Sustainability

In 2023, the UK Government announced plans to introduce a carbon border tax from 2027, known as the UK Carbon Border Adjustment Mechanism (UK CBAM). This policy aims to prevent carbon leakage (the practice of shifting emissions-intensive production to countries with weaker climate policies) by ensuring that imported goods are subject to a comparable carbon price as those produced domestically under the UK Emissions Trading Scheme (UK ETS). Ultimately, the goal is to drive global reductions in industrial emissions and support the transition to a low-carbon economy. What is the UK CBAM? The UK CBAM will apply to imported goods in emissions-intensive industries. Starting in 2027, businesses importing iron, steel, aluminium, ceramics, cement, fertilisers, glass and hydrogen into the UK will be required to: Mandatory Disclosures: Submit reports detailing the carbon emissions embedded in their products (embodied carbon). The UK CBAM will require reporting to detail the Scope 1 (direct emissions from production), Scope 2 (indirect emissions from purchased electricity), and select precursor product emissions embodied in imported products. Levy Payments: Pay a levy based on the carbon pricing of the exporting country. If the exporting country has little to no carbon pricing, UK importers will be subject to a higher tax rate. This initiative encourages businesses to source materials from suppliers with strong carbon policies, incentivising sustainable production methods. How Will it Work? The UK CBAM will require importers to report and pay for the emissions embedded in their products at the UK ETS carbon price. If a foreign producer has already paid a carbon price in the country of manufacture, this may be deducted from the payment charge under UK CBAM to avoid double taxation. The UK Government has proposed to have four accounting periods per year to align with the standard practices used by other taxes. How Does the UK CBAM Differ from the EU CBAM? While both mechanisms share the same overarching objectives, there are key differences: Scope of Products : The EU CBAM applies to cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen, whereas the UK CBAM excludes electricity imports but also applies to additional products, such as ceramics and glass. Implementation Timeline : The EU CBAM has already begun its transitional phase (October 1, 2023), requiring emissions reporting, with full financial enforcement starting in 2026. The UK CBAM, however, will take effect in 2027. What Can Businesses Do to Prepare? To limit exposure and ensure compliance with UK CBAM, businesses should take the following steps: Assess Supply Chains: Assess your exposure to UK CBAM by reviewing your suppliers to understand where imported products and materials are being manufactured and their carbon intensity. Identify other suppliers with lower-carbon intensities. Engage Key Suppliers: Work with your suppliers to encourage the adoption of low-carbon technologies and practices that will reduce the carbon intensity of manufactured materials. Consider switching suppliers and sourcing materials from UK-based companies that already comply with UK ETS, to reduce exposure. Comprehensive Emissions Reporting: Ensure you have sufficient emissions accounting and reporting practices in place, to minimise disruption caused by mandatory reporting. We recommend businesses understand their Scope 1, 2 & 3 emissions to identify high-impact activities and inefficiencies within their operations and their supply-chain. How We Can Help Cambridge Management Consulting is equipped with in-house sustainability experts through our sister-comp any, edenseven . edenseven is a sustainability consultancy with a proven track record in designing and delivering data-driven sustainability strategies. Our cloud-based carbon accounting and management platform, cero.earth , si mplifies compliance and reporting for businesses of all sizes. Why Choose cero.earth? Regulatory Compliance: Aligns with the Greenhouse Gas Protocol (Scope 1, 2 & 3) to ensure accurate and compliant carbon reporting. Expert Support: Backed by a team of analysts who guide you through the process, making compliance straightforward. Seamless Data Integration: Easily upload and export data in required formats with our integrated report building tools, for effortless reporting and disclosure. Enhanced Credibility: Track and disclose detailed emissions data to investors and stakeholders with confidence, ensuring enhanced credibility. Reduce Costs: cero.earth identi fies high emissions sources and inefficiencies within your operations and supply chain, enabling you to make informed decisions about where to implement impactful change, saving you cost with CBAM and ongoing operations. Net Zero Project Tracking: Design, implement and track your carbon-reduction projects and leverage our Net Zero Carbon (NZC) dashboard to visualise your pathway to Net Zero and set strategic carbon reduction targets. Flexible Packages: cero.earth of fers tailored packages to suit all businesses. For businesses seeking a hands-off experience, our Strategic package allows us to handle the entire carbon accounting and compliance process on your behalf, ensuring a seamless and fully managed approach, allowing you to focus on what you do best. Prepare Your Business for the Future With the UK CBAM on the horizon, businesses must take proactive steps to manage their carbon impact and ensure compliance. cero.earth by edenseven, on of the Cambridge Management Consulting family of companies, provides the tools and expertise needed to navigate these changes with ease. Click here to learn about Cambridge Management Consulting's full suite of sustainability services, and here to get in contact with edenseven to learn more about cero.earth .

