With the rise of environmental reporting requirements, internal and external pressures, measuring carbon emissions is a pressing reality that needs execution from companies.
When people are asked for the causes behind global warming, they often point at companies. Reducing climate change carbon emissions seems to be the slogan of the year, but how do companies start with such a blurry task? And how do they know whether they are doing better than before?
Already in 1954, Peter Drucker famously stated: “what gets measured, gets managed“. If a company want to become more sustainable, the first step it should take is trying to understand its current situation and start monitoring its carbon emissions.
Less CO2 means reduced costs
Identifying and quantifying your emissions can lead to substantial cost reductions rather than high cost. Measurement does not necessarily need to cover the three scopes of emissions to demonstrate efficiency gains for a company. High quantities of greenhouse gas (GHG) emissions often indicate excessive energy usage or other inefficiencies. So, lowering your GHG emissions goes hand in hand with increasing your efficiency and cost-effectiveness.
For example, Walmart identified through its GHG emission analysis that they spend much energy in the heating and cooling of their buildings. Because of this, they installed around 10 000 high-efficiency rooftop heating and cooling units. Per year, these units avoid the emission of 614 000 tons of CO2, but they also led to an €8 million in cost savings. On top of this, soon, energy prices will keep rising, which will only reinforce this effect.
One doesn’t need to be the size of Walmart to benefit from implementing sustainable change. In addition to the internal cost reductions, companies learn to gather new metrics and by way of consequence new insights about their companies. Dave Meyer, Principal environmental, health & safety and sustainability advisor for BSI EHS sustainability consulting, explains:
“Good metrics if applied properly will foster innovation and growth. Focus on continuous improvement as the primary driver for monitoring and measuring performance. […] Measuring performance with a sustainability lens is just one of the new responsibilities that companies can quickly embrace to nimbly drive organizational value.”
Measuring sustainability performances allows the company to make progress on all levels of their operations, from resource management to healthier teams and sustainable offices. Sustainable best practices go hand in hand with business objectives.
An evolving environmental regulatory landscape
In the near future, companies will have to pay an (increasing) price for every tonne of CO2 they emit. As of the 1st of April 2019, already 57 carbon pricing systems are in place, 28 in the form of an Emission Trading System (ETS) and 29 carbon taxes.
In an ETS, a maximum amount of tonnes CO2 is turned into allowances, and companies can buy and sell these allowances according to their emissions levels. The alternative, a carbon tax, is a set price you have to pay per unit of carbon radiated. Within both carbon pricing systems, a company or organisation is required to measure its emissions.
More carbon pricing initiatives are emerging or being consolidated. The prices for GHG emissions are on the rise. Finally, the private sector is engaging in internal or voluntary carbon pricing systems. In other words, monitoring and lowering your carbon emissions will not only become a legal obligation, but it can also become an opportunity to get ahead of competitors. Developing a solid long-term strategy to address carbon emissions schemes in your industry and geographic location is already determining for a company’s future.
Power to sustainable people
People – also known as customers, employees and shareholders – have also changed their habits and standpoint on climate change. Not only is the population increasingly aware and sensitive to the issue of climate change, but they also expect businesses to play a more significant role in society. According to Euromonitor International’s latest sustainability survey, 54 % of global consumers believe that ethical purchase decisions make a difference.
Because the consequences of climate change will become increasingly visible and will affect more and more people, this sustainability awareness trend is very likely to keep growing. In business terms: there is a growing market in sustainable consumer goods and services. Due to the pull of these 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 statements about the sustainability performance of your company, thus tapping into a growing market and reducing unnecessary spendings within the firm.
Consumers are not the only stakeholders sensitive to the image of a company. Employees care about the environment too, and they are more attracted to and retained in companies that involve in sustainability. If employees identify with the values of the company, they are more likely to stay, are more motivated and perform better.
On the investor side, the growth of sustainability awareness is salient. Oxford University found that more than 80% of mainstream investors now consider ‘ESG’ – environmental, social and governance – information when making investment decisions.
Companies with a plan to measure emissions and other ESG indicators are more likely to get funding. As an established enterprise, collecting environmental data would brace yourself against these sustainable and innovative start-ups that increasingly get funded.
There is still time to adapt
Companies of all shapes and sizes are (re)defining their role with regards to climate change. The formidable importance of this topic is pushing CEOs to spend resource on understanding its implications and how to position their companies. By will or by force, businesses will have to adapt to changing stakeholder behaviour, supply chain risks, performance indicators and governmental regulations.
Climate change impacts companies in complex ways. Becoming sustainable cannot happen overnight and requires a commitment from all team members. Plan A helps companies achieve just that with simple tools to measure their footprints, tailor smart and engaging sustainability action plans, and provide carbon offsetting opportunities across the world. Explore our offers for companies on our website.