Chartered Management Institute: In My Opinion

Dr John Roberts, a Companion of the Chartered Management Institute, wishes leaders would see how going green makes good business sense.

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Last Updated: 09 Oct 2013

Too many managers are failing to get to grips with the environmental challenge. This is bad for business. In December, the UN climate change conference will take place in Copenhagen. It will be a major political event that sets the context for the international effort to combat climate change over the next decade. Yet, whatever happens at the level of international policy, UK organisations - and therefore managers - have to adapt to the growing importance of the green agenda.

Copenhagen will undoubtedly prompt the media to examine the UK's role in this international effort. Sadly, our track record is not one we can be proud of. The EU has agreed a package of measures that include a 20% cut in carbon and a target of 20% of all energy to come from renewables by 2020. Our own contribution is to meet 15% of total energy needs from renewables. Yet of the 27 EU members, Britain ranks 25th in terms of achieving its target contribution - only Malta and Luxembourg lag behind us.

Why are we in this position? It isn't a lack of legislation. As far back as the Energy Act of 1983, government has sought to promote renewable generation. A plethora of environmental targets have been set, culminating in last year's Climate Change Act and the Carbon Budget announced this April. So the problem lies elsewhere.

Planning restrictions, funding and the availability of grid connections have all been cited as barriers. But whatever the extent of these problems, this challenge affects us all and so demands a collective response. It's not good enough to leave it to the Government or energy companies to sort out. As business leaders and managers, we all have a role to play.

Failure to recognise this responsibility is the biggest obstacle of all. It's neatly encapsulated in the 'Giddens Paradox': by the time the public recognises the severity of the challenge, it will be too late. But Lord Stern's 2006 Review of the Economics of Climate Change countered this attitude. Failure to address climate change, he showed, would cost 5% of GDP annually, compared with 1% for cutting carbon emissions now.

So the need for action is clear. But to what extent are the leaders of our economic activity, British management, rising to this challenge? To answer this critical question, I've chaired a major research initiative over the past 18 months. Led by the Chartered Management Institute in partnership with the Institution of Engineering and Technology and the UK Business Council for Sustainable Energy (supported by EDF Energy and the Welsh Association of Chief Police Officers), the project has aimed to improve the capability of organisations and managers to implement sustainable energy policies and effective carbon management. Working with the Centre for Environmental Strategy at the University of Surrey, we undertook a UK-wide survey of 1,500 managers and a range of case-study interviews.

The day-to-day experience of many managers is that a considerable gap persists between 'best practice' and current environmental policies and practices - even though in recent years there's been no shortage of advice on how to manage and mitigate the effects of climate change. Many organisations fail to grasp the fact that good environmental management makes good business sense - by reducing costs, improving brand image, attracting high-quality staff, and creating marketing and competitive advantage.

But it's not all doom and gloom. We uncovered organisations across the business spectrum that are outstanding examples of environmental practice. We also found that many managers - especially among the junior ranks - embrace the need for more effective carbon management.

The lack of response is most frequently found in the boardroom. The very people who should be giving a lead on this crucial agenda are failing to do so. The findings confirmed my experience that there is, across British management, a widespread under-appreciation of the benefits of investing to use less - in this case, less energy.

I tried to illuminate this blindspot during my 15 years as the CEO of three energy utilities, by establishing energy services companies to sell energy efficiency to users. In every case, it was a tough challenge. Even though energy efficiency is a low-risk investment, I found that managers looked for unrealistically high rates of return. Furthermore, most institutional investors were uninterested in our green credentials or initiatives to create commercial opportunities from carbon management.

Now, with the recession squeezing businesses and making cost control even more important, the message could not be clearer. One of the lowest-risk ways to improve business performance and to help combat climate change is to manage your energy costs more effectively and reduce your carbon footprint. The result will not only benefit your business in the short term but, in the long run, will benefit us all.

CV - JOHN ROBERTS was CEO of United Utilities from 1999 to 2006, and was previously chief executive of Manweb, South Wales Electricity and Hyder Utilities. He is a non-executive director of International Power, the Royal Bank of Canada (Europe), Merrill Lynch New Energy Technology Trust, and Remote Energy Monitoring Holdings. Roberts was awarded the CBE in 2005.

The executive summary of the CMI's new report on 'green' management will be available to download free of charge from 14 July at www.managers.org.uk/gogreen

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