Clear About Carbon: Leading Change in Procurement for Cornish Supply Chains
Dec 14th, 2011
By Fernando Correia, Annie Pye, Beverley Hawkins, Mickey Howard & Simon Ramsay
During the last decade the significance of climate change and the scientific consensus around the need for significant reductions in carbon emissions have grown sufficiently to directly inform and influence public policy at several levels, from national security to public procurement. The UK, for example, has not only become the first European country to commit to a long-term, legally binding framework for emissions reductions (the 2008 Climate Change Act), but also has the most ambitious targets (an 80% reduction in emissions by 2050, measured against a 1990 baseline). The same Act includes a provision for the UK Government to use powers under the 2008 Companies Act to make carbon emissions reporting mandatory (or explain to Parliament why it has not done so) by April 2012. The UK central government is already incorporating carbon reduction criteria in its procurement policies, with the general policy expectation that these criteria will soon appear in all public tender documents and processes in the future.
The project aims to develop and instil low carbon literacy, leadership and management skills into public sector procurement and private sector supply chains.
Markets have been influenced by a growing awareness of carbon emissions for some time, although it is not always clear who is driving whom. Growing public awareness of climate change, public policy developments and consumer trends are all likely to have contributed, but so too have market mechanisms and simple bottom-line business measures, as energy prices increase and the supply of commodities becomes less reliable and more unpredictable. Moreover, larger businesses are not only looking at their own emissions, but also expecting reciprocity from their suppliers. Recent positioning of some of the UK’s main supermarket brands and suppliers gives an idea as to the course being set:
■Sainsbury’s recently published “20 by 20 Sustainability Plan” where the company sets expectations from its own-brand suppliers to reduce carbon emissions by 50% by 2020.
■Tesco had previously declared its aim to achieve a 30% reduction in carbon emissions in its supply chain by 2020
■Marks & Spencer’s Plan A now includes a dedicated section focused on reducing its suppliers’ carbon footprint, listing ten separate commitments, from energy efficiency targets in its food suppliers to changes in logistics and operations.
■Unilever has pledged to halve the greenhouse gas impact of its products across their lifecycle (i.e. including the full supply chain) by 2020.
October 2011 saw the publication of the new Greenhouse Gas Protocol which sets the standards for products and corporate value chain carbon accounting and reporting. These are expected to set an industry-wide benchmark under which companies can measure emissions both upstream and downstream of their operations, and of the full life cycle of their products, including raw materials, manufacturing, transportation, storage, use and disposal. The scale of the challenges ahead for companies is therefore impressive – particularly for SMEs – with the pressure for increased carbon reductions amounting from both the public and private sectors. It is within this charged arena that the University of Exeter Business School is currently developing its path-finding programme – ‘Clear About Carbon’ – assisting organisations in Cornwall to address these challenges. In so doing, this is also generating lessons for dissemination to a wider audience on how sustainable procurement can lead the change towards a low carbon economy.
Context & background
Clear About Carbon is a European Social Fund-Convergence funded project and partnership which for the past 2½ years has been working to develop and instil low carbon literacy, leadership and management skills into public sector procurement and private sector supply chains. Delivery of the project is being carried out by a quartet of local establishments (the University of Exeter Business School, Cornwall Development Company, Duchy College Rural Business School and the Eden Project), all with impressive credentials in leading local business and informing on issues surrounding carbon reduction. Under this partnership, the University of Exeter Business School has been working with public and private senior sector management teams in Cornwall to develop their leadership and management skills to better drive low carbon economic development in the region.
This interdisciplinary project involves the use of Action Learning Sets and Value Stream Mapping Workshops which provide valuable data on how managers learn to bring about change for low carbon procurement.
This interdisciplinary project aims to understand the nature of leading change in procurement and supply chain practice to achieve lower carbon impacts and better organisational performance in Cornish organisations and their supply chains. The study is underpinned by foundational research drawn from the fields of environmental management, leadership and change, and purchasing and supply chain management. It brings together knowledge from the areas of distributed leadership and change, lean process mapping and performance, and environmental literacy. The methodologies used, in turn, involve the use of Action Learning Sets and Value Stream Mapping Workshops which are facilitated by key project staff and which provide valuable data on how managers learn to bring about change for low carbon procurement. At the same time, this also helps senior leaders to bring about change and improvement in their practice, leading to lower carbon consumption and production throughout the organisation.
Whilst the primary focus of the Clear About Carbon project has been aimed at organisations in Cornwall, the project also has three European ‘transnational’ partners with whom knowledge transfer and learning experiences have been shared. These are the Finnish region of Ostrobothnia, home of the Vaasa Energy Cluster and one of Europe’s leaders in renewable energies technologies; the Association of Local Authorities in Skaraborg, Sweden and EcoInstitut Barcelona which has been supporting Barcelona Council to adopt sustainable procurement practices.
