Environment Round Table

In November, as part of Small Business Week 2007, Insider held a round table discussion in association with BT Business to discuss the green challenge for SMEs. It produced a lot of ideas for the Scottish Government and local authorities to consider.

The panel members:

David Watt, IOD Scotland
Mark Strudwick, Prince's Scottish Youth Business Trust
Aydin Kurt-Elli, Chief Executive, Lumison
Ian Yeoman, VisitScotland
Councillor Tom Buchanan, City of Edinburgh Council
Andrew Cave, The Royal Bank of Scotland Group
Stewart Melrose, Scotwaste
Jane Shields, Living Water Ecosystems
Brendan Dick, BT Scotland
Anna Graham, Business Environment Partnership
Jim Ogston, Capital Connections
Chairman: Alasdair Northrop, Editor, Scottish Business Insider

Q What can SMEs in Scotland do to answer the green challenge?

Strudwick: When somebody is setting up a business, there is no doubt it's a big struggle. I think we need to have a one-stop shop where people can actually get advice on what they should be doing and how they can not only save money, but also appeal to their customers more.

Graham: I agree, businesses don't often knowwhere to go for support.  However, in some respects, there's probably too much information out there. There are a number of national organisations, such as Envirowise and Carbon Trust, who have a huge number of publications available for businesses. There's also Netregs which has been specifically designed for businesses, to provide information on legislation that might be pertinent to them. And obviously there's the likes of ourselves, the Business Environment Partnership, who are funded to provide free assistance to businesses. So there isn't a one stop shop. I think there has to be more together thinking from the support agencies, and we do try to work together but it's about trying to engage with the businesses.

Dick: We're doing a range of things in terms of servicing the small business market on green issues.  You can go onto the BT website and it's a relatively simple tool to really understand your carbon footprint by different top level segments.

Q A lot of businesses probably go to local authorities to find out information on what to do. Is there a consistent approach across all local authorities or are each of the authorities left to their own devices? And what does Edinburgh do in terms of helping businesses?

Buchanan: The local authorities across Scotland are inconsistent in the way that they answer the green issues and the green agenda and I think it's something we'll be looking closely at when the changes come through to the Scottish Enterprise Network. I know the City Council in Edinburgh has supported Change Works and, I think, the Business Environment Partnership to deliver some of the issues that relate to small businesses and how they interface with green matters and sustainability. But I do think it's inconsistent and insufficient.

Melrose: I think a lot of it lies with SEPA. A lot of people look at SEPA, when starting businesses, as a policing body. And they do police, that's what they're there for, but I know a lot of my customers approach SEPA for information and they're just not given it because it's not available from them.

Graham: I think that a lot of businesses approach the local authorities and SEPA because they see these organisations as the people that should be providing the information. And the signposting probably isn't sufficient. It is about joined up thinking and I do agree that improving business support from councils might help that, because a lot of people assume that the local authority should be offering that advice. SEPA, first and foremost, is a regulator and I don't think you can do both unfortunately, although they would like to.
There are a lot of people in SEPA who want to try and help businesses as much as they can, but they are tied by regulations that come from Brussels or Europe.

Melrose: To carry on from what was said about the Scottish local authorities, being inconsistent, I one hundred per cent agree with that. Local authorities really need to get themselves into gear. But I disagree slightly about SEPA - I think they can offer a facility because they are there and people will go to them.

Q How aware are businesses about environmental issues and how many of them are actually doing something about it?
Watt: People are in business to make money - that's actually why they set up business and if you stop making money, you stop doing business. However, if you don't get your green issues right, you don't make money. In terms of public social responsibility, but also actually in terms of delivery, I think business is now part of the solution and not part of the problem.   Historically, industrial processes and other things have damaged the environment, but now businesses are looking to be environmentally friendly. There are opportunities to be innovative and different and to improve your bottom line. So I think innovative solutions are a possibility and I think it's getting the innovative solutions across to businesses and actually delivering them.  For example, in Scotland we're awful at using video conferencing, yet given the geography of the country, it's obvious we should be using it all the time. I think the key issue is on energy and transport.  We can do big things. One, in my opinion, is keeping people at home.   Obviously people are looking at the energy they use and I think businesses will start to micro-generate.   There's a whole lot of innovative ideas coming through.

Q What about the tourism sector where there seems to have been a lot of innovation?

Yeoman: I think for the consumer especially, green issues are becoming more and more important. Is today's tourist green? Probably not, but I think tourists will probably be more green in ten or twenty years.

So yes, I would agree that taking on a sustainability agenda is very important for the future. For instance, if the Pharmaceutical Society of Germany now want to hold their 5000-strong conference in Edinburgh, for example, part of the tendering process will be for it to ask that destination what the carbon footprint of holding the event will be and how any ongoing issues will be mitigated? That then boils down to the small hotel or small restaurant or B&B - what are they doing to deliver that? From the tourism perspective, we try and drive that forward in terms of sustainability.

Our aim is for all Scottish tourism businesses to be part of the Green Tourism Business Scheme at entry level by 2015.

