What is decarbonisation and why is it crucial for your business?

What is decarbonisation and why is it crucial for your business?
ANNE-MARIE SOULSBYThe Sustainable Life Coach & Sustainability Assistant

Posted: Tue 18th Oct 2022

As business owners, it may seem that we have just emerged from a huge critical global health emergency to then be thrust almost immediately into an economic crisis.

So when you then also throw in addressing global warming at the same time it can feel overwhelming, and frustrating! Plus, there are a lot of new terminology and concepts to grapple with, such as ‘decarbonising’ or going ‘net zero’.

Let’s take a couple of minutes to help make going climate-friendly something that’s easier to understand, implement and benefit from.

Put simply, decarbonisation means all the measures through which your business can reduce the gases that it emits which are causing the world’s climate to shift.

For most businesses, this refers to the amount of greenhouse gas, mainly carbon dioxide (CO2) and methane, that is produced as part of their operations, through their supply chain and through their investments.

Book a free discovery call with Anne-Marie today to learn how your business can become more sustainable.

What is net zero?

Going net zero is when a company or organisation reduces their greenhouse gas emissions as much as they possibly can - i.e. by around 90% and then offsets the rest.

Offsetting means compensating for any CO2 emissions produced by an organisation or individual by taking part in schemes that remove the equivalent amount of carbon dioxide from the atmosphere. Common offsetting schemes include renewable energy farms, tree planting programmes and peat restoration projects.

One considerable confusion is that there’s a tendency to interchange the use of net zero with carbon neutral. However net zero is NOT the same as carbon neutral. All you need to do to be carbon neutral is to measure your business’s emissions (Scopes 1 & 2) and offset the rest.

Your business can become carbon neutral fairly quickly, but net zero requires the effort to significantly reduce all your emissions (across three scopes) first and then offset any remainder.

Additionally, net zero includes all greenhouse gases, not just carbon dioxide. It also only includes offsetting that reduces the carbon in the atmosphere not offsetting where carbon dioxide production is avoided.

*The UK government's 2050 net zero target does not specifically define that a circa 90% reduction in emissions is required before offsetting any remainder.

Therefore it is not a true net zero target as defined by the Science Based Target Initiative. For businesses, the SBTi definition of net zero, with reduction and then offsetting is the standard that has been adopted.

What are these “Scopes”?

  • Scope 1 emissions are directly controlled by a business, such as using a gas boiler or a petrol-fuelled fleet.

  • Scope 2 is indirect emissions and refers to any grid-supplied power that a company uses for its activities.

  • Scope 3 covers all the other indirect emissions, such as business travel, procurement, supply chain, waste, finances etc.

Decarbonising is how we can reach net zero at work, and at home too. This is what we need to do, throughout all of our operations.

Much like the pandemic, we need to act collectively, as a business community to win the fight against the common enemy of climate change.

Eager to make sustainable choices and embrace a greener lifestyle? Visit Anne-Marie's website to learn more.

Why do I need to decarbonise?

1) There are legal implications

You may think this all sounds fab and you wish you had the time, money and ability to do it, but it is not something that will affect your business.

However, from 6 April 2022, it is now mandatory for the top 1,300 largest UK-registered companies and financial institutions to disclose their climate-related risks and opportunities, known as TFCD reporting.

Within that requirement, those large businesses will also need to provide information from their suppliers, as they form part of a company’s Scope 3 emissions.

TFCD reporting can be useful for SMEs to show transparency, understanding and management of climate risks, making them more attractive to customers, investors and lenders. You won’t need a full audit report just yet, however it is a good idea to start working towards being able to report your climate change impact.

Like health and safety, fire and accessibility, TFCD disclosures will eventually become the norm; expected and required by all organisations in order to do business.

2) It makes business sense

You save money

By making a relatively short-term investment in sustainability measures, companies can experience long-term operational efficiencies, reduced costs and improved profits.

Simply examining how you use energy, monitoring and making straightforward adjustments or small changes can lead to reduced energy consumption and costs. There are also opportunities to generate new revenue streams. You can make money from waste (for example, coffee shops turning waste grinds into beauty products).

Survive and thrive by building resilience and avoiding risk

As the pandemic demonstrated, the most resilient, flexible, and well-prepared businesses survived and even thrived.

A decarbonisation strategy strengthens your business’ ability to weather unpredictable threats as well as immediate and foreseeable risks, such as stricter environmental compliance regulations and market and national disruptions e.g. increased energy costs or fuel prices.

Reducing climate change also protects you, your business, your suppliers and your customers from climate disasters such as fire, flooding, and heatwaves.

Discover new market opportunities, boost your brand image and gain a competitive advantage

Adopting net zero practices may enhance your reputation as a business, as customers increasingly expect companies to make sound ethical decisions on their behalf.

Green businesses attract new customers who are increasingly willing to pay more for environmentally friendly products, particularly young customers who don’t mind paying extra for sustainable goods and services.

It is also a way of having different kinds of sales and marketing conversations with your customers, moving away from just talking about price and instead creating new value propositions.

Unlock investment opportunities

Global investment analysts recognise that decarbonisation and being certified net zero is an increasingly critical company criterion.

It is attractive for investors and shareholders, in terms of long-term risk management strategy. Investors are attracted to smaller businesses that are less reliant on fossil fuels, as business operations are less likely to be disrupted in the event of supply problems.

Have happy staff

Being net zero supports recruitment, retention and employee satisfaction as it helps you hire and retain staff. People increasingly want to work for companies that are "doing the right thing", which makes it easier for you to attract new talent.

Research shows that being environmentally friendly makes people happier, which can improve morale among your staff. Also, potential employees want to work for companies that are protecting the future.

Decarbonising demonstrates your commitment to providing a healthy, happy environment for current and prospective workers.

3) There’s a moral reason

There is no question, we are in a climate emergency. Currently, we are at code red; we are at a crucial point to be able to minimise the damage that has already been done to the planet to avoid a climatic breakdown. We need to act and we need to act now.

It couldn’t get more serious. If you are concerned about future generations, creating a healthier society, protecting the countryside, having a nicer place to live or making the world fairer, decarbonising is a great way to achieve all of this and more. If none of that appeals to you then, for no other reason, do it to save yourself.

Relevant resources

ANNE-MARIE SOULSBYThe Sustainable Life Coach & Sustainability Assistant

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