The Warehouse and E-Manage

The Warehouse and E-Manage
                         CASE STUDY – October 2010

The Warehouse is New Zealand’s largest general merchandise retailer with approximately 7.6%
market share of the non-food retail sector and 40% of the department store sector. The Warehouse
is part of The Warehouse Group Limited, a publicly listed limited liability company. The Warehouse
has 88 stores nationwide carrying general merchandise, apparel and grocery products. Around 95%
of the country’s population lives within a 30-minute drive of a Warehouse store. The chain serves 58
towns and cities, giving it unrivalled coverage in New Zealand non-food retailing. Over one-and-a-
half million New Zealanders shop with The Warehouse each month.

The Warehouse’s sales for in the 2010
financial year $1.48 billion with an
                                                 “We have a leadership role to play also in the
operating profit of $112.7 million.
                                                 wider retail and business community. By
The purpose of this case study is to report      sharing our knowledge and vision and
                                                 collaborating with government and industry
on how The Warehouse uses the leading
                                                 we’ll work towards the betterment of New
greenhouse gas emissions software                Zealand’s society and environment”
reporting application – E-Manage as an           The Warehouse Sustainability Charter 2009
effective tool to manage and reduce its
greenhouse gases as part of its long term
commitment to sustainability.

E-Manage Overview
E-Manage is a comprehensive, transparent and robust online business software solution for
measuring, managing and reporting an organisation’s greenhouse gas (GHG) emissions, also
referred to as a ‘carbon footprint’.
E-Manage was first developed in 2005 by Landcare Research, a New Zealand Government owned
Crown Research Institute. Following three years of customer feedback and Landcare Research’s own
assessment of the tool, a second version was released in July 2008. The new version had extensive
development and testing, and incorporates a range of new features and functionality to maximise the
benefits to users. These benefits include:

      Cost savings through identification of emissions management opportunities through
       consistent monitoring and benchmarking

      Reduced time and costs associated with annual emissions inventory preparation

      Increased confidence of getting the numbers right – E-Manage contains the latest emissions
       factors published by the various competent authorities

   Efficient long term management of GHG emissions data – E-Manage provides a consistent
        framework for data collection and storage regardless of staff or organisational changes

       Reduced audit time and costs through improved traceability and transparency of data

    Key functions and features that make E-Manage effective for The Warehouse include:
        Able to input and report against multiple regions, multiple sites, multiple business units,
           suppliers
        Data is entered monthly and reported quarterly and annually
        Multiple users able to enter data
        Bulk upload facility for large datasets
        Emissions factors are provided and assured

Sustainability and The Warehouse – Overview
The Warehouse recognise that it needs to play a part in ensuring that growth today does not
compromise opportunities for future generations. It believes that a focus on credible sustainability
practices is good for business, and for the long-term interests of its shareholders and stakeholders.

Scientific knowledge about the scarcity of natural resources and man’s impact on the environment is
the basis for The Warehouse’s commitment to take greater responsibility for the environmental
impacts of its operations and the products it sells.

                       “A key part of our Core Purpose is to support New Zealand’s communities and
                      environment – this year’s progress once again reinforces how it makes good
                      business sense and will help us build long-term shareholder value. Our
                      customers and our team tell use it is important to them too, in choosing where
                      to shop and where to work.”

                      Ian Morrice, Group Chief Executive Officer and Managing Director

The Warehouse has been reporting its sustainability performance for nine years, which demonstrates
its long-term approach and ongoing commitment from its board and staff. Each year, it reviews the
environmental challenges it faces as a business and makes sure that it is tackling the most important
aspects.
The Warehouse has developed a Sustainability Charter and formally positioned community and
environment matters as one of five areas of strategic focus alongside its commercial objectives. It has
made significant progress across many of its key environmental performance measures.

It has also taken a leadership position on waste reduction through introducing a 10 cent charge for
plastic bags at its check-outs. When compared to the 2008 baseline, as at August 2010 this
programme had eliminated over 500 tonnes of plastic which would have otherwise gone to landfills!
This equates to an 83% reduction in bag volumes. Its bag reduction programme was awarded the
2009 Keep New Zealand Beautiful Consumer Education Award at the biannual Environmental

Packaging Awards. Criteria for this award included recognition for the special association between
brand identity and consumer education in promoting environmental principles; and showing where
industry has partnered with the community to promote recovery and recycling.
Clear targets and closer adherence to its operating guidelines for waste disposal has resulted in a
reduction in total waste volumes collected of almost 50% between 2007 and 2010.
Better management of inward shipping between 2004 and 2009 resulted in a big reduction in
emissions associated with domestic road (30%) and rail freight (45%) as more goods were shipped
direct to its South Island Distribution Centre instead of via our North Island Distribution Centre.
“These results are very encouraging and remind us what can be achieved with focus and attention
and demonstrate tangible evidence of our continued progress in the area of sustainability.” (Ian
Morrice)