The relevance of the project has also been acknowledged recently with the receipt of the 2011 ESF Sustainable Development Specialist Project Leader Award, and part of its carbon literacy learning outputs and training materials now form part of the National Sustainable Public Procurement Programme run by Defra.
Process & methods
Working with senior managers at Cornwall Council, NHS-Peninsula Purchasing and Supply Alliance (NHS-PPSA), Devon & Cornwall Constabulary and Cornwall College Group, the University of Exeter Business School team has been supporting the development of the organisations’ low carbon procurement policies and strategies, as well as preparing Cornish SMEs to respond to the challenges of the low carbon economy. The team is responsible for a work package entitled ‘Leadership & Procurement Management Skills for Climate Change’, aimed at board and executive level management within both the public and private sector, with a special focus on potential overlaps that occur between public procurement, a low carbon economy and sustainability promotion. The team has successfully initiated the delivery of its leadership development programme with key organisations facilitated by its innovative methodology.
As a precursor to the Action Learning Sets, Associate Professor Mickey Howard, from the Business School’s Management Department, has been facilitating Value Stream Mapping workshops with purchasing teams, creating the first stepping stone for rethinking the procurement operations within the organisation. The process of revealing wasteful activity as a core element of low carbon procurement provides a springboard for engaging in an Action Learning Set, in which participants work in a small group over a period of time (usually six sessions) to review and reflect on their own actions and experiences in order to improve their performance. This methodology generates valuable longitudinal, process-oriented data which affords insight into the leadership learning and development process, while also helping participants to learn and develop low carbon literacy and improve their procurement practice. As a result, the programme has achieved significant impact at different leadership and managerial levels in these organisations, and led to wider change, once these senior managers have returned to their organisations. Learning outcomes have been disseminated as case studies and findings from the Clear About Carbon project are integrated into parts of the new One Planet MBA programme launched by the University of Exeter in conjunction with WWF, to provide informed content and promote critical discussion and review of the approach and its outcomes.
Organisations benefit the most when a flexible and adaptive delivery approach allows them to integrate this new “low carbon thinking” into their other current programmes.
This innovative aspect of the Clear About Carbon project, its theme, its leadership angle, its path finding approach and flexibility, have all given it the capacity to adapt and explore opportunities to assess its potential and application to other related contexts and initiatives. Indeed, this has been one of the main learning outcomes of project so far – that the nature of the theme (low carbon procurement and low carbon economy) is such that organisations benefit the most when a flexible and adaptive delivery approach allows them to integrate this new thinking into other programmes they might have currently running, rather than as a standardised package of training delivery. The following examples of the Cornwall College Group and NHS provide practical demonstrations of this.
Findings & key challenges
So how does this work for organisations? NHS-PPSA has become the first NHS organisation in the country to pilot the national Procurement for Carbon Reduction (P4CR) programme, developed by the Department of Health (DH). After the initial training by the DH supported by Cornwall Development Company, a selected group of managers has started work with the University of Exeter Business School on assessing the strategic implications of the adoption of low carbon procurement. This work is ongoing and after a consideration on how to integrate ‘low carbon thinking’ in a series of selected tenders or contracts, the approach is now evolving to a wider consideration on the incorporation of sustainable criteria and carbon savings on award criteria and evaluation scores.
Cornwall College Group was the first further education college in the UK to implement a Carbon Management Plan, under the Carbon Trust’s Higher Education Carbon Management Programme. The Action Learning Sets and Value Stream Mapping Workshops facilitated by the Business School under the Clear About Carbon project have provided the perfect complement to this programme, by bringing together the organisation’s senior managers to discuss the strategic implications, directions and decisions the College needs to consider if it is to achieve its aim of becoming a low carbon organisation.
Such organisational examples have led to important implications for our understanding of how and why people make decisions in relation to reducing the carbon footprint within their supply chain. In particular, these examples highlight the competing logics or mindsets of different individuals in different contexts that attempt to make sense of words like ‘carbon’ and ‘sustainability’. Each logic, grounded in the assumptions and values embedded in a localised, temporally specific, organisational culture, offers the individuals a different ‘right answer’.
