Supply Chain Carbon Footprinting TRU COST Plc

1. Supply Chain Carbon Footprinting TRUCOST Plc

2. Capital Ambition’s Supply Chain Project • Commissioned by Capital Ambition - 3 Year Project • Trucost just completed the 1st Year – Are presenting their findings to all London Boroughs over the next two months. • Project Scope • Measuring the Supply Chain GHG emissions of 31 authorities - including the LDA, London Fire Emergency Planning Authority. • Engage with each London Authority and detail their supply chain emissions and mitigation strategies. • Ensuring every supplier that contributes to 90% of each body’s carbon emissions receives a carbon footprint report of their individual emissions. • Integrate the supply chain emission data into a centralised procurement system to be then used to select carbon efficient suppliers.

3. Central Contracts Register • The Central Contracts Register provides a unique advantage in being able to provide expenditure data across all London bodies across all suppliers. • The Contracts Register has expenditures classified into individual spend categories (ProClass) from one central source. • Expenditure in 2009 is the first year - this will be the Benchmark Year. • Total spend is £7.8 Billion which equates to 45,084 aggregated transactions. • Focus on 90% of total expenditure which is 18,200 aggregated transactions with 9,850 suppliers.

4. Trucost – Supply Chain Measurement • Environmental data provider, founded in 2000. • Largest and most comprehensive global environmental database of 4,500 public companies and 30,000 private companies. • Employs a proprietary model to determine supply chain emissions. • Engages with companies to collect physical data (Kwh of energy, water use etc) to refine the footprint. • Delivered over 120 individual corporate and public sector supply chain projects – including clients such as Marks & Spencer, BSkyB, Next, Mitie and Formula One • Member of the WRI/WBCSD Technical Working Group for GHG Protocol Scope 3 Accounting & Reporting Standard.

5. The Trucost Process Initial Footprint Validate Source Procurement Data Model Supplier Data Present Initial Audit Invitation & Supplier Participation Verify Supplier Data Present Final Verification Map 90% of all expenditure data to suppliers within the supply chain. Map all expenditure Categories. Data cleansing Map all supplier data to Trucost’s Environmental Register of over 30,000 suppliers. Produce initial footprint using emissions data held in the Trucost Environmental Register. Provides the ability to focus on 90% of the source emissions Issue invitations to suppliers including logon details for the secure supply chain portal. Suppliers are requested by the Buyer to confirm information presented in the portal and update as required. Trucost verify data collected; assess supplier responses on disclosure of information and performance and apply conversion factors. Produce final footprint and present to operations and senior management. Agree next steps.

6. Accurate Measurement • Trucost’s approach to measuring supply chain emissions is focussed on measuring the emissions of what you BUY not the total emissions of WHO you buy from. • If you use Centrica’s corporate carbon footprint then you will overestimate the carbon liability in London supply chain. • Centrica supplies both Gas and Maintenance Services. • Over 92% of it’s carbon emissions come from Gas Supply • London spends in total ~£14 Million with Centrica, however only £7.41 spent on Energy Supply the remaining on Maintenance Services • Hence you must footprint each individual business segment of the supplier.

7. Supplier Reports • Trucost have sent out 10,000 individual Supplier Reports in the Capital Ambition project. • Every supplier can use the report for environmental management and reporting purposes. • The report indentifies for each supplier : • Trucost Environmental Skyline • Disclosure Measurement • Environmental Key Performance indicators • GHG attribution - Scope 1, 2 and 3.

8. Supplier Map Concentration of carbon emissions is in London.

9. The Final Footprint Report Every London authority is delivered a final footprint report. There are three key elements: The first part of the report details the findings based on top contributors in the sectors and companies The second part is potential areas of carbon reduction based on observable data and percentage savings. The final part of the report details some scenario analysis which allows the body to focus on some potential reduction targets based on either engagement or supplier change.

10. Final Analysis Average supply chain footprint for a London local authority relative to other industries:

11. First Year Results – All Bodies • Total Carbon Footprint of London’s local authorities is 2.56 mn tCO2e • Average Carbon Intensity: 337 tCO2e per £mn (tonnes of Carbon per £1 mn expenditure) • Significant intensity variances between bodies : • Lowest emitter = 167 tCO2e per £mn • Highest emitter = 674 tCO2e per £mn

12. London Borough of Greenwich Supply Chain Carbon Footprint Final Results Questions and Next Steps Sector Analysis • Use supplier data to inform procurement process • Establish continuous improvement cycle for suppliers • Encourage suppliers to engage and consider their carbon footprint Category level emissions for an individual council as compared to the average of all councils (tracer line)

13. Examine suppliers within a sector Building Construction & Materials On average 20% of your suppliers will be responsible for 80% of your supply chain impacts. Target specific suppliers and compare with their average sector emissions and peers.

14. Using these results The challenge is to merge different parallel tracks (cost & carbon) Public Sector Service providers face a challenging mix of priorities. The carbon reduction objective must work within an Authority’s central strategy to provide cost effective services.

15. Smart Procurement Public Sector Procurement has many competing objectives, supply chain carbon emissions is just another, however if they have supplier level emissions data and it is integrated into their procurement process, carbon reduction is possible

16. Key Recommendations • Supplier development; help suppliers understand, measure and monitor their environmental impacts. • Provide a mechanism to drive closer collaboration with suppliers. • Support leading practice procurement techniques, including whole life costing and supplier relationship management. • Insert specific environmental criteria into key contracts and introduce reasonable target setting.

17. Ongoing support • Trucost will provide support throughout the duration of the project so please contact us if you have any questions or queries on any of the results • We are happy to come in and conduct further training sessions on the data if required • Key contacts at Trucost • Saad Rashid – Director of Research • Saad.Rashid@trucost.com • Steven Bullock – Head of Supply Chain Research • Steven.Bullock@trucost.com • Tom Barnett – Account Director • Tom.Barnett@trucost.com