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Small Businesses, Greenhouse Gases, and Competitive Advantage

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BEYOND BIG

2 3BEYOND BIG: SMALL BUSINESSES, GREENHOUSE GASES, AND COMPETITIVE ADVANTAGE

BEYOND BIG: SMALL BUSINESSES, GREENHOUSE GASES, AND COMPETITIVE ADVANTAGE

Climate Smart Businesses Inc. is a social enterprise providing training and software tools for businesses to measure their carbon footprint, identify key oppor tunities for cost, energy, and carbon reduction, and communicate their effor ts internally and externally.

We work with organizations not as consultants, but as teachers, utilizing a workgroup-based training curriculum, top-rated software carbon tool, and one-on-one hotline technical suppor t. Par ticipants leave the room with the ability to analyze, measure and reduce their company’s impact by themselves: key skills in the green economy of the future.

Climate Smar t also works with municipalities, helping them link community economic development and emissions reduction. The Climate Smar t program builds resilience in local businesses to risks associated with volatile energy prices and costs of climate change impacts, and catalyzes innovation and new business practices. Municipalities are able to engage their local businesses in climate action that will benefit the entire community.

Since 2008, we have worked closely with over 650 businesses and organizations, ranging from 1 to 2,000+ employees, under $500,000 annual revenue to over $10,000,000, from every industr y sector of our economy. We empower and enable our clients to focus their entrepreneurial spirit on reducing the impact of their business by methodically cutting unnecessar y consumption of energy, fuel, materials and waste, and tying climate action to smar t business practice.

What gets measured gets managed.

CONTENTS

CASE STUDIES12 North Shore Credit Union Employee professional development drives organizational change

15 Van Houtte Coffee Services Engaging staff, clients, and fellow businesses leads to new initiatives

18 eeko couriers Low-carbon services drive brand, efficiency, and growth

19 Purdy’s Chocolates Comprehensive and ongoing reductions initiatives tackle all areas of operation

22 Freybe Gourmet Foods Low-cost initiatives show payback and lead to fur ther capital investment

24 Miles Industries Product redesign result in significant energy savings for customers

29 Securiguard Optimizing routes reduces fuel use and fleet size

35 Otter Co-op Big savings from turning lights off and reducing waste

36 Fraserside Community Services Society Heating systems upgrades and lower paper use reduce cost and carbon

39 Tinhorn Creek Vineyards Ongoing commitment to sustainability pays off

40 Glacier Creek Contracting Site waste diversion yields significant financial savings

4 Executive Summary

8 Small-Medium Enterprises As Agents of Change

10 Carbon Management Across All Industries and Sizes

16 Business Drivers Emerge For SMEs To Manage Carbon

26 Greenhouse Gas Profiles Amongst SMEs

32 Patterns in Greenhouse Gas Reduction

41 Cost Savings From Cutting Carbon

Cutting carbon emissions reduces expenses, increases competitiveness, and strengthens business.

ABOUT CLIMATE SMART



The business case for sustainability is becoming well-known, as more organizations take action and share how they have reduced their environmental impact, while strengthening their bottom and top lines at the same time. To date, the spotlight has fallen mainly on large businesses and well-known brands: a great place to star t.

However, small-/medium-sized enterprises (SMEs) form the majority of our economy. They too are recognizing the potential impact of climate change on their businesses, the challenges and oppor tunities this represents, and the impor tance of taking action in a meaningful, quantifiable way.

Greenhouse gas (GHG) management is an ideal framework for measuring the impact of an organization and for prioritizing ways to reduce that impact. Businesses choosing to manage GHGs typically follow three approaches:

1. self-ser vice: building capability through self-learning and online research

2. training and suppor t: building capacity and internalize GHG management through structured learning

3. engaging external exper ts: outsourcing task to a dedicated consultancy

For many SMEs, time and human resource constraints limit their ability to wade through the mass of information available on GHG management. Engaging external exper ts can incur a high cost, and without ongoing suppor t, can fail to embed sustainable ethos and practices within an organization. Training people within SMEs builds an internal skill base for continuing GHG management by the people most exper t in their own business and operations.

This study examines GHG management amongst SMEs that have gone through the Climate Smar t program. These organizations have received training in GHG management1, and have measured their annual GHG emissions for at least one year. They are largely self-directed in deciding on and implementing reductions initiatives, though they receive guidance and peer suppor t.

1 The GHG management framework taught by Climate Smart is based on the World Resources Institute’s and World Business Council for Sustainable Development’s Greenhouse Gas Protocol, the most widely used international accounting standard for GHG emissions measurement.

A LOOK INTO THE SME SECTOR

INTENDED AUDIENCE

EXECUTIVE SUMMARYKEY FINDINGS Demography, motivations, profiles in GHG measurement and

patterns in reductions strategies under taken were examined amongst the SMEs par ticipating in Climate Smar t. This study also looked at actual GHG reductions achieved, extrapolating typical reductions achievable by SMEs, as well as a projected cost (and cost savings) associated with GHG reduction.

More businesses from service industries (vs. goods-producing industries) par ticipated. Professional ser vices, trade and transpor t of goods, and manufacturing companies are the top three categories in terms of uptake in Climate Smar t. While businesses of all sizes and sectors may choose to pursue GHG management, size of business (whether measured by revenue or number of employees) may determine whether an organization has funds or human resources sufficient to take on in-house GHG management.

The notion of GHG management is still a new one to many businesses, and uptake remains greatest amongst “ear ly adopters”: businesses that see the future potential of learning these skills and implementing these processes in their businesses. Personal interest and building upon self-identified existing “green initiatives”, taking a leadership position within their industr y are still the most oft-cited motivators. This is especially prevalent amongst smaller SMEs.

Pragmatism and business case is growing. More businesses are now waking up to the cost-savings aspect, and the need to meet requirements is growing, possibly from supply-chain pressure as many SMEs operate in supply chains of larger organizations who do fall under regulatory pressure. This is especially true amongst larger SMEs in this study. Between industr y sectors, different business-case motivators appear : community leadership amongst non-profits and advocacy organizations, supply chain concerns amongst food processors and manufacturers, etc.

Perhaps driven by these potential cost savings, the majority of businesses are comprehensive in their assessments of their operations, even opting to measure emissions that are optional under the GHG Protocol framework (e.g., contracted third-par ty transpor tation, paper usage, landfilled waste).

GHG emissions are broken down by activity type to examine operational areas that had the greatest carbon impact. 40% of emissions measured come from transpor t-related activities: fleet operations, business travel, third-par ty shipping, and employee commuting. GHGs from heating (largely natural-gas combustion) make up near ly a quar ter of emissions measured.

In general, emissions rise with size of organization, but appear to be influenced more by industr y and associated energy, material and transpor t-usage patterns. Construction, trade and transpor t, and manufacturing SMEs repor t the highest GHGs per employee; professional ser vice and public administration/service organizations (largely office-based) the lowest.

When asked how they will reduce their GHG emissions, SMEs tend towards ease of implementation: tackling business-process changes as a first step, and balancing capital investment against the business case and existing replacement schedules. Waste diversion, paper use, and suppor ting alternate staff-commuting methods are some of the top reduction strategies chosen. The

There is a growing awareness amongst SMEs of the business benefits of carbon management.

This study will inform:

• local governments in the midst of planning community climate-action outreach effor ts,

• product and service providers looking to supply SME clients,

• business schools, universities and colleges looking to enhance their curriculum with SME-sector data and a growing list of small-business case studies,

• Federal and Provincial ministries looking for third-par ty-reviewed data and insight on the energy, waste and transpor tation usage of SMEs, and

• other entrepreneurs and SMEs looking to their business peers for inspiration, strategies and suggestions.



