The CRC Energy Efficiency Scheme defies the ‘business as usual' approach because it will affect the whole of an affected organisation, not just isolated parts of it. The scheme, therefore, requires the engagement and response of the organisation as a whole. This is in stark difference to previous environmental regulation where responsibility and accountability typically rested with one part of the organisation.
There is a risk that the shift towards the CRC becoming a tax may reduce the incentives for organisations to invest in energy efficiency. There remains, however, an opportunity for organisations to react and respond positively to the challenge set out by the CRC. They will, thereby, be able to pave the way for a model of engagement and implementation that will support other change management projects including the transition to a more sustainable business model.
As we already know, CRC imposes new liabilities and responsibilities across the whole of an organisation whether it be private, public or a form of joint venture or special vehicle. Understanding the structure of organisations can prove complicated, particularly where Group structures exist. From a practical perspective, it would be a mistake to assume that all boards know exactly how many legal or operational entities they operate. The disconnection of information, particular in situations that have witnessed extensive change, is not uncommon and potentially dangerous.
The complexities of organisational structure are often compounded by problems associated with basic data capture. Identifying all qualifying information is a challenge in itself and will have proved time consuming for many registered organisations. In order to ensure that the process is simplified in future years, pragmatic ways of collecting the necessary information will often be required.
If the energy bill was considered sufficient (and this is, of course, subjective) to warrant close scrutiny then systems to track consumption are typically in place for some if not all of the required information. However, in other instances the registration period is likely to have identified situations where gaps or inconsistencies lie in the ability to maintain a compliant position. The issue typically impacts most upon those organisations where energy use was not previously a material consideration. It can also be observed where one part of an organisation has a different culture; there may, for example, be differences in approach to data capture within parts of the healthcare or creative/media sectors.
Building the evidence pack is currently work in progress for a number of organisations and this may be found to be a bigger job than was originally assumed. It is not just a matter of documenting the basics; the expectation is that the evidence pack will show the workings and this expectation can place burdens on already stretched staff if sufficient resource and support is not put in place. From an engagement perspective, organisations should be careful to look for opportunities to connect the production of the evidence pack into areas of core business strategy where this is possible. There should also be a recognition that the production of the evidence pack may well be occurring against a backdrop of organisational change and distraction. This is having an impact on the ability of some organisations to respond effectively, particularly where staff departures have also created ‘corporate memory loss'.
Looking at the demands of the CRC as being a living part of many organisations going forwards, it is important to start addressing the skills gaps very quickly. Yes, there will be impacts upon the way that estate management is considered and most businesses will be making preparations (even if these in the form of accruals) for the purchase of allowances. It is interesting that the majority of organisations had assumed that they would do well within the league table and would, therefore, benefit from recycled payments. Clearly this is no longer an option and the impact of these optimistic assumptions is to create a bigger gap between previously assumed payments and the projected reality.
In addition to the core need to reduce energy consumption (regardless of the shift towards a ‘tax'), other skills gaps will also become increasingly material. In some organisations this will relate to the finance team and their ability to factor new costs into the existing systems. For other organisations it may relate to internal audit skills to ensure ongoing compliance or, perhaps, communication skills to support the energy reduction efforts. In any case, the language used and skills deployed by a wide range of leaders and managers is likely to change to some degree and this will require focus, training and organisational development.
For those organisations that respond to the CRC in a positive fashion, the evidence is that it can trigger the definition and delivery of an implementation programme to ensure sustainability strategy lives within the organisation. Yes, there are substantial cost drivers associated with CRC but these are also wrapped up with a number of bigger picture issues and there attention of the leadership team is ensured when a monetary sum is attached to an issue.
There are well established approaches to understanding which issues are material to an effective strategy for sustainability. This means far more than compliance since a focus on compliance can produce complacency or a focus on avoiding loss, not creating benefits. An effective sustainability strategy will anticipate which issues are important to the ability of an organisation to deliver profitability into the medium term; delivering on such a strategy is about embedding change, and change requires engagement.
Engagement is a powerful force when put to work alongside good communication and a clear strategy. In a well engaged business, discretionary effort is released by everyone knowing how the company's long term strategy converts to personal tactics that can be deployed in day to day activities. A well engaged business is normally found to be a better performing business and if the CRC is used as a trigger, however unwelcome, to catalyse this engaged focus then positive benefits may emerge from a challenging compliance issue.
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