What are the Britons doing?

The United Kingdom is trying to take a step up in changes towards a sustainable way of living, the country have seen many green project lately such as Hockerton Housing Project which is the UK’s first earth sheltered, self-sufficient ecological housing development. Project members live a holistic way of life in harmony with the environment, in which all ecological impacts have been considered and accounted for. The residents of the five houses generate their own clean energy, harvest their own water and recycle waste materials causing no pollution or carbon dioxide emissions. The houses are amongst the most energy efficient, purpose built dwellings in Europe. England is actually well known for its annual rain rate as well as being a very windy country which give abundance of renewable energy sources and some region such as the highlands is investing money to develop wind turbine power energy supply. On the July 9th a big project has been announced, made from public bodies and private companies, they will invest £80m to create activities in environmental technology that will reduce the region’s carbon footprint and encourage energy efficiency.
The government is taking part in that new challenge by setting up new regulations on houses and created in 2006 the code for “Sustainable Home” which apply new energy and water efficiency standards beyond building regulations. “The Code will set out the trajectory and timescale of regulatory change over the coming years. It must go far enough and fast enough to deliver homes fit for the 21st Century.” (Paul King , 2006). With the rapid increase of the energy prices, governement is trying to make the Britons understand they will save money, save the environment, fight against climat change and so on by having more efficient houses in the future. Many organisations, whose aim is to advise people on sustainable future and how to make the right decision according to the future, have been created in the last decade such as SustainAbility which provids clients with counsel and practical support on all aspects of corporate sustainability strategy and implementation, including: risk management, innovation, reporting, accountability and engagement.
The UK, which is view as an “open minded” country, will try to take the pace and develop many green projects around England, the current Prime Minister Gordon Brown said “It’s an immense challenge and all of us have a major part to play” (Brown, 2008). Brown said he wants the North Sea to become to wind power what the Gulf of Arabia is to oil, by saying that it shows that England has realized nuclear power might not be the best solution for a greener future and they are ready to invest their money in a more sustainable way through natural energy ressources when nuclear is facing a huge harm for the environment and huge clean up operation at huge amount that at the end of the day tax-payer will pay. The UK has now a production of energy from renewable sources of 2% but its objective is to bring that rate to 10% by 2010 following the EU which have an average objective rate of 12% by 2010.

Following a conversation with the head of the UK Green party, Sian Berry; she said they want to build 2 millions green and sustainable houses and businesses to show the governement that there is a concern about sustainability and people are ready to invest for a better future. Also The new UK regulations impose Level 3  for all new built homes by 2010, meaning a 25 per cent energy efficiency improvement. Level 4, a 44 per cent energy efficiency improvement, will be mandatory by 2013. By 2016, all new houses will have to comply with Level 5(Governement, 2006). Again that proves how England is taking the lead in term of building greener houses and how the governement will put higher taxes on polluting houses. The best example of a company that take the lead in the UK in term of sustainable development is BT who has recently been elected as the second world’s largest green company. The telecoms group signed a three-year electricity supply contract in 2005 that provides nearly all of BT’s UK electricity from renewable sources and combines heat and power (CHP) plants. In addition, through energy efficiency, BT has exceeded its targets for reducing the use of electricity within its wholesale estate. It also scores highly on green procurement, water minimisation and waste minimisation strategies.
Regarding the UK government’s policies, I have looked at case studies and found that for example, the United Kingdom conducted a solicitations for a ‘non-fossil fuel obligation, adressed to businesses which basically refers to a collection of orders requiring the electricity Distribution Network Operators in the England and Wales to purchase electricity from the nuclear power and renewable energy sectors

The Kyoto treaty and the different world’s regulations

For more than 30 years now, scientists, governments, countries and individuals are studying the evolution of the earth and have realised that the world is getting warmer and warmer; that is what we call “Global Warming”. Even if we know that the world always has climatic cycle, the problem is now, because of human being’s carbon footprint, this process is changing quicker than it should be and now we are trying to slow down this progression by setting up regulations under protocols such as the “Kyoto protocol” which 189 countries have signed. This protocol basically aims to stabilize concentrations of greenhouse gases in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. They are collectively committed to take precautionary measures to anticipate, prevent or mitigate the causes of climate change and mitigate its adverse effects. Specifically, all countries are obliged to publish inventories of their emissions of greenhouse gases, develop, implement and publish national programmes containing measures to mitigate climate change. (the Committee on Science, 1998)
One of the regulations explains that energy consumers will need to use between 2 and 12 percent more natural gas in 2010 and between 2 and 16 percent more renewable energy. By knowing that 80 percent of the human-originated greenhouse gas emissions are energy-related, we need to develop greener strategies around the energy efficiency and the self-sufficiency might be “The solution” that organisations and government could work with. By not respecting those goals, countries expose themselves to huge fines. For instance Ireland, who failed to meet obligations under the Kyoto Protocol at the 1st January 2008 , now has to spend over a million euro per year to comply with the treaty. Ireland has failed to harness their natural resources and now it will cost them a fortune. (telegraph, 2008)