This report was made possible through financial suppor t from Metro Vancouver Regional District, Business Development Bank of Canada, the City of North Vancouver, and the City of Vancouver.

Thank you to our client businesses and organizations, for working together with us to collectively develop and share progressive business practices, build more resilient communities, and reduce the impact of business on our planet.

This repor t was prepared with the advice and counsel of:

Chris Bataille, PhD Executive Director, MKJA Energy Policy Consultants

Sarah Burch, PhD Postdoctoral Fellow in Sustainability Governance, Centre for Interactive Research on Sustainability, UBC

Coro Strandberg Principal, Strandberg Consulting

Peter ter Weeme and Mike Rowlands Principals, Junxion Strategy

smallest businesses are the most nimble in terms of changing business practice, and will target business processes with low capital/technological barriers to implementation.

Likelihood of capital investment increased with size of organization. Replacement of fleet vehicles with more fuel-efficient options (bound by existing fleet management schedules), and heating upgrades are the most common.

Across sectors, reduction strategies again lined up with usage patterns: enter tainment and accommodation SMEs look to heating upgrades and behaviour change; construction SMEs are interested in vehicle replacement and driver education (in this study, “fleet” includes light and heavy equipment).

In terms of actual GHG reductions measured, businesses measuring into their third year and beyond repor t greater annualized reductions than those that have only just begun actively managing their GHGs for one year. As is the case when introducing any change to an organization, new processes, equipment upgrades, and employee practices can take time to bear fruit.

Year-on-year fluctuations in measured emissions due to business growth or one-time events also help to highlight the impor tance of viewing GHG management as a long-term strategy, and that continuing effor t will pay off.

With the data collected in this study, we can project an illustrative, aggregated “commodity” cost of carbon of approximately $400 per tonne carbon-dioxide-equivalent (CO2e), based on commodity costs of inputs into a typical SME’s business activities (e.g., fuel, energy, waste dumping, paper).

As with any change in practice, GHG reduction initiatives can take time to embed within an SME.

Climate Smart has developed a database of information on GHG emissions and associated energy, waste and transpor tation-use characteristics of British Columbia’s small and medium-sized enterprises. This study encompasses data current as of July 2011; the Climate Smar t data set has near ly doubled since then.

Climate Smar t can provide in-depth tailored analysis on specific subsets of overall database as desired, for community-emissions modeling, industr y benchmarking, etc.

Climate Smar t will also be producing a series of briefs once a quar ter, each profiling an industr y sector (for example, office based, manufacturing, trade and transpor t businesses).

For more information, go to [email protected].

ACKNOWLEDGEMENTS

NOTE ON CLIMATE SMART DATA



SMALL-MEDIUM ENTERPRISES AS AGENTS OF CHANGE

BUILDING TOMORROW’S ECONOMY WITH THE LOCAL COMMUNITY IN MIND

SMEs: AN OVERLOOKED MAJORITY

The benefits to businesses from sustainability are becoming well-known. Financial incentives for conservation and efficiency; streamlining supply chains; de-materializing packaging and redesigning products and services: all benefit the bottom line by producing more value and less process and material waste.

Examples in the literature reference the practices of leading but large businesses, largely ignoring the vast majority of organizations that make up our economy: small-/medium-sized enterprises (SME) with fewer than 500 employees.

In economic development vernacular, while large businesses clear ly contribute to our economy, the entrepreneurial effor ts of SMEs are the engines of our local economies. SMEs are the majority of enterprises, and employ the majority of private-sector workers: in British Columbia, they represent 98% of businesses, employ over 1 million people (or 57% of the private sector jobs) and are creating jobs faster than their larger counterpar ts1.

Across Canada, fully 99.8% of all businesses are SMEs2, employing 64% of the countr y’s workforce. Small businesses alone (those with fewer than 50 employees) contributed 31% to Canada’s GDP. As we navigate today’s global recession and build tomorrow’s economy, we at Climate Smar t believe understanding the motivations, actions, impact, and innovations of this group is essential to weathering these storms and to successful economic development.

1 BCStatsSmallBusinessProfile20122 Industry Canada Key Small Biz Statistics, July 2011

With Canada’s withdrawal from the Kyoto Protocol, and recent uncer tainty surrounding the future of the Western Climate Initiative (of which British Columbia is a member), it looks inevitable that meaningful climate action must be spearheaded at the municipal level. By working in conjunction with local governments and communities where these organizations and people live and operate, we can harness the intelligence of local businesses to meet our shared community challenges.

Though falling below the threshold for mandatory carbon repor ting in jurisdictions where such requirements exist, SMEs compose a vibrant, innovative sector that can be engaged to voluntarily reduce greenhouse gas (GHG) emissions. Ear ly-adopter SMEs are moving down the road of corporate sustainability and beginning to quantify their achievements. Others who have not been proactive up to this point are recognizing GHG management as an ideal first step: by setting up systems to measure and monitor GHG inventories, they can more appropriately prioritize and measure return on investment on which projects and initiatives they can afford to under take.

>99% 64% 31%of businesses are small, employing fewer than

50 employees

of private-sector jobs are provided by these

small businesses

of Canada’s GDP comes from

small businesses

As we navigate today’s global recession and build tomorrow’s economy, we at Climate Smart believe understanding the motivations, actions, innovations and impact of this group is essential to weathering these storms and to successful economic development.



CARBON MANAGEMENT ACROSS ALL INDUSTRIES AND SIZES

Agriculture, Forestry, Fishing and Hunting

Mining, Quarrying, and Oil and Gas ExtractionUtilitiesConstruction

Manufacturing (Food, Textiles, Leather)Manufacturing (Wood, Printing, Oil, Plastic)Manufacturing (Machinery, Goods, Furniture, Misc)

Wholesale TradeRetail (Cars, Electronics, Food, Gasoline, Clothing)Retail (Goods, Misc)TransportationWarehousing, Couriers, and Postal

Educational ServicesHealth Care and Social Assistance

Arts, Entertainment, and RecreationAccommodation and Food Services

Other Services (except Public Administration)Public Administration

6%

1% Agriculture

Construction and Utilities

15% Manufacturing

9% Public Administration and Services

12% Entertainment and Accommodation

4% Health Care and Education

InformationFinance and InsuranceReal Estate and Rental and LeasingProfessional, Scientific, and Technical ServicesManagement of Companies and EnterprisesAdministrative, Support, Waste Management and

Remediation Services

33% Professional Services

participantsby industry

(NAICS)

19% Trade and Transport of Goods

SMEs of all sizes and sectors are choosing to actively engage in carbon measurement and reduction. The demography of Climate-Smar t-enrolled organizations reveals that some industries are acting first.

Service industries (vs. goods-producing industries) predominate. Organizations falling within Professional Services are especially well represented, making up a third of all par ticipants. This is a broad category that encompasses organizations where human capital, knowledge and exper tise are the primary offer (e.g., architectural and engineering firms, and management and technical consulting ser vices). Other sectors include design and website ser vices, law firms, and accountancies, and organizations that suppor t daily operations of other organizations (building suppor t and waste haulers, processors and recyclers).

Real estate and proper ty-management firms, rental firms, and financial and insurance institutions were also industries from which Climate Smar t found uptake in the program.

