“Why don’t we treat emissions like safety?”
Australian Journal of Mining, June 20th 2007.
Global warming means industry and government must take emissions reduction as seriously as workplace safety writes Alasdair Johnston.
With industry accounting for around 67% of all energy used in Australia, there is growing pressure on industry to reduce greenhouse emissions. Last time there was this much pressure, workplace safety went straight to the top of every Board agenda in the country.
Environment has moved to the forefront of companies’ attention. Yet there is still considerable ground to cover for emissions reduction to permeate organisations culture and systems in the way safety in the workplace has done.
Safety is built-in to processes and systems, driven by economic incentives, and “priority one” for resources company executives and boards. Emissions reduction is a public aspiration, but is not yet tightly ‘wired-in’ to companies ways of working.
Recent international studies indicate that not only are material reductions available, but that companies could reap considerable economic rewards if they meaningfully reduced emissions.
The American Council for an Energy Efficient Economy says that optimising the operation of industrial fans and pumps (which alone account for 25% of industrial electricity consumption in the U.S.), could achieve savings of between 20% and 50% without breaching typical investment return hurdles. In the UK, the Carbon Trust, a government funded body created to help industrial companies identify and implement carbon reduction opportunities, has seen energy savings of between 20% and 30% achieved. In Australia the Government’s Energy White Paper 2004, energy savings of between 10% and 30% are achievable by Australian high energy users in the short term without damaging productivity or profitability—And a mere 5% improvement in energy efficiency by Australian business would generate annual savings of over $1.5 billion.
So what lessons can be drawn from the successes that companies have had in improving safety?
What’s needed is for emissions reduction to be managed in the same way as cost, quality, quantity, profit and safety. This requires emissions reduction KPIs to be cascaded from the Board to the frontline, regular reviews of line performance against emissions reduction targets and meaningful linkages to their incentive processes.
For safety, strong external incentives already exist in the form of the threat of significant monetary and legal consequences where comprehensive workplace safety legislation is breached. Resources companies take safety KPIs extremely seriously, and employees at all levels have safety KPIs and safety behaviours resolutely enforced.
The introduction of an external regulation of energy efficiency, in the form of a carbon trading regime, is imminent. This ought to prompt companies to examine how they can further improve their emissions management.
Both government and corporate leadership have critical roles to play in reducing emissions. If recent polling is anything to go by, voters are ready and willing to force the Federal Government’s hand. With the introduction of carbon trading shareholders will not be far behind.
Alasdair Johnston is a Principal of operations improvement firm Partners in Performance.
Source: Australian Journal of Mining
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