Astute companies are recognising the worth of good corporate citizenship and increasingly are seeking to put a monetary value on successfully reducing their carbon footprints. Several corporate giants have already announced specific pledges to tackle their impact on the environment with a raft of environmental initiatives. The reasoning given for these is often not just environmental – but also based on sound financial judgements. My company, Greenstone Carbon Management, recently analysed responses to the publicly disclosed Carbon Disclosure Project (CDP4) by the top UK listed companies, and found that by setting quantified targets and monitoring their performance, 34 of the FTSE 100 companies achieved operational cost savings from reductions in their carbon footprint.
Other actions are less clear cut. For example, many companies are turning to carbon offsetting but the validity of offset programmes is being questioned. At Greenstone, we believe that the only credible form of offset are those which meet regulatory standards, enshrine the principles of sustainable development, are independently verified and are additional to projects that would have gone ahead anyway.
While there has been a lot of media interest in the validity of carbon offsetting , less has been said about practical measures that businesses can and should take to deal with the issues, and the real business benefits of doing so.
So bearing all of this in mind, what should small and medium sized businesses be doing to help reduce their carbon footprint and what are the benefits to the bottom line? Here are just a few suggestions.
Measure it – you can’t manage what hasn’t been measured.
It’s important to know accurately how much carbon your business is responsible for, and where it’s generated from. This is often the first step and can be as simple as recording your energy use on a daily or weekly basis and recording the data on a simple spreadsheet. Installing smart metering or processing your business data so it correlates with carbon factors will give you all the information you need. Greenstone has developed a cutting edge software package known as Greenstone Acco2unt that will measure, monitor and forecast your greenhouse emissions. It will also track which area of your business emissions come from, where cost effective reductions can be made and plan realistic reduction scenarios.
Get to grips with regulations, best practice and sector innovation.
You need to be aware what is required by law (UK and European), now and in the future. What are other companies in your sector doing? Are you ahead of the curve or woefully behind? Can you capitalise on the business benefits through financial savings, operational efficiency and enhanced company image?
Greenstone monitors the current and future legislative requirements in all major sectors and can help companies adapt to and plan for legislation at all levels; local, regional, national, and European.
Look at reductions – use less
Investigate where resources are being wasted. Before committing precious capital to carbon reduction projects, target the most cost effective savings first. This will usually involve improving the energy efficiency of your buildings, fleet, operation or process first.
An equipment upgrade may pay back very quickly through the savings it generates. The government also offers Enhanced Capital Allowances (ECA’s) on a wide range of energy efficient equipment.
Emissions reductions could be made using video conference facilities or changing the mode of transport to meetings such as using the train rather than plane for domestic journeys. The use of lower carbon options (e.g. rail) for logistics could also be analysed.
Further reductions could be found in buildings where typically two thirds of heat is lost through the fabric with the remaining third through gaps and vents. Reviewing the building fabric and heating/cooling plant will show if an upgrade is justified.
Explore efficient supply options
Investigate efficient energy supply plant such as Combined Heat and Power (CHP) systems. These generate on-site heat and power simultaneously and can create energy savings between 10-25% against conventional systems. CHP can also be matched with absorption cooling equipment to provide Combined Cooling Heat and Power (CCHP). Many companies chose to contract energy and CHP services through a third party supplier or an Energy Supply Company (ESCo.).
Renewable energy, recycled materials
Widely viewed by the popular press as the first step towards improved environmental performance, renewable technologies such as biomass boilers, solar thermal panels, solar PV or small wind turbines all have a role to play but will be more effective when other cost effective measures (such as efficiency improvements) have already been taken. Certain technologies will only work in particular situations and some technology combinations will work better together than others.
Renewable transport options such as the use of biofuels or biofuel blends can help to reduce your company carbon footprint, often with little or no modification to existing fleet or fuelling arrangements. Using hybrid, electric or even hydrogen vehicles may be appropriate in certain circumstances.
With such a vast range of options, companies like Greenstone can offer advice to help you make the best financial and environmental choice.
Addressing climate change is not only good for the environment; it is also good for business. For example, HBOS claims to have saved over £16m since 1998, equalling 133,000 tonnes of CO2 and Tesco reported savings of £8.1m from cutting 135 million kWh per year in energy use. These savings are substantial – and show the positive effect on the bottom line of reducing emissions, and provide a concrete incentive for companies to act now. As a proportion of profits, savings can be significant for smaller businesses too.
Aside from the financial benefits of reducing carbon emissions, businesses stand to gain from other less tangible benefits. Stakeholder expectations are rising with customers, suppliers, investors and even potential employees demanding that companies not only become greener, but can back up their environmental policy with concrete evidence and audited reports. Companies are encouraged to be transparent about carbon emissions by major investors such as The Carbon Disclosure Project and index providers, such as FTSE4Good’s new climate change criteria, launched on 6th February.
Once companies have realised cost savings from measuring and reducing their carbon footprint, they can then choose to reinvest these funds in technology or programmes to reduce further their carbon emissions, or pay to offset their remaining emissions through credible offset projects.
The IPCC report says that changes to our current climate are happening at the top end of previous predictions – and more rapidly than expected. We are already committed to irreversible change – but what we do in the next few years is crucial.
It is possible to reduce our emissions without endangering the economy or changing our way of doing business, but we must act now.