Lloydspharmacy is the largest community-based healthcare company providing medicines and healthcare services throughout the UK. It has over 1,700 pharmacies across the country, based predominantly in community and health centre locations. The company employs over 16,000 staff and dispenses 133 million prescription items annually.

Lloydspharmacy is the trading name of Lloyds Pharmacy Limited, a wholly owned subsidiary of Celesio AG based in Stuttgart. It is the first community pharmacy chain to introduce private consultation rooms, which enables the business to offer customers professional health checks such as diabetes and blood pressure tests, cholesterol and heart checks by fully-qualified pharmacists in a comfortable and discreet environment.

In addition to dispensing medicines and an extensive array of health and beauty products, the company is also a leader in promoting self-care with a range of affordable medical-electrical products including blood pressure monitors and heart rate monitors. Jo Stott has worked in the environment sector - both public and private - for about ten years now.

"My role at Lloydspharmacy reflects the diversity of the business," she says. "Clearly a core part of our business is delivering NHS prescriptions and providing an increasing number of healthcare services, but we also have a significant retail element which is set to grow. On top of this there are of course all the energy, transport and waste issues that go with having an estate of over 1700 outlets spread across the UK, the Channel Islands and the Isle of Man."

What governs Lloydspharmacy's attitude to the environment and sustainability?

"Lloydspharmacy's goal is to be a great healthcare brand. For us there is a unique motivation for encouraging sustainable business practices and protecting the environment - the link between good health, both mental and physical, and a clean and pleasant environment. Being a responsible healthcare business requires that due consideration be given to areas where we have the opportunity to develop a sustainable approach.

"There are also very clear messages coming through from the Department of Health and the NHS around addressing climate change. The NHS has publicly identified a role for itself as the public sector leader on sustainability and climate change. As one of our major customers we need to be aligned with the NHS and their response to these issues.

"There are some very clear expectations amongst our employees as well as customers, about how we should behave as a responsible retailer. We want our employees to be engaged and proud to work for Lloydspharmacy, and that means addressing the issues that concern them - including waste, recycling and energy use. And on top of all of these motivations, like any other business, we strive to be efficient - and that can be a really strong argument in protecting the environment through the reduction of unnecessary waste.

"We have been careful to rigorously assess all our improvement projects, to make sure that a sustainable business case can be made. We are really keen to develop 'built to last' improvements which have credibility across the business."

Which areas of the business were identified as the biggest carbon culprits?

"The two most obvious areas of impact for us are our use of energy to heat and power our estate, and the use of fuel by our fleet. Of course we recognise that our supply chain is also responsible for significant carbon emissions, and further investigation of the supply chain will no doubt identify areas where we need to work with our suppliers to reduce carbon emissions."

How has the organisation tried to tackle these issues?

"With more than 1700 individual buildings to address we've adopted a multi-stranded approach to try to make progress on reducing our energy-related impacts. We've worked with the Carbon Trust on our building energy use and with the Energy Saving Trust on our fleet. But we're really fortunate to have our own in-house expertise in both of these areas which has really helped us to identify solutions which work for our business.

"For example, our property team have worked with suppliers to design a new energy-efficient lighting specification for stores when they are refitted. This is based around energy efficient lamping but also takes advantage of PIR controls for back of shop areas, and where circumstances allow, natural light solutions such as sun tunnels. We're also working on trials of automated equipment controls which we hope will provide energy savings in our pharmacies, and also help us to identify where energy is being wasted across the estate.

"We're currently working on pilots of laptop video conferencing for field-based staff and the availability of video conferencing which has been in place at Lloydspharmacy for a number of years now will be improved and extended throughout the business next year. We've also given information to company car drivers about the emissions of vehicles available through the company car list and we've extended the vehicle list to include hybrid vehicles."

What about the energy sources supplying your pharmacies?

"Lloydspharmacy has been using energy from renewable sources for its pharmacies and offices throughout the UK for over two years. We are very concerned that the cost and availability of renewable energy will be, for us and many others, a barrier to widespread commercial uptake of genuine 'green tariffs'.

"Our environment policy commits us to always considering use of renewable energy sources so the situation will remain under review. However, given the lack of clarity around the real environmental benefits of buying green tariff electricity and the very significant price differential we have encountered it has been increasingly difficult to justify buying green, which is extremely disappointing."

How does the firm try to involve its staff on the low-carbon journey?

"Amongst our staff there is a real expectation that Lloydspharmacy acts responsibly on the environment, particularly around waste issues. We have a number of internal communications tools which we have utilised to make staff aware of ongoing work to minimise our environmental impacts. Regular use of these helps to keep staff up to date.

