MITIE boosts green credentials with CarbonCare programme

10 Dec 09

MITIE has launched CarbonCare – the first fully-integrated carbon management service providing organisations with an all-encompassing way of managing their energy usage and carbon emissions.

By Brian Sims

With new legislation such as the CRC Energy Efficiency Scheme coming into force, organisations have a real need for joined-up advice on managing their assets in an energy efficient way and meeting their obligations.

Most do not have the internal capabilities to deal with these complex issues and, until now, have had to approach a range of suppliers who can provide them with advice and practical delivery.

“No-one has successfully brought together all areas of carbon and energy management, and we’re understandably very excited by the prospects of this new business stream,” commented Mike Sewell, the marketing director for MITIE’s technical facilities management business.

Sewell added: “We’ve shown time and again that we can help clients significantly improve their efficiency in specific areas, like security, but now for the first time our customers can really benefit from an holistic solution that will multiply results across organisations.”

Full integration across all services

Through CarbonCare, MITIE can offer the expertise of individual specialists but, more importantly, full integration across all services. According to an official statement, organisations that outsource their carbon and energy management to MITIE will “achieve considerable benefits over the life cycle of their assets”.

As a business, MITIE’s track record encompasses all areas of energy and carbon management. In recent times it has assisted companies like Tesco to save millions by reducing their energy consumption. Its innovative energy solutions are currently helping local councils achieve 60% carbon reductions in ‘Building Schools for the Future’ new build educational establishments.

MITIE is also working with partners such as E.ON to install carbon ground source heat pumps in disadvantaged homes.

What does carbon management mean for the business?

Ruby McGregor-Smith, the chief executive at MITIE, delivered this speech to attendees at the official launch, held at The Cinnamon Club in central London...

“MITIE has always recognised the potential impact our business can have on the natural environment, and we understand the need today for carbon management in every organisation and the role it will increasingly play in the future of good business.

“Much of this need is driven by good business sense: the less energy you use, the less it costs you. On top of this, there is now much more legislation, either current or coming, which places specific obligations on organisations to reduce energy use and carbon emissions.

“An example of new legislation is the CRC Energy Efficiency Scheme which directly impacts over 5,000 organisations in the UK, introducing a real cost of carbon to the bottom line. As we go into 2010 we expect new legislation to increase the obligations on the provision of automatic metering for measuring energy use in buildings, as well as significant changes to Renewable Electricity Financial Incentives which could see many more renewable energy projects made cost-effective.

“The above, coupled with ever-increasing Government commitments for UK plc to reduce carbon emissions – and key global events such as the COP15 United Nations Climate Change Copenhagen Conference – makes it increasingly important for businesses to understand and manage their environmental impacts. This will ultimately lead to a reduced cost of energy to all businesses and, therefore, a real reduction in bottom line costs, all the while protecting our environment.

Carbon management: benefits and challenges

“Carbon management is therefore essential for all organisations. This brings both benefits and challenges. MITIE recognises that we can assist companies through the pitfalls of assessing and managing their carbon footprints, helping them to be both carbon-compliant and deliver real benefit.

“More and more of our clients are looking to us to manage and improve their facilities and assets more strategically. We recognise the importance of bringing together our energy and carbon management capabilities into one place under CarbonCare.

"in essence, CarbonCare is a full range of integrated services that can help manage down an organisation’s energy use and carbon footprint, from providing the right equipment and using it efficiently through to complying with the increasingly complex legislative environment.

“Our expertise ranges from measuring your carbon exposure to developing a comprehensive carbon reduction plan tailored to a particular business, helping them eliminate waste, reduce costs and identify effective clean energy alternatives."

Landlord and tenant in the energy and carbon management debate

Asset management is no longer just about the building. It’s about optimising the performance of that building using the technological and human assets, new and old, that accompany it.

Now is the time to consider one of the key ingredients of the UK Government’s low carbon plan - the Carbon Reduction Commitment (CRC).

MITIE sees the CRC as a catalyst for real change in the dynamics of the commercial property market – a direct challenge to property owners, occupiers and the facilities management industry, and the traditional building management business model.

Many of MITIE’s clients will fall into the CRC net, which will include most organisations that spend over £450,000 per year in the UK on electricity: large commercial offices, hotels, supermarkets, shopping centres and public sector organisations among them.

Distinct rules for reporting and participation apply to owner-occupiers and sole tenants under a full repairing lease, to multi-let properties where the landlord pays for all electricity use within the building (even where the costs are passed to the tenant through the service charge) and to cases where there is separate metering for tenant space.

As MITIE works with its clients to digest the contents of their CRC Qualification Packs, and identify early adoption measures along with longer term ones, the message is clear there’s an urgent need for landlord and tenant collaboration.

MITIE has already been involved with voluntary landlord-tenant schemes such as LES-TER, sponsored by the Carbon Trust, which can be helpful. The London Climate Change Agency’s Better Building Partnership Guidance on Green Leases is seen as a first tentative step to mutual action. However, while some companies have risked a lot to implement them, many landlords are unwilling to do so for fear of losing key tenants and a lack of understanding in the market of what a green lease actually provides.

These measures alone will not suffice to confront the urgent issue of carbon accountability.

Who will drive the change?

MITIE believes that landlords and tenants have equally strong incentives for making their properties more sustainable, but there are also obstacles and deterrents.

Many landlords understand that putting investment and resources into making properties more sustainable will reap rewards in terms of higher sale and rental prices as well as lower running costs. Others, however, work to short payback timescales where investment in longer-term sustainability cannot be justified.

Some tenants are driven by Corporate Social Responsibility issues: one major retailer, for example, is so determined to sustain its reputation and outperform its competitors in the CRC league table that it manages energy centrally from headquarters, even turning off lighting and other in-store processes outside opening hours.

Differences from one business model to the next

Not all tenants, however, are so motivated. They may be unwilling or unable to change their ways, particularly if the greater benefit would fall to the landlord. Retail premises tend to use excessive amounts of lighting as a way of attracting shoppers. In offices, energy usage only accounts for some 5% of overheads, so it’s not always high priority.

This can be frustrating for landlords who may only be able to effect improvements in energy usage within the common parts of their properties. MITIE’s view is that as the CRC starts to impact finances as well as reputations it will become imperative for landlords (and some tenants) to achieve higher and higher targets. This will demand changes in design, operation, use and management of the built environment, with significant investments in energy and lower carbon forms of power and heat generation.

Much of this investment, however, will be off the balance sheet of tenants, and possibly off balance sheet for landlords, too.

In this future scenario, the financing and management of low carbon investments and operation will be taken on by facilities managers and energy partners like MITIE, who will design outsourcing services that encompass both landlord and tenant through an integrated, long-term approach.

Need for a new business model

In the new carbon economy, carbon management will be outsourced to asset management companies like MITIE, which will take accountability for their clients’ carbon emissions. This model transfers the risk and responsibility to the energy and carbon partner.

Efficiency savings will generally fund all the capital investments required to meet the targets. MITIE’s clients are therefore able to focus their full financial and management resources on running the core business.

For this model to succeed, the clients need to be prepared to enter long-term partnerships with their asset manager.