Adopting green approaches to business: the road ahead

Stephen Rouatt, Signify chief executive for the UK and Ireland, discusses some of the policy changes needed to put Britain on the road to net zero emissions and how energy-efficient lighting can contribute to the effort.

Since the 21st century, adopting green approaches to energy, such as renewables, has been a significant area of research for scientists and action amongst businesses. However, achieving carbon neutrality or even simply adopting greener ways to business is a challenge many companies face. The UK’s ten-point plan sets out the approach that the government will take to build back better, support green jobs, and accelerate our path to net zero. However, despite suggested approaches, getting businesses to switch to renewable energy sources has been relatively slow and uncertain. Therefore, to me, the most crucial question is: what practical interventions will help local net-zero projects become a reality?

At Signify, we have reduced our operational emissions by more than 70 per cent since 2010, making us the first major lighting company in the world to reach carbon neutrality. We shifted to 100 per cent renewable electricity, including wind and solar-generated power purchases and also made offsetting an integral part of our strategy aligning closely with corporate social responsibility. We began measuring and reducing our carbon emissions more than a decade ago and made a commitment to achieve carbon-neutral operations by the end of 2020. Now, as part of our commitment to Sustainable Development Goals we are going beyond carbon neutrality and doubling our pace to the Paris Agreement 1.5C scenario   But going green requires an ecosystem that makes the environment conducive for businesses and goes beyond numerical targets. I feel the pace of action can pick up when the industry acts as a collective force and work that must be done at scale and speed by energy suppliers, regulators, and the government has a huge role in this.

Energy suppliers

The energy sector is currently the world’s largest source of greenhouse gas emissions while it also holds the key to decarbonisation. Thanks to a more competitive energy market, there are great value deals available for green energy. However, for environmentally conscious consumers, finding a truly “green” tariff could be confusing. Many suppliers buy electricity directly from renewable electricity generators, and some invest directly in renewable energy infrastructure. These are arguably “greener”, but the difference and the benefit of each are not communicated to the customers making it misleading. Passing on this information is a vital role of the suppliers so businesses can plan for cost and make the right choices.

I also feel a need for energy companies to increase their investment in technologies like carbon sequestration and expand their consumer-facing offers such as an electric vehicle (EVs) charging. According to the Climate Change Committee, there needs to be around 150,000 public charge points operating in our country by 2025, and these should be “widely available across the UK”. Cities have the challenge of solving the charging problem with limited access to off-street and charging capabilities. As cities strive to achieve their sustainability objectives, energy suppliers should work with lighting companies to make infrastructure more readily available. This means retrofitting poles with LED light solutions to free up capacity for EVs. Smart LED lighting is one of the quickest renovations that dramatically increase the energy capacity available to support the ambitious targets for electric vehicles and be a cornerstone to innovation towards the 10-point green recovery plan.

Regulation

Achieving the needed levels of renewable electricity requires a wide installation of solar and wind farms in cities, rural areas and offshore, while ceasing to rely on coal and natural gas to fuel electricity generation. Energy regulators can play a large role in supporting this infrastructure development. In the UK, recent reports suggest that renewable electricity generation outperformed fossil fuels for the first year ever in 2020. Renewables provided 43 per cent of the UK’s electricity while fossil fuels generated 38.5 per cent. But sources of energy like solar and wind are intermittent in the context of the UK and need flexibility on the grid. There is also a need to upgrade legacy infrastructure for energy storage, efficiency, and demand response. Regulators will need to design new frameworks to manage power systems that look entirely different to today’s, to flex demand and better match supply from infrastructure such as hybrid-solar streetlight poles, as an example. To ensure that customers’ interests are protected and drive the transition to net zero, regulators will need to continue building collaborative relationships with the government, energy companies, and wider sectors to ensure the resilience of renewable energy in the country.

I would also like talk about REGOs (Renewable Energy Guarantees of Origin) here. These certificates are a step in the right direction to ensure the energy supplied is green. However, a loophole currently exists as suppliers can buy fossil fuel energy, and provided they match the amount of REGOs per MWh, they can still call themselves green. Ofgem acknowledges this and urgently needs to investigate what measures they can bring in to stop this happening and ensure transparency in the market.

Government

I see from my engagement with leaders across sectors the lack of a clear understanding of the government’s funding and how the private sector can have easy access to these funds. Here, I would cite the example of the EU’s Green deal as it has a very clear programme built around the green recovery of its 27 member states, against set “thematic areas” to a climate-neutral Europe by 2050. The European Commission has recently selected 72 research and innovation projects with €1 billion under the European Green Deal Call. This is a clear step towards the EU’s response to the climate crisis and helps protect Europe’s unique ecosystems and biodiversity. In the UK, the government’s 10-point plan is absolutely a step in the right direction as the plan is relatively all-encompassing and with ambitious targets. But a few recent announcements have shown that more work still needs to be done around the three major pillars: decarbonisation, digitisation, and decentralisation. This is evident from the scrapping of the Green Homes Grant and the scaling down of the fund for decarbonisation.

In the UK, much-needed measures are being taken. Recently, BEIS announced that the majority of halogen light bulbs would be phased out from September 2021 with fluorescent light bulbs to follow, cutting emissions and saving consumers on their energy bills. BEIS also set the deadline to phase out coal from Great Britain’s energy system. This ban has been brought forward by a year, highlighting the UK’s leadership to go further in tackling climate change. While these announcements are a move in the right direction, I strongly feel the need for governments to collaborate with the private sector more closely to work on how these changes can be better implemented and how the access to funds can be made easy to tap into opportunity areas.

Lastly, local authorities are often highly experienced in practical programme delivery. However, for net-zero programmes to succeed on a large scale, national policy frameworks must recognise the operational practicalities at regional and local levels. So rather than seeing local authorities solely as delivery bodies for national policy, there needs to be a practical partnership approach between national and local government, with regular feedback loops built into delivery programmes. At Signify, we feel the pace of action can pick up when the industry acts as a collective force and can bring together their best practices and learning. In the UK, we are a main signatory of the Terra Carta, we work closely with the Corporate Leaders Group, UK Green Building Council and Construct Zero to help expand the reach and impact of corporates and enable them to gain insight on what is required to develop sustainable economies, globally.

While environmental, social and governance policies continue to evolve, another easy win is for businesses to identify opportunities in their own systems and infrastructure. Buildings and construction, for example, account for almost 40 per cent of CO2 emissions related to energy use, according to the UN Environment Programme. So lighting is a simple way to begin or advance the journey to green. Historically, lighting has accounted for about 18 per cent of all electricity use globally, with energy-efficient solutions, like LED lighting alone, this has come down to 13 per cent, and this can further go down to 8 per cent – so it’s the right time for us to invest in lighting and increase business efficiency – possibly even an opportunity for developers to consider for installation in their buildings.

Conclusion

The challenge for energy suppliers and generators is to continue developing renewable energy products and services that work for all types of businesses. This will ensure we meet the growing demand for renewable energy, continue to increase the proportion of renewables in the UK fuel mix, and help to build towards a carbon-free future.

The bigger picture is very promising. We are wondering how businesses can be helped to adopt renewable energy because every industry is enthused about a low-carbon world, and that’s so exciting. The government’s ten-point plan and COP 26 will ensure that carbon reduction remains front of mind for all businesses.