Carbon Emissions and the Service Sector

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Carbon emissions and the service sector

Companies outside the manufacturing sector generally do not perceive themselves as

significant sources of atmospheric carbon dioxide. This impression is mistaken. Large

service companies are usually major users of electricity and gas, and many of their

employees engage in substantial car and air travel. The delusion that non-manufacturing

companies are responsible for only a small volume of emissions is dangerously

widespread.

The widespread scientific consensus is that typical total emissions, across all human

activities, will need to fall from about 12 tonnes per person in European countries to

about 3 tonnes, or even less. Per employee, many large service-sector companies today

emit at least three or four tonnes of greenhouse gases. In other words, people's emissions

in their employment - covering just forty or so hours of the week – are greater than the

total allocation that we can allow across all activities.

The purpose of this note is to provide benchmarks for office energy use and business

travel patterns. We hope to assist senior managers and investors assess the performance

of individual companies.

Our main conclusions are as follows

· Office-based companies, with no retail or manufacturing activities, produce about

two and a quarter tonnes of carbon dioxide per year from the workplace. This is

more than the carbon output per person of the typical UK home.

· Retail activities, such as running the branches of banks or operating supermarkets,

add significantly to these numbers. Media companies can exceed five tonnes per

person.

· These numbers do not include the impact of purchasing electricity generated from

renewable sources.

· There is no evidence that emissions are falling. In fact, the increased power use of

computing equipment and the growth of air conditioning are tending to increase

carbon dioxide output

· Business air travel continues to grow. Large companies continue to need their

employees to use aircraft to visit customers and attend internal meetings and there

is not sign of any successful substitute. Even inside those companies trying hard

to make conferencing work, it replaces an infinitesimal fraction of all flights.

· Air travel per employee varies enormously between companies. The emissions

from flights exceed 3 tonnes per head in companies as diverse as professional

service firms and publishing companies. Businesses with a small number of sites

and a limited need for travel have figures of less than a tenth of this.

· These air travel figures use the conventional assumption that the total global

warming effect of air travel is about 3 times the impact of the CO2 alone.

· Business car travel does not appear to be growing, at least if the limited data from

large companies is representative. Purely office-based companies appear to have

average emissions of about 0.3 tonnes of carbon dioxide per employee. Rail travel

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is insignificant as a source of pollution and, encouragingly, distances travelled are

rising.

· There is no typical company, but most large UK service businesses probably have

office emissions of 2 to 3 tonnes, air travel emissions of 1 to 2 tonnes, and car

travel of about 0.3 tonnes per employee. An average firm will therefore have total

emissions of at least 3 and probably 4 tonnes per head. Northern Rock, possibly

the smallest emitter in our survey, puts out less than 1.5 tonnes per head.

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Barclays Bank: an example

In order to set the scene for this report, we briefly summarise the example of Barclays

Bank in its UK operations. We focus on the company not because Barclays is particularly

energy inefficient, but because the bank publishes full CO2 emissions data in a

convenient form.

The company is also reasonably typical of the modern UK economy, with no

manufacturing activities but with a substantial usage of well-lit and heated floor space.

Barclays' contends that 'banking is a low carbon activity' and that the bank 'is not a

significant emitter of CO2'.1

These comments are true, of course, but only in some senses. Barclays is directly

responsible for only about one thirtieth of one per cent of UK emissions. But a detailed

look at the company's greenhouse gas output shows a picture which demonstrates that

even a financial services company has unsustainable emissions per person. The following

figures are taken from Barclays' 2006 UK environmental data2

Carbon dioxide emissions per employee, 2005 (tonnes)

Electricity 2.35

Gas 0.47

Energy in

offfices 2.82

Car 0.18

Train 0.01

Air short-haul 0.22

Air long- haul 0.40

Travel 0.82

Paper 0.27

Total 3.91

This table puts Barclays in a somewhat different light. Many of those active in the field

of climate change say very strongly that total emissions per person needs to fall to no

more than about three tonnes per head. In other words, the carbon dioxide footprint of

Barclays exceeds the sustainable limit, even though it is simply a workplace in which

employees spend less than one quarter of their time. If the employee's other emissions

from running a house, driving a car and taking other forms of transport declined to zero,

1 These quotations are taken from Barclays very full 2006 submission to the Carbon Disclosure Project.

2 http://www.barclays.com/corporateresponsibility/environmentaldatauk.htm

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he or she would still not meeting the required targets for greenhouse gases. This is an

illustration of the profound challenge posed by the issue of climate change.

Electricity and gas use

Other comparisons are revealing. Barclays' total use of electricity and gas per square

metre exceeds the typical home. It needs over 300 kwh of energy to run its business,

compared to only about 280 kwh per square metre for the average UK house. The carbon

problem is even worse; 70% of Barclays energy use is electricity, compared to 25% in the

average home. A kilowatt hour of electricity requires more than twice as much carbon

dioxide to be emitted to the atmosphere than gas of the same energy value. So the typical

UK resident generates yearly emissions of about 2.3 tonnes of CO2 from space heating,

water heating, cooking, lighting and running all electric appliances. The figure is 2.8

tonnes from working at Barclays.

Barclays is not unusual, and these comments