BEYOND BIG Small Businesses, Greenhouse Gases, and Competitive Advantage climatesmartbusiness.com

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1 BEYOND BIG Small Businsss, Grnhous Gass, and Comptitiv Advantag climatsmartbusinss.com

2 What gts masurd gts managd. Cutting carbon missions rducs xpnss, incrass comptitivnss, and strngthns businss. ABOUT CLIMATE SMART Climat Smart Businsss Inc. is a social ntrpris providing training and softwar tools for businsss to masur thir carbon footprint, idntify ky opportunitis for cost, nrgy, and carbon rduction, and communicat thir fforts intrnally and xtrnally. W work with organizations not as consultants, but as tachrs, utilizing a workgroup-basd training curriculum, top-ratd softwar carbon tool, and onon-on hotlin tchnical support. Participants lav th room with th ability to analyz, masur and rduc thir company s impact by thmslvs: ky skills in th grn conomy of th futur. Climat Smart also works with municipalitis, hlping thm link community conomic dvlopmnt and missions rduction. Th Climat Smart program builds rsilinc in local businsss to risks associatd with volatil nrgy prics and costs of climat chang impacts, and catalyzs innovation and nw businss practics. Municipalitis ar abl to ngag thir local businsss in climat action that will bnfit th ntir community. Sinc 2008, w hav workd closly with ovr 650 businsss and organizations, ranging from 1 to 2,000+ mploys, undr $500,000 annual rvnu to ovr $10,000,000, from vry industry sctor of our conomy. W mpowr and nabl our clints to focus thir ntrprnurial spirit on rducing th impact of thir businss by mthodically cutting unncssary consumption of nrgy, ful, matrials and wast, and tying climat action to smart businss practic. CONTENTS 4 Excutiv Summary 8 Small-Mdium Entrpriss As Agnts of Chang 10 Carbon Managmnt Across All Industris and Sizs 16 Businss Drivrs Emrg For SMEs To Manag Carbon 26 Grnhous Gas Profils Amongst SMEs 32 Pattrns in Grnhous Gas Rduction 41 Cost Savings From Cutting Carbon CASE STUDIES 12 North Shor Crdit Union Employ profssional dvlopmnt drivs organizational chang 15 Van Houtt Coff Srvics Engaging staff, clints, and fllow businsss lads to nw initiativs 18 ko courirs Low-carbon srvics driv brand, fficincy, and growth 19 Purdy s Chocolats Comprhnsiv and ongoing rductions initiativs tackl all aras of opration 22 Fryb Gourmt Foods Low-cost initiativs show payback and lad to furthr capital invstmnt 24 Mils Industris Product rdsign rsult in significant nrgy savings for customrs 29 Scuriguard Optimizing routs rducs ful us and flt siz 35 Ottr Co-op Big savings from turning lights off and rducing wast 36 Frasrsid Community Srvics Socity Hating systms upgrads and lowr papr us rduc cost and carbon 39 Tinhorn Crk Vinyards Ongoing commitmnt to sustainability pays off 40 Glacir Crk Contracting Sit wast divrsion yilds significant financial savings 2 3

3 EXECUTIVE SUMMARY A LOOK INTO THE SME SECTOR Th businss cas for sustainability is bcoming wll-known, as mor organizations tak action and shar how thy hav rducd thir nvironmntal impact, whil strngthning thir bottom and top lins at th sam tim. To dat, th spotlight has falln mainly on larg businsss and wll-known brands: a grat plac to start. Howvr, small-/mdium-sizd ntrpriss (SMEs) form th majority of our conomy. Thy too ar rcognizing th potntial impact of climat chang on thir businsss, th challngs and opportunitis this rprsnts, and th importanc of taking action in a maningful, quantifiabl way. Grnhous gas (GHG) managmnt is an idal framwork for masuring th impact of an organization and for prioritizing ways to rduc that impact. Businsss choosing to manag GHGs typically follow thr approachs: KEY FINDINGS Dmography, motivations, profils in GHG masurmnt and pattrns in rductions stratgis undrtakn wr xamind amongst th SMEs participating in Climat Smart. This study also lookd at actual GHG rductions achivd, xtrapolating typical rductions achivabl by SMEs, as wll as a projctd cost (and cost savings) associatd with GHG rduction. Mor businsss from srvic industris (vs. goods-producing industris) participatd. Profssional srvics, trad and transport of goods, and manufacturing companis ar th top thr catgoris in trms of uptak in Climat Smart. Whil businsss of all sizs and sctors may choos to pursu GHG managmnt, siz of businss (whthr masurd by rvnu or numbr of mploys) may dtrmin whthr an organization has funds or human rsourcs sufficint to tak on in-hous GHG managmnt. Th notion of GHG managmnt is still a nw on to many businsss, and uptak rmains gratst amongst arly adoptrs : businsss that s th futur potntial of larning ths skills and implmnting ths procsss in thir businsss. Prsonal intrst and building upon slf-idntifid xisting grn initiativs, taking a ladrship position within thir industry ar still th most oft-citd motivators. This is spcially prvalnt amongst smallr SMEs. Pragmatism and businss cas is growing. Mor businsss ar now waking up to th cost-savings aspct, and th nd to mt rquirmnts is growing, possibly from supply-chain prssur as many SMEs oprat in supply chains of largr organizations who do fall undr rgulatory prssur. This is spcially tru amongst largr SMEs in this study. Btwn industry sctors, diffrnt businss-cas motivators appar: community ladrship amongst non-profits and advocacy organizations, supply chain concrns amongst food procssors and manufacturrs, tc. Prhaps drivn by ths potntial cost savings, th majority of businsss ar comprhnsiv in thir assssmnts of thir oprations, vn opting to masur missions that ar optional undr th GHG Protocol framwork (.g., contractd third-party transportation, papr usag, landfilld wast). GHG missions ar brokn down by activity typ to xamin oprational aras that had th gratst carbon impact. 40% of missions masurd com from transport-rlatd activitis: flt oprations, businss travl, third-party shipping, and mploy commuting. GHGs from hating (largly natural-gas combustion) mak up narly a quartr of missions masurd. In gnral, missions ris with siz of organization, but appar to b influncd mor by industry and associatd nrgy, matrial and transport-usag pattrns. Construction, trad and transport, and manufacturing SMEs rport th highst GHGs pr mploy; profssional srvic and public administration/srvic organizations (largly offic-basd) th lowst. Whn askd how thy will rduc thir GHG missions, SMEs tnd towards as of implmntation: tackling businss-procss changs as a first stp, and balancing capital invstmnt against th businss cas and xisting rplacmnt schduls. Wast divrsion, papr us, and supporting altrnat staff-commuting mthods ar som of th top rduction stratgis chosn. Th INTENDED AUDIENCE 1. slf-srvic: building capability through slf-larning and onlin rsarch 2. training and support: building capacity and intrnaliz GHG managmnt through structurd larning 3. ngaging xtrnal xprts: outsourcing task to a ddicatd consultancy For many SMEs, tim and human rsourc constraints limit thir ability to wad through th mass of information availabl on GHG managmnt. Engaging xtrnal xprts can incur a high cost, and without ongoing support, can fail to mbd sustainabl thos and practics within an organization. Training popl within SMEs builds an intrnal skill bas for continuing GHG managmnt by th popl most xprt in thir own businss and oprations. This study xamins GHG managmnt amongst SMEs that hav gon through th Climat Smart program. Ths organizations hav rcivd training in GHG managmnt 1, and hav masurd thir annual GHG missions for at last on yar. Thy ar largly slf-dirctd in dciding on and implmnting rductions initiativs, though thy rciv guidanc and pr support. 1 Th GHG managmnt framwork taught by Climat Smart is basd on th World Rsourcs Institut s and World Businss Council for Sustainabl Dvlopmnt s Grnhous Gas Protocol, th most widly usd intrnational accounting standard for GHG missions masurmnt. This study will inform: local govrnmnts in th midst of planning community climat-action outrach fforts, product and srvic providrs looking to supply SME clints, businss schools, univrsitis and collgs looking to nhanc thir curriculum with SME-sctor data and a growing list of small-businss cas studis, Fdral and Provincial ministris looking for third-party-rviwd data and insight on th nrgy, wast and transportation usag of SMEs, and othr ntrprnurs and SMEs looking to thir businss prs for inspiration, stratgis and suggstions. Thr is a growing awarnss amongst SMEs of th businss bnfits of carbon managmnt. 4 5