"Of course staff don't always have time to digest all the information they receive - they're often too busy getting on with the day job and meeting the challenges of working in a busy pharmacy environment. However, engaging staff is crucial.

"The most successful way of doing this is to get them playing their part without interrupting their day job - so for example staff have been really keen to get involved in recycling schemes. If we give them the infrastructure and the opportunities to do something positive for the environment then we're finding that they are already on board."

What about customers and the supply chain?

"We have had some success working with suppliers of both products and goods not for resale. For example, we have undertaken some very successful work with suppliers of our medical electrical equipment to reduce the amount of packaging around products. This in turn has helped reduce the number of containers of goods needed to ship products and the amount of road haulage needed simply because more product can be fitted into distribution vehicles.

"We've also worked successfully with packaging suppliers to reduce the environmental impact of our dispensary and counter bags, proving that a good relationship with suppliers can pay dividends. Clearly though we have a diverse supply chain which includes pharmaceuticals and major branded goods so influencing the supply chain is an ongoing challenge but something that we need to pursue.

"You only have to look at the experiences of other companies in exploring the carbon hot spots of their supply chain to realise that there are probably some big gains to be made in reducing waste and carbon emissions if you start to look back along the supply chain.

"In terms of high street customers we have included some messaging on products and packaging to try to encourage good environmental behaviours. We've also got a lot of really good initiatives under our belt in terms of healthcare services which should demonstrate to our customers that we are very serious about responsible retailing and healthcare services. Just take, for example, our free diabetes tests or our decision to only sell sun protection goods of factor 15 or above. We've been quite careful not to oversell our environmental achievements - we only want to communicate genuine messages and achievements.

"Overall we have a very strong sustainability package - our challenge now is to pull all these items together to make sure our customers can't doubt our commitment to the environment and sustainability."

What has been the biggest obstacle you have faced in trying to reduce GHG emissions?

"The major barrier for us has been around getting accurate data for our premises. We have over 1700 pharmacies and no two are necessarily the same! The problem with the lack of data has been around the old adage 'you can't manage what you can't measure'. Not having accurate data has made understanding our immediate carbon impact a long term job and has made building business cases for invest to save opportunities quite difficult."

And what has been your greatest low-carbon achievement?

"I think it's hard to say which of the various improvements we've made has been our greatest achievement because I get quite excited about all of them! There's a real sense of achievement when you know that a genuine improvement has been made in the business and I think that as staff become more engaged the achievements will be increasingly fundamental in their impact."

Are there any particular technologies emerging that might be of use to the business?

"Lighting and air conditioning are big energy users for us so improvements in the energy efficiency of these items is something we continue to monitor. The one thing that I would really like to see is a shift in approach to waste collection and recycling. With small volumes of waste produced across a large number of locations we could soon end up with multiple collections of different materials - and I'm not sure that that adds up in terms of vehicles on the road and associated carbon emissions. That's certainly an area we need to look at."

What are you working on right now?

"We're currently working on a series of targets which run through to 2012 across all areas of environmental impact in our business. Work underway to deliver on those targets includes video conferencing trials and packaging reduction initiatives."

What advice do you have for other environmental/low carbon managers?

"Make time - even if it's only for a few minutes once in a while - to remind yourself why it's important that you are at your desk or out in the field doing your job, whatever anyone else may tell you!. It's so easy to get frustrated with or overwhelmed by the challenges of environmental management that you can end up wondering what the point is. I find a quick visit to some of the NGO websites, for example the WWF, helps to keep my drive up!"

A Place At The Top Table – Winning Support In The Boardroom

It is widely acknowledged that board-level involvement is essential if a company is to make a decisive impact on its carbon emissions. Only directors can provide the leadership, resources, and overall cohesion required if emissions reduction is to succeed.

Which raises the questions – which aspects of emissions reduction are most likely to catch the attention and win support from the board? And which aspects will appeal to which directors?

“In terms of appealing to the board you’re not going to have a ‘one-size-fits-all’ approach,” suggests Mark Chadwick, CEO of Carbon Clear, which offers a portfolio of carbon management services. Thinking about how the interests of particular stakeholders are served by emissions reduction is an obvious way to start thinking about boardroom buy-in, he suggests.

Stakeholder interests

“If you approach it as an energy management issue, then in most cases this will be about saving electricity and the stakeholder is likely to be the finance guy. Some companies may have switched suppliers in the past and are looking for other ways to reduce costs,” he says.

How much weight specific stakeholder interests have will depend on the sector it operates in, Chadwick suggests. “If a company has a strong environmental function – if it’s in manufacturing, for example – it might have a lot of knowledge of compliance issues. Some companies have broadened their Health and Safety function to include environmental issues,” he says.

