The start of the CO2 Performance Ladder: 'We had the wind at our backs'.

It is 2007. Al Gore's film An Inconvenient Truth is still fresh in everyone's mind. And climate change is a hot topic, even in the business world. Not surprising therefore that the subject comes up during a dinner of managers and directors from the railway industry. Ger was also at the table, then still head of the Procurement, Cost Management and Purchasing department (AKI) at the Dutch railway manager ProRail.

"At the time, we were already quite satisfied with how ProRail was doing in the area of sustainability. At the same time, a large part of our finances (about 90 percent, equivalent to 2 billion euros) went to external parties. We asked ourselves: how can we encourage them to do the right things? Everyone at the table looked at me. After all, I was responsible for relations with external parties.”

The start of the CO₂ Performance Ladder

After that, the subject sank in for a while, Ger remembers. Until the Royal BAM Group (one of the largest construction groups in the Netherlands) announced its CO2 footprint, as one of the first companies in the country. It reminded him that ProRail also had work to do: "I thought: go and do something, Ger." No sooner said than done. From 2008 to the spring of 2009, ProRail developed a new sustainability instrument to encourage contractors to reduce their CO₂ emissions. The CO₂ Performance Ladder was born.

Johan was immediately enthusiastic about the initial design of the Ladder and soon became responsible for its development. "We found a number of things important," he says. "Firstly, we wanted to give contractors as much freedom and space as possible. They had to be able to decide for themselves how they were going to reduce their CO₂ emissions. The Ladder also had to encourage companies to work together, share knowledge and make a joint impact in the value chain. Certification turned out to be a good way of achieving that.”

It was also important that sustainability and CO₂ reduction would not take place only on a project basis. The CO₂ Performance Ladder had to encourage companies to embed sustainability in their entire business operations. "The director of a dredging company explained it nicely to me at the time. ‘We operate all over the world,' he said. Do we have to bring our most efficient ships from all over the world in order to win a tender? That is illogical, creates more CO₂ emissions and does not really help. By rewarding companies for making their entire business operation more sustainable, we circumvented the problem.

Convincing the management and the market

Once the first version of the CO₂ Performance Ladder was on the table, the task was to convince ProRail's internal organisation of its added value. Ger and Johan had the wind at their backs in that respect, Ger says: "Climate change and sustainability were already in the heads of the board members, they applauded our initiative. But the first reaction of the financial director was of course: 'what will it cost?’” After all, a fictitious award advantage of 10 per cent on a budget of EUR 2 billion suggests a possible cost of EUR 200 million. "But we were able to demonstrate quickly and simply that the maximum extra cost would be 0.33%," says Ger. The CO₂ Performance Ladder was therefore fairly uncontested within ProRail."

The next step: convincing the market. That was no difficult task either. There was a simple reason for this: ProRail controlled roughly 95 per cent of the railway market and many contractors were almost entirely dependent on the railway manager. So when ProRail announced the CO₂ Performance Ladder, there was little resistance from the market. Contractors set to work with the Ladder energetically in fact. "ProRail had a lot of freedom to make its own decisions. And thus also to simply put the CO₂ Performance Ladder on the market."

Proud of the certificate

But that was certainly not the only reason for the Ladder's success. It didn't take long, for instance, for contractors to become intrinsically enthusiastic about the Ladder and to discover and exploit the opportunities. Johan: "Every company had at least a few enthusiasts. They realised that they could save money by using the Ladder, by picking the low-hanging fruit (i.e. by investing in energy saving).”

More and more companies turned out to be proud of their Ladder certificate and started actively communicating about it. "They made it a question of public image and let it work to their advantage," adds Ger. "That enthusiasm with which the market picked up the CO₂ Performance Ladder was an important success factor."

A market-compliant instrument

The CO₂ Performance Ladder also fits very much with what companies do, how they do it and why they do it. That, too, proved to be an important key to success, according to Johan: "The Ladder is a market-compliant instrument. It gives companies room to make their own choices, rewards innovation and progressiveness, focuses on matters such as efficiency, process control, competition and cooperation... All elements that fit in well with what companies are and what they stand for."

"When you develop a sustainability tool, it's important to put yourself in the shoes of the companies it affects," Johan continues. "We succeeded well in that, I think. We soon noticed that companies appreciated and embraced the CO₂ Performance Ladder."

Handing over the baton

Eventually it became necessary to transfer the CO₂ Performance Ladder to an independent foundation. "The Ladder took up more and more of our time, while it was not our core task. In the meantime, Rijkswaterstaat also wanted to work with it and interested municipalities came knocking at our door."

In other words, it was time to hand over the Ladder to a party that could focus on it full-time. That became the Foundation for Climate Friendly Procurement and Business, or SKAO for short.

Starting small, with big ambitions

Under the auspices of SKAO, the CO₂ Performance Ladder has steadily grown in the Netherlands. And neighbouring Belgium is now also experimenting with it. Johan is not surprised: "The CO₂ Performance Ladder is an important instrument in every phase of the climate transition. In the initial phase, it can set the climate transition in motion, in various sectors. At a later stage, it provides the knowledge and cooperation infrastructure to take follow-up steps. And it encourages companies to continue integrating new innovations into their business operations."

For countries working with the CO₂ Performance ladder in the future, Ger concludes with a gold tip: "If you build up slowly and give companies the space to prepare, you will get everyone on board. So start small, for example by introducing the Ladder in one sector. At the same time, clearly communicate that the CO₂ Performance Ladder is suitable for every sector. That way, the companies in that one sector will feel like the frontrunners and companies in other sectors can prepare themselves for what's to come."

This article is part of a new series. On the occasion of the 12.5 year anniversary of the CO₂ Performance Ladder and our activities to roll it out in Europe, we look back at the early years and the development of the instrument with the aim of learning lessons and sharing stories.

>> Check out our Testimonials, a selection of stories and examples from the Ladder's history since 2009. What does it take to successfully implement the Ladder and what benefits does it bring?