Businesses engaging primarily in transpor tation were another

impor tant category where carbon management proved to be a priority. Trade and transpor t of goods included retail outlets and transpor t of people and goods. Wholesale and warehousing organizations are a segment with large warehousing premises and deliver y fleets.

Goods-producing industries have long approached business processes from the perspective of waste reduction and elimination. Printers, wood product, electronic and machinery manufacturers make up a sizable propor tion of par ticipants. Consumer-facing industries such as food, beverage, apparel and furniture producers, perhaps driven by marketing as well as cost-reduction, made up over half of all manufacturing SMEs par ticipating.

Other sectors include Enter tainment and Accommodation (restaurants and hotels) and Other Services, a sub-sector under Public Administration and Services. Respondents in this sector were predominantly business-advocacy associations—either geographic (i.e ., local chambers of commerce) or industr y-specific associations—as well as social advocacy and civic organizations.

Forthepurposesofthisstudy,NorthAmericanIndustryClassificationSystem(NAICS)sectorsweregroupedtogetherintoeightcategoriesaccordingtofirstNAICSdigit.Agriculture,ConstructionandUtilities,andManufacturingaregoods-producingindustriesasdefinedbyIndustryCanada;theremainingcategoriesareservice-producingindustries.See http://www.ic.gc.ca/eic/site/cis-sic.nsf/eng/h_00006.html for more details.

Top three industries in terms of uptake in carbon management with Climate Smart:

professional services

trade and transport of goods manufacturing

13BEYOND BIG: SMALL BUSINESSES, GREENHOUSE GASES, AND COMPETITIVE ADVANTAGE

North Shore Credit Union (NSCU) is a financial institution offering banking, investment, lending, and insurance services for individuals and small businesses.

Every business and organization knows that keeping employees engaged and inspired leads to more productive staff and lower turnover. Forward-thinking companies are now realizing that the encouragement of such initiatives as “green teams” and sustainability programs are great ways to engage employees and reduce environmental impact and costs.

NSCU is treating sustainability and corporate social responsibility programs as a form of professional development – with stellar results.

When it comes time to recruit employees for these types of teams, NSCU does not present the volunteer positions as an oppor tunity to “save the world”, but rather as an oppor tunity to develop public speaking skills and leadership skills, effect change in the organization, and get noticed by demonstrating leadership and teamwork.

The response from NSCU employees has been overwhelming. Employees regular ly volunteer to be par t of working groups and are actively involved in the process.

These types of programs are a win-win for employees and employers. NSCU

North Shore Credit UnionEmployee professional development drives organizational change

employees relish the oppor tunity to develop new skills to use in their jobs and to add to their resumes. Nor th Shore Credit Union is able to see employees demonstrate leadership and teamwork skills, which improves the company’s ability to promote from within the organization. There are also benefits like reduced costs from recruiting, and the intangible benefits that come from people from across the company sharing ideas and problem-solving together.

These benefits are, of course, in addition to reducing the environmental impact on the company’s operations: a task that is collectively shared by enthusiastic and engaged employees.

Benefits:

greater cross-team collaboration

lower HR costs

internal team building and professional development

The majority of participants in Climate Smar t were small businesses: 67% of par ticipant organizations had fewer than 50 full-time-equivalents (FTEs). 90% of all par ticipants employed under 200 FTEs. Greater uptake was seen amongst businesses with 11–50 FTEs versus those with fewer than 10, seeming to indicate a possible barrier is human-resource limitation. Above a cer tain threshold, organizations are better able to afford time for employees to engage in activities that may not be currently par t of their primary job function.

25FTEswork at a “typical” (median) Climate Smart business

SMEs are more likely to take on in-house carbon management if they have:

size (FTEs) size (FTEs) size (FTEs) size (FTEs) size (FTEs)

participantsby size (full-time

equivalents)

30% 1-10 FTEs4% >500 FTEs

6% 201-500 FTEs

37% 11-50 FTEs23% 51-200 FTEs

enough staff to allow time for employees to undertake and implement new business practices

12

CLIMATE SMART CASE STUDY



A robust balance sheet gives businesses more bandwidth and security to incorporate new business practices, especially perceived “novel” practices such as carbon management. Stability gives the chance to tweak. 72% of par ticipant organizations have annual revenues greater than $1,000,000; 38% generate more than $5,000,000 annually.

> $1mannual revenue for majority of Climate

Smart business

15% <$500,00038% >$5,000,000

13% $500,000-$999,999

participantsby size

(annual revenue)

34% $1,000,000-$4,999,999

$

established revenue-generating operations (with annual revenue as an approximate indicator)

SMEs are more likely to take on in-house carbon management if they have:

Through comprehensive fuel, electricity and natural gas reduction strategies implemented over a two-year period, Van Houtte Coffee Services’ British Columbia operations are reducing emissions annually by 202 tonnes CO2e—over 14% of their 2009 baseline emissions—as well as seeing significant cost savings.

“From environmental initiatives, we have permanently cut annual operating expenses in BC by over $100,000,” says Mor ten Schroder, VP Operations for British Columbia.

While these cost and carbon savings represent outstanding successes, equally impressive is the comprehensive manner in which Van Houtte has taken on sustainability in all areas within their business.

The primary area of cost savings and emissions reductions came from fuel reductions in their vehicle fleet. By conver ting 20 gasoline vehicles to propane, and optimizing fleet vehicle routes, emissions from transpor ting goods out of the Van Houtte locations in BC were reduced by over 270 tonnes CO2e total over a two-year period. Costs saved during this time totalled over $200,000. With an approximate cost of $5,000 to retrofit each vehicle, the investment was paid for in one year.

Mor ten and his team also looked at reducing their electricity usage, by retrofitting and, in some cases,

Van Houtte Coffee ServicesEngaging staff, clients, and fellow businesses leads to new initiatives

reducing the amount of lighting in their office and warehouse. This has cut their electricity consumption by close to 100,000 kWh annually. Adjusting for rising electricity rates, annual cost savings are over $8,000 and emissions are fur ther reduced by near ly 2 tonnes. By accessing local utility incentives (BC Hydro PowerSmar t retrofit program), the payback on this investment was reduced to under two years.

An additional $4,000+ in cost savings and a reduction of near ly 15 tonnes CO2e annually has been achieved through initiatives and behaviour change around conserving natural gas usage.

Van Houtte has been an exemplar of business-to-business engagement and sharing of knowledge. They have reduced their paper use simply by surveying their clients and switching many accounts over to paper less e-statements.

In speaking with another Climate Smar t business, Mor ten learned about using cardboard baling machines to reduce waste pickups. Installing one in the warehouse, Van Houtte has now cut down on frequency of cardboard pickup significantly. As well, Van Houtte now gets paid per tonne for their baled cardboard, helping to offset the cost of recycling and processing waste. Payback-period range:

Annual reduction:

1 to 2 years

202 tonnes CO2e

$100,000+

15





Why do SMEs choose to take on in-house carbon management? Motivations are changing as the business case for sustainability gains traction.

Since the ear ly days of Climate Smar t in 2007, there has been a strong showing in “visionary” motives: personal interest in education, building upon existing initiatives, and industr y/community leadership and engagement. These motivators remain the most oft-cited reasons for carbon management.

Meeting requirements is a nascent motivator but growing. In the absence of regulatory requirements, SMEs measure their carbon voluntarily. External requirements come from competition and supply-chain pressure as clients (for instance, large corporates or local governments) update their procurement policies with sustainability stipulations.

Similar ly, demand from inside and outside the organization, while modest in comparison to visionary drivers, continues to grow. Customer and employee demand are often seen as motivators for businesses to take action.

