How can I reduce carbon emissions in my small business?
Reducing greenhouse gas emissions has become good business. With 70% of Australian CEOs now recognising climate and environmental change as a threat to business growth, and nine in ten Australian consumers declaring a preference for buying ethical and sustainable products, business leaders see sense in reducing greenhouse gas emissions and making their operations environmentally sustainable.
The Business Council of Australia has called for transitioning to net zero emissions by 2050. With small business accounting for between 97.4% and 98.4% of all businesses, it is vital that SMEs adopt practical and affordable ways of working towards a reduced carbon footprint.
What is sustainability?
The 1987 United Nations Brundtland Commission defined sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
In business, sustainability refers to doing business without adverse impacts on the environment, community, or society. And in small business, the main way to achieve environmental sustainability is to reduce or minimise carbon emissions.
A first step: auditing your carbon emissions
Understanding your business carbon footprint will allow you to set carbon emissions reduction goals. Businesses need to assess:
- direct carbon emissions from your owned or controlled sources such as manufacturing
- indirect carbon emissions from key providers such as electricity
- indirect carbon emissions from other sources such as emissions from employee travel and your supply chain.
There are several companies that specialise in calculating business carbon footprints. But you can get started with a range of freely available online calculators such as these from the Australian Clean Energy Regulator.
Reducing energy consumption and switching to renewable options
Energy consumption is responsible for 51.2% of the national greenhouse gas inventory in Australia. In 2019, 21% of Australia’s total electricity generation was from renewable sources. There is scope for SMEs to reduce existing energy consumption and also look to renewable energy options.
Incentives and assistance to help SMEs reduce energy consumption
The $11.7 million Business Energy Advice Program is a national scheme providing free advice for eligible small businesses to help get better energy deals and increase their energy efficiency.
For example, switching from halogen downlights to LED downlights can save one small business up to $2300 per year per 50 bulbs. Incentives for small business lighting upgrades are available under the NSW Government Energy Savings Scheme.
The Energy Savings Scheme can also assist NSW businesses with incentives to reduce energy use in office buildings. The NSW Government also provides free coaching and courses for NSW businesses to learn effective energy management.
Switching to renewable energy
Only 46% of Australian SMEs are using renewable energy. Of those companies, two-thirds use 10 per cent or less of their total energy spend on renewable energy. There are grants and incentive schemes available including the Small-scale Renewable Energy Scheme, which provides a financial incentive for small businesses to install renewable energy systems such as solar panels, small-scale wind systems, small-scale hydro systems, solar water heaters and air-source heat pumps. Switching to renewable energy can save an SME thousands of dollars each year.
Carbon offsetting is an increasingly common way for businesses to adapt to reducing and minimising their carbon footprint. It’s the practice of balancing carbon dioxide emissions with activities that remove or eliminate emissions. There are now multiple carbon offset providers for Australian SMEs supporting a range of domestic reforestation and biodiversity projects.
Storage company goes carbon-neutral
One example is Australian storage company Greenbox, which has partnered with Carbon Neutral to guarantee all of storage units are built and stored in carbon neutral facilities. For every Greenbox storage cube delivered, they also plant a tree in the Yarra Yarra biodiversity corridor in Western Australia.
Ice cream company doubles turnover
Australian dairy-free ice cream company Over The Moo went carbon neutral in 2019. Through a partnership with the Carbon Reduction Institute, the company assessed all its emissions. The total included the coconut farm, the national delivery to supermarkets as well as how employees were commuting to work. Over The Moo then purchased carbon credits for reforestation in Indonesia and a wind farm in China. The cost of carbon neutrality for the business is about one cent per tub of ice cream. Since achieving carbon neutrality in 2019, Over The Moo has continued its rapid growth.
Beware of greenwashing
When a business spends more time and money marketing itself as environmentally friendly than genuinely minimising the environmental impact of its products and services, it is said to be “greenwashing”. Environmental claims can be a powerful marketing tool. However, the Australian Competition and Consumer Commission has warned that firms that make “green” claims should ensure those claims are scientifically substantiated to avoid legal repercussions such as allegations of misleading and deceptive conduct.
In May 2021, Greenpeace accused AGL of greenwashing its image. Despite AGL’s pledge to go carbon neutral by 2050, Greenpeace’s analysis found the company remains Australia’s largest greenhouse emitter.
Make your business sustainable in a way that makes sense as well as dollars
In business, we believe in setting reasonable goals, using relevant data, and clear communication with all your stakeholders. When it comes to reducing your carbon footprint, you should go about it in the same way as any other project. Define realistic greenhouse emissions targets for your business, ensure any environmental claim is backed up with credible data, and be honest about your progress towards becoming a more environmentally sustainable business.
Any decision that affects your business has legal implications. Contact us today to help secure your business for whatever tomorrow brings.