4 As with any chang in practic, GHG rduction initiativs can tak tim to mbd within an SME. smallst businsss ar th most nimbl in trms of changing businss practic, and will targt businss procsss with low capital/tchnological barrirs to implmntation. Liklihood of capital invstmnt incrasd with siz of organization. Rplacmnt of flt vhicls with mor ful-fficint options (bound by xisting flt managmnt schduls), and hating upgrads ar th most common. Across sctors, rduction stratgis again lind up with usag pattrns: ntrtainmnt and accommodation SMEs look to hating upgrads and bhaviour chang; construction SMEs ar intrstd in vhicl rplacmnt and drivr ducation (in this study, flt includs light and havy quipmnt). In trms of actual GHG rductions masurd, businsss masuring into thir third yar and byond rport gratr annualizd rductions than thos that hav only just bgun activly managing thir GHGs for on yar. As is th cas whn introducing any chang to an organization, nw procsss, quipmnt upgrads, and mploy practics can tak tim to bar fruit. Yar-on-yar fluctuations in masurd missions du to businss growth or ontim vnts also hlp to highlight th importanc of viwing GHG managmnt as a long-trm stratgy, and that continuing ffort will pay off. With th data collctd in this study, w can projct an illustrativ, aggrgatd commodity cost of carbon of approximatly $400 pr tonn carbon-dioxidquivalnt (CO 2 ), basd on commodity costs of inputs into a typical SME s businss activitis (.g., ful, nrgy, wast dumping, papr). ACKNOWLEDGEMENTS This rport was mad possibl through financial support from Mtro Vancouvr Rgional District, Businss Dvlopmnt Bank of Canada, th City of North Vancouvr, and th City of Vancouvr. This rport was prpard with th advic and counsl of: Chris Bataill, PhD Excutiv Dirctor, MKJA Enrgy Policy Consultants Sarah Burch, PhD Postdoctoral Fllow in Sustainability Govrnanc, Cntr for Intractiv Rsarch on Sustainability, UBC Coro Strandbrg Principal, Strandbrg Consulting Ptr tr Wm and Mik Rowlands Principals, Junxion Stratgy Thank you to our clint businsss and organizations, for working togthr with us to collctivly dvlop and shar progrssiv businss practics, build mor rsilint communitis, and rduc th impact of businss on our plant. NOTE ON CLIMATE SMART DATA Climat Smart has dvlopd a databas of information on GHG missions and associatd nrgy, wast and transportation-us charactristics of British Columbia s small and mdium-sizd ntrpriss. This study ncompasss data currnt as of July 2011; th Climat Smart data st has narly doubld sinc thn. Climat Smart can provid in-dpth tailord analysis on spcific substs of ovrall databas as dsird, for community-missions modling, industry bnchmarking, tc. Climat Smart will also b producing a sris of brifs onc a quartr, ach profiling an industry sctor (for xampl, offic basd, manufacturing, trad and transport businsss). For mor information, go to info@climatsmartbusinss.com. 6 7

5 SMALL-MEDIUM ENTERPRISES AS AGENTS OF CHANGE SMEs: AN OVERLOOKED MAJORITY Th bnfits to businsss from sustainability ar bcoming wll-known. Financial incntivs for consrvation and fficincy; stramlining supply chains; d-matrializing packaging and rdsigning products and srvics: all bnfit th bottom lin by producing mor valu and lss procss and matrial wast. Exampls in th litratur rfrnc th practics of lading but larg businsss, largly ignoring th vast majority of organizations that mak up our conomy: small-/mdium-sizd ntrpriss (SME) with fwr than 500 mploys. In conomic dvlopmnt vrnacular, whil larg businsss clarly contribut to our conomy, th ntrprnurial fforts of SMEs ar th ngins of our local conomis. SMEs ar th majority of ntrpriss, and mploy th majority of privat-sctor workrs: in British Columbia, thy rprsnt 98% of businsss, mploy ovr 1 million popl (or 57% of th privat sctor jobs) and ar crating jobs fastr than thir largr countrparts 1. Across Canada, fully 99.8% of all businsss ar SMEs 2, mploying 64% of th country s workforc. Small businsss alon (thos with fwr than 50 mploys) contributd 31% to Canada s GDP. As w navigat today s global rcssion and build tomorrow s conomy, w at Climat Smart bliv undrstanding th motivations, actions, impact, and innovations of this group is ssntial to wathring ths storms and to succssful conomic dvlopmnt. BUILDING TOMORROW S ECONOMY WITH THE LOCAL COMMUNITY IN MIND With Canada s withdrawal from th Kyoto Protocol, and rcnt uncrtainty surrounding th futur of th Wstrn Climat Initiativ (of which British Columbia is a mmbr), it looks invitabl that maningful climat action must b sparhadd at th municipal lvl. By working in conjunction with local govrnmnts and communitis whr ths organizations and popl liv and oprat, w can harnss th intllignc of local businsss to mt our shard community challngs. Though falling blow th thrshold for mandatory carbon rporting in jurisdictions whr such rquirmnts xist, SMEs compos a vibrant, innovativ sctor that can b ngagd to voluntarily rduc grnhous gas (GHG) missions. Early-adoptr SMEs ar moving down th road of corporat sustainability and bginning to quantify thir achivmnts. Othrs who hav not bn proactiv up to this point ar rcognizing GHG managmnt as an idal first stp: by stting up systms to masur and monitor GHG invntoris, thy can mor appropriatly prioritiz and masur rturn on invstmnt on which projcts and initiativs thy can afford to undrtak. 1 BC Stats Small Businss Profil Industry Canada Ky Small Biz Statistics, July 2011 >99% 64% 31% of businsss ar small, mploying fwr than 50 mploys of privat-sctor jobs ar providd by ths small businsss of Canada s GDP coms from small businsss As w navigat today s global rcssion and build tomorrow s conomy, w at Climat Smart bliv undrstanding th motivations, actions, innovations and impact of this group is ssntial to wathring ths storms and to succssful conomic dvlopmnt. 8 9

