In the past few weeks, I’ve focused on emerging trends in the new year. These include the four-day work week and increased globalization. In addition, in this post about business trends in 2023, I mentioned challenges that will arise to sustainability efforts. Economic challenges will pressure many organizations to deprioritize this important value. However, that would be a mistake. In this blog, I’ll explain the importance of reducing your organization’s carbon footprint and suggest ways to get started.
What You Need to Know About Carbon Accounting
To begin with, it’s important to understand how we talk about environmental impact. For the purposes of this blog, I’ll focus on greenhouse gas emissions, often called carbon emissions. Concerns about the impact of carbon emissions on the planet have led to many efforts to curb them. These exist at every level: for individuals, communities, and countries. There are even international efforts, like an international treaty called the Paris Agreement, designed to limit emissions. Everyone plays a part in making a difference.
Several organizations have stepped up as leaders in helping businesses reduce emissions. For instance, the Greenhouse Gas Protocol “provides standards, guidance, tools and training” for organizations. These resources are informed by the World Resources Institute and the World Business Council for Sustainable Development. They can help you measure your impact and decrease it. The CDP (originally the Carbon Disclosure Project) is also good to know. They help businesses and other entities report their carbon emissions data and demonstrate progress.
The CDP scores organizations on how well they are contributing to reducing carbon emissions. How can they do this? Well, you can read about how they calculate scores. Or you can check out this interactive carbon footprint calculator. It helps you estimate your organization’s emissions by showing you the key contributors. For instance, travel is a big one. Whenever employees commute to work or fly for business, that counts. So does your energy use in facilities, like electricity. Finally, there are emissions associated with organizations’ supply chains. For example, how does the printer paper you purchase get produced and delivered to you? All these factors affect how your organization contributes to carbon emissions.
Thinking of Carbon as Future Liability
It’s important to realize that reducing carbon emissions isn’t only about what’s good for the world. It’s also important from a financial perspective. As this forward-thinking HBR article points out, carbon is free… for now. That’s likely to change. Based on increasingly detailed international and national agreements, governments will likely put a price on emissions. For instance, they might charge a fine for producing more than a certain amount. However it plays out, this could start to hurt your bottom line.
When organizations start to see price tags on carbon emissions, it could hurt a variety of stakeholders. Obviously, investors would suffer most immediately. However, the benefits will continue to ripple. When a company’s economic situation changes, employees get hit too. Just look at the current tidal wave of layoffs. Finally, costs get passed on to consumers. And of course, it all comes back to bite the business. For a myriad of reasons, it’s smart to think ahead about this issue.
Fortunately, there are ways to begin mitigating financial risks associated with carbon emissions now. The article cites one notable example: airline Ryanair. In the past year, they announced a plan to become carbon neutral by 2050. So how can your organization follow in their footsteps? Start by tracking your emissions. (I’ll say more about the challenge inherent here in the next section.) Then, predict how emissions might change as the organization grows. At this point, you can use estimates of future carbon pricing to estimate the future costs to your organization. Now you’re ready to make the argument for investing in emissions reductions. Remember to use your persuasive powers and presentation skills to get key stakeholders on board.
The Major Challenge: Traceability
Let’s circle back to the issue of tracking emissions. As I mentioned above, this is not so simple. On the surface, it sounds easy. Just figure out how much carbon dioxide your business releases into the atmosphere. However, it’s complicated to think about all the ways a business can do that.
This article from Forbes outlines three scopes of emissions that businesses need to understand. The first is the most obvious. It includes emissions from resources owned by the company. Then there’s Scope 2. These are emissions from energy the business purchases, like electricity. Both these categories are explained in this information from the EPA. What’s more complex is Scope 3. Here, businesses need to consider all of the emissions produced by their value chain. (That’s all the events involved in producing a business’ goods or services.) For instance, consider the impact of business travel. Or how about the ways that customers dispose of packaging when they receive your product? You can start to see how this gets complicated fast.
Unfortunately, Scope 3 emissions comprise the majority of most businesses’ carbon emissions. It’s frustrating to realize that this is the category hardest to track and control. For example, how can you persuade supply chain partners to shoulder the cost of tracking their emissions? There are strategies, but it’s not a straightforward problem to solve. That’s why it’s been a concern for a while, as this CNBC article shows. Fortunately, there’s a lot of information out there to help businesses begin tackling this issue. For instance, you can consult this fact sheet from the GHG Protocol. You can also refer to this information for each sector compiled by the CDP.
Small Companies, Big Difference
For large organizations, it may seem more obvious how to address such massive problems. They’ve got teams of executives whose job it is to handle large-scale issues. But what about the little fish? Turns out, even small companies can make reducing carbon emissions a priority. The important thing is just to make it part of company culture. This means it doesn’t get left to executives only. Everyone knows about it, from new hires going through onboarding and up.
This article from Forbes suggests strategies even small companies can take on. For example, you can develop a policy on business travel with emissions in mind. Ultimately, this will involve efforts to reduce travel wherever possible. For example, maybe you’ve historically flown all members of a team to one location for professional development. Can you offer this training virtually in the coming year? On a related note, explore flexibility with remote work and hybrid options. When fewer employees commute, emissions go down. Likewise, you can provide incentives to employees for commuting or taking public transportation. Get creative with these approaches.
Finally, you can learn more about and purchase carbon offsets. This basically means spending funds to reduce the impact of carbon emissions outside your business. Your business enables efforts like reforestation or constructing renewable energy infrastructure to “offset” the inevitable emissions associated with most businesses. This is just one more way to build your strategy towards reducing emissions.
Software Solutions to Reducing Emissions
I found another great approach to reducing emissions that any company can implement in this article. That’s digitizing business processes. Fortunately, software solutions like Pyrus offer workflow automation software you can customize for your business needs. This will not only reduce the paper you use and allow employees to communicate while working remotely, reducing travel-related emissions. Automating business processes also frees up your time to focus on more important issues, like reducing your carbon footprint. So check out what Pyrus can offer to move your work forward.