Why Strong Policy Matters When we look back over the first few years of this decade, there have been numerous environmental pledges, policies, and targets announced with great fanfare around the world. In the media, we constantly see images that affirm that history is being made: world leaders in rare agreement and lofty speeches behind podiums. In the meantime, the business sector has taken a deep, quiet breath. In most cases, companies have acted: starting their net-zero journey by recalibrating their operating models. It is clear that policy should lead to direct action. But legislation isn’t always contractual; sometimes policy can simply be guidance. Even then, under the influence of public pressure and media scrutiny, it can effectively steer customers and businesses in the right direction. Awareness of policy and the effects of ignoring it are also significant factors. If businesses respond slowly to this shift, it can have a material impact on the products and services that they provide, and even destabilise their long-term financial security. How to Create Momentum To create momentum, a policy needs to provide clear targets for all market participants to work toward. Secondly, depending on the market, a subsidy/support mechanism should be considered to stimulate customer participation and provide the right conditions for investors. We will look at both elements in a bit more detail: Targets and Plans Every target needs a business plan. However, you will struggle to make a realistic plan without knowing what the rules are—picking up the ball and throwing it in the net won’t get you very far in football. In this analogy, when I say ‘rules’ I am referring specifically to policy. Policy creates structure and gives the market guidance. This in turn creates the ability to grow from a solid foundation through investment. What makes a good or bad policy? With the introduction of each new policy there will be those who support it, those who hate it, and those who are in between. The simple key to a good policy is that it is clearly defined with a set of well-considered actions to complete. To achieve this outcome, policymakers should: Engage with the market : This is critical. The market participants, suppliers, consumers and relevant stakeholders live and breathe it on a daily basis. It is important to do more than just listen when creating the policy: make sure you are constantly responding to the market throughout its implementation to better understand when sensible adjustments are required. Timing and certainty : For any market and its participants, having a clear view of when polices will be introduced or changed gives the sector time to plan. Markets and investors hate surprises and uncertainty. If a policy creates shockwaves and continues to be short-term (due to ministerial change etc.), then investors will flee and find another market to work in. Larger participants, who can bring volume and real change to a market, need a clear reason to change. In some instances, these market leaders have been established for decades. Changing the rules creates uncertainty, and uncertainty reduces investment. Subsidy or Transitional Support In any new market ( such as green hydrogen ) or a new version of a market (such as the transition from ICE to EVs and boiler degasification ), there is a need to create momentum. In a nascent market, companies don't have a bottomless pit of finances to run R&D programmes, invest in potentially expensive equipment, or employ technical expertise. In a changing market, customers don’t have the ability to jump into a new environment when disposable income isn’t available. A lack of subsidy creates a huge barrier to entry for small dynamic and innovative businesses, who are often the ones who really challenge tradition and drive the necessary change into a market. Without subsidies, progress is difficult or impossible, as contracts are often short in duration. This means that businesses start on the back foot from day one. In short, cash flow is key. Transitional support is also instrumental for customers who need to make the ‘leap of faith’. It has become clear from recent experience that we need this support to create a national shift. Without it, only the wealthy can afford to make the necessary changes and not the wider population—and a large chunk of this demographic is necessary to move the needle in a material way. This has been evidenced in the renewables market in the UK over the last decade, where we have seen the benefit of subsidy-support in developing a market. This gave investors the confidence to invest, and businesses the confidence to build, amounting to a huge success. We should also expect some bumps in the road, as we saw with the Solar PV Feed in Tariff which was initially set too high and therefore too attractive to ignore. It led to a greater take up than envisaged by the government, which resulted in unplanned charges having to be absorbed by suppliers or passed onto end users. The silver lining, however, is that it put momentum into installation and has boosted the UK to rapidly decarbonise its grid ahead of a number of leading global nations. Stability and Support will Bring Change It is clear that the journey to net zero will be challenging for companies of all sizes, but it is also clear that we as a nation and global community will need to do this at pace. If we don’t create challenging timelines, then only a small proportion of the population will decarbonise. This means governments will need to make firm, long-term decisions which not all of the population will agree with. But, if the policies are good, and subsidy/transitional support mechanisms are put in place, momentum will increase and public perception will amplify those effects as more and more households and businesses report progress. Given these statements, it is clear that both consumers and markets need stable targets and continued support to reach ambitious and legally-binding net-zero goals. Our 4-Point Plan to Protect your Business against Policy Change In a politically unstable world, we must expect twists and turns on the route to net zero. As a supplier, innovator, or anyone who is trying to develop products, deliver services or enter new or evolving markets, there is need to prepare for sudden changes. To help, we have set out four steps that can be followed to navigate volatile policy: Be aware : Make sure as a business you are