BITC index suggests firms must raise climate game

Business’s performance on climate change stagnated in 2006 for the first time since 2000, according to Business in the Community’s environment index,1 despite firms claiming the issue remains a priority.

The overall score on climate indicators for the 152 firms using the index last year remained 80%, unchanged from 2005. This is despite the 2006 index results showing that businesses saw climate change as the most strategically important environmental issue.

BITC increased the weighting given to climate change criteria from 15% to 25%. Static climate performance helped bring the index’s total average score down from 83% in 2005 to 82%, the first fall since environment impact questions were introduced in 2000.

BITC assesses climate change performance against criteria on measuring and reporting, target setting and performance improvements. Flexibility on information required allows for firms’ "distinct stages in aggregating their climate change data".

Because the index has been left behind by the development of more comprehensive indicators, BITC is consulting on proposals to strengthen its climate change criteria. Proposals include adding criteria on renewable energy use and employee engagement; using a joint industry-NGO greenhouse gas accounting tool to measure emissions; and standardising key performance indicators for emissions intensity data by sector. Mandatory sector-specific questions may also be introduced to reflect differences in pollution intensities.

BITC also wants to include criteria on environmental fines. Anticipating that future regulation on carbon emissions will involve prosecutions reflecting poor carbon management, BITC is considering including criteria on fines across environmental impacts.

This could help make its assessment of environmental management quality more meaningful. Many companies prosecuted for environmental infringements continue to achieve high index scores.

For instance, United Utilities achieved a score of 90-94%, but had the second highest number of prosecutions for environmental offences in the water industry in 2006 (ENDS Report 384, p 53 ).

BITC has also introduced a new colour-coded grading system for its indices that replaces numerical ranking.

United Utilities achieved a gold rating, although its score fell by 3-10%. Head of corporate responsibility Helen Norris blamed rising energy use and the increased weighting for climate change.

Since United Utilities answered the index questionnaire, it has promised to reduce its carbon emissions by 8% over five years.

The index has helped the firm manage its environmental impacts in areas such as waste, according to Ms Norris. "We use the index very much as a tool to measure ourselves against our peers and identify where we could improve," she said.

The shift in climate weighting could be behind a fall of over 10% on 2005 in the scores of insurer Prudential and Ford Motor Company.

Prudential’s emissions are driven by its property investment portfolio, and it plans to introduce a group-wide carbon-reduction programme during 2007.

A Ford spokesperson blamed its score instead on a gap in waste data while installing a global monitoring and reporting system.

Pharmaceuticals company Shire saw its score rise by more than 10% on 2005, when it appointed a global head of environment health and safety, Leonard Fasullo, to establish a corporate EHS programme. He built an EHS management system integrating policies and standards throughout the company, in line with the ISO14001 environmental management standard.

"I stressed consistency across sites and compliance with EHS regulations," said Mr Fasullo. "We have started monitoring greenhouse gas emissions, energy and water usage and waste disposal and have set a goal to reduce impacts across all key environmental parameters by 10% by the end of 2007. Colleagues now see the value in an EMS."

The average environmental management score was 82%, down from 86% in 2005 (ENDS Report 376, pp 9-10  ). Just 40% had ISO14001 or equivalent management system for their entire operations.

Companies scored an average of 93% on corporate strategy, which look at environmental assessments in board-level decisions.

The highest score achieved by newcomers to the index was silver, awarded to waste management company Shanks, Standard Life, United Co-operatives, Toyota Manufacturing, Home Retail Group and F&C Asset Management.

Newcomers with scores below 70% included the Inland Revenue’s Valuation Office Agency and BITC itself.

While its score may not reflect its role in helping others "integrate responsible business through their operations", BITC said that an organisation of its size would not usually be eligible to participate in the indices publicly, but it wanted to show leadership on and commitment to public benchmarking.

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