Energy price rise

“A massive increase in gas and electricity bills for all of Britain’s 24 million homes is to be announced by all the major energy companies in the next few weeks, Around 24 million homes in Britain are served by the six major companies, and the increases will make household gas and electricity bills almost double what they were five years ago” (Mathiason, 2008)
As we have seen recently, it is not only the barrel of Oil which is increasing but all the energy suppliers are putting their prices higher in response to the demand. Besides an increased 15% on energy bills this year, British Gas annouced on the 19th July 2008 (Savage, 2008) that Gas bills might rise by 66% over the next two years. The customer’s fear is growing due to the price rise, and this issue is not just in the UK but in most of the countries around the world. This UK price rise might come from the fact that the UK’s energy storage capacity can only store a fraction of the reserves which can be held on the Continent (Bloxham, 2008) that proves the very limited power of the UK and thus make them very vulnerable and dependant on foreign supplier like Russia, that is why prices are increasing but England could fight this dependence by investing more in energy self-sufficiency rather than nuclear power in order to become more independant such as Denmark which is a net producer and exporter of energy and therefore has a negative energy dependence rate (-37%) (Eurostat, 2008).

UK Fuel Price Indices for the Industrial Sector (1990=100), 1990-2007

Year    Coal    Heavy Fuel Oil    Gas    Electricity    All Fuels
1990    100.0    100.0    100.0    100.0    100.0
1991    98.5    87.8    101.0    103.3    100.6
1992    99.8    84.5    104.5    109.0    104.5
1993    93.6    90.1    102.7    114.2    107.9
1994    92.5    97.4    103.6    110.1    106.4
1995    86.8    113.8    90.4    109.1    105.7
1996    82.6    125.7    66.1    105.3    104.0
1997    80.6    120.2    69.7    99.3    97.5
1998    82.5    100.2    73.6    98.4    93.5
1999    81.3    114.7    72.9    99.0    96.1
2000    81.4    166.0    79.3    91.7    104.0
2001    83.5    165.8    106.8    84.0    106.6
2002    85.6    173.6    101.5    80.9    104.1
2003    78.4    200.4    105.5    78.3    111.9
2004    87.4    201.8    117.3    85.4    120.3
2005    102.6    268.2    177.8    114.4    162.1
2006    98.2    342.0    227.2    153.7    207.6
2007    110.0    318.8    195.3    169.6    205.1
Source: Quarterly Energy Prices, September 2007, Department for Business, Enterprise & Regulatory Reform

The Peak Oil

Over the past 60 years the world has been and is completely dependent on Oil and Gas, but those resources are non-renewable in the time and one day we will reach a maximum rate of global petroleum extraction, that means the resources will start to decline and will begin to run out, that what we call “Peak Oil”. Some big petroleum companies such as Shell are studying different scenarios on Oil extraction, consumption and plan that we will be out of Oil in 2050 (Shell, 2008) But there was some previous studies made by Goescientist like Mr King Hubbert who predicted the American Peak Oil will come in the 70s.

As the consumption of Oil is increasing phenomenally, those massive petroleum companies believe the high dependence of most modern industrial transport, agricultural and industrial systems on the relative low cost and high availability of oil will cause the post-peak production decline and possible severe increases in the price of Oil to have negative implications for the global economy. According to the data on the historical crude Oil prices, it started at around $20 a barrel in 1946 to be around $145 a barrel in our days and it forecast for the next year bring it at approximately $180 (price.net, 2008).

