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Carbon footprint: A competitive advantage?
There's no doubt that carbon management and environmental sustainability practices are still very much in their infancy and for many small businesses the mention of sustainability conjures up images of 'green wash'. So what part does sustainability play in your business plan? And do you consider it as a competitive advantage?
Many larger organisations already pay tax on the levels of carbon they produce. No doubt, as the government's carbon commitment program is further legislated these taxes will increase. For many organisations, until now, so-called 'green wash' has been nothing more than a feel good smokescreen. A way of implying your commitment to sustainability without having to ACTUALLY prove it. This approach is no longer relevant as the addition of costs through increased taxation and rising fuel prices directly effects profitability in a dramatic way.
When analysing how large businesses react to these issues it is important to understand how carbon footprints are measured and some of the methods larger organisations will employ to reduce their carbon footprints.
Carbon Scope
The current standard for carbon foot printing splits carbon into three separate scopes. More details of these can be found on the carbon trusts website.
Scope 1 - Direct emissions
Direct emissions resulting from activities within the organisation’s control. Includes on-site fuel combustion, manufacturing and process emissions, refrigerant losses and company vehicles.
Scope 2 - Indirect emissions: electricity and heat
Indirect emissions from electricity, heat or steam purchased and used by the organisation.
Scope 3 - Indirect emissions: other
Any other indirect emissions from sources not directly controlled by the organisation.
Generally speaking scope 1 and 2 carbon emissions are relatively easy to calculate as the information required is usually readily available to the business. These can also be relatively easy to reduce with the implementation of sustainable technologies and renewable power sources.
It is Scope 3 that provides the biggest challenge to both calculate and reduce as it takes into account the business supply chain. This is the scope that will have a direct effect on the small businesses that deal directly with larger organisations. As larger businesses have traditionally 'screwed down' the costs associated with the supply chain, so will the inevitably look to turn the screw on the equivalent carbon burden.
Put simply, if you are a low carbon company you have less of a carbon overhead to pass on to the up-chain.
Promoting your carbon footprint
So how can you promote your carbon footprint positively? Well, first of all, you must be clear, committed and open about what you measure and what you don't measure. If your carbon footprint is based on scope 1 and scope 2 tell your customers this.
If you're customers are focused on 'Scope 3' then they will expect you to be. Simply 'pushing' some of your 'Scope 1 and 2' carbon into 'Scope 3' won't fool anyone if you're not declaring it. No one likes to suddenly be hit with a hidden charge, and this is exactly what you could be leaving your customer open to.
So whilst there are certain elements of your business that can be pushed into 'Scope 3' it isn't necessarily is also not good practice unless the 'Scope 3' is fully disclosed.
You can however use this method to reduce costs and your carbon footprint if you look carefully at your 'Scope 3' suppliers.
Example 1: IT outsourcing
If you outsource IT services you can directly reduce scope 1 and 2 carbon emissions through less labour, hardware, travel etc. If your selected supplier also has a low or better still a zero carbon footprint you will also reduce your organisations overall carbon footprint. Their footprint is proportionally passed into yours and so on and so forth. Whilst merely outsourcing will have some positive effects on your footprint, outsourcing to low carbon suppliers, who in turn have good 'Scope 3' credentials will increase your attractiveness upwards throughout the overall supply chain.
Example 2: Cloud Computing
Leaving aside the debate about what is and isn't 'cloud' computing we can still use it to support our goals with regards cost and carbon reduction.
Consider your IT infrastructure as Servers (Hardware) and Services (The functions they perform). Each of these, but mainly the services can be moved from internal platforms to hosted solutions on the internet AKA cloud computing services. It's a common misconception that you have to move ALL of your infrastructure to the cloud and its dependency, this isn't the case. It is more likely that you will be able to move a large proportion, if not all, of your day to day administrative applications, such as email, word processing, spreadsheets etc to a secure cloud based service whilst retaining ERP or Accounting systems in house. It is also worth noting that the availability of superfast broadband is NOT a pre-requisite, and a great many organisations are enjoying the benefits of having their regular 'office' applications 'in the cloud' with their existing broadband connection thus reducing the need for extensive file servers and streamlining their in-house server resources. There are many different cloud services available and each should be considered in isolation for its benefits to your business.
So, its similar to the first example but on a slightly smaller scale you can move IT services to cloud computing platforms to reduce your running costs and scope 1 and scope 2 carbon emissions but you must consider the carbon footprint of the service you undertake in order to calculate and disclose your overall carbon footprint.
Gaining a competitive advantage
So for those of us that are small businesses and not directly impacted by legislation that taxes our carbon emissions we need to consider our place in the 'Scope 3' of larger organisations. If you are clear, committed and communicate your actions, achievements and progress you will gain a competitive advantage over your competition and rank higher in the selection process for larger organisations.
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