More mainstream businesses take action based on pragmatism and the business case. More and more businesses are seeking to strengthen top-/bottom-line performance, showing an awareness in the SME sector around the benefits of carbon management beyond environmentalism: the growing realization that this is simply smar t business practice.

Need to change how business is done to impact the earth. Also my children.”“

BUSINESS DRIVERS EMERGE FOR SMES TO MANAGE CARBON

We are a big emitter of carbon and from a moral as well as a financial perspective this must change.”“

Businesses were asked upon registration in the Climate Smart program why they choose to pursue carbon management. Vision and personal motivations continue to be strong drivers, but awareness of the business case is building.

1

10

100

2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

Num

ber

of B

usin

esse

s

Vision and Curiosity

education/interest/personal motivationindustry/community engagement build on our existing green initatives

Meeting Requirements

supply chain engagement/requirementsother existing requirementsanticipating future requirements

Strengthening Business

marketing, reputation and brand imagecut costs and boost efficienciesnetworking and B2B opportunities

#%%2-:'&%?",&%#%-8+'

attract and retain employees

Fiscal Year (April)

customer/investor/partner demand

Internal/External Demand

Number of Businesses axis is cumulative and plotted logarithmically to highlight changes in quantity

eeko Couriers Inc. is growing rapidly, providing low-carbon deliver y ser vices throughout Metro Vancouver on both bikes and in hybrid vehicles. They measured their baseline inventory using their 2010 fiscal year, which was measured to be 26 tonnes CO2e.

While their business is on track to more than double in the coming year, they don’t expect their emissions to double as they have seen efficiencies in routing. Where it is efficient, they are also experimenting with split-mode deliveries, where they use bikes for downtown pickups, then use public transit to get to the suburbs where they pass off to a hybrid vehicle for final deliver y.

They have demonstrated that incorporating green modes of transpor t can improve uptake in their ser vices: owner Mike Shekhtman estimates that 5-10% of growth this year can be attributed to the expansion of their bike deliver y ser vices.

eeko couriers Low-carbon services drive brand, efficiency,andgrowth

Annual growth due to green initiatives: 5-10%

Purdy’s ChocolatesComprehensive and ongoing reductions initiatives tackle all areas of operation

Purdy’s Chocolates is an iconic Canadian chocolatier located in Vancouver, BC. Purdy’s was able to reduce their largest single source of emissions, solid waste, by near ly half in just one year. By the end of 2011, Purdy’s had reduced emissions from this source by over 47% compared to their 2010 baseline measurement year. This waste diversion effor t cut Purdy’s’ emissions by 112 tonnes CO2e.

Jim Pritchard, Director of Chocolate Operations at Purdy’s, had encouraging words to say about the straightforward nature of their initiatives.“I had asked [an employee] to tr y to find a company that would take items we were sending to landfill. He found one company that would take everything and we just had to separate it and store for them to pick up.” In addition to improving recycling rates, the absolute number of waste and recycling-hauling trips made to the Purdy’s facility has also been decreased.

Sustainability is a continuing effor t at Purdy’s. Purdy’s has retrofitted lighting, windows, heating systems and roofing materials in various areas of the Purdy’s business. They are also rigorously evaluating their emissions in areas such as electricity, transpor t and natural gas. Initiatives such as the installation of energy-efficient hand dryers has reduced the production of wastepaper at their facilities. In addition, by discouraging the use of disposable plastic bags at the retail end of their operations, Purdy’s has managed to reduce this waste stream by 10%.

Critical to the drive toward sustainability has been the education of employees on electricity, paper and waste reduction strategies using staff, depar tment manager and supervisor meetings in tandem with newsletters. Duncan Johnston, Chief Financial Officer at Purdy’s, and a par ticipant in the Climate Smar t program, estimated that implementing these strategies required “30% education, 60% follow-up and 10% inspiration.”

Annual reduction:

112 tonnes CO2e

10% less waste from retail outlets

They continue to work towards reducing their emissions fur ther by fine-tuning the recycling program at the factory, implementing a lower-emission deliver y program, performing a natural-gas audit at the factory, and investigating alternative packaging.

Purdy’s is projecting a wide array of efficiency gains that have potential to yield an even lighter organizational footprint in future years. “New oppor tunities are always coming up”, says Johnston.

19


BEYOND BIG: SMALL BUSINESSES, GREENHOUSE GASES, AND COMPETITIVE ADVANTAGE18





Drivers for managing GHGs var y across size of organization and revenue.

Very small businesses embarking on GHG management may not link carbon reduction with cost reduction, and act based on improving marketing and brand image (a less tangible benefit) and the potential for B2B oppor tunities. This may be a function of where the responsibility lies for GHG management within the organization: in smaller organizations, it is often the business owners themselves.

Supply-chain engagement is a driver for action in larger and higher-revenue businesses, highlighting the tendency for larger businesses to have more extensive and complex supply chains. Supply chains are also more immediately visible to businesses (as opposed to potential future legislative requirements).

That having been said, few businesses overall anticipate future requirements as a top motivator. Future GHG-measurement requirements, and their impacts on the SME sector, appear to remain poorly visible and poorly understood by SMEs. Larger organizations appear to have a greater awareness of carbon management as preparation for future business.

Businesses in this voluntar y space are largely self-motivated. Personal

motivation and building on existing green initiatives were consistently high across all categories. This suggests the market is still in an ear ly-adopters phase, moving into an ear ly majority reflecting business owners who already understand what carbon management is, and its value to their business.

education/interest/personal motivationindustry/community engagement

build on our existing green initatives

cut costs and boost efficienciesmarketing, reputation and brand image

networking and B2B opportunities





0% 25% 50%

under $500,000

$500,000 - $999,999

“ As a young company we would like to develop a [carbon] baseline for the company and source early on where we can cut emissions.”

Smaller SMEs lead with their vision, and look to build their brand and business practices.

Cost-cutting and efficiency increase in impor tance as business size increases, perhaps as a more traditional, capital-budgeting approach emerges. However, above a cer tain threshold, cost cutting decreases as a cited reason. This may indicate a more complex set of motivators for larger businesses (including industr y and community engagement) touching on aspects of competitiveness and good corporate citizenship. Industr y and community leadership is a driver in the smallest businesses: owner-operators who are connected to the communities they live and work in.









$1,000,000 - $4,999,999

over $5,000,000

0% 50% 100% 0% 50% 100%

under $500,000

$500,000 - $999,999

$1,000,000 - $4,999,999

over $5,000,000industry orcommunity

engagement

cut costsand boost

efficiencies

“ Efficiency, cost savings, leader in industry and source of change. Future necessity for competitiveness in tender and bidding process.”

Larger SMEs focus on the broader business case: efficiencyandcompetitiveness.


Freybe Gourmet FoodsLow-cost initiatives show payback and lead to further capital investment

Payback-period range:

Annual reduction:

immediate to 1.5 years

400+ tonnes CO2e

$75,000+

Starting with low cost (or no cost) solutions, Freybe Gourmet Foods, Ltd. quickly realized emissions and cost savings—some with immediate paybacks. They are building the business case in pursuing emissions reductions and continuing on to more capital-intensive projects.

Freybe began by analyzing the operating hours of their manufacturing facility in Langley, BC. Redistributing shifts and compressing their workweek by 6 hours immediately reduced their overall energy consumption by 2% and it cost them nothing.

