Managing our operational carbon

In the year being reported upon, we generated 248,000 tonnes of carbon dioxide (CO2) through the use of energy in our buildings and the fuel used by our fleet of commercial vehicles. This equates to 42 kilograms per £1000 of sales.

Our CO2 emissions have reduced by over 12% over the past year, and by 17% per £1000 of sales. Whilst we have been more efficient with the way we use energy in our buildings, and a greater proportion of the energy we use now comes from renewable sources, the unseasonably warm weather during the year has also been a contributing factor.

Buildings

We use energy in our building to provide heat, power and lighting in our stores, distribution centres and offices. This year we used 530 million KWh of energy, which is a reduction of 9% from the previous year, partly as a result of energy efficiency initiatives across the business helping to drive down our usage. For example, we now use only energy efficient bulbs in our lighting display canopies thereby significantly reducing our energy consumption. In addition, the unusually warm weather during the year (with the Met office describing 2006 as “the highest average temperature recorded since the Central England Temperature series began in 1659”1) has meant that we have used less energy to heat our buildings.

1 http://www.metoffice.gov.uk/corporate/pressoffice/2006/pr20061214.html

28% of the electricity we use comes from renewable sources, such as solar or wind power. This represents 18% of the total energy consumed by the business. Our purchasing policy is that we will always purchase CHP or green electricity if available from our suppliers, as long as this represents no additional cost to the business once we have taken into account the Climate Change Levy. We are committed to increasing this proportion where we can. For example, since October 2006, 90% of the electricity used by Homebase was from renewable or low-carbon sources.

The improvement in energy efficiency , the use of electricity from renewable sources and the warm weather means our CO2 from building energy use has reduced by 24% compared to last year (29% reduction per unit of sales) to 142,000 tonnes (24 kilograms per £1000 of sales).

Commercial fleet

We have a commercial fleet of over 1,000 vehicles that distribute our products between our Distribution Centres (DCs), to our stores and to our customers through home deliveries. It is important to us that this fleet works as efficiently as possible to ensure that the products we transport are in the right place at the right time, whilst minimising the amount of fuel that we use.

The fleet comprises vehicles owned by Home Retail Group and those provided by a third party. It is our responsibility to ensure the efficiency of all these vehicles. However, we have greater control over our own vehicles rather than on those used by our third party providers.

In the last year, our commercial fleet used 37 million litres of fuel. This compares to 33 million litres in the previous year. This is an increase of 14%. However, our efficiency has remained broadly constant as we have travelled over 15% more kilometres compared to the same period. This extra distance is because we have opened new stores and undertaken more home deliveries. The fuel used per £1,000 of sales has increased by 7%, these changes being driven largely by home delivery becoming a larger element in our business mix.

The fuel used by our fleet generated 98,000 tonnes of CO2, equating to 17 kilograms tonnes per £1,000 of sales. The emissions generated are roughly split equally between our internal product movements between our DCs, deliveries to our stores and deliveries to customers at their homes.

This year we have improved the way we schedule our journeys and the way we pack our vehicles. We continue to monitor the fuel performance of our fleets on a weekly basis. This ensures we are able to identify any inefficient vehicle quickly and rectify any problems they may have. This is supported by driver training and regular vehicle replacements to more efficient models.

Increasingly, we are looking to partner with other organisations in order to reduce the number of kilometres we drive. For example, if we know that a haulier is making a delivery to a location near to one of our distribution centres, then it is sensible for us to see if they can carry our products rather than undertake its return journey empty. We have been running a trial at Argos with Christian Salvesen to test this principle between our DCs in Kettering and Castleford. So far this has saved us over 233,000 kilometres, even though it has only been operational for half the year.

Over recent years we have seen significant growth in the number of home deliveries we are making, particularly through the increased use of the Internet. Emissions from home deliveries are now more or less equal to emissions from our store deliveries. Better scheduling and monitoring of our home delivery fleet for large products has meant that its efficiency has improved significantly and the average number of deliveries made by each ‘two man’ delivery vehicle each day has increased substantially from 31 to 34.

We have also investigated other ways to transport our products rather than all by road. For example, we have piloted the use of rail to distribute Homebase products to Scotland.

We are also aware that the different ways that our customers shop with us may have differing impacts on climate change. For example, does a customer that travels to an Argos store on the high street emit more carbon than a customer that orders online and whose products are delivered to them? We are a long way off having definitive answers on such issues but these are questions we are looking to address over the long term.

Company cars

Home Retail Group also operates a fleet of 1,254 cars. The fuel used by these cars generated 7,600 tonnes of CO2, equating to 1.3 kilograms per £1,000 of sales in 2006/07. This represents just over 7% of the total emissions from transport.

Currently the fleet is 85% diesel with CO2 emissions generally below 165 gms/km. We are working on opportunities to develop a ‘greener’ emphasis to our flexible car policy. The primary objective is to introduce innovative ways of promoting the reduction of the carbon footprint within the Group’s flexible benefits framework.

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