Money talks

A survey published today shows how 65 European companies are using natural resources – measured for the first time in monetary terms – with the utility and oil and gas companies consistently generating the worst results.

Shell comes bottom of the league table with a negative sustainable value of €180 billion in 2003 (the last year studied), with BP second last at €134 billion.

Other examples show that ICI uses its environmental resources 6.5 times more efficiently than the Finish chemicals company Kemira. Centrica – which owns British Gas and Scottish Gas – has an eco- efficiency rating 3.5 times above the eco-efficiency of Scottish and Southern Energy, while BP and Shell do not achieve one fifth of the eco-efficiency with which resources are used in the 15 existing EU countries (EU15) on average.

If the BP and Shell resources being used were given to average companies in the existing European Union countries (EU15), an extra €300 billion of gross domestic product (GDP) would result each year, the study leaders have found.

The EU-funded Advance study by Professor Frank Figge and Dr Tobias Hahn used their own unique Sustainable Value Approach which measures environmental performance in the same way as financial performance. It matches with the logic of financial markets and turns corporate environmental performance into the language of managers and investors.

Martin Persson, analyst at GES Investment Services in Stockholm, one of the four eco-rating- agencies involved in the survey, described it as a milestone for integrating corporate environmental assessment and financial markets.

In two years of research, Professor Figge and Dr Hahn also found that the number of European manufacturing companies publishing reliable environmental figures was alarmingly low.

Dr Hahn said: “There are a great number of companies reporting on environmental aspects today. However, only very few companies publish environmental reports that are good enough to conduct a meaningful performance assessment. Much of the environmental data we looked at was sketchy, incomplete and sometimes even wrong.”

Economist Professor Frank Figge is the new chair of Corporate Social Responsibility at the School of Management at the University of St Andrews. The chair is a joint appointment with the Sustainable Development Research Centre (SDRC) of the University of the Highlands and Islands (UHI). Frank has joined the University of St Andrews from the Sustainability Research Institute of the University of Leeds. Before joining academia, Frank worked in the bank and insurance sector in Germany and Switzerland.

Environmental scientist Dr Tobias Hahn is senior researcher at Berlin’s Institute for Futures Studies and Technology Assessment (IZT).

“We wanted to prove that you can do assessment with data in the market today. All companies are publishing information, but it is not being used. The problem is that they don’t have the tools to analyse it. Our Sustainable Value Approach will enable companies to identify problems,” Professor Figge explained.

Advance took into account seven environmental indicators based on data published by companies on a voluntary basis – water use, waste generated, emissions of carbon dioxide, nitrogen oxide, sulphur oxide, volatile organic compounds and methane.

Dr Hahn said: “The results are based on a transparent assessment process and show precisely which companies are using our scarce environmental resources in a way to generate the highest possible economic return. The large performance spread within sectors clearly shows which companies are environmental laggards.”

Professor Figge added: “The underlying logic of the Sustainable Value Approach is simple – a company only creates value with an environmental resource, such as water, if it generates more return with that resource than other companies.”

“For example, AstraZeneca used 5.7 Mio m3 water in 2003 and generated a gross value added of about 9 billion €. With the same amount of water, the EU15 would have only produced a gross domestic product of 236 Mio €. Benchmarked against the EU15 average, AstraZeneca thus generated a value of about 8.8 billion €.”

AstraZeneca was one of only seven British companies included in the survey. Out of that seven, it was the only company which used its resources more efficiently than the EU15 on average.

Its eco-efficiency was twice as high as the efficiency of the EU15 on average, but still lower by a factor of two compared to the industry leader, the Danish pharmaceutical company Novonordisk.

“Other British companies performed rather poorly when assessed against the EU15 average – Centrica and Scottish and Southern Energy generated a negative Sustainable Value of -6.5 billion € and -12 billion € respectively, but still ranked as the second and seventh most eco-efficient companies among the 13 utility companies included in the project,” Professor Figge continued.

With a negative sustainable value of -4.6 billion €, BG Group is best of class among the oil and gas companies analysed.

“This demonstrates that the oil and gas industry is a highly resource-intensive business and that BG Group’s focus on gas pays off. ICI almost reached benchmark level and ranks first among the chemical companies featured in Advance,” he added.

The company that used its environmental resources most efficiently in 2003 was Airbus – four times more than the EU15 on average. However, this figure only considered the production of aircraft.

With the study now complete, Professor Figge and Dr Hahn intend to run workshops on their project, and are now planning to look at smaller companies.

ENDS

For further information, Professor Figge can be contacted on 07877 100742 or at the Sustainable Development Research Centre (SDRC) on 01309 678113 or via email [email protected]

Full results of the study, the companies involved, league tables, and the Sustainable Value Approach, can be found at http://www.advance-project.org and http://www.sustainablevalue.com

Jpeg images of Professor Figge are available from Claire Grainger, University of St Andrews Press Officer – contact details below.

Issued by Beattie Media – www.beattiegroup.com On behalf of the University of St Andrews For more information, please contact Claire Grainger, Press Officer – 01334 462530, 07730 415 015 or [email protected]; Ref: press releases/figgenational View the latest University news at http://www.st-andrews.ac.uk