6 CARBON MANAGEMENT ACROSS ALL INDUSTRIES AND SIZES Top thr industris in trms of uptak in carbon managmnt with Climat Smart: profssional srvics trad and transport of goods manufacturing 9% Public Administration and Srvics Othr Srvics (xcpt Public Administration) Public Administration 12% Entrtainmnt and Accommodation Arts, Entrtainmnt, and Rcration Accommodation and Food Srvics 4% Halth Car and Education Educational Srvics Halth Car and Social Assistanc 33% Profssional Srvics Information Financ and Insuranc Ral Estat and Rntal and Lasing Profssional, Scintific, and Tchnical Srvics Managmnt of Companis and Entrpriss Administrativ, Support, Wast Managmnt and Rmdiation Srvics participants by industry (NAICS) 1% Agricultur 6% Agricultur, Forstry, Fishing and Hunting Construction and Utilitis Mining, Quarrying, and Oil and Gas Extraction Utilitis Construction 15% Manufacturing Manufacturing (Food, Txtils, Lathr) Manufacturing (Wood, Printing, Oil, Plastic) Manufacturing (Machinry, Goods, Furnitur, Misc) 19% Trad and Transport of Goods Wholsal Trad Rtail (Cars, Elctronics, Food, Gasolin, Clothing) Rtail (Goods, Misc) Transportation Warhousing, Courirs, and Postal SMEs of all sizs and sctors ar choosing to activly ngag in carbon masurmnt and rduction. Th dmography of Climat-Smartnrolld organizations rvals that som industris ar acting first. Srvic industris (vs. goods-producing industris) prdominat. Organizations falling within Profssional Srvics ar spcially wll rprsntd, making up a third of all participants. This is a broad catgory that ncompasss organizations whr human capital, knowldg and xprtis ar th primary offr (.g., architctural and nginring firms, and managmnt and tchnical consulting srvics). Othr sctors includ dsign and wbsit srvics, law firms, and accountancis, and organizations that support daily oprations of othr organizations (building support and wast haulrs, procssors and rcyclrs). Ral stat and proprty-managmnt firms, rntal firms, and financial and insuranc institutions wr also industris from which Climat Smart found uptak in th program. Businsss ngaging primarily in transportation wr anothr important catgory whr carbon managmnt provd to b a priority. Trad and transport of goods includd rtail outlts and transport of popl and goods. Wholsal and warhousing organizations ar a sgmnt with larg warhousing prmiss and dlivry flts. Goods-producing industris hav long approachd businss procsss from th prspctiv of wast rduction and limination. Printrs, wood product, lctronic and machinry manufacturrs mak up a sizabl proportion of participants. Consumr-facing industris such as food, bvrag, apparl and furnitur producrs, prhaps drivn by markting as wll as cost-rduction, mad up ovr half of all manufacturing SMEs participating. Othr sctors includ Entrtainmnt and Accommodation (rstaurants and hotls) and Othr Srvics, a subsctor undr Public Administration and Srvics. Rspondnts in this sctor wr prdominantly businss-advocacy associations ithr gographic (i.., local chambrs of commrc) or industry-spcific associations as wll as social advocacy and civic organizations. For th purposs of this study, North Amrican Industry Classification Systm (NAICS) sctors wr groupd togthr into ight catgoris according to first NAICS digit. Agricultur, Construction and Utilitis, and Manufacturing ar goods-producing industris as dfind by Industry Canada; th rmaining catgoris ar srvic-producing industris. S for mor dtails

7 CLIMATE SMART CASE STUDY North Shor Crdit Union Employ profssional dvlopmnt drivs organizational chang SMEs ar mor likly to tak on in-hous carbon managmnt if thy hav: nough staff to allow tim for mploys to undrtak and implmnt nw businss practics North Shor Crdit Union (NSCU) is a financial institution offring banking, invstmnt, lnding, and insuranc srvics for individuals and small businsss. Evry businss and organization knows that kping mploys ngagd and inspird lads to mor productiv staff and lowr turnovr. Forward-thinking companis ar now ralizing that th ncouragmnt of such initiativs as grn tams and sustainability programs ar grat ways to ngag mploys and rduc nvironmntal impact and costs. NSCU is trating sustainability and corporat social rsponsibility programs as a form of profssional dvlopmnt with stllar rsults. Whn it coms tim to rcruit mploys for ths typs of tams, NSCU dos not prsnt th voluntr positions as an opportunity to sav th world, but rathr as an opportunity to dvlop public spaking skills and ladrship skills, ffct chang in th organization, and gt noticd by dmonstrating ladrship and tamwork. Th rspons from NSCU mploys has bn ovrwhlming. Employs rgularly voluntr to b part of working groups and ar activly involvd in th procss. Ths typs of programs ar a win-win for mploys and mployrs. NSCU mploys rlish th opportunity to dvlop nw skills to us in thir jobs and to add to thir rsums. North Shor Crdit Union is abl to s mploys dmonstrat ladrship and tamwork skills, which improvs th company s ability to promot from within th organization. Thr ar also bnfits lik rducd costs from rcruiting, and th intangibl bnfits that com from popl from across th company sharing idas and problm-solving togthr. Ths bnfits ar, of cours, in addition to rducing th nvironmntal impact on th company s oprations: a task that is collctivly shard by nthusiastic and ngagd mploys. Bnfits: gratr cross-tam collaboration lowr HR costs intrnal tam building and profssional dvlopmnt 25FTEs work at a typical (mdian) Climat Smart businss Th majority of participants in Climat Smart wr small businsss: 67% of participant organizations had fwr than 50 full-tim-quivalnts (FTEs). 90% of all participants mployd undr 200 FTEs. Gratr uptak was sn amongst businsss with FTEs vrsus thos with fwr than 10, sming to indicat a possibl barrir is human-rsourc limitation. Abov a crtain thrshold, organizations ar bttr abl to afford tim for mploys to ngag in activitis that may not b currntly part of thir primary job function. 4% >500 FTEs 6% FTEs 23% FTEs participants by siz (full-tim quivalnts) siz (FTEs) 30% 1-10 FTEs 37% FTEs 12 13

8 CLIMATE SMART CASE STUDY SMEs ar mor likly to tak on in-hous carbon managmnt if thy hav: $ stablishd rvnu-gnrating oprations (with annual rvnu as an approximat indicator) Van Houtt Coff Srvics Engaging staff, clints, and fllow businsss lads to nw initiativs >$1m annual rvnu for majority of Climat Smart businss A robust balanc sht givs businsss mor bandwidth and scurity to incorporat nw businss practics, spcially prcivd novl practics such as carbon managmnt. Stability givs th chanc to twak. 72% of participant organizations hav annual rvnus gratr than $1,000,000; 38% gnrat mor than $5,000,000 annually. 38% >$5,000,000 34% $1,000,000-$4,999,999 participants by siz (annual rvnu) 15% <$500,000 13% $500,000-$999,999 Through comprhnsiv ful, lctricity and natural gas rduction stratgis implmntd ovr a twoyar priod, Van Houtt Coff Srvics British Columbia oprations ar rducing missions annually by 202 tonns CO 2 ovr 14% of thir 2009 baslin missions as wll as sing significant cost savings. From nvironmntal initiativs, w hav prmanntly cut annual oprating xpnss in BC by ovr $100,000, says Mortn Schrodr, VP Oprations for British Columbia. Whil ths cost and carbon savings rprsnt outstanding succsss, qually imprssiv is th comprhnsiv mannr in which Van Houtt has takn on sustainability in all aras within thir businss. Th primary ara of cost savings and missions rductions cam from ful rductions in thir vhicl flt. By convrting 20 gasolin vhicls to propan, and optimizing flt vhicl routs, missions from transporting goods out of th Van Houtt locations in BC wr rducd by ovr 270 tonns CO 2 total ovr a two-yar priod. Costs savd during this tim totalld ovr $200,000. With an approximat cost of $5,000 to rtrofit ach vhicl, th invstmnt was paid for in on yar. Mortn and his tam also lookd at rducing thir lctricity usag, by rtrofitting and, in som cass, rducing th amount of lighting in thir offic and warhous. This has cut thir lctricity consumption by clos to 100,000 kwh annually. Adjusting for rising lctricity rats, annual cost savings ar ovr $8,000 and missions ar furthr rducd by narly 2 tonns. By accssing local utility incntivs (BC Hydro PowrSmart rtrofit program), th payback on this invstmnt was rducd to undr two yars. An additional $4,000+ in cost savings and a rduction of narly 15 tonns CO 2 annually has bn achivd through initiativs and bhaviour chang around consrving natural gas usag. Van Houtt has bn an xmplar of businss-to-businss ngagmnt and sharing of knowldg. Thy hav rducd thir papr us simply by survying thir clints and switching many accounts ovr to paprlss -statmnts. In spaking with anothr Climat Smart businss, Mortn larnd about using cardboard baling machins to rduc wast pickups. Installing on in th warhous, Van Houtt has now cut down on frquncy of cardboard pickup significantly. As wll, Van Houtt now gts paid pr tonn for thir bald cardboard, hlping to offst th cost of rcycling and procssing wast. Annual rduction: 202 tonns CO 2 $100,000+ Payback-priod rang: 1 to 2 yars 14 15