Melrose: I live in Appin in Argyll which is a beautiful part of the country, full of B&Bs. As people up there know what I do and I'm very involved with the community, they ask me how do to recycle and what they can do. We have B&B owners driving from Appin to Oban to put bottles in a bottle bank at Tesco because there's nothing available closer to home.

I think we have to come back to offering a facility first and once the facility has been offered then try and talk to the guy who's started his business to say, look, the facility's there, use it.

Kurt-Elli: Every single decision we make on planning, design, and engineering embeds environmental issues. We're investing 20 to 30 per cent more in terms of capital into our cooling technology, in order to deliver 20 to 30 per cent more energy savings. It costs up to 30 per cent more on our capital cost but, balancing that, our energy costs are 30 per cent less. Over the lifespan of that product, it's neutral to us, but it ticks the box in terms of defending the environment for my kids, and also the message it sends to the market about what we are and what we do. When we were smaller, we did benefit from some of the interest free loans the Carbon Trust provides. They provide interest free loans for a proportion of the capital cost if you're buying plant that delivers energy efficiency. So there are some practical tools out there for small businesses if they know that they are there.

We produce huge amounts of waste. We have thousands of servers in our data centre and those servers come in huge cardboard boxes full of padding. We spend a fortune on recycling the cardboard and have to buy a shipping container just to store the cardboard that we "produce", that gets delivered to our site every single week.

The servers come foam packed to protect them within the cardboard but you can't recycle the foam.

We spent 18 months trying to find a way, talking to the suppliers like Dell, Compaq, talking to supply chains to the supply side, management side, and we can't find a way of recycling this foam. So we're literally land filling entire container loads of foam filler, every single month. Trust me, like I said, we've spent 18 months researching and trying to find a use for this stuff.

And remember we're small so if you multiply that by the scale of our industry you see the scale of the challenge here.

Shields: In Germany they have made the supplier responsible, not the receiver. What they do there is just return everything to the supplier.

The packaging has changed - it used to be foam and styro-foam but now everything is recyclable. If the polluters are paying to get rid of all the packaging you'd be surprised how quickly industry changes.

Kurt-Elli: Even though we invest a lot of money in recycling, cynicism kicks in when you find out more details about your supply chain. I thought we were doing something useful, and then found out that our cardboard is probably shipped off to China - it just made me want to stab myself in the eye. in the eye.

It's a hugely frustrating issue.

Buchanan: When I first came into the council I wanted to find out, in business terms, how and what we recycle. Edinburgh actually has quite a good figure published on what it does in terms of recycling.

It's a mindset and a culture, and the councils have a great opportunity to be facilitators. We can encourage our small businesses to tell their suppliers to take excess packaging back because they don't want it, that they want the supplier to recycle it. And we can be enablers ourselves.Edinburgh City Council has just put a sum of money into a thing called Woodworks which is for people with health issues who are coming back into employment.

There's a small company which has started to recycle wood. I suggested they use one of our big depots.

There must be tonnes of wood coming in there.

Cave: I think underlying all this is a very serious problem about measurement and what we're talking about here is how businesses can get their head round the environment.

I fully understand the value driven approach but, having seen it in action in a company like ours - trying to push environmental issues around 140,000 people, values can only take you so far. It's a slow process, you've got to go out and win over hearts and minds and that's one way of doing it. But if you could actually get the measurement right, people would start to get an idea of how different things stack up. You start to get people questioning themselves about whether it makes sense to do 50 mile round trips to recycle waste. I think it takes you from 'wanting to do the right thing' in a very unstructured way, to being able to make relative judgement calls about different impacts whether it be energy, waste, or travel. The better you get the measurements, the more business people understand that.

Looking at our experience, we put a lot of time into the carbon footprint thing. It's not particularly scientific, but it's a huge leap forward from nothing. It's a bit like trying to run a business without financial accounts.

Unless you can total up and get an overall management view, it's never going to happen, is it? A lot of business people have a good eye for figures and detail and they can quickly get their head round measurements. Our senior management team have a very good idea of what our carbon footprint is as a business, per employee, how that benchmarks across different countries.

All that's been within about six to nine months, whereas if I'd consistently gone in to speak to them about values, I don't think it would have had the same effect.

They needed something tangible to look at and use to make decisions, to look at the data and see where we could do things better.

Ogston: One of the small things that I do is work at home on Friday. I tend to do a lot of reports on a Friday, and I don't have to be in the office to be able to do those reports. I've got broadband at home and I can connect it to my office and transfer across the internet, check all my emails and go onto the systems, I can work from home. You might think that's a small thing, that's only one day a week, but the SME community probably employ about 60 per cent of the employed staff in the UK. If every single one of those companies had one person that worked at home for just one day a week statistics have shown that 500 million kilograms of CO2 would be saved in a year. That's a massive amount, just by one day a week.

How easy is that to do?
Watt: We talked about the bottom line element, but another huge part of your business is your people. You will attract people if you are environmentally friendly and you will also attract people if you will let them work at home.