Freybe has also saved over 530,000 kWh of electricity in the last 9 months. By switching their lights from metal-halides to T5s, they now save near ly 400,000 kWh annually with a capital investment of $39,000 plus labor. They have installed variable frequency drives on all of their refrigeration units, allowing them to adjust output and energy consumption based on demand. With fur ther investment in automated control, they expect to increase their savings to near ly 1,000,000 kWh annually: cutting over 12% off their total annual electricity usage.

Freybe is also working to reduce their natural gas use. In reexamining their high-pressure boiler setup, staff determined that the risk of boiler failure was low. They decided that constant operation of their backup boiler was not necessar y; by fir ing it

only when needed, they can practically eliminate its use. In addition, they have found a way to step down excess high-pressure steam to provide low-pressure steam for other processes, eliminating the need for their low-pressure boiler. Changing how they use their equipment has effectively reduced their requirement for three boilers down to one. Over 15% savings are expected: a 5-month payback.

They are now regular ly checking their steam traps and compressed-air-system to ensure maximum efficiency in the lines. Adding insulation on piping and feedwater systems will fur ther reduce heat loss. Installing an instant heat exchanger eliminated the need to fire up a boiler for one production process in an otherwise idle period.

Freybe has also reduced its water consumption. Polishing (physically filtering) water at the inlet to their refrigeration coolant loop, rather than using a chemical process, has reduced their water usage by 3,500 cubic meters per year. By reducing the total organic waste going into their effluent in the first place, Freybe’s manufacturing wastewater is purer, and the cost of disposal of this collected waste (typically to landfill) is lowered. In addition, they are currently looking at the possibility of par tnering with local food manufacturers to process their waste in an anaerobic digester, eliminating landfill-bound organic waste entirely.

MARKETING AND BRAND IMAGE

SUPPLY CHAIN REQUIREMENTS

CUTTING COSTS

Motivators are largely similar across industries, and are dominated by visionary, values and brand-related drivers. In addition to these, more nuanced business-case drivers appear that are par ticular to cer tain sectors.

Marketing advantage and improving brand image was impor tant to professional ser vices, food and textiles manufacturers, finance/insurance organizations, and administrative and waste-management businesses (which include businesses providing B2B administrative and B2B/B2C waste services).

Industr y leadership and community engagement was a top motivator in the Accommodation and Food Services sector. The consumer-facing nature of the hospitality and restaurant sector may create a perceived need to stand out amidst competition. Note the retail sector also showed a strong response to industr y leadership. Another motivator was staff retention, a concern in the hospitality sector with its frequent employee turnover. Community leadership and engagement was also a top motivator amongst non-profit/advocacy organizations, as well as personal care and service businesses.

Supply-chain pressure motivates sectors that are especially reliant on strong supplier contracts and relationships: food processors, and machinery and goods manufacturers. Retail businesses also cite this as a concern. Forward-thinking financial institutions anticipate future requirements as well.

Cost-cutting is a top motivator for manufacturers. Many organizations in this sector own their own facilities and near ly all operate energy-intensive equipment where efficiencies translate readily into financial savings. Reducing costs also resonated with retail SMEs: energy use (lighting and heating) in their retail spaces can be a large por tion of their overall costs, especially in smaller operations.

INDUSTRY LEADERSHIP AND COMMUNITY ENGAGEMENT

Businesses perceive specific business-case reasons to manage their emissions, particular to their industry sectors.

22




Miles Industries Ltd. is Nor th America’s exclusive designer, manufacturer and distributor of Valor Radiant Gas Fireplaces.

In looking at their overall GHG inventory, they chose to include emissions from use of their fireplace products. They are working with their suppliers to design a pilot light system that has a timed remote shut-off. This will reduce their total GHG inventory by near ly 1,165 tonnes CO2e through extensive reductions in natural gas consumed by their product. This will also result in significant cost savings to the end-user.

Miles’ voluntar y extension of their GHG-reduction scope highlights the innovation taking place in the SME sector, and the potential for substantial natural gas conservation through thoughtful product redesign and refinement by industr y leaders.

Miles Industries Product redesign results in significantenergysavingsfor customers

Annual reduction:

1,165 tonnes CO2e

21,000 GJ natural gas

Develop capacity to reduce the GHG footprint of our own business operations, injecting this capacity into our general practice e.g., encouraging the businesses we work with to reduce their emissions.”

Maintain highest environmental practices while delivering value to our guests, safe workplace for our employees and a lasting legacy for our families and community.”

““

The drive to become industry leaders and good corporate citizens motivates SMEs.

There is also an element of “co-opetition”: businesses will collaborate with competitors to elevate the industry as a whole while maintaining or attaining a leading position.

24





GREENHOUSE GAS PROFILES AMONGST SMES

GHG inventories compiled through the Climate Smar t program follow the GHG Protocol, an internationally recognized standard developed by the World Resources Institute and the World Business Council for Sustainable Development. According to this protocol, an organization’s emissions are divided into three categories, or scopes:

Scope 1 comprises all direct sources of emissions (i.e ., sources owned or controlled by the repor ting SME): fuel combustion from heating and fleet vehicles owned by the repor ting SME, and refrigerant leakage from company-owned machinery. Repor ting of Scope 1 emissions is mandatory for the completion of a compliant inventory.

Scope 2 includes indirect sources of emissions (i.e ., emissions consequent to the activities of the repor ting SME, but that come from sources owned or controlled by another entity). Typically, this encompasses purchased electricity, heat, or steam. Repor ting of Scope 2 emissions is mandatory for the completion of a compliant inventory.

Scope 3 comprises all other indirect emissions: materials and paper use, waste disposal to landfill, transpor t of people and goods with vehicles not owned or controlled by the repor ting SME (business travel, third-par ty shipping), and other greenhouse-gas contributing emissions, such as third-par ty hazardous waste incineration. Repor ting of Scope 3 emissions is currently optional for the completion of a compliant inventory.

784tonnes CO2e emitted by an average Climate

Smart business

Scope 1 emissions make up near ly half the emissions measured by Climate Smar t businesses. This is split near ly evenly between company-owned vehicles, and fuel combustion for heating.

Scope 2 emissions make up a small por tion, and mainly include purchased electricity. Related emissions are therefore low due to the availability of low-carbon hydroelectric power in British Columbia, where the majority of these SMEs are based.

Scope 3 emissions account for near ly as much carbon measured as Scope 1, illustrating that this optional category actually represents a sizeable por tion of an SME’s inventory, as well as significant oppor tunities to reduce these emissions.

1

2

45% scope 143% scope 3

12% scope 2

emissionsby scope

Scope 3 emissions come mainly from materials and transpor t, with some from hazardous waste incineration and refrigerant leakage. These activities typically are some of the most “top-of-mind” in an organization’s operations, and areas where an SME can easily take steps to reduce emissions. For instance, four out of five repor ting SMEs opt to measure their paper consumption, and 65% of businesses measure landfill-bound waste. As a result, paper use and waste together make up near ly a quar ter of total measured emissions. Third-par ty transpor t-related emissions from business travel, staff commuting, and shipping—also scope 3 emissions—together make up 18% of measured emissions.

For organizations just launching their sustainability effor ts, these are easy “low-hanging fruit” strategies for quickly reducing emissions with relatively little effor t. For small operations, they can also represent the lowest-cost oppor tunities for emissions and cost savings, as compared to more capital-intensive electrical and heating-equipment upgrades.

Measuring scope 3 emissions captures a sizeable portion of overall emissions.