9 BUSINESS DRIVERS EMERGE FOR SMES TO MANAGE CARBON Why do SMEs choos to tak on in-hous carbon managmnt? Motivations ar changing as th businss cas for sustainability gains traction. Sinc th arly days of Climat Smart in 2007, thr has bn a strong showing in visionary motivs: prsonal intrst in ducation, building upon xisting initiativs, and industry/community ladrship and ngagmnt. Ths motivators rmain th most oft-citd rasons for carbon managmnt. Mting rquirmnts is a nascnt motivator but growing. In th absnc of rgulatory rquirmnts, SMEs masur thir carbon voluntarily. Extrnal rquirmnts com from comptition and supply-chain prssur as clints (for instanc, larg corporats or local govrnmnts) updat thir procurmnt policis with sustainability stipulations. Similarly, dmand from insid and outsid th organization, whil modst in comparison to visionary drivrs, continus to grow. Customr and mploy dmand ar oftn sn as motivators for businsss to tak action. Mor mainstram businsss tak action basd on pragmatism and th businss cas. Mor and mor businsss ar sking to strngthn top-/bottom-lin prformanc, showing an awarnss in th SME sctor around th bnfits of carbon managmnt byond nvironmntalism: th growing ralization that this is simply smart businss practic. Numbr of Businsss childrn. Nd to chang how businss is don to impact th arth. Also my prspctiv W ar a big mittr of carbon and from a moral as wll as a financial this must chang. Businsss wr askd upon rgistration in th Climat Smart program why thy choos to pursu carbon managmnt. Vision and prsonal motivations continu to b strong drivrs, but awarnss of th businss cas is building. Vision and Curiosity Fiscal Yar (April) ducation/intrst/prsonal motivation industry/community ngagmnt build on our xisting grn initativs Mting Rquirmnts supply chain ngagmnt/rquirmnts othr xisting rquirmnts anticipating futur rquirmnts Numbr of Businsss axis is cumulativ and plottd logarithmically to highlight changs in quantity Intrnal/Extrnal #%%2-:'&%?",&%#%-8+' Dmand attract and rtain mploys customr/invstor/partnr dmand Strngthning Businss markting, rputation and brand imag cut costs and boost fficincis ntworking and B2B opportunitis 16 17

10 CLIMATE SMART CASE STUDY CLIMATE SMART CASE STUDY ko courirs Low-carbon srvics driv brand, fficincy, and growth ko Courirs Inc. is growing rapidly, providing lowcarbon dlivry srvics throughout Mtro Vancouvr on both biks and in hybrid vhicls. Thy masurd thir baslin invntory using thir 2010 fiscal yar, which was masurd to b 26 tonns CO 2. Whil thir businss is on track to mor than doubl in th coming yar, thy don t xpct thir missions to doubl as thy hav sn fficincis in routing. Whr it is fficint, thy ar also xprimnting with split-mod dlivris, whr thy us biks for downtown pickups, thn us public transit to gt to th suburbs whr thy pass off to a hybrid vhicl for final dlivry. Thy hav dmonstratd that incorporating grn mods of transport can improv uptak in thir srvics: ownr Mik Shkhtman stimats that 5-10% of growth this yar can b attributd to th xpansion of thir bik dlivry srvics. Annual growth du to grn initiativs: 5-10% Purdy s Chocolats Comprhnsiv and ongoing rductions initiativs tackl all aras of opration Purdy s Chocolats is an iconic Canadian chocolatir locatd in Vancouvr, BC. Purdy s was abl to rduc thir largst singl sourc of missions, solid wast, by narly half in just on yar. By th nd of 2011, Purdy s had rducd missions from this sourc by ovr 47% compard to thir 2010 baslin masurmnt yar. This wast divrsion ffort cut Purdy s missions by 112 tonns CO 2. Jim Pritchard, Dirctor of Chocolat Oprations at Purdy s, had ncouraging words to say about th straightforward natur of thir initiativs. I had askd [an mploy] to try to find a company that would tak itms w wr snding to landfill. H found on company that would tak vrything and w just had to sparat it and stor for thm to pick up. In addition to improving rcycling rats, th absolut numbr of wast and rcycling-hauling trips mad to th Purdy s facility has also bn dcrasd. Sustainability is a continuing ffort at Purdy s. Purdy s has rtrofittd lighting, windows, hating systms and roofing matrials in various aras of th Purdy s businss. Thy ar also rigorously valuating thir missions in aras such as lctricity, transport and natural gas. Initiativs such as th installation of nrgy-fficint hand dryrs has rducd th production of wastpapr at thir facilitis. In addition, by discouraging th us of disposabl plastic bags at th rtail nd of thir oprations, Purdy s has managd to rduc this wast stram by 10%. Critical to th driv toward sustainability has bn th ducation of mploys on lctricity, papr and wast rduction stratgis using staff, dpartmnt managr and suprvisor mtings in tandm with nwslttrs. Duncan Johnston, Chif Financial Officr at Purdy s, and a participant in th Climat Smart program, stimatd that implmnting ths stratgis rquird 30% ducation, 60% follow-up and 10% inspiration. Thy continu to work towards rducing thir missions furthr by fin-tuning th rcycling program at th factory, implmnting a lowr-mission dlivry program, prforming a natural-gas audit at th factory, and invstigating altrnativ packaging. Purdy s is projcting a wid array of fficincy gains that hav potntial to yild an vn lightr organizational footprint in futur yars. Nw opportunitis ar always coming up, says Johnston. Annual rduction: 112 tonns CO 2 10% lss wast from rtail outlts 18 19

11 Smallr SMEs lad with thir vision, and look to build thir brand and businss practics. As a young company w would lik to dvlop a [carbon] baslin for th company and sourc arly on whr w can cut missions. Largr SMEs focus on th broadr businss cas: fficincy and comptitivnss. Efficincy, cost savings, ladr in industry and sourc of chang. Futur ncssity for comptitivnss in tndr and bidding procss. Drivrs for managing GHGs vary across siz of organization and rvnu. Vry small businsss mbarking on GHG managmnt may not link carbon rduction with cost rduction, and act basd on improving markting and brand imag (a lss tangibl bnfit) and th potntial for B2B opportunitis. This may b a function of whr th rsponsibility lis for GHG managmnt within th organization: in smallr organizations, it is oftn th businss ownrs thmslvs. Supply-chain ngagmnt is a drivr for action in largr and highrrvnu businsss, highlighting th tndncy for largr businsss to hav mor xtnsiv and complx supply chains. Supply chains ar also mor immdiatly visibl to businsss (as opposd to potntial futur lgislativ rquirmnts). That having bn said, fw businsss ovrall anticipat futur rquirmnts as a top motivator. Futur GHGmasurmnt rquirmnts, and thir impacts on th SME sctor, appar to rmain poorly visibl and poorly undrstood by SMEs. Largr organizations appar to hav a gratr awarnss of carbon managmnt as prparation for futur businss. Businsss in this voluntary spac ar largly slf-motivatd. Prsonal motivation and building on xisting grn initiativs wr consistntly high across all catgoris. This suggsts th markt is still in an arly-adoptrs phas, moving into an arly majority rflcting businss ownrs who alrady undrstand what carbon managmnt is, and its valu to thir businss. ducation/intrst/prsonal motivation industry/community ngagmnt build on our xisting grn initativs markting, rputation and brand imag cut costs and boost fficincis ntworking and B2B opportunitis ducation/intrst/prsonal motivation industry/community ngagmnt build on our xisting grn initativs markting, rputation and brand imag cut costs and boost fficincis ntworking and B2B opportunitis Cost-cutting and fficincy incras in importanc as businss siz incrass, prhaps as a mor traditional, capital-budgting approach mrgs. Howvr, abov a crtain thrshold, cost cutting dcrass as a citd rason. This may indicat a mor complx st of motivators for largr businsss (including industry and community ngagmnt) touching on aspcts of comptitivnss and good corporat citiznship. Industry and community ladrship is a drivr in th smallst businsss: ownr-oprators who ar connctd to th communitis thy liv and work in. 0% 25% 50% undr $500,000 $500,000 - $999,999 0% 50% 100% 0% 50% 100% undr $500,000 $500,000 - $999,999 $1,000,000 - $4,999,999 ovr $5,000,000 ducation/intrst/prsonal motivation industry/community ngagmnt build on our xisting grn initativs markting, rputation and brand imag cut costs and boost fficincis ntworking and B2B opportunitis ducation/intrst/prsonal motivation industry/community ngagmnt build on our xisting grn initativs markting, rputation and brand imag cut costs and boost fficincis ntworking and B2B opportunitis industry or community ngagmnt cut costs and boost fficincis $1,000,000 - $4,999,999 ovr $5,000,