Greenhouse Gas Emissions
The cumulative result of improved buying and freight strategies and the reduction in electricity
consumption has resulted in a 17% reduction in the company’s total carbon footprint, from 27,688
tonnes of carbon dioxide equivalent (tCO2e) in 2006 to 23,106 tCO2e in 2009.
The reduction achieved through electricity efficiency initiatives was influenced by the conversion
factor used to calculate electricity emissions that was linked to a year with a relatively high share of
renewable generation. Emission factors vary from year to year dependent on variations to the thermal
versus renewable mix in the generation profile of New Zealand’s electricity supply.
Emissions associated with sea freight also were reduced as the number of containers shipped
decreased by almost 12%. In addition, road and rail-based emissions decreased significantly with the
implementation of a supply chain initiative to ship greater volumes of stock directly to its South Island
Distribution Centre – avoiding domestic freight emissions which may have otherwise occurred.
The Warehouse does not anticipate being able to further reduce transport emissions in the near term.
However, they see electricity efficiency as an area of opportunity and it has been actively trialling new
forms of lighting and modelling what impact these might have on costs and emissions if the trials
prove successful.
                 The Warehouse Limited Carbon Footprint Summary 2004 - 2009

The Warehouse Emissions Profile 2009

How The Warehouse Calculate their Emissions
The Warehouse has been using E-Manage since 2006. E-Manage provides the framework required to
manage its greenhouse gas inventory. Raw data, provided to The Warehouse by their transport and
energy providers, is entered into the E-Manage tool, which calculates the emissions in tonnes of
carbon dioxide equivalents (tCO2e) according to an internationally and nationally agreed set of
protocols and factors. In setting reporting boundaries on emissions from their operations, The
Warehouse has adopted the approach recommended by the GHG Protocol – namely, it categorises
emissions into various ‘scopes’ or groupings.
Scope 1 - direct emissions generated from sources owned or controlled by The Warehouse Limited
(vehicles).
Scope 2 – indirect emissions arising from purchased electricity consumption.
Scope 3 indirect emissions are generated from sources that are not directly owned by The
Warehouse but are relevant to the operations of their business (air travel, car rentals, reimbursement
of use of employee own vehicles, domestic road and rail freight and the inward shipping of The
Warehouse’s direct imports from China).

How is The Warehouse set up in E-Manage?
The Warehouse enters and reports on emissions data using multiple ‘business units’. Business units
are established on the basis of geographical location and consumption. For example, electricity
emissions are reported at Store level and regional level. The Warehouse has 87 sites and 8 regions.
All other business units are based on consumption areas (such as freight) that are consistent with the
scope 1-3 definitions in the GHG Protocol.

Business Unit Structure for The Warehouse in E-Manage

Raw data is entered online via data forms. For large datasets, such as electricity, data is entered
using a bulk upload facility.

E-manage – users, roles and interactions
All users are internal Warehouse employees and span across the following departments;

       Logistics
       Finance
       Facilities Management
       Property

Roles associated with the application outside of finance are primarily input based, while finance is
primarily focussed on analysis, assurance and reporting. E-Manage is used on a monthly basis to
input data and reports are generated quarterly, with most emphasis on annual reporting.

The Warehouse has suppliers that provide data in a format that allows for direct data entry or uploads
into E-Manage. The following suppliers provide info;

       Transport companies (e.g. Toll, Te Kauwhata)
       On Gas
       Electricity retailers (e.g. Genesis, Meridian)
       Leaseplan – Vehicle fleet emissions
       Gilpin Travel – Domestic & International travel
       Avis rentals – Rental vehicles
       Direct Fuel – Diesel for Straddles

Number of staff using/reporting on E-Manage and location:
The Warehouse has five key users across the business using E-Manage and two key users use the
tool for reporting. These users are located at the support office in Auckland and one at the North
Island Distribution centre.

Before E-Manage
The Warehouse stored all their information in excel spreadsheets. Emission factors were sourced
from UNEP guidelines, IPCC guidelines, DEFRA, EECA and the Ministry for Economic Development.
Reporting was done via excel spreadsheets and reported in the form of a pie chart that broke down
emissions into five key categories. This method was time consuming, manual and susceptible to
errors.

Why does The Warehouse use E-Manage?
Benefits to E-Manage users are maximised thanks to the range of robust features and functionality.
These include:

      Traceability of data – A central and secure framework for storing data and source
       documents. A data upload function enables efficient data entry for large volumes of data.

      Enhanced emissions reporting - Allows users to view source data and calculated
       emissions, and to assess results against key performance indicators. All reports can be
       exported to Microsoft Excel for editing or formatting to suit an organisation’s particular
       requirements.

      Latest emissions factors – E-Manage is loaded with the most recent emissions factors by
       the carboNZero Holdings Ltd. Therefore users can be confident that all report calculations
       generated by E-Manage comply with the emissions calculation requirements of the
       carboNZeroCertTM programme which in turn are based on international greenhouse gas
       quantification standards.

      Web-based functionality – Accessible from any computer with internet access, anywhere in
       the world.

      Multiple organisational and permission levels – Enables an organisation to customise the
       tool to reflect its data management and reporting requirements, with multiple users with
       defined permission levels.

      Independent verification – The calculation functionality within E-Manage has been
       independently reviewed by ERM New Zealand Ltd to ensure that the emissions factors, the
       update procedure, and the quantification methods work correctly.

For more information, please contact:
Kathryn Hailes
Marketing and Communications Manager
carboNZero Holdings Ltd
hailesk@landcareresearch.co.nz

OR

Stewart McKenzie
Senior Sustainability Advisor
carboNZero Holdings Ltd
mckenzies@landcareresearch.co.nz