Graham: My concern, from a business advisory point of view is, if a firm has been established for 25 or 30 years, the workers may have been there for 16 to 20 years, and they don't want to change. They've got old heating, they've got ancient lighting, they've got people that do the same thing, the same way day in and day out. These are the people, these are the SMEs, that need the support. Some of them don't even have IT.

Ogston: You say that they don't want to change, but I don't think that's the case. I just think they don't know what to do and how to make it easy for themselves.

Graham: It's not about not wanting to change, it's about a way of working and I'm not talking about the directors of companies, I'm talking about getting the culture of change.

The drivers for waste are also important. A lot of the drivers from Europe have concentrated on domestic waste and diversions of biodegradable waste from landfill.

Domestic waste is a small fraction of UK waste, where are the drivers for commercial waste?

Ogston: In my house it's great, and the council's great, they provide separate bins for separate types of waste and I can recycle, I can do all of that. But as far as my business is concerned I've just got a black bin outside that everything gets chucked in. And the council don't do anything to help us with that.

Graham: Councils are not obligated to offer a trade waste service for businesses.

They are obligated by the Environmental Protection Act to offer a domestic service, but it's not compulsory for them to offer a trade waste service. Some councils, like Perth and Kinross, have taken it upon themselves to develop their business trade services before developing their domestic services, but most councils have done it the other way round. The fraction of domestic waste to business waste is a quarter to three quarters, there's a huge issue out there.

Buchanan: I would say though that the business community has a fantastic opportunity. SMEs especially, because of the number that there are to drive that cultural change.

On trade waste, why are we not offering the same facility in offices as we would offer a domestic waste client? All of the issues surrounding that element arise around what is a council's statutory obligations? As there's an increasing drive on efficiencies in local authorities, they tend to focus on funding their statutory obligations first. That leaves a very small pot of money which is salami sliced when you have to make efficiency savings, so you don't go and visit the business waste issue. The cultural thing about the SME is that you can say to us that this is the service that you want, this is the service that you require and make us look at things that could be done to improve that.

Q How does BT Scotland persuade its people to adopt good environmental practices within the organisation?

Dick: It's a combination of things.

We've been working hard on our environmental agenda for over ten years. We've reduced our carbon footprint by 60 per cent since 1996 and we want to have reduced it by 80 per cent by 2015, which will be tough. The bulk of that has come because it makes business sense to do it and that is the way the position has been articulated. We live in a small country and even the Minister responsible for climate change, Stewart Stevenson, has said that we can't pretend that Scotland's going to reverse climate change in the world. It's not.

However, we do have a collective opportunity to make Scotland an exemplar of how we can drive this.

I remember going back to the turn of the century when broadband was starting to go out. At the time, Scotland, in terms of usage of ICT and broadband, was very low in UK terms. It wasn't at the bottom but it wasn't far off it. One of the keys things that happened around 2003/2004 was that everybody, the Scottish Government, enterprise agencies, big businesses, business organisations like the IOD and the Chambers of Commerce, all got together and said this matters for all of us. And what we actually created was a marketing campaign.

There was a website called Broadband for Scotland and that, in a very neutral way, brought together information that could resonate with small businesses, big businesses and consumers. What strikes me from today's discussion is that a lot of this is not rocket science.

It's a matter of contantly permeating the brain cells and a lot of it is marketing. It's something we as a nation should be thinking about.

Q Do you think the private sector has capitalised enough on this massive growth area in Scotland? Do you think there's more that can be done?

Melrose: There is an unbelievable amount of future business here.

Today, my son is in Juarez, Mexico working for the town council, showing them how to operate waste collection vehicles. We've worked in El Salvador and Colombia and these people are coming to us in Scotland. We're a small company really by international standards, but they're looking at what we've done. The incentives should be there and should be increasing, but they are not there and not increasing for SMEs. There are huge difficulties, there are huge obstacles, they must be overcome.

Q What would help and encourage small businesses to be more green?

Shields: It'd be useful to prepare a best practice guide for business. I could input on certain areas and there would be other people who could provide information on green accountancy and recycling bins. I think it could be helpful if a group like this got together to really look at best practice and to put together a document with services and contact numbers, in different parts of Scotland, or the UK if need be.

Dick: The last administration of the Scottish Executive set up a Climate Change Business Delivery Group that's chaired by Ian Marchant of Scottish & Southern Energy. Its mostly large organisations, about 20 people and I'm involved in it. It doesn't actually have practitioners which is a very interesting point.

It's not designed to be all-encompassing but I think maybe the next stage is to get that. In the first of two meetings we've had, I recognise that the biggest problem is that you don't know what you don't know. We need a natural consensus in a sense of activity and it is about marketing information largely, to just move people onto the same level of knowledge, or the ability to communicate. Clearly the Government has a role to act as a catalyst for that, but I suspect it would involve all sectors of society.

However, going back to the original question, I have got one simple idea, a grossly simple idea of which nothing has been said. Switch things off.