12 CLIMATE SMART CASE STUDY Fryb Gourmt Foods Businsss prciv spcific businss-cas rasons to manag thir missions, particular to thir industry sctors. Low-cost initiativs show payback and lad to furthr capital invstmnt Starting with low cost (or no cost) solutions, Fryb Gourmt Foods, Ltd. quickly ralizd missions and cost savings som with immdiat paybacks. Thy ar building th businss cas in pursuing missions rductions and continuing on to mor capital-intnsiv projcts. Fryb bgan by analyzing th oprating hours of thir manufacturing facility in Langly, BC. Rdistributing shifts and comprssing thir workwk by 6 hours immdiatly rducd thir ovrall nrgy consumption by 2% and it cost thm nothing. Fryb has also savd ovr 530,000 kwh of lctricity in th last 9 months. By switching thir lights from mtalhalids to T5s, thy now sav narly 400,000 kwh annually with a capital invstmnt of $39,000 plus labor. Thy hav installd variabl frquncy drivs on all of thir rfrigration units, allowing thm to adjust output and nrgy consumption basd on dmand. With furthr invstmnt in automatd control, thy xpct to incras thir savings to narly 1,000,000 kwh annually: cutting ovr 12% off thir total annual lctricity usag. Fryb is also working to rduc thir natural gas us. In rxamining thir high-prssur boilr stup, staff dtrmind that th risk of boilr failur was low. Thy dcidd that constant opration of thir backup boilr was not ncssary; by firing it only whn ndd, thy can practically liminat its us. In addition, thy hav found a way to stp down xcss high-prssur stam to provid lowprssur stam for othr procsss, liminating th nd for thir lowprssur boilr. Changing how thy us thir quipmnt has ffctivly rducd thir rquirmnt for thr boilrs down to on. Ovr 15% savings ar xpctd: a 5-month payback. Thy ar now rgularly chcking thir stam traps and comprssd-airsystm to nsur maximum fficincy in th lins. Adding insulation on piping and fdwatr systms will furthr rduc hat loss. Installing an instant hat xchangr liminatd th nd to fir up a boilr for on production procss in an othrwis idl priod. Fryb has also rducd its watr consumption. Polishing (physically filtring) watr at th inlt to thir rfrigration coolant loop, rathr than using a chmical procss, has rducd thir watr usag by 3,500 cubic mtrs pr yar. By rducing th total organic wast going into thir fflunt in th first plac, Fryb s manufacturing wastwatr is purr, and th cost of disposal of this collctd wast (typically to landfill) is lowrd. In addition, thy ar currntly looking at th possibility of partnring with local food manufacturrs to procss thir wast in an anarobic digstr, liminating landfill-bound organic wast ntirly. Annual rduction: 400+ tonns CO 2 $75,000+ Payback-priod rang: immdiat to 1.5 yars Motivators ar largly similar across industris, and ar dominatd by visionary, valus and brand-rlatd drivrs. In addition to ths, mor nuancd businss-cas drivrs appar that ar particular to crtain sctors. MARKETING AND BRAND IMAGE SUPPLY CHAIN REQUIREMENTS CUTTING COSTS INDUSTRY LEADERSHIP AND COMMUNITY ENGAGEMENT Markting advantag and improving brand imag was important to profssional srvics, food and txtils manufacturrs, financ/insuranc organizations, and administrativ and wast-managmnt businsss (which includ businsss providing B2B administrativ and B2B/B2C wast srvics). Supply-chain prssur motivats sctors that ar spcially rliant on strong supplir contracts and rlationships: food procssors, and machinry and goods manufacturrs. Rtail businsss also cit this as a concrn. Forward-thinking financial institutions anticipat futur rquirmnts as wll. Cost-cutting is a top motivator for manufacturrs. Many organizations in this sctor own thir own facilitis and narly all oprat nrgy-intnsiv quipmnt whr fficincis translat radily into financial savings. Rducing costs also rsonatd with rtail SMEs: nrgy us (lighting and hating) in thir rtail spacs can b a larg portion of thir ovrall costs, spcially in smallr oprations. Industry ladrship and community ngagmnt was a top motivator in th Accommodation and Food Srvics sctor. Th consumr-facing natur of th hospitality and rstaurant sctor may crat a prcivd nd to stand out amidst comptition. Not th rtail sctor also showd a strong rspons to industry ladrship. Anothr motivator was staff rtntion, a concrn in th hospitality sctor with its frqunt mploy turnovr. Community ladrship and ngagmnt was also a top motivator amongst non-profit/advocacy organizations, as wll as prsonal car and srvic businsss

13 CLIMATE SMART CASE STUDY Mils Industris Product rdsign rsults in significant nrgy savings for customrs Mils Industris Ltd. is North Amrica s xclusiv dsignr, manufacturr and distributor of Valor Radiant Gas Firplacs. In looking at thir ovrall GHG invntory, thy chos to includ missions from us of thir firplac products. Thy ar working with thir supplirs to dsign a pilot light systm that has a timd rmot shut-off. This will rduc thir total GHG invntory by narly 1,165 tonns CO 2 through xtnsiv rductions in natural gas consumd by thir product. This will also rsult in significant cost savings to th nd-usr. Mils voluntary xtnsion of thir GHG-rduction scop highlights th innovation taking plac in th SME sctor, and th potntial for substantial natural gas consrvation through thoughtful product rdsign and rfinmnt by industry ladrs. Dvlop capacity to rduc th GHG footprint of our own businss oprations, injcting this capacity into our gnral practic.g., ncouraging th businsss w work with to rduc thir missions. Maintain highst nvironmntal practics whil dlivring valu to our gusts, saf workplac for our mploys and a lasting lgacy for our familis and community. Annual rduction: 1,165 tonns CO 2 21,000 GJ natural gas Th driv to bcom industry ladrs and good corporat citizns motivats SMEs. Thr is also an lmnt of co-optition : businsss will collaborat with comptitors to lvat th industry as a whol whil maintaining or attaining a lading position