Alternatively, a company may have a strong commitment to Corporate Social Responsibility (CSR), and emissions reduction may fit well with this agenda. “Some of the CSR coming out of the big companies is extremely robust. But CSR has always been complex because it is concerned with wherever a company impacts on society – locally through pollution and waste – or as a whole – its labour policies and practices,” says Chadwick.

A stakeholder with a large amount of weight is the Government, particularly through legislation like the Climate Change Bill, which introduced the Carbon Reduction Commitment, requiring large organisations to participate in emissions trading. “As a stakeholder, the Government is very, very important,” says Chadwick.

What are the drivers?

Stakeholder interests are one starting point. Another route to a strategy for winning board support is to think about the drivers for carbon reduction – an issue closely linked to stakeholder interests. This is the approach taken by Logica. “We’ve summarised the buttons to push with board members as four ‘Rs’ – responsibility, regulation, risk, and reward,” says Tony Rooke, Group Environmental Champion at Logica.

The first of these – responsibility – is the company’s response to stakeholder pressure, perhaps internally through its employees, or to external investors including ethical funds and pressure groups such as the Carbon Disclosure Project. The Carbon Reduction Commitment is only the beginning of increased regulatory pressure.

There is a range of risks that directors must consider, says Rooke. “Financial exposure due to the volatility of energy prices is an obvious one, but there are also risks such as the continuity of energy supplies, and the more direct effects of climate change such as extreme weather, which is a risk to assets and can have knock-on effects – to logistics, for example.” The potential rewards from positioning brands to exploit their green credentials are obvious from the efforts of companies such as Marks & Spencer, says Rooke.

The cost savings from improved energy efficiency may not be large enough to win boardroom buy-in, suggests Paul Pritchard, Corporate Responsibility Manager at RSA – formerly Royal & Sun Alliance. “If your total energy bill is a few million pounds, and is only a tiny proportion of your total cost of doing business it’s not a strategic issue. In that context why would the board want to talk about a pitch that saves a hundred thousand pounds, for example?” he says. Energy intensive industries are already very aware of the need to manage their energy consumption, Pritchard suggests. “For example, the cement companies I’ve dealt with know their energy bills down to the last penny,” he says.

Opportunities missed

A policy document ‘Energy Efficiency – Joining the use-less energy generation’, published this year by the Institute of Directors IoD suggests that most companies could do far better with energy efficiency, reaping substantial rewards as a result.

Targeting companies that pay directly for their energy consumption, the IoD found that more than 60% of organisations do not have an energy management policy or strategy and more than half do not have a person with direct responsibility for energy management. A similar picture emerged for energy saving or efficiency programmes – almost 60% of organisations did not address energy efficiency. Of those organisations that do, some 30% reported energy savings of 6–10%.

According to David Boomer, Head of Energy Efficiency and Climate Change at the IoD, there are three main barriers to action on energy efficiency – lack of knowledge about the lifetime cost of equipment, as distinct from its capital costs; lack of leadership, including from the Government; and a lack of awareness of the returns on investment in energy efficiency.

“It’s so obvious when you walk around the City and look at the office blocks - it’s remarkable all this energy that’s expended,” Boomer told Low Carbon Board Report. Research carried out in 2006 on behalf of Philips Electronics found that only 1% of lighting in the workplace had timers, presence detection or daylight sensors, Boomer says. “The companies that manufacture this equipment – like Philips – are really frustrated.”

Opportunities worth grasping

The revitalising effect of the Marks & Spencer ‘Plan A’ on the company’s brand is well known, but newer brands are also exploiting the opportunities says Mark Chadwick of Carbon Clear. “Innocent Drinks is exemplary in its approach to sustainability, and in pursuing sustainable options. For example, it uses 100% recycled plastic in its smoothie bottles – even though the industry said it couldn’t be done,” he says. “Sustainability is a key part of the Innocent brand, and from what I’ve seen, all people in the company are engaged on this,” he says.

Sustainability may also become a new differentiator for business products, says Chadwick. “We may see an arms race of green claims in the print industry, for example. We’re starting to see claims about recycling; we’ll probably see more about vegetable-based inks, and then possibly carbon management. And remember, virtually every business has a relationship with printers,” he says.

In summary, Tony Rooke at Logica offers a rule of thumb about how to “push the buttons” of board members: “The CEO will be interested in the vision and brand aspects, the CFO will be interested in compliance and cost, and the COO will be interested in risk and business continuity,” he says.

Key questions:

• Which stakeholder interests would be served by emissions reduction?
• What are the drivers for emissions reduction?
• What is our strategy for exploiting the opportunities of the emerging low carbon economy?