Trucost
Richard Mattison

M&S Plan A cuts carbon risk

Richard Mattison

A quick glance at the Marks and Spencer sustainability website will leave you feeling inundated with tree-hugging ideas. Want to start a car pool? Follow this step by step pledge! Want to reduce your household water consumption? Install this hippo water butt! Unlike many companies that offer "green" products and services, M&S is also working to improve the carbon efficiency of its operations and supply chain.

M&S's comprehensive corporate responsibility programme, Plan A, has delivered £70 million in benefits this year alone, while reducing the company's environmental footprint.  M&S is working to reduce impacts including greenhouse gas emissions, water and waste. Initiatives include improving in store energy efficiency and the fuel efficiency of delivery fleets; working with farmers to encourage seasonal food trends to help double the amount of food sourced regionally by 2012; and working with suppliers to become more resource efficient.

Plan A started with 100 "commitments" back in 2007, and another 80 goals were added in 2010. Leave it to the numbers to reflect the M&S go-green-or-go-home attitude. Last year, M&S emitted around 655,234 tonnes of greenhouse gas emissions, measured in carbon dioxide equivalents (CO2e) ]  through operations and electricity purchases (Scopes 1 and 2 of the Greenhouse Gas Protocol). 

Relative to revenue, its Scope 1 and 2 emissions were 43 tonnes of CO2e/US$ mn, almost 30% lower than the carbon intensity of the four General Retailers shown in Chart 1.

Chart 1: Carbon intensity ranking of General Retailers General Merchandise Relative Intensities

While intensities provide an effective way to benchmark company carbon performance within industries, most companies cast their sights on money savings and cost reduction when deciding which environmental practices to adopt. These decisions will increasingly factor in exposure to carbon costs as carbon dioxide emissions are priced under policy measures such as the CRC Energy Efficiency Scheme. If its global Scope 1 and 2 emissions were priced at the environmental external cost of carbon, M&S could see carbon costs of around US$23 mn.2 Of the Retailers shown in Table 1, M&S would have the lowest carbon costs per US$ mn revenue.

Table 1: General Retailer potential exposure to carbon costs

Since the majority of emissions are carbon dioxide from energy use, reducing emissions can address risks from rising energy costs too. And cutting carbon embedded in supply chains can help tackle exposure to price hikes as suppliers try to pass through higher carbon, fuel and electricity costs.

For M&S, carbon risk reduction is in full swing and continuously evolving as part of Plan A, which has boosted its brand too. The company's comprehensive environmental management strategy helped it achieve a ranking near the top of this year's global Newsweek Green Rankings. M&S was ranked second in the Retail sector, after WalMart de Mexico. With additional environmental commitments to meet by 2012, M&S looks set to maintain its toehold as an industry leader.

1 Trucost Plc carbon price for 2010 is US$35.25 per metric tonne of CO2e.