Despite a lack of requirement to do so, 96% of SMEs measure at least a portion of their scope 3 emissions.

paper waste

fleet business travel commuting shipping

0% 10% 20% 30% scope

1

2

3

electricity

heat

materials

transport

other emissions by activity type and scope


Heating is the largest single activity type from an emissions standpoint. The majority of these emissions come from on-site combustion of heating fuel—typically natural gas in BC.

Materials use and disposal, comprising paper/packaging use and landfilled waste, make up near ly a quar ter of measured emissions.

“Other” emissions typically come from refrigerant leakage and third-par ty hazardous-waste incineration.

Emission profiles vary greatly across sectors. For instance, paper use and heating are the main areas of carbon impact for professional ser vices, whereas trade and transpor t SMEs can expect most of their emissions to come from fleet-vehicle activity. Manufacturers have impacts in multiple areas, with business travel being the highest amongst SMEs surveyed. Heating (building or process fuel combustion), fleet vehicles, electricity and landfilled waste are also significant emission sources for manufacturers.

Transportation generates more emissions than energy use.

top three sectors comprise 66% of all Climate Smart-surveyed SMEs

emissions by activity type, top three sectors

electricity

heat

paper

waste

fleet

business travel

commuting

shipping

other

5%

13%

3%

13%

<1%

4%

6%

22%

33% 7%

11%

6%

3%

9%

3%

professionalservices

3%

66% 14%

6% 2% 3%

13%

17%

2%

24%

10% 2%

trade andtransportof goods

manufacturing

12% electricity

emissionsby activity type

14% paper8% waste

10% business travel

4% commuting

4% third-party shipping

2% other

22% fleet

24% heat

Annual savings:

$80,000+

97+ tonnes CO2e

SecuriguardOptimizing routes reduces fueluseandfleetsize

Securiguard is a full-ser vice integrated security solutions company offering customized corporate security ser vices, security guards and security consulting. Through par ticipating in the Climate Smar t program, the company measured their baseline inventory for their Nor th American operations for the 2010 fiscal year, and is currently measuring their footprint for 2011 and 2012.

The 47-vehicle Securiguard fleet currently includes 17 hybrid vehicles and one diesel vehicle. In addition to replacing conventional vehicles with the 17 efficient hybrids, Securiguard is working to replace an additional 12 vehicles with leased hybrids in the next year.

The net per-vehicle savings that Securiguard has realized from these changes are $100 per month, including additional leasing costs. Annual savings amount to $21,000 in fuel costs (assuming $1.30 per litre), and translate into a projected greenhouse gas (GHG) emissions reduction of 97 tonnes CO2e, or a 13% reduction in emissions from Securiguard’s 2010 baseline measurement, with fur ther reductions to come from increased fleet efficiency.

Securiguard was also able to reduce the total number of vehicles in their fleet over the past two years, through better route planning using new route optimization software implemented in their vehicles. Financial returns from this on-board software, and the subsequent fuel savings and reduced size of the Securiguard fleet have been substantial. Securiguard is realizing savings of $5,000 on a monthly basis.

In total, Securiguard’s fleet efficiency initiatives have brought the company annual fuel savings of more than $80,000, as well as reducing a major component of their carbon footprint.

Cutting down on vehicle idling, implementing electronic invoicing, improving their recycling infrastructure and reducing energy consumption by implementing “turn-it-off ” programs and reducing vampire power are other ways Securiguard is working to thoroughly and thoughtfully green their operations.

29





Emissions increase with size of organization approximately (using full-time equivalents as a proxy for size). The repor ting of Scope 3 emissions may be a convoluting factor, as this is optional and can compose a significant por tion of a typical SME inventory. Note also the significant outliers in near ly all categories. GHG emissions are not exactly correlative to an organization’s emissions; however, a strong coincidental relationship exists: larger organizations use more energy and resources.

The relationship between emissions and annual revenue is similar ly coincidental: emissions* increase with increasing revenue. However, again there is significant variance in the data (par ticular ly with low-revenue businesses), and extreme outliers exist in each category: contrast the emissions of one small organization’s emissions—128 tonnes per FTE—against the 3.7 tonnes per FTE median value for businesses with less than $500,000 annual revenue.

* Analysis is facilitated by normalizing emissions for number of full-time equivalents, yielding a tonnes-per-FTE intensity metric to remove size of organization as a factor.

Emissions generally increase with size and revenue, though outliers show this is not always the case with every SME.

0

2,000

4,000

6,000

8,000

1-10 FTEs

tonnes CO2e

11-50 51-200 201-500 >500

median

GHG emissions, by full-time equivalents

14,856 14,094max 16,404

< $500,000 $500,000 - $999,999

$1,000,000 - $4,999,999

>$5,000,000 0

10

20

30

40

50 tonnes CO2e

GHG emissions per FTE, by annual revenue

median

128 93 176 56max

Emissions by industry sector per FTE exhibit trends that largely coincide with an understanding of typical business activities within sectors. This is especially true in activity types related to fixed premises, such as electricity and heating. Note that sector groupings are necessarily broad to facilitate analysis; as a result, outliers exist in each grouping.

Construction and utilities, trade and transpor t, and manufacturing organizations have the highest emissions per FTE. Health care/education and enter tainment/accommodation organizations emit similar levels, perhaps indicating a commonality in energy/resource use and subsequent emissions. Professional and administration SMEs, having mainly office-based operations, showed the lowest emissions per FTE (though the professional ser vices sector, encompassing engineering, waste-hauling, and other potentially fleet-intensive operations, shows higher emissions than purely administrative SMEs).

Climate Smar t has determined through this analysis that grouping SMEs into similar usage categories (e.g., manufacturing, office-based, transpor t/fleet, hospitality) may yield more correlative industr y benchmarks. Climate Smar t can also break out this data by activity type: electricity, heating, fleet activity, business travel, waste, etc.

Construction, trade and transport of goods, and manufacturing are the highest emitting industries.

0

10

20

30

construction and utilities

manufacturing trade and transport of goods


health care and education

entertainment and accommodation

administrativeservices

median

128max

GHG emissions per FTE, by sector

tonnes CO2e

56 93 176 55



PATTERNS IN GREENHOUSE GAS REDUCTION

Simple strategies dominate emissions reduction plans following an SME’s first GHG inventory. The top five comprise waste diversion (typically involving implementation or improvement of recycling schemes); reducing paper use; promoting alternative means of staff commuting; reducing third-par ty shipping emissions; and behaviour change centred on fleet activities. All are either related to improving business or day-to-day operational processes. Similar ly, the next two most popular reduction strategies involve behaviour change around electricity and heating use.

SMEs choose capital-intensive reduction strategies (such as electrical and heating equipment replacement, fleet vehicle fuel-switching conversions or replacement) when sizeable cost savings can be realized. In par ticular, upgrading electrical equipment is an area that, though highly visible and often top-of-mind for SMEs approaching environmental initiatives for the first time, is not a priority given its low carbon impact in BC (compare uptake in heating vs. electrical capital projects). The exception are simple electrical upgrades where payback (often substantial) and shor t payback periods were achievable.

Behaviour-change campaigns centred on transpor tation are also popular : fleet behaviour change (often driver re-education and implementing anti-idling policies), promoting public transit/carpooling to staff, reducing business travel. These lie within an SME’s direct control, and are highly visible in day-to-day operations and excellent ways to engage all employees at once. Cost and carbon savings can be immediate.

waste diversionpaper use

staff commutingthird-party shipping

fleet behaviour

topfivereductionstrategiesby%ofSMEsplanning to implement

Simple versus capital equipment

For the purposes of this study, a simple equipment upgrade is an equipment purchase or project, less than $500 up-front cost, that typically does not require significant work by a contractor or electrician. Examples include switching incandescent bulbs to compact fluorescents; purchasing multi-outlet power bars to facilitate equipment shutdown; installing occupancy sensors in unoccupied areas; small weatherstripping and caulking projects; installing programmable thermostats; etc.

