Written evidence submitted by Sodexo (ENE0034)
sodexo response to the BEIS Select
Committee inquiry into the
Government’s approach to delivering energy efficiency improvements to buildings
17 January 2019
Sodexo welcomes the opportunity to be able to provide views on the area of delivering energy efficiency improvement to buildings and related policy to the BEIS Select Committee.
Sodexo employs over 35,000 in the UK & Ireland at over 2,000 client locations across all market sectors - with a global turnover of over £22bn.
Our core provisions are built around developing, managing and delivering diverse services, designed to improve the quality of life for our clients and customers. We have an unrivalled reputation for building lasting partnerships with clients through open, transparent relationships based on trust and exceptional performance.
Our range of services include construction management, reception and food services through to asset maintenance, security and grounds maintenance for our clients in offices, schools, prisons, hospitals, military bases, remote sites and hospitality events. We deliver for both the private and public sector, with government clients such as the Department of Work and Pensions, Ministry of Defence and Ministry of Justice.
Our UK business is therefore formulated into the following key client delivery segments:
As an organisation involved within the commercial sector, and one which is also covered by legislation such as CRC and ESOS previously as well as delivering energy efficiency projects and implementing related practices at our own sites and on behalf of clients, we are therefore pleased to input here.
Our commitment to minimising the environmental impacts from our operations are clear, we have implemented our ‘Better Tomorrow 2025’ sustainability strategy, with projected targets of reducing our global carbon emissions by 34% against a 2010 baseline. In addition, we work with clients on a global scale as their chosen delivery partner to help reduce their energy consumption and carbon emissions, as well as comply with relevant regional legislation.
Going forward we would also welcome the opportunity to engage with BEIS to help develop the understanding and implementation of legislation in addition to projects which reduce environmental impacts as the UK works towards mandated carbon targets.
We are pleased to provide our responses to the areas requested:
1.1 Energy efficiency is a critical component in ensuring that the UK has a sustainable energy supply policy going forward. By reducing demand and wasting less this thereby reduces the supply burden, with the consumer therefore it is a truly sustainable approach to supply and demand.
1.2 We therefore recommend that energy efficiency is considered a national infrastructure priority, and support the likes of the Frontier Economics ‘Energy Efficiency: An infrastructure priority’ (2015) study in this field, noting:
“In the absence of Government intervention, there will be under-delivery of energy efficiency investments.” (p23)
1.3 Whilst this intervention is predominantly ‘the stick’ approach via legislation and resultant programmes, by adopting energy efficiency within national infrastructure, this could lead to long-term public and private sector investment, given the surety associated with infrastructure projects.
1.4 The benefits of a national infrastructure approach to energy efficiency could result in significant impacts on the economy. We note with interest the findings of the UK Energy Research Centre in their ‘Unlocking Britain’s First Fuel: The potential for energy saving in UK housing’ (2017) study, with their key findings that:
“• Since 2004, improved energy efficiency has helped reduce the UK’s total household energy consumption by one fifth, saving the average dual fuel household £490 in 2015.
• Technically, one half of the energy currently used in UK housing could be saved by investing in a mix of current technologies encompassing improved energy efficiency, heat pumps and heat networks.
• Cost-effective investments to 2035 could save around one quarter of the energy currently used, an average saving of £270 per household per year at current energy prices.
• This saving is approximately equivalent to the output of six nuclear power stations the size of Hinkley Point C.
• Using Treasury guidance for policy appraisal, this investment has an estimated net present value of £7.5 billion.