14 GREENHOUSE GAS PROFILES AMONGST SMES GHG invntoris compild through th Climat Smart program follow th GHG Protocol, an intrnationally rcognizd standard dvlopd by th World Rsourcs Institut and th World Businss Council for Sustainabl Dvlopmnt. According to this protocol, an organization s missions ar dividd into thr catgoris, or scops: Scop 1 compriss all dirct sourcs of missions (i.., sourcs ownd or controlld by th rporting SME): ful combustion from hating and flt vhicls ownd by th rporting SME, and rfrigrant lakag from companyownd machinry. Rporting of Scop 1 missions is mandatory for th compltion of a compliant invntory. Scop 2 includs indirct sourcs of missions (i.., missions consqunt to th activitis of th rporting SME, but that com from sourcs ownd or controlld by anothr ntity). Typically, this ncompasss purchasd lctricity, hat, or stam. Rporting of Scop 2 missions is mandatory for th compltion of a compliant invntory. Scop 3 compriss all othr indirct missions: matrials and papr us, wast disposal to landfill, transport of popl and goods with vhicls not ownd or controlld by th rporting SME (businss travl, third-party shipping), and othr grnhous-gas contributing missions, such as third-party hazardous wast incinration. Rporting of Scop 3 missions is currntly optional for th compltion of a compliant invntory. 784 tonns CO 2 mittd by an avrag Climat Smart businss Masuring scop 3 missions capturs a sizabl portion of ovrall missions. lctricity Dspit a lack of rquirmnt to do so, 96% of SMEs masur at last a portion of thir scop 3 missions. 0% 10% 20% 30% scop 1 43% scop 3 45% scop 1 Scop 1 missions mak up narly half th missions masurd by Climat Smart businsss. This is split narly vnly btwn companyownd vhicls, and ful combustion for hating. hat matrials transport papr wast flt businss travl commuting shipping 2 3 missions by scop % scop 2 Scop 2 missions mak up a small portion, and mainly includ purchasd lctricity. Rlatd missions ar thrfor low du to th availability of low-carbon hydrolctric powr in British Columbia, whr th majority of ths SMEs ar basd. Scop 3 missions account for narly as much carbon masurd as Scop 1, illustrating that this optional catgory actually rprsnts a sizabl portion of an SME s invntory, as wll as significant opportunitis to rduc ths missions. othr missions by activity typ and scop Scop 3 missions com mainly from matrials and transport, with som from hazardous wast incinration and rfrigrant lakag. Ths activitis typically ar som of th most top-of-mind in an organization s oprations, and aras whr an SME can asily tak stps to rduc missions. For instanc, four out of fiv rporting SMEs opt to masur thir papr consumption, and 65% of businsss masur landfill-bound wast. As a rsult, papr us and wast togthr mak up narly a quartr of total masurd missions. Third-party transport-rlatd missions from businss travl, staff commuting, and shipping also scop 3 missions togthr mak up 18% of masurd missions. For organizations just launching thir sustainability fforts, ths ar asy low-hanging fruit stratgis for quickly rducing missions with rlativly littl ffort. For small oprations, thy can also rprsnt th lowst-cost opportunitis for missions and cost savings, as compard to mor capital-intnsiv lctrical and hating-quipmnt upgrads

15 CLIMATE SMART CASE STUDY 2% othr 4% third-party shipping 4% commuting 10% businss travl 22% flt 8% wast missions by activity typ 12% lctricity 24% hat 14% papr Hating is th largst singl activity typ from an missions standpoint. Th majority of ths missions com from on-sit combustion of hating ful typically natural gas in BC. Matrials us and disposal, comprising papr/packaging us and landfilld wast, mak up narly a quartr of masurd missions. Othr missions typically com from rfrigrant lakag and third-party hazardous-wast incinration. Transportation gnrats mor missions than nrgy us. Scuriguard Optimizing routs rducs ful us and flt siz Scuriguard is a full-srvic intgratd scurity solutions company offring customizd corporat scurity srvics, scurity guards and scurity consulting. Through participating in th Climat Smart program, th company masurd thir baslin invntory for thir North Amrican oprations for th 2010 fiscal yar, and is currntly masuring thir footprint for 2011 and Th 47-vhicl Scuriguard flt currntly includs 17 hybrid vhicls and on disl vhicl. In addition to rplacing convntional vhicls with th 17 fficint hybrids, Scuriguard is working to rplac an additional 12 vhicls with lasd hybrids in th nxt yar. 3% 9% 3% 6% 11% 7% profssional srvics 6% 22% 33% 3% 3% 2% 6% trad and transport of goods missions by activity typ, top thr sctors top thr sctors compris 66% of all Climat Smart-survyd SMEs lctricity Emission profils vary gratly across sctors. For instanc, papr us and hating ar th main aras of carbon impact for profssional srvics, whras trad and transport SMEs can xpct most of thir missions to com from flt-vhicl activity. Manufacturrs hav impacts in multipl aras, with businss travl bing th highst amongst SMEs survyd. Hating (building or procss ful combustion), flt vhicls, lctricity and landfilld wast ar also significant mission sourcs for manufacturrs. 3% 13% <1% 4% 2% 2% 10% 24% 66% 14% manufacturing 13% 17% 5% 13% hat papr wast flt businss travl commuting shipping othr Th nt pr-vhicl savings that Scuriguard has ralizd from ths changs ar $100 pr month, including additional lasing costs. Annual savings amount to $21,000 in ful costs (assuming $1.30 pr litr), and translat into a projctd grnhous gas (GHG) missions rduction of 97 tonns CO 2, or a 13% rduction in missions from Scuriguard s 2010 baslin masurmnt, with furthr rductions to com from incrasd flt fficincy. Scuriguard was also abl to rduc th total numbr of vhicls in thir flt ovr th past two yars, through bttr rout planning using nw rout optimization softwar implmntd in thir vhicls. Financial rturns from this on-board softwar, and th subsqunt ful savings and rducd siz of th Scuriguard flt hav bn substantial. Scuriguard is ralizing savings of $5,000 on a monthly basis. In total, Scuriguard s flt fficincy initiativs hav brought th company annual ful savings of mor than $80,000, as wll as rducing a major componnt of thir carbon footprint. Cutting down on vhicl idling, implmnting lctronic invoicing, improving thir rcycling infrastructur and rducing nrgy consumption by implmnting turn-it-off programs and rducing vampir powr ar othr ways Scuriguard is working to thoroughly and thoughtfully grn thir oprations. Annual savings: 97+ tonns CO 2 $80,

16 Emissions gnrally incras with siz and rvnu, though outlirs show this is not always th cas with vry SME. Construction, trad and transport of goods, and manufacturing ar th highst mitting industris. GHG missions, by full-tim quivalnts 8,000 tonns CO 2 6,000 max 14,856 14,094 16,404 GHG missions pr FTE, by annual rvnu max tonns CO Emissions by industry sctor pr FTE xhibit trnds that largly coincid with an undrstanding of typical businss activitis within sctors. This is spcially tru in activity typs rlatd to fixd prmiss, such as lctricity and hating. Not that sctor groupings ar ncssarily broad to facilitat analysis; as a rsult, outlirs xist in ach grouping. Construction and utilitis, trad and transport, and manufacturing organizations hav th highst missions pr FTE. Halth car/ducation and ntrtainmnt/accommodation organizations mit similar lvls, prhaps indicating a commonality in nrgy/rsourc us and subsqunt missions. Profssional and administration SMEs, having mainly offic-basd oprations, showd th lowst missions pr FTE (though th profssional srvics sctor, ncompassing nginring, wast-hauling, and othr potntially flt-intnsiv oprations, shows highr missions than purly administrativ SMEs). Climat Smart has dtrmind through this analysis that grouping SMEs into similar usag catgoris (.g., manufacturing, offic-basd, transport/flt, hospitality) may yild mor corrlativ industry bnchmarks. Climat Smart can also brak out this data by activity typ: lctricity, hating, flt activity, businss travl, wast, tc. 4,000 GHG missions pr FTE, by sctor 20 max tonns CO 2 2,000 mdian 10 mdian >500 FTEs 0 < $500,000 $500,000 - $999,999 $1,000,000 - $4,999,999 >$5,000, Emissions incras with siz of organization approximatly (using full-tim quivalnts as a proxy for siz). Th rporting of Scop 3 missions may b a convoluting factor, as this is optional and can compos a significant portion of a typical SME invntory. Not also th significant outlirs in narly all catgoris. GHG missions ar not xactly corrlativ to an organization s missions; howvr, a strong coincidntal rlationship xists: largr organizations us mor nrgy and rsourcs. Th rlationship btwn missions and annual rvnu is similarly coincidntal: missions* incras with incrasing rvnu. Howvr, again thr is significant varianc in th data (particularly with low-rvnu businsss), and xtrm outlirs xist in ach catgory: contrast th missions of on small organization s missions 128 tonns pr FTE against th 3.7 tonns pr FTE mdian valu for businsss with lss than $500,000 annual rvnu. 10 mdian * Analysis is facilitatd by normalizing missions for numbr of full-tim quivalnts, yilding a tonns-pr-fte intnsity mtric to rmov siz of organization as a factor. 0 construction and utilitis manufacturing trad and transport of goods profssional srvics halth car and ducation ntrtainmnt and accommodation administrativ srvics 30 31