A capital equipment upgrade is a larger or more extensive equipment purchase or project with a commensurately higher initial cost. Payback period ranges from under 12 months to multiple years. Examples of this are facility-wide lamp or ballast retrofits; machinery replacement; variable-speed motors; improved equipment-control technology; boiler replacement; re-insulation; etc.

Only one in five SMEs prioritizes their largest-emitting activity for reduction effor ts. The likelihood that an SME will target an activity type appears not to be driven purely by scale of emissions. Reduction effor ts remain dependent on business-case factors—degree of direct control, ease of implementation, and payback—rather than the mere fact that it is a high-impact activity.

The largest activity type in terms of carbon may lie outside of an SME’s ability to influence: for instance, SMEs repor ting electricity as their area of greatest impact are largely micro-to-small office-based businesses in leased premises. Despite significant potential savings from equipment upgrades, businesses may be unable to target these areas for improvement.

A greater propor tion of shipping-heavy businesses choose to reduce shipping-related carbon and costs. Along with business travel, these are process-related activities (versus capital investment in building stock), are often less cost-intensive, and therefore lie within reach of more SMEs. Similar ly, reducing emissions related to staff commuting is behaviour-change-based, and requires little expense to implement.

The majority of SMEs, having measured their operations through a carbon-emissions lens, opt to pursue carbon and cost reductions in multiple areas of their business operations. Rather than focussing solely on electricity use, heating use, or waste hauling, GHGs are a useful proxy for all types of reduction strategies and activities in an organization’s operations.81%

of SMEs choose reductions in more

than one activity type

of SMEs prioritize their largest-emitting activity for planned reductions

29%

7%

21%

24%

15%

20%

10%

46%

50%

34%

32%

40%

39%

7%

22%

behaviour change

capital equipment simple equipment

behaviour change

capital equipment simple equipment

packaging paper use

waste diversion

fleet behaviour change

business travel staff commuting

third-party shipping

fleet fuel switching fleet replacement/capital

electricity

heat

materials

transport

% businessespursuing

reduction strategies

18%


Smaller SMEs lead in behaviour change and nimble shifting of business processes.

Small businesses are nimble: the smallest size category (1–10 FTEs) shows the highest percentage uptake in fleet behaviour change, business travel, third-par ty shipping and waste reduction. With less institutional iner tia, smaller organizations may be able to change arrangements around waste contracts, fleet usage, and suppliers quickly. Business travel in par ticular is an area where the smallest SMEs can make significant carbon and cost savings.


third-party shipping

business travel

waste diversion

59% 43%

55% 42%

42% 36%

26% 20%

54% 38%

25% 22%

41% 35%

24% 17%

1-10 FTEs

11-50

51-200

201-500

1-10 FTEs

11-50

51-200

201-500

% businesses pursuing strategy, by FTE

Small SMEs opt for low-capital-cost initiatives.

Smaller businesses are willing and able to move quickly. Smaller SMEs are most likely to make changes to their shipping, business travel and waste diversion: focussing on business processes with low capital and technological barriers. Business travel may form a larger por tion of overall expenses for smaller SMEs, who therefore have a greater financial incentive to reduce.

Capital-intensive projects (e.g., heating equipment upgrades, fleet vehicle replacement) have greater uptake as revenue increases.

third-party shipping business travel

capital equipment waste diversion

<$500,000$500,000–$999,999

$1,000,000–$4,999,999>$5,000,000

<$500,000

$500,000–$999,999

$1,000,000–$4,999,999

>$5,000,000

75% 53%

48%

20%

63% 50%

29% 22%

5%

10%

18%

18%

50%

73%

52%

48%

% businesses pursuing strategy, by revenue

Otter Co-opBig savings from turning lights off and reducing waste

Otter Farm and Home Co-operative is an agricultural and home product co-op located in Langley, BC. They operate a retail centre, a bulk plant, feed plant, and several gas bars and convenience stores.

Simply switching off lights in their retail centre for 4 hours a day when the space is not in use will reduce their annual electricity costs by near ly $17,500.

Otter Co-op has additionally retrofitted their retail location with energy-efficient lighting. With an investment of $5,800 and a $1,200 rebate from BC Hydro, they project a savings of $750 a year, with an ROI of approximately 6 years.

In their newly renovated deli, a modest investment of $100 in reusable glasses means a savings of near ly $600 a year in paper cups. Near ly 600 pounds of magazines arrive at the store every week, many of which go unsold. By reducing their order, Otter Co-op will save 1,560 pounds of paper annually, as well as the 5 hours of labour a week required to process the unsold copies.

Annual savings:

$19,000 + reduced labour and waste

3 tonnes CO2e

35




less expensive than regular paper, resulting in $1,000 savings annually.

Building improvements have been made within the housing stock managed by Fraserside, through the replacement of inefficient appliances, installation of programmable thermostats, lighting retrofits, and home weatherization initiatives. These have reduced both emissions and costs from decreased gas and electricity consumption. The replacement of a conventional boiler with one that is 97% efficient at a single location resulted in over $7,500 in savings, decreasing the gas bill by over a quar ter at this location. This translates into 6% reduction in emissions from that location, and 2.5% off Fraserside’s total baseline emissions inventory. Low-maintenance appliances also save on maintenance trips.

As of 2010, Fraserside has also created a Green Committee with members representing all levels of the company, from directors to frontline staff. They are working on fur ther developing the society’s green policy, and will continue developing ways to fur ther reduce both costs and GHG emissions.

Fraserside Community Services SocietyHeating systems upgrades and lower paper use reduce cost and carbon

Fraserside Community Services Society is an accredited non-profit multi-ser vice organization providing quality ser vices to individuals and families in New Westminster, Burnaby, Delta, Surrey and the Tri-Cities area in BC. They measured their baseline inventory for their 2009 fiscal year FCSS has approximately 20 years experience in housing; the agency currently manages 13 facilities in total.

Fraserside is working to reduce their GHG emissions and costs by implementing new policies and reduction strategies. For instance, FCSS has drastically reduced their paper usage through accepting only online job applications, and using online bill payments, electronic time sheets and pay stubs. In addition, Fraserside has instituted a 30% recycled-content paper purchasing policy. This is actually

Annual savings:

$8,500+9.5+ tonnes CO2e

Patterns indicate areas of focus for environmental initiatives by sector.

Entertainment and accommodation organizations repor t the highest uptake in behaviour change in electrical and heat use, and heating capital upgrades. For the hospitality-sector businesses in this grouping, these are especially relevant areas of their operations with significant potential for carbon and cost savings.

Construction SMEs are most likely to cite fleet driver behaviour change and vehicle replacement as potential areas of savings. “Vehicles” here also include light and heavy construction equipment: a typically high-emitting activity within construction.