clearly aware of the detail behind any policy or subsidy that has an impact on you and your business. If you are short on knowledge, this is a clear risk to your business. As an individual responsible for policy or subsidy you will need to know these details to reassure senior stakeholders. As a business you will need to know these details for long-term planning and presenting to customers and investors. Engage with policy makers and industry think tanks : One of the key points we made above is that a good policy is one that has been developed by listening to the market. This doesn’t always happen; so, sometimes this means that the market itself needs to be proactive and talk to the policy makers in a coordinated manner. This might be through direct contact as an individual business, a group within the industry, or through a consultation process. Create a Plan B : If your business is solely dependent on the current policy or subsidy in place, then you clearly need to ask ‘What if’? A business plan needs to factor in changes to subsidy, term, and government, etc. By doing this you will be able to weather the storms and react quickly to change. Surprises can immediately derail a business and permanently damage its long-term viability. Having a Plan B may also produce opportunities that your competitors haven’t seen and are slow to react to. Continuously evaluate : Businesses are continually evolving and, as we’ve discussed, so are policies and subsidies. This means that continually reassessing scenarios, and the impact these changes can have, gives your business a first-mover advantage. We advise companies all the time about maintaining up-to-date management reporting to deploy net-zero strategies. This should be no different to your assessment of the impact of policy and subsidy changes. Summary We have outlined the role of policy in establishing clear goals and subsidising new markets, which encourages both the business sector and consumers to take critical decarbonisation actions. The journey to net-zero emissions is undeniably challenging, but with the right policy framework, both businesses and consumers can benefit in both the short- and long-term. The importance of continued support and stable targets to meet ambitious and legally binding net-zero objectives is vital to the future resilience of our economy and the confidence of our markets. A proactive and resilient approach to policy will allow businesses to adapt, react swiftly to changes and potentially discover opportunities missed by competitors. About edenseven edenseven is the sustainability-focussed sister-company of Cambridge Management Consulting. We work with businesses across all sectors in multiple regions to deliver robust and deliverable net-zero strategies. A cornerstone of any strategy’s success is an awareness of how changes in policy and subsidies can create both risks and opportunities for a business. If you are a business trying to enter a new market or evolving in an existing market and would like to learn more about how edenseven can support you, please get in touch with the team at edenseven at info@edenseven.co.uk or use the contact form below. Find out more about edenseven on their website: edenseven.co.uk

Mawdsleys signs a long-term agreement to use edenseven’s market-leading carbon reporting and management platform, cero.earth, to monitor all emissions and programmes of work to reach net zero Press Release: 23/10/2024 – Mawdsleys is the UK’s largest independent pharmaceutical distributor. Established nearly 200 years ago, they have a fast-growing international network supplying medicines to meet patient needs and providing a route to market for manufacturers. Mawdsleys has signed a long term agreement with edenseven to use their carbon accounting and management platform, cero.earth. Built by edenseven, one of the Cambridge Management Consulting group of companies, cero.earth is a cloud-based carbon accounting and management platform that provides businesses with a complete view of their emissions and decarbonisation plan. Using a dynamic view of all three emissions scopes, cero.earth provides a clear understanding of the current position against net zero targets and allows for the proactive monitoring of both current and planned projects. With a need to monitor and decarbonise operations at pace, Mawdsleys will leverage cero.earth to assess their current sustainability targets and produce a dynamic delivery plan to eradicate emissions permanently from their supply chain. Pete Nisbet, Managing Partner of edenseven, said: “We continue to evolve cero.earth to make sure we are providing our customers with the tools to dynamically monitor their decarbonisation programmes in a clear and practical manner. We are very excited to be working with Mawdsleys and are certain that, by embedding cero.earth into their net zero deliver plan, we can collectively make significant quantifiable environmental and financial gains.” William Sanders, CEO of Mawdsleys, commented; “Mawdsleys are leading the way in our sector, working towards net zero. Investment into thousands of solar panels and cutting edge battery storage technology, as well as operating electric vehicles, up to and including an HGV, makes edenseven the perfect partner to assist monitoring our decarbonisation plans. Mawdsleys are a key part of the healthcare system, delivering critical medicines to hospitals every day, so utilising cero.earth will help us maintain and enhance our position in the NHS Evergreen benchmarking assessment.” About edenseven edenseven is a sustainability consultancy and technology provider, who use data and market experience to enable companies and their supply chains to play their part in tackling climate change while achieving sustainable growth. edenseven uses the combined power of data, advanced analytics, and pragmatic project management to help companies baseline their current status, identify improvement opportunities in the short, medium, and long terms, and plan and implement those opportunities. For more information, visit their website: www.edenseven.co.uk About Mawdsleys Mawdsleys, founded in 1825, is the UK’s largest independent pharmaceutical wholesaler. They supply both licensed and unlicensed medicines globally, partnering with healthcare providers to ensure timely delivery. With a strong international presence, they offer services like logistics, over-labelling, and third-party logistics.