The new industrialize revolution and the high economic growth of China and India, push them to consume more and more Oil and if the demand is increasing, the price is rising also. Those two countries have the highest rate of growth in oil use, whose combined populations account for a third of humanity. In the next two decades, China’s oil consumption is expected to grow at a rate of 7.5% per year and India’s 5.5%. (Compare to a 1% growth for the industrialized countries). It will be strategically imperative for these countries to secure their access to oil (Security, 2007). If China and India keep their high growth consumption rate, they will be consuming the entire world Oil production in 20 years time, but an oil based economy such as ours doesn’t need to deplete its entire reserve of Oil before it begins to collapse. A shortfall between demand and supply as little as 10 to 15 percent will start to completely destroy our oil-dependent economy and might reduce the world population to poverty.
The effects of even a small drop in production can be devastating. For instance, during the 1970s oil shocks, shortfalls in production as small as 5% caused the price of oil to nearly quadruple (LANDLER, 2008). Because of speculations in the market on demand, production and so on the prices of Oil, unless our world is taking a step forward a new energy independent economy, will keep rising. Our civilisations have to understand the consequences of this “Oil addiction” and start its “rehab” toward a more independant economy, of course the production will not stop tomorrow and even after the peak, there will still be huge amount of Oil extracted but we already know that one day, the Oil resources will become rare and very expensive, to avoid a major crisis around the world, as it already started , politicians, individuals, organisations, governement have to work together and find solutions. Another issue behind the Oil consumption is the percentage of carbon footprint it has on the wold pollution which has a huge impact on the global warming, and guide our world to an independent Oil economy will help to fight against those issues. Some organisations are already giving a reasonable part of their finacial budget to develop a greener future, the best recent example is Toyota who has build an Hybrid car , Toyota is a leader in acting upon global issues such as climat change, they have understood the rapidly changing market and to answer customer expectations and growing concern, they adapted their strategies toward sustainability and green development project. According to USA TODAY: Toyota President, Katsuaki Watanabe, told reporters at a Tokyo hall: “Without focusing on measures to address global warming and energy issues, there can be no future for our auto business” (Kageyama, 2008). In March 2008, Toyota announced its year-end financial result, their net revenues for the fiscal year was about 29.3 trillion yen which represent an increase of 10% compare to the past year (2007), that shows the benefit of the new green direction the organisation has taken and it has to be a example for every other car companies for instance. Peak Oil is a very important subject, as the entire world depends on Oil and Gas, the beginning of the decline is and will create huge international and geopolitical tension and the modern economy has to understand the big challenge hide behind this issue by acting rather than suffering.

3. Off-grid style

The term Off the grid or Off-grid refers to use of a self-sufficient method without dependence on one or more outside supplier, for instance the Off-grid user will not depend on the water supply from the municipality but will use his own water waste system i.e. rain. An off grid company is completely independent from any usual public utility services. The best example of an Off-grid society is the Amish community which leaves using renewable energy sources and independently from any form of outside supply.  According to USA today there is an increasing number of people living Off-grid, the growth is equivalent to 33% a year (Davidson, 2006). London, with its ex-mayor: Ken livingstone, was conducting a positive example in term of Off-grid living, Ken livingstone wanted to take the entire city Off-grid, as the most expensive city in the world, he said “London needs to be a model for the rest of the world”. The ex london mayor has understood that 65% of energy is wasted on the cooling system and if the city would produce its own energy from local sources, it could reduce its fossil consumption by 50% (Rosen, 2008). That is the evidence of a new economic goal which can be done trough green develpement project.

See: http://www.gaiam.com/category/solar-living/off-grid-living.do

2. Evolution

Self-sufficiency, being a way for businesses to grow wealth creation in harmony with the environment and the society, is associated with corporate social responsibilities (CSR). CSR really started in the 50s when Howard Bowen published Social Responsibilities of the Businessman and started asking questions such as what kind of responsibilities the business people have in our environment, and he came up with a precise definition of CSR: “its refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society“. In 1960, Keith Davis suggested that social responsibility refers to “businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest”. We will see later why self-sufficiency associated with CSR could become a direct economic and technical interest in the future. However, for quite a long time people have started to study and explain that businesses were not only here to make money to satisfy the shareholders but they have also some responsibilities and obligation for the society.
In 1984 one of the most famous theorists, Peter Drucker, started writing on CSR and basically he was trying to prove that the social responsibilities can be transformed on economic advantages and opportunities. More and more companies and managers build their awareness on the subject and began to act and take decisions in a more socially friendly way. In 1971 the Committee for Economic Development (CED) outlined a model of CSR:
•    the inner circle: the basic responsibilities an organisation has for creating profit and growth;
•    the intermediate circle: an organisation must be sensitive to the changing social contract that exists between business and society when it pursues its economic interests; and
•    the outer circle: the responsibilities and activities an organisation needs to pursue towards actively improving the social environment poverty or urban crowding issues (Thinkingshift, 2007)

The leader in the 80s was Ben & Jerry’s with its social report (see Appendix 1.2.1), explaining the benefits of being part of a new responsible business approach, B&J has developed the idea that a sustainable corporation has to build its reputation around ethical principle based on the respect of the environment and the human being, in other word it is about giving a human face to the capitalism. B&J has found a series of benefits that can bring direct advantages to a company (Appendix 1.2.2):
•    A good reputation makes it easier to recruit employees.
•    Employees stay longer, reducing the costs and disruption of recruitment and retraining.
•    Employees are better motivated and more productive.
•    CSR helps ensure you comply with regulatory requirements.
•    Activities such as involvement with the local community are ideal opportunities to generate positive press coverage.
•    Good relationships with local authorities make doing business easier. See the page in this guide on how to work with the local community.
•    Understanding the wider impact of your business can help you think up profitable new products and services.
•    CSR can make you more competitive and reduces the risk of sudden damage to your reputation (and sales). Investors recognise this and are more willing to finance you.