Office-based SMEs, such as professional and administrative services organizations, favour staff behaviour change campaigns around electricity, commuting and paper reduction: all highly visible aspects of their daily operations that impact all staff and depar tments.


manufacturing

trade and transport of goods




administrative services

heating behaviour change

27%

20%

14%

29%

0%

45%

19%

13%

18%

11%

10%

20%

32%

13%

heating capital equipment


72%

28%

33%

34%

0%

22%

40%

44%

10%

25%

21%

0%

22%

20%


manufacturing






fleet replacement/capital

electricity behaviour change

32%

21%

22%

39% 20%

39%

17%

staff commuting

25%

32% 56%

51% 0%

11%

45%


manufacturing






% businesses pursuing strategy, by sector

36




While a segment of any population engaging in new practices will show greater enthusiasm and pull ahead of the pack, many SMEs need to measure carbon beyond their second year to begin achieving reductions: to embed and fine-tune their data-gathering processes and measurement boundaries.

GHG inventories collected by Climate Smar t show a greater net decrease in emissions by the third year of measurement and continued reduction effor t. Looking at only the par ticipants who have completed third-year inventories, the resulting total reduction from baseline year is 11.5% (an annualized reduction of 5.8%): greater than reductions achieved by SMEs who have only measured up to year 2.

By this stage, more SMEs begin to realize reductions, and those reductions appear to be deeper. Some

organizations who actually measure net GHG increases in their second year, go on to achieve significant savings and achieve net overall reductions by their third year.

Reductions appear to occur mainly in heating, transpor t and landfilled waste. Transpor t in par ticular, which makes up 40% of average SME emissions, is

3.6%

11.5%

net reduction in GHGs between year 2 and baseline year

net reduction in GHGs between year 3 and baseline year

Organizations that actively manage their GHGs for at least two years achieve deeper reductions.

A long-term carbon-reduction trend is more important than year-on-year fluctuation.One Climate Smart SME greatly increased their paper use in their second year of measurement, due purely to business growth; however, by the third year, their paper use had begun to decrease. Year-on-year variability in measured emissions can occur despite an SME’s best attempts to manage and reduce emissions, due to one-time or weather-related events that have a propor tionately large effect on an SMEs total emissions. For instance:

an area of oppor tunity for significant emissions reductions, and constitutes the bulk of overall net reductions to date.

No trends emerge in looking at whether sector or size of organization impacts likelihood of achieving reductions quickly (i.e ., by year 2 of measurement).

Tinhorn Creek Vineyards, based in Oliver, BC, has 28 employees (20 permanent, 8 seasonal) and annual greenhouse gas emissions of 102 tonnes CO2e. This is a 34% decrease from their initial baseline measured 2 years ago.

In their first year, Tinhorn Creek targeted their wine bottles, switching to a lighter wine bottle that allowed more to be carried per shipment. The switch cut transpor tation and production costs while costing them nothing, and now saves them approximately $28,000 annually.

Over the next 4 years, Tinhorn Creek will be improving their irr igation system. Switching from their current overhead-spray to a drip-irrigation system allows them to combine water and fer tilizer together in the same stream. This gives them the ability to increase yield and significantly decrease water usage by targeting irrigation and fer tilizer to those vines that most need it.

Drip irrigation also eliminates the need for tractors to disperse fer tilizer. Once this project is completed, annual diesel consumption will be reduced by an estimated 25%, eliminating 5.5 tonnes CO2e. Tinhorn Creek will also save $2,500 annually. This does not include additional ongoing savings from reduced cost of equipment replacement, machinery maintenance, and labour.

Tinhorn Creek VineyardsOngoing commitment to sustainability pays off

Annual savings (year 2): Annual savings (year 3):

additional $2,500 + reduced maintenance, equipment, labour and increased yield

$28,000

• A proper ty-management SME observes drastic increases in heating use across its buildings due to a cold winter.

• A grocer is forced to source an alternate supplier due to crop failure, increasing their shipping-related emissions.

• A consulting SME is required to make additional flights for business due to a new client, increasing their travel emissions year-on-year.

This highlights a paradox in the SME sector : small but forward-thinking, progressive organizations have high growth potential, which in turn leads to an increase in emissions, even as they actively work to reduce them. It is impor tant to foster continued carbon management to create a long-term trajectory in emission reductions.

39




Glacier Creek ContractingSite waste diversion yields significantfinancialsavings

Glacier Creek Contracting Ltd. is a leading contractor in Whistler, BC. ser ving the Sea-to-Sky corridor.

After completing their baseline inventory in late 2009, Glacier Creek performed a waste audit to assess waste streams from their construction sites and diver t as much as possible from being sent to landfill. They worked with their waste hauling ser vice providers to provide separate bins for sor ting recyclable materials from unrecyclable garbage.

Through these effor ts, they were able to reduce their waste sent to landfill by 35% and their emissions from landfilled waste by 226 tonnes CO2e. They were also able to reduce their waste hauling fees by more than $64,500 from their baseline year.

Annual savings:

$64,500228 tonnes CO2e

35% waste reduced

COST SAVINGS FROM CUTTING CARBON

Carbon reduction efforts can have significant financial benefits to SMEs, and initiatives put in place now will continue to provide return as common business expenses rise in the future.

As the business community continues to link sustainability initiatives to business benefits, the quantification of those effor ts can be proxied using GHG emissions and associated costs.

Climate Smar t has calculated an illustrative average cost for emitting one tonne of CO2e, and therefore the savings achievable by SMEs reducing their GHG emissions.

This is a theoretical “commodity” cost of inputs into the average GHG emissions profile across all SMEs surveyed. This aggregated figure includes assumptions of average prices of carbon-intensive inputs:

• liquidfuels: gasoline, diesel, propane, jet-fuel

• utility-providedenergy: electricity, natural gas

• landfilledwaste: landfill dumping fees

• paper: wholesale rates

Note this estimate does not include other business/financial benefits, such as retention of staff, increased business due to green initiatives, marketing ROI, or reduced labour : some of which were observed in the case studies in this repor t.

For an SME, at a minimum carbon management can create economic resiliency and protect against fluctuating energy prices. This carbon-cost estimate—while making use of Nor th American and global averages—is centred on British Columbia, where the majority of SMEs in this study conduct their business. Utility rates var y greatly amongst jurisdictions, and British Columbia has some of the lowest

average cost in Canadian Dollars(and therefore potential savings)

to an SME of emittingone tonne of CO2e

$397utility rates in Nor th America. This carbon-cost estimate, based solely on commodity cost of inputs, will likely be higher for other jurisdictions.

By putting in place initiatives that result in a permanent and ongoing financial savings, businesses not only avoid costs in the present, but they avoid those same costs in the future, even as they continue to rise. If energy, fuel, waste dumping and commodity prices continue to increase, expenditures in carbon management and reduction programs can therefore be viewed as an investment, an undeniable one with a guaranteed and perpetually increasing return.

40




cover flickr/38314728@N08

2 frame-capture: Metro Vancouver “The Sustainable Region”, 2011, archived at www.metrovancouver.org/mediaroom/videos

12 flickr/squeakymarmot

15 flickr/neilconway

18 flickr/pommesking

19 flickr/like_the_grand_canyon

22 flickr/lululemonathletica

24 flickr/mikeblogs

29 © Securiguard Services Limited, used with permission

35 flickr/65487073@N03

36 flickr/11066072@N06

39 flickr/delphaber

40 flickr/mdpettitt

PHOTO CREDITS

BEYOND BIG SMALL BUSINESSES, GREENHOUSE GASES, ANDCOMPETITIVE ADVANTAGE

Elizabeth Sheehan Executive EditorLloyd Lee Analysis, Author and Design

Copyright © 2012 Climate Smar t Businesses Inc.

All r ights reserved.

This publication is protected by copyright and written permission is required to reproduce, store in a retrieval system or transmit in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise).

For information regarding permission, please contact [email protected].

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