The availability of solutions for reducing carbon emissions is seemingly dependent on which issues and agendas in terms of ‘sustainability’ are given priority, and these in turn, are influenced by the cultural lens through which they are perceived. As a result, there is no universal ‘best’ way to engage with this complex leadership challenge, because what is right in one context may appear wrong in another. It is clear that any heroic, all-conquering solutions to the reduction of carbon emissions are unlikely to succeed. What the Business School’s research has shown is that leaders find their way towards new and better courses of action based on the issues and potential answers to which they attend. Sharpening the focus in this way is affected in turn by many different factors, including the agendas of board members, government and indeed projects like Clear About Carbon itself. Leading change for low carbon procurement can therefore be a more clumsy process of grappling with contextually-embedded challenges, and cannot be entirely separated from the network of activities that constitute the organisation itself.
Discussion & implications
The significance of the Clear About Carbon project is not just to raise awareness amongst public and private Cornish organisations about the role of carbon and its effects on the environment as a whole. The importance of connecting carbon with daily activities and the role public procurement plays in addressing this is also fundamental. Using Action Learning Sets to raise collective awareness of the need for leadership around carbon reduction, and Lean Mapping Workshops to identify specific parts of the supply chain where activity within and between firms can be improved, the project has demonstrated that sustainability and more efficient business practices are not divergent but closely linked.
One of the key learning outcomes of the project so far is that public organisations are still at a stage of trying to understand the many implications – be they strategic, organisational, operational, financial or legal – of adopting a low carbon procurement approach. As a consequence, most still hesitate to publicly advertise or readily embrace a low carbon procurement agenda without receiving more clarity on these issues or obtaining clear mandates from their boards. With the support of the University of Exeter Business School’s programme, participants have been exploring and discussing these implications, gradually building their strategies around it, and tentatively considering the adoption of low carbon procurement approaches on selected pilot contracts or tenders. These discussions are providing rich information that will be reported to inform policy development.
Public organisations are still at a stage of trying to understand the many implications of adopting a low carbon procurement approach.
In terms of the private sector, the recent and rapidly evolving regulatory and market developments on carbon considerations have created new challenges and opportunities that the project could not have anticipated when it first started. For example, the cautious approach of public sector procurement described above can slow the engagement of businesses with carbon issues. Conversely, an increased market drive from bigger corporations on product carbon footprinting, is able to shift the balance the other way and place renewed pressure on the private sector to deliver carbon reductions. This potential volatility will force businesses to embrace new sets of leadership skills from that go beyond carbon literacy for public tendering, but rather require them to reconsider their whole strategic and commercial positioning in a carbon competitive marketplace.
As the participant organisations in the Clear About Carbon project move from attaining added clarity on implications and directions to the practical implementation of low carbon procurement, their experiences and results are bound to provide some of the most valuable lessons from and to practitioners, both on its challenges and the skills necessary to address the issue. The same situation is apparent within the private sector, as businesses move from strategy definition to testing practical approaches that place them in an advantageous position, both in terms of internal efficiencies and externally with their clients in terms of value chain carbon reductions.
The Clear About Carbon project aims to continue to follow and support the journey of Cornish organisations in their low carbon journey (and path-finding processes). In this sense, it is currently submitting a bid for further funding which would focus on the organisations’ experiences as they move from strategy to implementation, looking at issues of leadership, learning and change. By capturing the organisational and participants’ learning outcomes of its low carbon implementation attempts, Clear About Carbon would provide valuable practice-based case studies and outcomes that can inform future policy on skills development for the low carbon economy, of relevance for both national and international levels.
About the authors
Dr. Fernando Correia is a Research Fellow in the University of Exeter Business School. He has a PhD in sustainability and his current research focus on identification of best practices in sustainable and low carbon supply chain management. He has a professional and academic background on the areas of sustainability evaluation and certification.
Professor Annie Pye is Professor and Director of Research at the Centre for Leadership Studies, University of Exeter Business School. Her research explores how small groups of people ‘run’, organise and make sense of complex organisations, including those leading companies to bring about strategic change. She publishes widely and is Principal Investigator on the research project which underpins this article.
Dr. Beverley Hawkins is a lecturer in the Centre for Leadership Studies, University of Exeter Business School. She has a PhD in management and has published work on leadership, organisational culture, teamwork and sustainability. Her research interests focus on the collaborative, sense-making interactions that take place amongst people in organisations.
Dr. Mickey Howard is Associate Professor in Supply Chain Management at the University of Exeter Business School. His research investigates the implementation of supply chain strategy such as service-based innovation and low carbon procurement. He publishes widely, complements his research with private advisory work, and has guest lectured in business schools around the world.
Simon Ramsay has a degree in Ibero-American Studies and a background in communications, marketing and research. He joined the University of Exeter Business School to work on the transitional phase of the University’s One Planet MBA programme and now works, as an Associate Research Fellow, within the multi-disciplinary team on the Clear About Carbon project.
Source: www.europeanfinancialreview.com
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