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The carbon-cutter’s
guide 2: Retail industry
From April 2010, UK organisations using large amounts of electricity
will need to comply with the carbon reduction commitment (CRC)
energy efficiency scheme. In the second of a series of case studies,
we explore the options for a typical high-street chain, “Stores R Us”.

The organisation The challenges


Stores R Us has progressively increased its impact of its activities on the environment and As consumers and pressure groups grow
presence on the high street over the past two the communities it serves. The employees are more sophisticated, Stores R Us will have to
decades. It operates a number of clothing aware of this, but their day-to-day focus is on show that its actions aren’t mere “greenwash”.
chains to cater for several markets. The meeting shorter-term performance targets. This will also apply to indirect carbon
company also has a food retail chain, which The company spends more than £20m a emissions along its whole supply chain.
was a relatively small operation until the year on energy. This is mainly for electricity The company’s long history of under-
recession. Now its sales figures are starting and is well over the carbon reduction investment in energy management presents
illustrations by Russell cobb

to underpin the profitability and share price commitment (CRC) qualifying threshold of problems, too. There is some catching up to
of the whole group. The company’s support 6,000MWh of half-hourly metered electricity. do with basic housekeeping and educating
operations include the group HQ, regional But its small central energy team has a staff on being more carbon-conscious.
offices, warehousing, logistics and a data relatively low profile unless power prices are Merchandisers have had a free hand in the
centre for its in-house IT function. rocketing. As a result, the team has focused type of lighting used in product displays until
Like many medium-sized and large mostly on energy procurement to keep a lid now. Future refits will need to consider low-
retailers, Stores R Us is responding to on costs rather than on energy management carbon alternatives, especially for lighting,
mounting consumer pressure to reduce the to control consumption. heating, air-conditioning and refrigeration.

18 financial management
Option 1: best practice
The board understands that smart green n Engage expertise to investigate This is a good time for the
initiatives can win over customers and cut energy-heavy processes and recruit company to review its monitoring
costs, but the directors acknowledge that more energy managers to enable a and targeting software. Ideally, it
they haven’t paid enough attention to more comprehensive analysis of should consider investing in building
reducing the amount of energy used energy-saving opportunities. management systems to improve the
throughout the organisation. It’s important n Ensure that the energy management control of energy usage in stores. By
for Stores R Us to approach this team is made aware of planned store controlling shut-down times, such systems
systematically, because short-term gestures openings, expansions or closures well in will remove the likelihood that equipment is
typically fail. Internal energy management advance, so it can effectively forecast the left switched on while no one is using it.
capabilities can be boosted by company’s total energy use and In general, it’s important to build energy
implementing the following three measures: purchase the correct amount of CRC efficiency into maintenance schedules so
n Give the energy managers better access emissions allowances. This will reduce that engineers can ensure that settings are
to the senior management team. This will the risks of being penalised for having optimised for maximum efficiency.
ensure that other functions, such as insufficient allowances and of having Significant energy savings can be made by
warehousing or merchandising, are excess capital tied up in allowances. configuring the server room to improve
receptive to green initiatives that fall into Installing automatic meter reading (AMR) cooling and ventilation, for example.
their areas of responsibility. It will also give meters in smaller outlets will help the These activities should put Stores R Us
the energy managers the chance to roll company to benefit from the CRC’s early- on a cycle of high performance, where the
out basic efficiency models designed for action metric and improve the quality of rewards from previous activities make future
individual stores across the company. data for future energy management. gains technically and financially possible.

Option 2: on-a-budget response


Stores R Us should focus on maximising in energy management responsibilities. The AMR metering installation
staff engagement: the employees’ skills Alternatively, staff could be seconded from should still go ahead, because it
could help to meet its energy reduction other teams to help with the admin and free costs relatively little and provides
targets. Because the energy management up technical experts to work on energy essential data for future energy
team is small, other functions will have to management activities. The company can initiatives. The company should also
play a greater role in this exercise. If the use the money released from the results of balance the amount of renewable energy
recruitment of energy managers is not an this engagement programme to pay for bought from the grid against funds for
option, existing employees should be trained energy-efficient equipment and maintenance. energy reduction.

Option 3: the bare minimum


Inaction is not an option. Fines are possible for each fuel used will be tough. The board
and the company’s reputation is at risk. must ensure that the team knows about
Stores R Us must at least give operational any changes to the group’s portfolio of
and administrative responsibility to one businesses and sites. This will reduce the
team, which can focus on carbon reporting. likelihood of fines for late or inaccurate
Considering the company’s record in reporting and prevent the company from
energy management, simply gathering a being named and shamed when the CRC
site list and compiling a CRC carbon profile performance league tables are published.

Further information
See the user guide at www.decc.gov.uk or
www.defra.gov.uk, or visit www.edfenergy.com/crc.
For more guidance on energy efficiency from
CIMA, visit www.cimaglobal.com/sustainability.

financial management 19