CSR is not just based on the respect for the environment but companies have recognized the impact on the image and reputation, thus organisations started to build strategies around valuable and socially responsible role in order to convince the public but also to get rid of any unethical behaviour. In other words CSR is part of a knowledge management programme that companies have to take in consideration to stay sustainable and competitive in our present world. Some companies, in the 70s/80s, went through unethical blame and have been witness of major boycotts such as the Nestlé boycott over the company’s aggressive milk formula marketing strategies in the global South (July 4, 1977) which forced them to change their strategies towards social and environmental guidelines.
Then in 1992 The Earth Summit in Rio was a key factor in the progression of CSR as corporate involvement succeeded in holding back the Summit’s ambitious task to ‘find ways to slow down the destruction of unsustainable natural resources and pollution of the planet (Strong, 1992). The United Nations Conference on Environment and Development (UNCED) basically set up a scope of regulations and propositions that would help governments and countries to build up their social impact on the environment and the people (see Appendix 1.2.3).
The 1990s saw CSR turned out to be an established industry with major
companies such as PricewaterhouseCoopers, KPMG and Burson Marsteller entering the CSR service provision market. New consultancies, such as SustainAbility (1989), Business for Social Responsibility (1992) and CSR Europe (1996), also sprang up over this period, all promising to protect industry from protest. Specialist university research centres and the CSR conferencing circuit also emerged in the late 90s. Similarly CSR evolved beyond simple codes of conduct and reporting to include more extensive dialogue with stakeholders, NGO engagement and ‘multistakeholder initiatives’ such as the Ethical Trading Initiative (1993) and the Forest Stewardship Council (1998), bringing together companies, NGOs and in some cases governments. Similarly trade unions began negotiating and signing global framework agreements.
Another concept of responsible business was the “Triple bottom line”, created by the Brundtland Commission  of the United Nations in 1987. It developed the idea that following this model, a business can satisfy its stakeholder’s expectations by combining financial results, social awareness and environmental responsibilities.
Whatever the culture and wherever in the world, the term self-sufficient has always been present.

Why a more sustainable future

For a long time, economists and managers have been concerned about growth and they have realised recently, according to factors developed later, that in the present world, growth and development have to go with sustainability. In fact it really started in 1992 with the UN conference on environment and development where different organisations had developed ways for government to rethink their economic developments with sustainable goals, in order to stop the destruction of natural resources but also to fight the increasing pollution around the world and prevent the effect of the global warming (UN, 1992). The conference demonstrated the real problems that the planet is and will face in the near future, such as poverty and the increasing consumption and waste from developed countries. The different governments have understood the need to give new regulations and plans, to make sure that economic decisions will be taken with responsibilities and also for environmental impact. So they came up with a report on eco-efficiency with different principles for organisations and businesses such as alternative sources of energy or reliance on public transportation to reduce vehicles and industrial pollution, carbon emissions and fight climate change.
Climate change is an international problem and the catastrophic effects are already affecting today’s world with increasing temperature, flooding, and so on and will continue to grow and get worse in the very near future. This is a global problem that all social actors must take into consideration. Even today, companies, yet major players, do not invest enough mainly because they do not realize the benefits in the short but also long term of their commitments. The challenge now, is to develop a language that will be understood by managers and the people who build up strategies. Even though many improvements have been made regarding water pollution or atmospheric pollutant, there is still a long way to go to insure the future for our children on this planet, this message is relevant to any countries whatever their impact on the environment, we are all responsible for this deterioration.

I will try to explain how organisations, which are the major responsible, can through a rethinking of their energy consumption and social responsibilities, help to fight against issues such as global warming but also prevent massive crisis when the barrel of oil will reach $200 and runs out for instance. Through identification of energy cost, the paper will explain that energies efficiency management is much more than just a fashion subject but a real challenge for the entire world. Organisations, for the first time are facing an authentic problem and are compelled to explore new solutions to consume energy without destroying natural resources. The awareness is there but it is time now to act. This paper will show that sustainable development and social responsibilities must be an integral part of the strategy and must be taken in consideration at the high level of management. It is expected that this report will be used in organisations to progress in their approach to energy self-sufficiency, will help develop new strategies, through significant consultation assist futures managers in raising their interest towards a more sustainable future.