The business case for managing your carbon footprint
It is important not to be discouraged by these seemingly gloomy forecasts. In Canada, commercial, institutional and industrial operations currently represent nearly 50% of Canada’s contribution to climate change1, but as the biggest contributor, therein exist the greatest opportunities to reduce emissions.
Climate change will undoubtedly affect all businesses large and small, in terms of increased insurance costs due to more extreme weather events or increased operating costs due to the introduction of a carbon tax as has already been implemented in British Columbia, to name just two examples. But avoiding increased costs is not the only incentive to reducing carbon emissions; a number of valuable benefits can create valuable points of competitive advantage for businesses operating in a warming climate.
Identify opportunities to reduce energy costs
Three significant sources of greenhouse gas emissions for your business are onsite energy use, electricity consumption, and the fuel required to run any company-owned vehicles. Not coincidentally, managing your footprint in these three impact categories can also reduce your operational costs as well. By installing programmable thermostats, for example, you can potentially reduce unnecessarily heating areas that are vacant, thereby reducing your natural gas consumption, and your natural gas bill. Switching to fluorescent bulbs from incandescent bulbs, or from regular fluorescent tubes to super-efficient tubes, will reduce your electricity consumption, as well as your power bill. Using route-planning software to eliminate unnecessary mileage on your vehicles will reduce the fuel needed to run your fleet, along with your fuel costs as well as extra wear and tear. By evaluating your operations to improve the efficiency of any onsite fuel use, electricity consumption and vehicle fuel, you will often find that reducing your carbon footprint and operational costs go hand-in-hand.
Engage employees, suppliers and customers on environmental initiatives
In September of 2007, the world’s largest retailer, Wal-mart, announced that it would begin to request carbon footprint information from its network of roughly 60,000 suppliers2, many of which would be classified as small- and medium-sized enterprises. Also that year, a poll conducted by Toronto-based Environics determined that 75 percent of Canadians polled stated that they would pay a premium price for products with green attributes3. Additionally, in July 2008, an advertising agency Bensimon Byrne found that 80 percent of Canadians incorporate environmental considerations into purchasing decisions4. The evidence is becoming increasingly irrefutable that going green is simply good for business.
Be it for customers asking about environmental policies or suppliers requesting environmental information for procurement decisions, it has become sound business practice to understand your organization’s environmental impact, and more importantly, what you are doing to reduce it. Understanding how your business is contributing to climate change can give you an advantage over less-engaged competitors. By assessing your organization’s major sources of emissions and taking steps to reduce them, you will be better place to engage with well-informed stakeholders on your proactive response to climate change.
Proactive risk management
No less an authority than the well-recognized auditing and accounting firm Ernst & Young has called climate change the “greatest strategic threat facing the insurance industry”5. As climate change is widely predicted to result in a higher frequency and intensity of extreme weather events, the rising cost of climate change for insurers has become a prominent concern for business today. In addition, when we hear terms like “carbon tax”, a tax on corporate greenhouse gas emissions, and “cap and trade”, programs where businesses are assigned a fixed volume of emissions, which are traded in turn by more efficient companies to less, it is widely believed that regardless of which policy is ultimately implemented, it has become more of a question of “when” as opposed to “if”.
Undertaking a preliminary carbon inventory before these programs come into effect will give your organization a head start over slower-moving competitors as you take preemptive steps to reduce emissions. Not only will this offer potential insurance cost benefits, but also reduces the risks associated with non-compliance with climate change legislation.
Positive brand-building
It should come as no surprise that undertaking environmental initiatives is simply good public relations. As mentioned, four in five Canadians incorporate environmental considerations into their purchasing decisions4, as do a growing number of large multinationals who may encourage suppliers to conform to greener procurement strategies. As such, there is no reason why an organization that has undertaken a sincere and long-term commitment to reducing its environmental impact should not promote these initiatives. At the Eco-Efficiency Centre, we have seen tremendous positive publicity for a number of organizations whom we have awarded Environmental Excellence in Business awards. Celebrating a reduction in greenhouse gas emissions can be a valuable promotional opportunity for any organization.
Reducing your carbon footprint, of course, is only possible by measuring it. Taking an initial estimate of your organization’s greenhouse gas emissions is a critical starting point in becoming better informed of your contribution to climate change. However, there are many valuable financial benefits of understanding and reducing your carbon footprint. Be it for good publicity, preempting inevitable legislation, or reducing your energy and fuel costs, or a combination of the three, managing your carbon footprint offers a number of benefits that strengthen both the environmental and economic performance of your business.