17 PATTERNS IN GREENHOUSE GAS REDUCTION top fiv rduction stratgis by % of SMEs planning to implmnt wast divrsion papr us staff commuting third-party shipping flt bhaviour lctricity bhaviour chang simpl quipmnt capital quipmnt hat bhaviour chang simpl quipmnt capital quipmnt matrials packaging papr us wast divrsion transport businss travl staff commuting third-party shipping flt bhaviour chang flt ful switching flt rplacmnt/capital 7% 7% 10% 15% 20% 21% 22% 24% 29% 32% % businsss pursuing rduction stratgis 34% 40% 39% 46% 50% Simpl stratgis dominat missions rduction plans following an SME s first GHG invntory. Th top fiv compris wast divrsion (typically involving implmntation or improvmnt of rcycling schms); rducing papr us; promoting altrnativ mans of staff commuting; rducing thirdparty shipping missions; and bhaviour chang cntrd on flt activitis. All ar ithr rlatd to improving businss or day-to-day oprational procsss. Similarly, th nxt two most popular rduction stratgis involv bhaviour chang around lctricity and hating us. SMEs choos capital-intnsiv rduction stratgis (such as lctrical and hating quipmnt rplacmnt, flt vhicl ful-switching convrsions or rplacmnt) whn sizabl cost savings can b ralizd. In particular, upgrading lctrical quipmnt is an ara that, though highly visibl and oftn top-of-mind for SMEs approaching nvironmntal initiativs for th first tim, is not a priority givn its low carbon impact in BC (compar uptak in hating vs. lctrical capital projcts). Th xcption ar simpl lctrical upgrads whr payback (oftn substantial) and short payback priods wr achivabl. Bhaviour-chang campaigns cntrd on transportation ar also popular: flt bhaviour chang (oftn drivr r-ducation and implmnting anti-idling policis), promoting public transit/carpooling to staff, rducing businss travl. Ths li within an SME s dirct control, and ar highly visibl in day-to-day oprations and xcllnt ways to ngag all mploys at onc. Cost and carbon savings can b immdiat. Simpl vrsus capital quipmnt For th purposs of this study, a simpl quipmnt upgrad is an quipmnt purchas or projct, lss than $500 up-front cost, that typically dos not rquir significant work by a contractor or lctrician. Exampls includ switching incandscnt bulbs to compact fluorscnts; purchasing multi-outlt powr bars to facilitat quipmnt shutdown; installing occupancy snsors in unoccupid aras; small wathrstripping and caulking projcts; installing programmabl thrmostats; tc. A capital quipmnt upgrad is a largr or mor xtnsiv quipmnt purchas or projct with a commnsuratly highr initial cost. Payback priod rangs from undr 12 months to multipl yars. Exampls of this ar facility-wid lamp or ballast rtrofits; machinry rplacmnt; variabl-spd motors; improvd quipmntcontrol tchnology; boilr rplacmnt; rinsulation; tc. 18 % of SMEs prioritiz thir largst-mitting activity for plannd rductions 81% of SMEs choos rductions in mor than on activity typ Only on in fiv SMEs prioritizs thir largst-mitting activity for rduction fforts. Th liklihood that an SME will targt an activity typ appars not to b drivn purly by scal of missions. Rduction fforts rmain dpndnt on businss-cas factors dgr of dirct control, as of implmntation, and payback rathr than th mr fact that it is a high-impact activity. Th largst activity typ in trms of carbon may li outsid of an SME s ability to influnc: for instanc, SMEs rporting lctricity as thir ara of gratst impact ar largly micro-to-small offic-basd businsss in lasd prmiss. Dspit significant potntial savings from quipmnt upgrads, businsss may b unabl to targt ths aras for improvmnt. A gratr proportion of shipping-havy businsss choos to rduc shippingrlatd carbon and costs. Along with businss travl, ths ar procss-rlatd activitis (vrsus capital invstmnt in building stock), ar oftn lss costintnsiv, and thrfor li within rach of mor SMEs. Similarly, rducing missions rlatd to staff commuting is bhaviour-chang-basd, and rquirs littl xpns to implmnt. Th majority of SMEs, having masurd thir oprations through a carbonmissions lns, opt to pursu carbon and cost rductions in multipl aras of thir businss oprations. Rathr than focussing solly on lctricity us, hating us, or wast hauling, GHGs ar a usful proxy for all typs of rduction stratgis and activitis in an organization s oprations

18 CLIMATE SMART CASE STUDY Smallr SMEs lad in bhaviour chang and nimbl shifting of businss procsss FTEs FTEs % businsss pursuing stratgy, by FTE flt bhaviour chang 42% 36% 26% 20% third-party shipping 25% 22% 38% 54% businss travl 24% 17% wast divrsion 41% 35% 59% 43% 55% 42% Small businsss ar nimbl: th smallst siz catgory (1 10 FTEs) shows th highst prcntag uptak in flt bhaviour chang, businss travl, third-party shipping and wast rduction. With lss institutional inrtia, smallr organizations may b abl to chang arrangmnts around wast contracts, flt usag, and supplirs quickly. Businss travl in particular is an ara whr th smallst SMEs can mak significant carbon and cost savings. Small SMEs opt for low-capital-cost initiativs. <$500,000 $500,000 $999,999 $1,000,000 $4,999,999 >$5,000,000 <$500,000 $500,000 $999,999 $1,000,000 $4,999,999 >$5,000,000 % businsss pursuing stratgy, by rvnu third-party shipping 20% wast divrsion 53% 48% 50% 52% 48% 75% 73% businss travl 29% 22% capital quipmnt 5% 10% 18% 18% 50% 63% Smallr businsss ar willing and abl to mov quickly. Smallr SMEs ar most likly to mak changs to thir shipping, businss travl and wast divrsion: focussing on businss procsss with low capital and tchnological barrirs. Businss travl may form a largr portion of ovrall xpnss for smallr SMEs, who thrfor hav a gratr financial incntiv to rduc. Capital-intnsiv projcts (.g., hating quipmnt upgrads, flt vhicl rplacmnt) hav gratr uptak as rvnu incrass. Ottr Co-op Big savings from turning lights off and rducing wast Ottr Farm and Hom Cooprativ is an agricultural and hom product co-op locatd in Langly, BC. Thy oprat a rtail cntr, a bulk plant, fd plant, and svral gas bars and convninc stors. Simply switching off lights in thir rtail cntr for 4 hours a day whn th spac is not in us will rduc thir annual lctricity costs by narly $17,500. Ottr Co-op has additionally rtrofittd thir rtail location with nrgy-fficint lighting. With an invstmnt of $5,800 and a $1,200 rbat from BC Hydro, thy projct a savings of $750 a yar, with an ROI of approximatly 6 yars. In thir nwly rnovatd dli, a modst invstmnt of $100 in rusabl glasss mans a savings of narly $600 a yar in papr cups. Narly 600 pounds of magazins arriv at th stor vry wk, many of which go unsold. By rducing thir ordr, Ottr Co-op will sav 1,560 pounds of papr annually, as wll as th 5 hours of labour a wk rquird to procss th unsold copis. Annual savings: 3 tonns CO 2 $19,000 + rducd labour and wast 34 35

