Posted: Monday, May 17, 2010 10:21 am

This article is written by Claire Davey, Global Marketing Manager at EcoSecurities, a leading company in the business of sourcing and developing carbon emission reductions.

Fast Moving Consumer Goods to Full Mitigation of Carbon Gases

Despite the economic downturn and consumers becoming increasingly cautious when parting with their hard earned cash, the commitment to reducing the carbon intensity of the Fast Moving Consumer Goods (FMCG) sector shows no sign of abating. Reducing the harmful emissions from your business activities will not only mitigate against impending regulations but could also create significant savings from reduced energy bills and increased operational efficiencies, as well as boosting a company’s brand in the eyes of environmentally conscious consumers.

In 2008, the UK Government made a commitment to reduce 80% of greenhouse gas (GHG) emissions by 2050. In order to hit this target and ease the transition towards a low carbon economy, the UK Government and the EU have introduced a number of emission reducing programmes such as the Carbon Reduction Commitment (CRC) and Climate Change Agreements (CCAs) with more initiatives likely to follow. This, alongside the high level of consumer spend on FMCGs (it is estimated that £85 out of every £100 in the UK is spent on food), provides the incentive for leading suppliers to reduce emissions as effectively and sustainably as possible.

Many aspects of a company’s operations have room to become more efficient, but in order to optimise where these inefficiencies occur it’s important to establish one of the key components of any successful carbon management strategy - a company’s ‘carbon footprint’. A thorough understanding and awareness of GHG emissions will help identify ‘hotspots’ throughout operations and these may not be as expected. For example, prior to completing its first carbon footprint, Wal-Mart assumed that its main emissions source would be freight transport, but in fact found it to be HydroFluoroCarbon (HFC) emissions used in cool storage. Energy audits are a useful first step in identifying areas where the largest improvements can be made and the results from these audits and reports allows for benchmarking of progress as a company works to reduce those emissions.

Many companies based in the FMCG sector have by now already implemented a suite of measures designed to reduce their carbon emissions. The cheapest, easiest measures are those relevant to almost any operation and include recycling, waste reduction, energy efficiency measures, and incentivising behavioural change in employees. However, FMCG suppliers can dramatically increase the effectiveness of their efforts by extending the scope of their environmental reporting, and assessing emissions throughout the entire product life cycle including the design, manufacture, transportation, packaging and waste disposal phases.

More complicated and longer-term strategies could include designing new ways to decrease the amount of packaging. Optimal utilisation of space within packaging and boxes made from eco-materials can reduce warehouse packaging usage by up to 20%. Innovating new products or services is also an option and can drive significant changes across industries. The Coca-Cola Company, for example, has invested more than $50 million in research and development to advance the use of climate-friendly cooling technologies and has pledged that 100% of its new vending machines and coolers will be HFC-free by 2015. This will reduce the equipment's direct GHG emissions by 99% and, as a result, reduce carbon emissions by at least 52.5 million metric tons over the life of the equipment - the equivalent of taking more than 11 million cars off the road for one year.

As a direct result of Coca-Cola's supply chain engagement, a major supplier has communicated its intention to build a dedicated CO2 compressor production facility, helping to meet the growing demand for HFC-free refrigeration options throughout the industry. Other companies such as Unilever opened its first HFC-free restaurant in 2003 and shared an EPA Climate Protection Award for efforts to promote eco-friendly refrigeration with Cola-Cola.

Other abatement measures include upgrading to compact fluorescent lighting, implementing modern efficient boilers or operational equipment, upgrading buildings to become more energy efficient and/or investing in on-site renewable energy or purchasing green energy. For customers to remain satisfied, a business based in the FMCG sector needs to ensure the supply chain process is as effective and efficient as possible. Developing and investing in systems to eradicate inefficiencies in assortment planning, and order and inventory management will not only help reduce the amount of emissions released into the atmosphere, but will save you money in the long run by ensuring customer satisfaction at the most optimal level.

Managing the transportation of goods is also important as road freight accounts for more than 30% of the UK domestic transport emissions, yet implementing successful change within this area is fraught with difficulties. Not only are the logistics of organising freight partnerships extremely complex and time consuming, but accurately measuring transport emissions baselines can also be problematic. Furthermore, alternative, less energy intensive modes of transport are often not sufficiently effective and can require significant investment to adapt the infrastructure.

Nevertheless, as freight volumes continue to grow and transport emissions and congestion increase, the pressure for companies to tackle their transport footprint is also escalating, both through legislative targets and pressure from customers. Therefore embarking on collaborative external partnerships and establishing load consolidations should be high on a FMCG company’s agenda. Employing a solution provider such as Wincanton could help organisations to really tackle these types of challenges.

These more complicated and long-term strategies take a significant amount of time and investment to effectively implement. However, carbon offsetting is not only a valid and proven way to balance your carbon footprint whilst a company waits for the fruition of its internal abatement measures, but it can also internalise the cost of carbon. Buying offsets to cover the footprint of individual brands or products can encourage behavioural change and support for environmental schemes at a regional level. What’s more, not even the most ambitious of environmental policies will result in a zero-carbon enterprise. Carbon offsetting provides the opportunity to offset unavoidable emissions whilst also providing marketing opportunities in terms of promoting the sustainable and community benefits that a great many offset projects provide.

Standards have been set up to provide assurances to buyers that the emissions reductions generated by a particular project are indeed real, quantifiable and additional. There are many credible standards in the market, including the UN developed Clean Development Mechanism (CDM), Voluntary Carbon Standard (VCS) and Gold Standard (GS). These provide high quality, independently verified assessment, not only of the emissions reductions produced by a project but also its impact on the local environment and any associated sustainable co-benefits. To ensure the purchase of high quality carbon offsets, it is imperative that companies pursue offsets that have been subjected to rigorous third party monitoring and verification procedures. It is also useful to source carbon credits from a reputable offset supplier who can offer transparent pricing and enhance the marketing of your investment through various media, such as photos and testimonials.

It is essential for companies within the FMCG sector to reduce their carbon intensity. They have the power to not only evoke a real change in consumer purchasing behaviour, but to also make significant savings from reduced operational expenditure and energy costs whilst improving their brand perception and mitigating against the risk of impending regulation.