Planning to decarbonise your business? Here's what you need to consider
We all know that decarbonisation is the answer to achieving Net Zero targets and alleviating climate change.
But the challenges and misconceptions are preventing many companies from building emissions targets into their long-term strategy and business plans.
A recent study found that only 50% of SMEs calculate their emissions, and two-thirds lack sufficient knowledge and skills to tackle the climate crisis. So where does this leave us?
At the current rate, the world is on course to exceed its Global Carbon budget by 2030.
To stand a chance of reaching the target set by the Paris Agreement (carbon neutrality by 2030 and net zero emissions by 2050), we need an 80-90% reduction in greenhouse gas emissions – and we need it now. The only way to achieve this? Rapid decarbonisation.
So what can you do to decarbonise your business? Where do you begin? And if you’ve already made a start, how do you accelerate your progress?
Here’s what you should be thinking about if you want to decarbonise your business and achieve Net Zero…
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Why do businesses need to decarbonise?
It’s not just businesses. Everyone needs to decarbonise, including businesses – of all sizes.
The objective is to create decarbonised or low-carbon economies in order to reduce the levels of greenhouse gas emissions (GHG) in the atmosphere.
Naturally there are some sectors with higher emissions than others (industry, agriculture, transport). And at first glance you might think that decarbonisation and Net Zero targets only apply to these industries and large businesses.
But when you consider that 99.9% of the US (and UK’s) business population is made up of SMEs, you get a very different picture. Without SMEs decarbonising, both the US and the UK will fall short of their targets to reduce carbon emissions.
Decarbonising is a business opportunity
Decarbonisation is great for the environment. But it’s also great for business. Here’s why:
- Transformation and growth - The process of decarbonising presents a huge opportunity for transformation and growth – and it can help you build a culture of innovation and agility. Why? Clear purpose is the driving force for innovation. Reimagining your business operations can help you discover groundbreaking solutions, and in turn, achieve new growth.
- Cost savings - If you need less energy to run your operations, it will cost you less. And if you can extract value from waste, innovate new carbon saving ideas, or repurpose your CO2 as output products, you’ll save even more money.
- Talent retention and acquisition - Employees care about who they work for. If you’re a company that puts sustainability first, people will want to work for you. If you don’t, you’ll struggle to attract the right talent – and the ones you have might not stick around.
- Your brand - Customers and stakeholders expect businesses to take accountability for reducing emissions and be proactive in decarbonising. If you don’t do it, your reputation will suffer.
- Future-proofing - Did you know that a lot of tenders now ask for details on how you approach sustainability and reduce carbon emissions? More and more organisations will only enter partnerships or do business with companies that are actively working to reduce their emissions. For example, it might not be long before businesses are refused loans, credit, or insurance if their business is seen as ‘dirty’.
How big is your footprint?
It’s the classic story: to know what to change you need to know where the problems lie.
Measuring your carbon footprint allows you to identify the size of your outputs and pinpoint where they occur. To get an accurate measurement, you need to measure your footprint against the common standard for businesses (ISO 14064-1).
This will give you a complete list of what you should include so that you can get a comprehensive picture of your footprint across all three scopes: Scope 1 (direct emissions), Scope 2 (electricity and gas related emissions), Scope 3 (indirect emissions throughout your chain).
Once you have a clear understanding of the size of your footprint – and the highest carbon cost areas – you can make a plan. There might even be some changes you can make straight away.
Simple shifts like using more efficient equipment, replacing light bulbs with LEDs, switching to a renewable energy provider or purchasing carbon offsets, could make a significant difference to your CO2 output.
Set a target and make a plan
Decarbonisation is a tool to get to Net Zero. If your ultimate target is to reach Net Zero by 2045, you’ll need some smaller milestones along the way. This will make your decarbonisation progress easier to measure.
Once you know what your long and short-term aims are, it’s time to create a clear, detailed plan – one that’s transparent and credible.
Your plan should highlight key details and findings for each phase of your GHG reduction, including all direct and indirect emissions, as well as your value chain.
Creating a detailed roadmap outlining exactly how you plan to reach your goal will help you stay on track and accountable. It’s also the most effective way to share your progress with all the relevant stakeholders.
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Invest in technology and partnerships
How will you achieve your decarbonisation and Net Zero goals? One of the challenges of decarbonisation is the issue of scalability. Your strategy needs to create maximum value and impact at scale. Luckily, there are plenty of solutions that can help with this.
From companies that can facilitate carbon capture and forest carbon offsets to energy efficiency tech solutions and clean energy alternatives – whatever you need, there’s a business that can provide it.
It’s all about identifying exactly where your biggest outputs and challenges are, and then investing in the appropriate technology to facilitate change. For example, if there’s an area of your footprint where you simply can’t reduce emissions any further – or fast enough – a good solution might be purchasing carbon offsets. Or if you're struggling to manage supply chain emissions, you could invest in Scope 3 tracking tools.
Keep monitoring and improving
When it comes to your decarbonisation strategy, iteration and continuous improvement are key. Of course you need to track and measure your overall progress, but you also need to make sure that your plan reflects changes in your business, tech, and operational environment. So how will you measure performance and stay accountable?
Again, the metrics you use should align with the specifics of your business and your main areas of GHG mitigation.
For example, Barclays has implemented a metric based on carbon pricing; they track their financed emissions and use the information to influence their investment decisions. This effectively creates an ongoing loop of decarbonisation - their measurements directly inform their actions.
For most businesses, the problem with decarbonisation is that it sounds too big to conquer. But like most things, it’s all a matter of perspective. Seeing decarbonisation for what it is – a business opportunity with the power to transform and future proof your company – will alter the way you approach it. Just like any other part of your business, your decarbonisation strategy should be a work in progress, a journey that begins with small steps and a commitment to change.
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