FOCUS ENERGY MANAGEMENT
COUNTING CARBON
The impact COVID-19 has had
on our lives and on the planet
is unprecedented, but one notable
by-product has been that global
carbon emissions are plummeting.
Pictures of fish returning to Venetian
canals and satellite imagery of clear
skies over industrial cities across
China have flooded the internet. But
the question remains: will this new
low-carbon world remain once we
emerge from this crisis?
Many countries, including the UK,
are now making carbon reporting
mandatory, not only for listed
companies but other large businesses
too. Whether it’s through additional
legislation, punitive carbon tax
regimes or simply a recognition that
a sustainable, low-carbon business
is a profitable one, the ‘carbon
correction’, as some analysts have
called it, is coming. The first step
in the new, lower-carbon world is
carbon accounting, the calculation
and monitoring of a firm’s carbon
emissions, essentially bookkeeping
for greenhouse gas production.
These numbers are o en given in
carbon dioxide equivalent (CO2e).
The challenge can come with
knowing where to source the data
and understanding the terminology
and calculations. Companies produce
emissions in a variety of ways – directly
from their own activities; indirectly
through their energy consumption;
34 JUNE 2020
and through other indirect activities
such as business travel and creation of
plastic packaging.
THE BUSINESS BENEFITS OF
CARBON ACCOUNTING
A form of carbon accounting has
been mandatory for some time for
listed and other large businesses. The
Streamlined Energy and Reporting
(SECR) legislation which has just come
into force is the latest iteration bringing
the benefits to a wider number of
businesses. But beyond the obvious
benefits of meeting legislation, carbon
accounting has numerous advantages.
Cost saving: There are direct
advantages for organisations
in measuring environmental
performance and taking steps to
improve on it, as they will benefit
from lower energy and resource costs.
Simply put, understanding where your
carbon emissions are generated is the
first step to reducing them and saving
money in the medium- to long-term.
Savings could come from reduced
energy bills and lower purchasing
costs thanks to a reduced requirement
for goods as a result of increased
e iciency, or using recycled goods.
Point of di erence: Detailed
carbon reporting can create
market di erentiation by setting
an organisation apart from its
competitors. But it’s not just potential
customers who are attracted by
this approach. Investors and other
stakeholders are increasingly
demanding more detailed
environmental information in annual
reports and accounts. Organisations
which demonstrate leadership in this
area are more likely to have a pipeline
of investment in their businesses.
Access to new markets: A growing
number of governments have tied
organisations’ carbon performance to
their public procurement processes,
meaning that only those businesses
which are proven to be low-carbon can
bid for work.
PR opportunity: Companies that step
forward and voluntarily display their
emissions in an attempt to reduce
them will benefit from a stronger
public perception. They will be seen as
organisations which genuinely care.
Talent recruitment and retention
tool: In an era o en depicted as
being a war for talent, using carbon
accounting as a tool to demonstrate
your environmental credentials can
help to attract – and retain – the best
recruits. High sta churn is expensive.
Business benchmark: Any form
of measurement, such as carbon
accounting, encourages an outsidein
view of an organisation. It’s an
opportunity to sit back and ask why
things are done in a certain way and
think constructively about areas
for improvement. It also provides
an opportunity to compare an
organisation with its competitors.
Futureproofing: Carbon reporting
helps businesses to better understand
– and therefore mitigate – the risks
of climate change to their own
organisation and people. Those risks
could be physical as a result of climate
change, or business-related thanks
to volatile energy and commodity
prices or the unpredictable supply
of raw materials. By bringing carbon
emissions higher up the corporate
agenda, businesses can shine a
light on areas which have had little
scrutiny to date and become more
operationally resilient. At the same
time, carbon accounting, and the
associated reductions in emissions,
helps businesses to become ever
more resource e icient and lean,
and enables them to prepare for, and
ride out, more challenging market
conditions.
Carbon taxes: All businesses in the
UK are impacted. Whether your supply
chain is paying carbon taxes, or your
customers are, the more reliant an
organisation is on carbon intensive
industries such as energy provided
by fossil fuel providers, the greater
the cost to the business in the future.
Carbon taxes matter, even if you’re not
paying them now.
Access to green funding and capital:
With a carbon correction may come
a shi in the availability of capital.
Investors could well start to penalise
polluting companies with a higher cost
of capital and reward greener ones
making it easier for green firms to
access funding.
Contributing to carbon reduction:
While the business focus of carbon
accounting is o en on financial
metrics, the substantial reduction
in carbon emissions has a clear
environmental benefit in helping
businesses to contribute substantially
towards the Government’s net zero
carbon target by 2050.
Benefits for small businesses:
Although the SECR legislation
only currently applies to large
organisations, there is substantial
evidence that small and medium-sized
businesses can gain similar business
benefits by following its principles.
The COVID-19 pandemic has
shown us that changes can make
an immediate di erence to climate
change. Until now, the discourse
around carbon accounting has largely
been about doing the right thing for
the planet to help to mitigate the
climate crisis. While that remains true
– action from individuals, businesses
and governments is needed urgently
– the business benefits of carbon
accounting make this a clear business
imperative, whatever the size of your
organisation.
The COVID-19 outbreak has been estimated to have reduced carbon
emissions by a quarter in some areas. But will this last once the pandemic
is over? Caroline Bartlett, Head of Carbon Accounting at Emitwise