The benefits of managing the carbon footprint of your company

The private sector is often pointed at when looking for culprits of climate change. Reducing your carbon emissions seems to be the slogan of the year, but how do companies start with such a blurry task? How do we measure progress? Back in 1954, Peter Drucker wrote the premise of an answer: “what gets measured, gets managed.”

If a company really wants to become more sustainable, the first step it should take is trying to understand its current situation and start managing its carbon emissions.

Measuring carbon emissions is not an easy task. Major companies that do not have carbon measuring and reducing programmes have become the exception to the rule. Apple, Facebook and even oil giants like Shell or BP all report on their CO₂ emissions. This is not just because these CEOs care about the environment.

Less CO₂ = less costs

Identifying and quantifying CO₂ emissions helps to identify excessive energy usage or other inefficiencies. Lowering GHG emissions typically goes hand in hand with increasing efficiency and cost-effectiveness in a company's processes.

Walmart identified through its GHG emissions that they spend a lot of energy on the heating and cooling of their buildings. Because of this, they installed around 10 000 high-efficiency rooftop heating and cooling units. These units avoid 614 000 tonnes of CO₂ per year. This also led to €8 million in cost savings.

Access the carbon market

In addition to the internal cost reductions, more and more companies have to pay a price for every tonne of CO₂ they emit. This is the so-called carbon emission trading system.

Globally, already 57 carbon pricing systems have been implemented, 28 in the form of an Emission Trading System (ETS) and 29 carbon taxes. The value of traded global markets for carbon dioxide (CO2) allowances soared 250% between 2018 and 2019 to a record high of €144 billion. In an ETS, a maximum number of tonnes of CO₂ is turned into allowances, and companies can buy and sell these allowances according to their emissions.

The other format, a carbon tax, is a set price you have to pay per unit of carbon emission. Within both carbon pricing systems, you are obliged to measure your emissions. A lot of people advocate that these systems are THE solution to make a real change.

On a trend level, more carbon pricing initiatives are emerging, prices for GHG emissions are on the rise and the private sector is implementing internal carbon pricing systems of its own. Managing and reducing your carbon emissions is not only becoming an obligation, but also a business opportunity to get ahead of competitors. All of this is only available, however, if your company measures its carbon emissions, the first step to survive the sustainable market shift.

Transparency is the new black

Another very good reason to start measuring and reducing your carbon emissions is your brand image. Customers, whether company or individuals, care about who they do business with.

Sustainable conscience is on the rise, as demonstrated in the streets, polls and business circles. According to Euromonitor International’s latest sustainability survey, 54 % of global consumers believe that ethical purchase decisions make a difference. Clients are looking for ways to lower individual and collective carbon footprint, minimise waste, buy green products and get services from environmentally-friendly companies.

Transparency over emissions has become so basic that even the most polluting industries disclose their (vast) footprint. In a race to become the most sustainable carriers, major airlines like Easyjet and Delta have announced sweeping plans to measure, reduce and offset their respective carbon footprint.

The sustainable market is not going anywhere

Sustainability awareness is something that is very likely to continue and grow in importance. In business terms: there is a growing market in sustainable consumer goods and services, demonstrated in the sustainable product sales graph in the U.S (see below). Due to the pull of these end-consumers, through the whole B2B supply chain the demand for more sustainable alternatives will rise. By measuring and reducing your carbon emissions, you can make scientifically supported and therefore credible statements about the sustainability performance of your company.

Consumers are not the only stakeholders that are sensitive to the image of a company. According to Deloitte's Millennial surveys, employees not only care a lot about the environment but are more attracted to companies that are environmentally aware. Company sustainability has become a weapon of choice in the ongoing talent war. Employees that identify with the values of the company are more likely to stay on board and are more motivated.

On the investor side, there is increasing sustainability awareness. Oxford University found that more than 80% of mainstream investors now consider ‘ESG’ – environmental, social and governance – information when making investment decisions.

This means that emerging companies have a higher chance to access investments when integrating environmental indicators to their business plan. As an established enterprise, collecting environmental data would provide another lens to better understand productivity, product and market performances.

Where do I start managing my carbon emissions?

So, how can a company get ahead of the curve? Plan A has developed an integrated solution for companies to reduce their environmental footprint and build a truly sustainable company culture.

First, create an account on planA.earth and prepare your essential data.

Second, access your Emissions Dashboard to understand where your footprint comes from and what your priorities should be.

Third, implement your tailored Sustainable Action Plan to reduce your emissions and offset with certified projects across the world.

Whether you're starting your journey or are looking for better insights to engage your internal and external stakeholders, join the Plan A community and get on the green side of the fence!

This article was written by Michelle Hallemans. Michelle is currently studying for a Masters in Sustainable entrepreneurship and innovation at the ESCP. Michelle is studying and works in between Paris and Berlin where she is a Plan A Academy contributor.