19 CLIMATE SMART CASE STUDY Frasrsid Community Srvics Socity Hating systms upgrads and lowr papr us rduc cost and carbon Frasrsid Community Srvics Socity is an accrditd non-profit multi-srvic organization providing quality srvics to individuals and familis in Nw Wstminstr, Burnaby, Dlta, Surry and th Tri- Citis ara in BC. Thy masurd thir baslin invntory for thir 2009 fiscal yar FCSS has approximatly 20 yars xprinc in housing; th agncy currntly manags 13 facilitis in total. Frasrsid is working to rduc thir GHG missions and costs by implmnting nw policis and rduction stratgis. For instanc, FCSS has drastically rducd thir papr usag through accpting only onlin job applications, and using onlin bill paymnts, lctronic tim shts and pay stubs. In addition, Frasrsid has institutd a 30% rcycld-contnt papr purchasing policy. This is actually lss xpnsiv than rgular papr, rsulting in $1,000 savings annually. Building improvmnts hav bn mad within th housing stock managd by Frasrsid, through th rplacmnt of infficint appliancs, installation of programmabl thrmostats, lighting rtrofits, and hom wathrization initiativs. Ths hav rducd both missions and costs from dcrasd gas and lctricity consumption. Th rplacmnt of a convntional boilr with on that is 97% fficint at a singl location rsultd in ovr $7,500 in savings, dcrasing th gas bill by ovr a quartr at this location. This translats into 6% rduction in missions from that location, and 2.5% off Frasrsid s total baslin missions invntory. Low-maintnanc appliancs also sav on maintnanc trips. Pattrns indicat aras of focus for nvironmntal initiativs by sctor. construction and utilitis manufacturing trad and transport of goods profssional srvics halth car and ducation ntrtainmnt and accommodation administrativ srvics construction and utilitis manufacturing trad and transport of goods profssional srvics halth car and ducation ntrtainmnt and accommodation administrativ srvics % businsss pursuing stratgy, by sctor hating bhaviour chang 0% 27% 20% 14% 29% 19% 45% flt bhaviour chang 0% 28% 33% 34% 22% 40% 72% hating capital quipmnt 0% 13% 18% 11% 10% 20% 32% 13% flt rplacmnt/capital 10% 25% 21% 22% 20% 44% Entrtainmnt and accommodation organizations rport th highst uptak in bhaviour chang in lctrical and hat us, and hating capital upgrads. For th hospitality-sctor businsss in this grouping, ths ar spcially rlvant aras of thir oprations with significant potntial for carbon and cost savings. Construction SMEs ar most likly to cit flt drivr bhaviour chang and vhicl rplacmnt as potntial aras of savings. Vhicls hr also includ light and havy construction quipmnt: a typically high-mitting activity within construction. As of 2010, Frasrsid has also cratd a Grn Committ with mmbrs rprsnting all lvls of th company, from dirctors to frontlin staff. Thy ar working on furthr dvloping th socity s grn policy, and will continu dvloping ways to furthr rduc both costs and GHG missions. Annual savings: construction and utilitis manufacturing trad and transport of goods profssional srvics halth car and ducation ntrtainmnt and accommodation administrativ srvics lctricity bhaviour chang 32% 21% 22% 39% 20% 39% 17% staff commuting 25% 32% 0% 11% 56% 51% 45% Offic-basd SMEs, such as profssional and administrativ srvics organizations, favour staff bhaviour chang campaigns around lctricity, commuting and papr rduction: all highly visibl aspcts of thir daily oprations that impact all staff and dpartmnts tonns CO 2 $8,

20 Organizations that activly manag thir GHGs for at last two yars achiv dpr rductions. Whil a sgmnt of any population ngaging in nw practics will show gratr nthusiasm and pull ahad of th pack, many SMEs nd to masur carbon byond thir scond yar to bgin achiving rductions: to mbd and fin-tun thir datagathring procsss and masurmnt boundaris. GHG invntoris collctd by Climat Smart show a gratr nt dcras in missions by th third yar of masurmnt and continud rduction ffort. Looking at only th participants who hav compltd third-yar invntoris, th rsulting total rduction from baslin yar is 11.5% (an annualizd rduction of 5.8%): gratr than rductions achivd by SMEs who hav only masurd up to yar 2. By this stag, mor SMEs bgin to raliz rductions, and thos rductions appar to b dpr. Som organizations who actually masur nt GHG incrass in thir scond yar, go on to achiv significant savings and achiv nt ovrall rductions by thir third yar. Rductions appar to occur mainly in hating, transport and landfilld wast. Transport in particular, which maks up 40% of avrag SME missions, is 3.6 % 11.5 % nt rduction in GHGs btwn yar 2 and baslin yar nt rduction in GHGs btwn yar 3 and baslin yar A long-trm carbon-rduction trnd is mor important than yar-on-yar fluctuation. On Climat Smart SME gratly incrasd thir papr us in thir scond yar of masurmnt, du purly to businss growth; howvr, by th third yar, thir papr us had bgun to dcras. Yar-on-yar variability in masurd missions can occur dspit an SME s bst attmpts to manag and rduc missions, du to on-tim or wathr-rlatd vnts that hav a proportionatly larg ffct on an SMEs total missions. For instanc: A proprty-managmnt SME obsrvs drastic incrass in hating us across its buildings du to a cold wintr. A grocr is forcd to sourc an altrnat supplir du to crop failur, incrasing thir shippingrlatd missions. A consulting SME is rquird to mak additional flights for businss du to a nw clint, incrasing thir travl missions yar-on-yar. an ara of opportunity for significant missions rductions, and constituts th bulk of ovrall nt rductions to dat. No trnds mrg in looking at whthr sctor or siz of organization impacts liklihood of achiving rductions quickly (i.., by yar 2 of masurmnt). This highlights a paradox in th SME sctor: small but forward-thinking, progrssiv organizations hav high growth potntial, which in turn lads to an incras in missions, vn as thy activly work to rduc thm. It is important to fostr continud carbon managmnt to crat a long-trm trajctory in mission rductions. Tinhorn Crk Vinyards Ongoing commitmnt to sustainability pays off Tinhorn Crk Vinyards, basd in Olivr, BC, has 28 mploys (20 prmannt, 8 sasonal) and annual grnhous gas missions of 102 tonns CO 2. This is a 34% dcras from thir initial baslin masurd 2 yars ago. In thir first yar, Tinhorn Crk targtd thir win bottls, switching to a lightr win bottl that allowd mor to b carrid pr shipmnt. Th switch cut transportation and production costs whil costing thm nothing, and now savs thm approximatly $28,000 annually. Ovr th nxt 4 yars, Tinhorn Crk will b improving thir irrigation systm. Switching from thir currnt ovrhad-spray to a drip-irrigation systm allows thm to combin watr and frtilizr togthr in th sam stram. This givs thm th ability to incras yild and significantly dcras watr usag by targting irrigation and frtilizr to thos vins that most nd it. Drip irrigation also liminats th nd for tractors to disprs frtilizr. Onc this projct is compltd, annual disl consumption will b rducd by an stimatd 25%, liminating 5.5 tonns CO 2. Tinhorn Crk will also sav $2,500 annually. This dos not includ additional ongoing savings from rducd cost of quipmnt rplacmnt, machinry maintnanc, and labour. Annual savings (yar 2): Annual savings (yar 3): $28,000 CLIMATE SMART CASE STUDY additional $2,500 + rducd maintnanc, quipmnt, labour and incrasd yild 38 39