In today’s day and age, more and more companies are gearing towards integrating sustainability and environmental friendliness in their operations. And rightfully so.
With consequences like global warming and climate change looming before us, it’s a race against time to ensure the world’s long-term natural viability. Taking proactive steps to ensure that your business isn’t contributing to the steady downfall of the planet’s ecological balance is crucial in that regard.
One way businesses can take part in this initiative is by tracking carbon emissions. Regardless of your business’s scope and industry, you’re bound to contribute to some carbon emissions to some capacity. Instead of leaving these emissions untracked and unaccounted for, you and the community are much better off if you have a clear picture of your carbon emissions.
This activity goes beyond just keeping the planet green and healthy. There are tangible business benefits that firms can achieve when greenhouse gas emissions are properly tracked, managed and organised.
If you’re keen to learn more, then you’re in the right place. We’ll delve into the reasons why tracking carbon emissions is so vital for a modern-day business. Let’s jump right into it.
1. Ensures Regulatory Compliance
One of the main reasons why businesses standardise their carbon tracking procedures is that it’s a mandatory step for them to stay compliant with the policies imposed by regulatory bodies.
Some countries and regions follow far stricter rules than others concerning GHG-emission activities.
In Australia, for instance, a national framework called the National Greenhouse and Energy Reporting (NGER) Scheme is required for corporations emitting high levels of greenhouse gases. This framework mandates that corporations report their annual emissions, energy consumption and production.
For businesses operating on larger facilities with high emissions, the Safeguard Mechanism builds directly on NGER data and requires covered facilities to manage emissions against declining baselines over time.
Regulators and auditors tend to scrutinise a few key factors. This includes method consistencies, boundary clarity, control measures and risks involved in the process.
When all these things are aligned and accounted for, businesses won’t have any trouble with the law and can continue to operate freely.
That said, they do need to keep a watchful eye on the decreasing baseline targets that the regulators tend to impose in succeeding years, as Australia is generally pretty set on reducing emissions over time and even eyeing net-zero by 2050.
But with an agile strategy and a high-quality measuring tool like this carbon accounting software by Fair Supply, falling within reasonable benchmarks is achievable for any facility.
2. Helps Pinpoint Excessive Cost Centres
Another perk of tracking business carbon emissions is its ability to help you measure your cost expenditures more accurately.
When you quantify emissions, you get a more complete picture of your operations. This includes your equipment usage and energy consumption, among other areas of spending.
By tracking your carbon footprint, you can find areas where you may be spending more than needed.
For instance, you could find that your cooling units are consuming more energy than usual due to a leak, causing your electricity bill to spike higher than it did in the previous months.
You could also determine that a supplier’s distant headquarters may be contributing to its high shipping costs (and carbon emissions per unit)—and that switching to a new and closer supplier may be an ideal choice for prioritising sustainability.
These blind spots may not be visible if you don’t actively track them, which could cost your business hundreds of dollars of unnecessary spending as well as excessive GHG emissions in the long run.
Moreover, tracking carbon emissions could also lead you to identify equipment, contracts and systems that may be utilising more electricity than usual—giving you the data to back up future replacement strategies to reduce recurring expenses in the long run.
By tracking your business’s carbon footprint, you can make proactive decisions to cut or replace costly operational activities, which can keep your business overhead low and provide you a higher capital for future activities.
3. Supports Measurable ESG Benchmarks
Another reason why tracking corporate carbon footprint is beneficial is that it supports the business’s pursuit of attaining good ESG ratings.
The ESG criteria consist of Environmental, Social and Governance — a framework used to evaluate how responsibly and sustainably a company operates beyond pure financial performance.
In essence, it maps your business’s environmental impact, social responsibilities and governance standards in one easy-to-read framework for regulators, customers and insurers to access.
ESG benchmarks essentially signal your business’s commitment to non-financial-based performance to these stakeholders. This helps them see your business in terms of resilience and preparedness amidst shifting climate, social and political situations.
When your business tracks its carbon footprint, you’ll have backed-up and quantifiable data to support your commitment to upholding a sound ESG framework. Without reliable carbon data, these benchmarks cannot be credibly established.
This, in turn, grants you more opportunities as investors, lenders and potential clients will look favourably at your performance discipline. They’ll view your business as one with a solid long-term strategy and resilience, making them more confident to partner with you and see your company as a reputable partner rather than some unproven firm.
4. Boosts Business Reputation
Another business benefit of tracking carbon emissions is the fact that it can boost your business’s reputation.
Nowadays, nearly everyone is paying attention to business operations and their impact on the environment. Customers are conscious of a business’s commitment to sustainability, and the same goes for investors and potential new hires.
As much as possible, it’s crucial to stick with green practices to ensure that clients and stakeholders keep maintaining their relationship with you. When your company shows commitment to environmental friendliness, you’ll be better perceived by the broader public and strengthen your branding in the process.
This also extends to your internal culture. Younger talents are more likely to choose employers who take action to keep their carbon emissions low.
If you want to tap into a broader talent pool, then reinforcing your commitment to sustainability by tracking your carbon footprint can give you an edge when looking to hire new talent in your respective industry. This, in turn, can help promote a more positive and supportive culture within your firm.
5. Enables Better Procurement Decisions
Businesses that systematically track their carbon footprint strengthen sustainability within their own operations. And beyond that, they can also spot potential inefficiencies across their broader supply chain.
Before anything else, it’s important to understand the three recognised scopes when it comes to tracking GHg emissions.
Scope 1 covers direct emissions from sources within a business’s operations. Scope 2 covers emissions generated from other companies that the business uses, like electricity and temperature regulation. Scope 3 encompasses indirect emissions across the value chain, from procuring inventory to customer delivery.
An often-overlooked reality that most businesses face is the fact that over 70% of emissions typically fall under the “Scope 3” category, which means that it’s outside their direct control.
Your business likely has emissions that fall close to that percentage threshold. Conducting a thorough assessment of your operations allows you to validate where those emissions occur and develop a targeted action plan to address them.
This may mean switching to a more local supplier, batching shipping to reduce the frequency of transportation logistics, or simply using sustainable packaging alternatives.
We hope that we’ve given you enough insights into the significance of tracking your business’s carbon footprint. All the best in creating a lean and green business!
