• details the nature of both the risks that companies will face, and the opportunities presented by the legislation
• identifies and characterises the seven critical business processes most affected by the legislation
• explains the EU environmental regulation framework and the five key environmental areas it seeks to address
• examines key national differences in current and future legislation, and its impact, with particular reference to the UK, France and Germany
• assesses how sustainable change can be effected within businesses, and identifies the key success factors in this process.

The report contains interview-based case studies from ten enterprises across Europe.

Executive summary

New European and national regulation means businesses and organisations must act to counter climate change. A welter of regulation covering the environmental impacts of business activity, and of products and services, is already in place. More is on its way. Businesses need to pay attention to key regulation now, as the measures concerned pose substantial cost risks (from compliance and non-compliance) and competitiveness risks, while presenting opportunities for cost savings and new market opportunities.

Regulations are in five main categories: emissions, energy efficiency, renewable energy, transport (including biofuels) and waste. The difference in structures of national economies influences how regulations are applied in these areas: there are significant differences in emphasis for instance between the UK, France and Germany.

EC and government principles that environmental improvement should be focused where it is most practical, least costly and most economically efficient mean no sector is immune from regulation (though some – e.g., material manufacturing – are more significantly affected than others).

Seven aspects of business operations are affected by environmental regulation: procurement, facilities management, production/operations, logistics/transport, auditing; financial, regulatory/risk management, sales, and business development/ strategy.

Experience from “early mover” companies shows that driving necessary change is not easy: long-term commitments can be slow to demonstrate results, but strategies to improve environmental efficiency can also deliver quick wins: they can deliver financial, and in some cases other, unexpected, benefits without major investment.

Table of Contents

Executive summary

1. New regulation means risk and opportunity for business
1.1 The risks
1.1.1 Cost of compliance
1.1.2 Cost of non-compliance
1.1.3 Failure to adapt to changing market conditions
1.1.4 Loss of competitiveness
1.1.5 Negative sales and marketing impact
1.1.6 Survival of the fittest
1.2 The opportunities
1.2.1 Longer-term cost savings
1.2.2 Cost reduction from compliance
1.2.3 New market opportunities

2. The EU Framework sets the tone for change throughout Europe
2.1 EU environmental regulation will affect business in five key areas
2.2 Rules will be interpreted differently around Europe
2.2.1 In the UK, the focus has been on CO2 emissions ...
2.2.2 In France, there is a greater emphasis on energy efficiency...
2.2.3 In Germany a strong drive towards renewable energy...
2.3 Key recent and upcoming environmental regulations

3. No sector will be insulated from the requirement to change

4. Seven business processes will come under particular pressure to change
4.1 Procurement
4.2 Facilities management
4.3 Production and operations
4.4 Logistics and transport
4.5 Auditing; financial, regulatory and risk management
4.6 Sales
4.7 Business development, strategy

5. Experience shows that driving change will not be easy ...
5.1 The top ten key success factors for driving change

6. Case studies
6.1 Deutsche Telekom
6.2 AXA Group
6.3 Ericsson
6.4 Svenska Cellulosa Aktiebolaget (SCA)
6.5 BT
6.6 Virgin Trains
6.7 Alliance Boots
6.8 Kingfisher
6.9 E.ON UK
6.10 MotivAction Group plc

Total pages: 77

Figures and tables

Figure 1: Total estimated energy usage plotted against turnover (relative scales) by industry sector across France, Germany and the UK
Figure 2: Total estimated green house gas emissions plotted against turnover (relative scales), by industry sector across France, Germany and the UK
Figure 3: Total estimated transport energy usage plotted against turnover (relative scales), by industry sector across France, Germany and the UK
Figure 4: Total estimated energy usage and emissions by material manufacturing sub-sector across France, Germany and the UK, as a proportion of all material manufacturing-related usage / emission

Table 1: Primary EU environmental regulations
Table 2: Key recent and forthcoming EU-wide environmental regulation
Table 3: Key recent and forthcoming UK environmental regulation
Table 4: Key recent and forthcoming French environmental regulation
Table 5: Key recent and forthcoming German environmental regulation

Meeting the challenges of climate change and environmental legislation: lessons from early movers is priced at GBP750 (plus VAT if you are in the UK, plus £5 postage and packing) for a licence for up to five users. The report will be delivered by email as a .pdf file and a hardcopy will be posted to you.

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