• Experimental appraisal undertaken for this briefing estimates that the value of additional benefits from these investments – including improved health, additional economic activity and benefits to the electricity system – could be up to £47 billion.” (p1)
1.5 Therefore, the collective benefits to consumers (demand-side) and generators/suppliers via the reduction of strain on the grid, along with the underlying socio-economic benefits to the health and welfare of society, makes a compelling case for this national infrastructure investment. Indeed we are also aware of the National Energy Action (NEA) 2016 study which estimated that nationally the cost of ‘cold homes’ to health services is £3.6 million per day (accessed via https://www.theade.co.uk/news/policy-and-regulation/cold-homes-claiming-needless-lives-and-costing-every-local-health-and-wellb)
1.6 Programmes therefore will rely on suppliers and generators to deliver benefits and results may not be the most effective route, without this investment.
1.7 Sodexo does support the continuation of legislation such as ESOS and the forthcoming SECR programmes for the non-domestic sector, as these provide a stimulus at least for organisations to monitor, measure and report their energy consumption. However, without clear, long-term and consistent investment, energy efficiency will not be adopted across the board, and therefore the impacts and benefits will be marginalised.
2.1 Given that Sodexo does not operate within this sector, we feel unable to advise accordingly. However, we would recommend that government policy in this area is consistent, appropriate and acts as a stimulus for parties to benefit. We also recommend that domestic residents are not discriminated against due to property heating types (i.e. electric v gas) and the property archetype (i.e. solid wall v cavity). We feel that the focus for this type of support should be directed to those who need it most, which will likely include those classed in fuel poverty along with others who are also in need of assistance but who may not necessarily tick the box of being classed as fuel poor.
3.1 Given that Sodexo does not operate within this sector, we feel unable to advise accordingly.
4.1 We feel that this area refers mainly to the domestic sector, so we feel unable to advise accordingly.
5.1 Sodexo works in close partnership with our clients, as well as within our own operations, to work as efficiently as possible – including the use of energy and water on a day-to-day basis. Our corporate sustainability strategy, ‘Better Tomorrow 2025’, sets out our commitments in this area, including reducing our global carbon footprint by 34% by 2025, against a baseline of 2010 emissions.
5.2 With this, it is therefore critical that we use energy sustainably and efficiently, a strategy which we also employ in our delivery of services for clients using best practise centred around ISO50001– whether this is in the ‘hard’ or ‘soft’ facilities management areas, or in the delivery of catering services.
5.3 Whilst the area of energy efficiency has obvious benefits with regard to environmental impacts, it is also important to note the financial benefits to companies and organisations of implementing efficiency measures and practices. Within our engagement with clients, we look to model projects to emphasise the positive area of paybacks, and provide access to finance mechanisms to enable cash-positive projects from day-one. Similar to the principles of ‘pay as you save’, this route has gained traction but also helps to emphasise the importance of energy efficiency within a whole strategy to make businesses ‘fit for the future’.
5.4 With regard on-going development within this area, Sodexo would like to see:
5.5 In addition to these areas, we would also suggest positive incentives (in tandem with legislative compliance programmes such as ESOS) such as investigating the possible stimulus to energy efficiency adoption by the associated reduction of business rates linked to energy performance. This will be particularly beneficial to smaller companies to encourage efficient practice.
6.1 It is clear that government does have a role to play within implementing and then legislating policy to encourage energy efficiency. The critical aspect of this is to provide consistency in the approach to policy programmes, and also funding to help stimulate and encourage early adoption.
6.2 Although not an area in which Sodexo is active, we have noted the example of the HEEPS programme in Scotland to help provide this funding stimulus for the domestic sector in addressing fuel poverty and hard-to-treat homes, and the respective achievements, as well as working in tandem with th Energy Efficiency Standard for Social Housing (EESH) legislating energy performance criteria to protect new tenants.
6.3 With the recent NHS Energy Efficiency Fund launch, and the level of interest shown (although at this point the funding allocation as yet is unknown), this shows that such funding is attractive to the non-domestic sector as well.
6.4 As the nature of businesses, and certainly investors, is one of reducing risk and having surety in the approach, a combination of consistent government policy as well as access to possible funding therefore combine to help provide a means to invest in the area of energy efficiency by businesses (as well as funding provision and uptake for the domestic sector).
Submitted January 2019