Transcript Teresa Hitchcock Partner, UK Head of Safety Health and

GREEN AND LOW CARBON
SUPPLY CHAINS
The pressures and opportunities
Teresa Hitchcock
Partner, UK Head of Safety Health and Environment
29 June 2009
Introduction
 Propose to discuss the growing supply chain pressures for
green products, the background to them and how they are
likely to impact on business here in the UK
 Will seek to argue that while the pressures present a challenge
they also present an opportunity for businesses to meet their
own goals
6084555
June 2009
2
Introduction
Background
 The growing appreciation in recent decades of the challenge of
climate change
 The growth of legal frameworks to address climate change in
sustainability issues
 The move away from the "quick-fix" solution to broaden legal
frameworks
 The challenge of the recession
6084555
June 2009
3
Introduction
 New international framework:
 Copenhagen COPMOP in December
 EU climate and energy package
 Broader legal framework being introduced in the UK through the
Climate Change Act with other countries following
6084555
June 2009
4
UK Climate Change Act
 Key features
 National Targets to reduce GHG emissions (80% by 2050, at least
26% by 2020)
 Five-year carbon budgets (three to be set in advance to assist with
business planning)
 Independent Committee on Climate Change to advise on progress
on targets and budgets
 Adaptation Sub-Committee
 Provision for limits to be set on purchase of international credits by
UK
 Provision for inclusion of international shipping and aviation
emissions
 Power to set up further emissions trading schemes to be used to
set up Carbon Reduction Commitment
6084555
June 2009
5
The importance of the Indirect Footprint
 Focus now moving away from the big emitters, which in the EU
are subject to the EU ETS, and towards consumption by public
authorities and smaller businesses and also by households
and individuals. Ultimately it is the choices of consumers
which drive large-scale emissions of greenhouse gases and
other unsustainable uses of resources
 Growing realisation that public policy needs to focus not only
on regulation of the big emitters, but also on behaviour change
by society as a whole
6084555
June 2009
6
The importance of the Indirect Footprint
The Direct Footprint:
6084555
June 2009
7
The importance of the Indirect Footprint
The Indirect Footprint:
6084555
June 2009
8
Three Planets Consumption and
Indirect Emissions
 World Wildlife Fund "Living Planet" Report 2004 estimated that
average UK resident's consumption, if replicated globally,
would require three planets, not one, to support consumption
 This has led to idea that production and consumption patterns
need to be changed to be on a "One Planet", not a "Three
Planet" basis
 World Wildlife Fund Ecological Budget UK Report 2006 found
total carbon emissions embedded in imports amounts to
10-30% of total UK emissions
 This reflects the fact that countries like the UK have "exported"
their emissions to countries like China which have taken over
manufacturing operations
6084555
June 2009
9
Supply chain pressures: legal drivers
 Move to encourage more sustainable consumption and
production is international
 "Marrakech Process" aims to carry forward commitments made at
World Summit on Sustainable Development
 This is being translated into legal drivers
 In the UK, because of the Single European Market, many of
the important measures are at EU level
6084555
June 2009
10
Supply chain pressures: legal drivers
 Direct Regulatory measures at EU level
eg
 Labelling requirements for household appliances (Directive
92/75/EEC)
 RoHS Directive restricts use of hazardous substances in electrical
and electronic goods
 Move towards more general regulatory frameworks eg
 Energy-Using Products Directive provides for mandatory standards
for non-transport products (introduces CE marking)
 First proposal for implementing measure under this Directive put
forward by EU Commission on 8 July 2008. Will set maximum
power consumption standards for standby mode in a range of
products
 Moves towards carbon efficiency standards for cars
6084555
June 2009
11
Supply chain pressures: legal drivers
Indirect Regulatory pressures
eg REACH Regulation will impede use of more environmentally
damaging substances
 Eco - labelling scheme
 This is intended to set credibility standards for environmental
claims, to distinguish truly "green" products from competitors
 Current proposal to revise the scheme through a new
Regulation. Aim is to increase awareness, reduce costs of
compliance and increase number of Ecolabel products on the
shelves. However, this is a voluntary scheme, which will only
apply to certain products which meet the highest standards
6084555
June 2009
12
Supply chain pressures: policy pressures
 For this reason government policy pressures perhaps even
more important
 eg UK Government's "One Planet Economy" policy. The
Government is leading by example through public procurement,
with effects on contractual provisions and tendering procedures
 Public authority procurement is an important part of total
economic activity
6084555
June 2009
13
The private sector
 The move towards sustainability by the private sector
 Activities of regulated utilities and banking eg through
sustainability webpage
 Wider moves towards educating employees and hence the
consumer (our own example at DLA Piper)
 Inevitable impact on consumer demand
 Consequential impact on producers/importers of consumer goods
6084555
June 2009
14
What are the opportunities for business?
 Misconception that a time of recession is a time to relax
environmental goals: the low carbon economy is even more
important at a time of recession
 Pressures on other businesses and on the public sector will
provide opportunities for low-carbon products
 Increasingly consumers will also demand such products
6084555
June 2009
15
What are the opportunities for business?
 Competitive pressures will favour producers/importers with
green supply chains
 Those with green supply chains will become the market
leaders
6084555
June 2009
16
GREEN AND LOW CARBON
SUPPLY CHAINS
The pressures and opportunities
Teresa Hitchcock
Partner, UK Head of Safety Health and Environment
29 June 2009