Just 18 months ago Arete Zero Carbon didn't exist.
But today it counts swathes of the UK IT channel among its clientele, most notably heavyweight distribution trio TD Synnex, Exertis and Westcoast.
Having helped TD Synnex UK craft a net zero plan, Arete Zero Carbon is halfway through a six-month engagement with Exertis Ireland - a relationship the duo intend to expand into UK and Europe. It has also just inked an agreement with Westcoast.
Together, this trio represent over £7bn of revenue in the UK alone, according to the CRN Distribution Report.
Talking to CRN, Arete Zero Carbon managing director Dr Stephen Finnegan opened up on a range of topics including:
- How Arete Zero Carbon came to be 80 per cent focused on the IT channel
- Why incoming legislation makes it "inevitable" that all companies will soon have to produce a net zero plan for scopes 1, 2 and 3
- Why he thinks the Science Based Targets initiative (SBTi) "isn't listening to the channel"
- How "boundary setting" is the biggest net zero challenge for the IT channel
- His biggest net zero bugbear
The partnership you inked in January with Westcoast means you're now working with the UK's three largest distributors, as well as the likes of Jigsaw24, Softcat and Daisy. Was it a deliberate ploy to focus on the channel?
It all started thanks to [N2S director and former England rugby international] Andy Gomarsall. He set up the link with [TD Synnex UK MD] David Watts and it's just grown from there. We haven't done any marketing or advertising. We haven't bid for tenders; it's just happened organically. People contacted me to say ‘we know you're working with some of the big players in this space; can you help us too?'
We're focused on the channel because of how things worked out. We're still working with other clients - legal firms, KFC is another one, manufacturing companies, ports, logistics etc. But 80 per cent of our focus now is on the channel.
How would you assess the demand for the services you provide, and is it mainly coming from PLCs?
You're right, 90 per cent of our work at present has come through the PLCs. The large [private] corporates are currently putting their toe in the water. It's driven by whoever leads the business. The likes of Jigsaw24 have put a lot of time and effort into it because [Jigsaw24 CEO] Roger Whittle is very driven by this. But he also sees it as a huge business opportunity. I think there are a number of reasons why those sorts of voluntary companies are doing this. They're driven by the future longevity and sustainability of the business, and by doing the right thing.
You can see from the timeline that we've created (see bottom), that there's a huge amount of legislation coming, and it's coming thick and fast. It is 100 per cent inevitable that companies will have to do a net zero carbon plan for scope 1, 2 and 3. It's just a matter of time. The non-PLC companies are less willing to engage with consultants because of the cost involved, which makes sense. But I think they'll have to as time moves on. They don't have the skills in house.
You mention legislation coming "thick and fast". Which incoming law or rule is the most significant?
The biggest recent announcement is something called CSRD - Corporate Sustainability Reporting Directive. At the moment, it's for Europe. Next year, every very large company will have to report on scope 3 and have a net zero plan, and then it applies to every large company in 2025 and then every single SME by 2026. That's across the European Union, which obviously we're not part of. But there's a link to that with another standard, which is applicable to the UK. So I think the CSRD is probably the most important announcement in the last few months.
Then there are also a huge amount of voluntary standards that will become mandatory in the next two to five years.
What's your background?
I completed my doctorate looking at the greenhouse gas protocol back in 2001 and I started looking at carbon footprinting and lifecycle assessment of the GHG protocol back then. For the last 20 years, I've worked as a consultant for KPMG, Ernst & Young, Arup. In the last six or seven years I've been an associate professor at the University of Liverpool.
I run this company as well. I've only been running it for 18 months. We've now got eight staff full time.
How do you typically engage with customers?
We offer a project and then a programme. The project is typically six months. During that project phase, we'll go into the business and map their entire global supply chain. We carbon label and carbon map every aspect of the business, and then give them a roadmap and a plan.
And then the ongoing programme side is about how do you now realise that plan. Do you have to reassess every 12 months? Where are your big areas of focus?
Exertis Ireland are about three or four months away [from completing the initial project]. We started with Westcoast last month, so that's going to be another six months at least.
What do the carbon reduction roadmaps typically look like, and where are the easy wins?
Typically, for the disties it's around upstream and downstream transport and distribution. They seem to be the big focus areas, which makes sense as they are shipping millions and millions of pounds' worth of product all over the world.
What we've also done on the mapping side of things, is come up with our own concept called control and influence strategy. What are all the things a distie can actually control? For example, TD Synnex can decide how they run their Magna Park facility (pictured below). But they can only really influence the supply chain. They can't change the way Maersk ship products from the Far East to the UK. So in terms of developing their roadmap, there are target years where they can act on things quickly and get things done. Then there are stretch targets, where they have to wait for the transport or logistics market to sort itself out.
And the ultimate goals of net zero is to reduce absolute emissions to the lowest level possible?
Absolutely, and that is the distinction between net zero and carbon neutral. A lot of companies are jumping to carbon neutrality now by offsetting - planting trees and everything else. But essentially, 90 per cent of the carbon offsetting programmes that we have now are worthless [according to this article by The Guardian].
The carbon neutral bit will become something of the past.
Net zero is about how you minimise what you do in your business. Then with what's left - the residual carbon - how you better offset that. There's a load of work being done in central government around carbon offsetting and carbon markets. So I think there will be clarity on that towards the end of this year or beginning of next year, to give people reassurance and confidence that they can offset properly.
How close to absolute zero can the firms you're working with actually get, in percentage terms?
We've done some analysis with KFC. We looked at a 2021 position of that business and said ‘if you want to be net zero in 2040, what percentage could you actually reduce it by?' And the answer was 50 per cent. For the disties, we think it would be between 50 and 70 per cent, but we'll have more information on that in about six months' time.
In some of the examples we've talked about, it seems like the same carbon emissions will be counted at least twice. Is that an issue?
It matters hugely for the people we're working with. We've got in touch with the SBTi, and they know it's double counting. So Softcat reports on it. Jigsaw24 reports on it, everyone reports on it, but they don't see that as a problem. We think it is a problem to double count.
What annoys you most in your professional life?
Just the claims and terminology. I don't think the governments helps and I think scope 1, 2 and 3 is still confusing for a lot of people. If you're a distie or a reseller, why do you have to take account of raw materials extraction and the manufacturing of a Lenovo laptop? What's it got to do with you?
It's about how we apportion responsibility, and it's not clear. The SBTi, which is really the only verification body out there at the moment - they're not clear. But they don't seem to want to listen to the channel. The greenhouse gas protocol when it was written back in 2001 was written for any business. It's not specific for the channel, and I think the channel should get together and tell the SBTi ‘look, this is how we're going to do it', not the other way around.
"When I told Dave [Watts] that we would be working with Exertis, he said ‘no problem, I'm happy for you to do it because the whole channel need to change'.
"I think it's good that we're doing the assessment for all three, because we can then be consistent with the approach."