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BGlobal Warming: The Business Response

Going green doesn’t have to cost you a lot and it’s not just the preserve of big, wealthy companies – Brad Howarth finds that, as well as cutting costs, many SMEs are impressing their customers by reducing consumption and waste.

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In the past year climate change has evolved from an academic discussion to become one of the most talked about topics in Australia. With consensus reached that the climate is both warming and changing, the main arguments today revolve around what the impacts will be and what should be done to mitigate the causes.

The impacts will be many. They range from the agriculture industry, where crop and livestock production is already threatened by worsening drought conditions, through to tourism, which is predicted to bear the brunt of increasing coastal storm activity, more frequent bushfires, and decreasing snowfalls.

Increased storm activity will also prove costly for the insurance industry, possibly driving up premiums. Decreased rainfall will also lead to increased energy prices as generators are forced to pay more for the water that’s essential in the process of generating electricity. Some manufacturing businesses have witnessed spot energy price increases of 100 percent and beyond.

Many larger businesses, such as the ANZ Bank and News Limited, have taken it upon themselves to clean up their acts on their own, making it increasingly difficult for any business to ignore its obligation to the environment (to become carbon neutral a business invests in programs such as tree planting or renewable energy to offset the greenhouse emissions that it can’t eliminate).

But the benefits are not just in having a green conscience. Rising petrol prices have combined with heightened environmental awareness to drive the sale of fuel-efficient vehicles, particularly hybrid petrol-electric cars such as Toyota’s Prius. Already the insurance company IAG has replaced a third of its fleet of vehicles for insurance assessors with hybrids, and is offering a discount on insurance to hybrid drivers.

While the programs being planned by large businesses often involve multi-million dollar investments in new premises and equipment, making a business environmentally friendly doesn’t need to be hugely expensive. In many cases smaller businesses can learn from the pioneering work done elsewhere in terms of reducing both energy consumption and greenhouse emissions.

Various state government initiatives have also been created to assist small businesses, such as the Victorian Government’s Grow Me The Money website, which provides information on cutting water and energy usage and reducing waste.

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According to Danin Kahn, founder of the Sydney-based energy consultancy and green products retailer Todae, for a modest outlay of several thousand dollars it should be possible to reduce the energy consumption of an average business by 25 percent. The return on that investment will be dependent on the overall energy usage of the business itself, but in the meantime workers can feel secure in that they have assisted the planet.

Kahn says the first step is to perform an energy audit, which looks at how the business is consuming power in the key areas of lighting and equipment, air conditioning, and water heating. It can then set to work devising ways to minimise energy usage.

Some steps are free, such as setting all printers to double-sided printing by default, which halves both paper consumption and energy usage. Kahn says companies should also eliminate wasteful practices such as printing e-mails, and should instead invest in electronic archiving solutions.

Personal computers and servers are large consumers of technology. Kahn says upgrading old monitors to flat-panel LCD screens reduces power consumption by at least two-thirds.

Companies should also strive to ensure that computers are powered down when not in use. This includes banning use of screen-savers, as these still draw significant power while running. In this way the ANZ Bank recently cut 4 percent of its power bill.

Water coolers and boilers are another target for energy savings. Kahn says that hot water boilers commonly found in staff kitchens can draw up to 0.5 kilowatt hours of electricity every hour of the day (equivalent to about 5 percent of the power used by an average household). The application of a simple time switch should see a return on investment in just a couple of months.

Air conditioning is another target, accounting for 30 percent of average energy bills. Companies without automated systems are prone to leave them running after hours. Implementing a time switch can prevent this problem.

"Turn your air conditioning off earlier and see what happens," Kahn says. "By ensuring that it is turned on and off at the right times, I reckon you could easily knock 10-15 percent off your energy bill."

While not all power usage can be eliminated, numerous electricity suppliers now offer green power alternatives. Energy retailer, Jackgreen, offers a service including 10 percent green power that it says is no more expensive than mainstream providers. The cost increase of switching to power from 100 percent green sources can be fractional in comparison to a total energy bill.

According to Howard Parry-Husbands, director of the environmentally oriented marketing consultancy Pollinate Green, having a climate strategy can also make good marketing sense, especially in terms of maintaining the integrity of a brand. Parry-Husbands says his company’s Green Pulse research shows that 75 percent of Australians are very concerned about the environment, while up to 90 percent are choosing a green alternative, or will where it is available.

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Travel remains one of the strongest contributors to greenhouse gas emissions, with air travel alone said to contribute two percent of all emissions. Hence, Intrepid Travel, a business that prides itself on the eco-friendly nature of its tourism business, has been one of the first to pursue a path to become carbon neutral.

While the company had long been concerned with its own energy consumption, the strong focus on climate change in the media last year prompted by the film An Inconvenient Truth and Australian writer Tim Flannery’s book The Weather Makers, further heightened the interest of the company’s director and co-founder, Darrell Wade. The company had already been receiving communication from clients asking what its climate strategy was. Intrepid appointed a full-time staff member, Lisa Patterson, to the position of carbon offset manager, and declared that it would be a carbon neutral business by 2010. "We really realised what was happening out there, and the impact our industry was having," Patterson says.

In January this year, Intrepid introduced an additional carbon offset charge on all flights sold from Australia. It was a brave decision, which added as much as $50 to the price of a ticket to Bangkok, and it had an immediate impact on flight bookings.

But, despite a drop off in January and February, the trend in bookings has been moving consistently upwards. Patterson says that by explaining the program—such as how a flight to Bangkok produces emissions equivalent to driving a car for a year—the company has won back many clients.

The company also used its green ethos in marketing, offering to refund the cost of admission for anyone who handed in a ticket stub to An Inconvenient Truth. Intrepid refunded nearly 10,000 tickets.

  

Carbon Neutral

Even large consumers of energy can take a green path. The 14-person Perth-based company ilisys runs a data centre hosting data and websites for around 18,000 small businesses, which consumes around 200,000 kilowatt hours of electricity each year.

At Christmas the team went off together to see An Inconvenient Truth. Management then posed the question to staff of what the organisation should be doing in response. In Februar
y, ilisys announced that it had become the first data centre in Australia to become carbon neutral. The company’s director of product development, Matt Mulligan, says the decision was born of a sense within the company that it was using more power than it should.

"We were quite efficient in many areas of our business, but we looked at power as something that was a bit of a freebie," Mulligan says.

The company has gone through a number of steps to reach its green status. It started by reorganising its data centre to boost its efficiency, upgrading PC monitors to flat-screen LCD panels, and implementing policies such as ensuring that machines were switched off when not in use.

The next step was switching over to 100 percent green electricity from WA-based supplier Synergy at the beginning of the year. Mulligan says this pushed up the cost of power from $0.15 per kilowatt-hour to $0.18 per kilowatt hour, but says the company has been able to absorb the increase.

What he didn’t expect was the strong response from clients, but says it is too early to determine whether the decision has assisted in growing the business. "People were really excited that a supplier that was close to their business was doing something, and they felt as a result that they could do something to," Mulligan says. "It’s good for our business to be using less power, and it’s good for us to be saying that to our customers.

"I imagine that as time passes people are going to be looking to suppliers to be genuinely serious about the environment."

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