This week (April 4th, 2022), in their third major review of the latest scientific evidence within eight months, the UN's Intergovernmental Panel on Climate Change (IPCC) gave a stark reminder that greenhouse gas emissions have risen 12% since 2010 and are now higher than at any point in human history. In this landmark report, the UN said that the only hope of ensuring a "liveable future" is for humanity to halt the rise of planet-warming carbon emissions in under three years, slashing them almost in half within less than a decade.
Whether you view it in terms of safeguarding our natural environment or merely from a perspective of legislation and enforcement, there’s no getting away from it: controlling and reducing the carbon emissions generated by your business is becoming a more critical issue by the day.
In this article, we examine some of the biggest challenges faced by businesses as they embark or continue on their journey to ‘net zero’, with a particular focus on small to medium enterprises.
What is 'net zero'?
Carbon dioxide (CO2) is the principal greenhouse gas emitted by human activity, trapping heat in the earth’s atmosphere and consequently leading to climate change. Climate change poses significant threats around the globe, including rising sea levels, floods, droughts and extreme weather. Combined with other human impacts such as pollution and material waste, it also contributes to the destruction of the natural environment and has the potential to cause a wide-reaching loss of biodiversity. The term ‘net zero’ means reducing carbon emissions as far as is technically possible and offsetting any residual emissions by removing greenhouse gases from the environment. How this looks varies by sector, but all businesses will need to make significant reductions in their carbon footprints in the years to come.
Signed by 195 countries, the Paris Agreement of 2015 set a target of keeping the increase in global average temperature to well below 2°C above pre-industrial levels, aiming to limit this increase to 1.5°C. To abide by this goal, countries have set their own targets. According to the UN, more than 70 countries, including the biggest polluters — China, the United States and the European Union — have set a net zero target. Over 1,200 companies have put in place science-based targets in line with net zero, while more than 1,000 cities, over 1,000 educational institutions, and over 400 financial institutions have pledged to take ‘rigorous, immediate action’ to halve global emissions by 2030. Both Ireland and the UK have pledged to meet a legally binding target of net zero greenhouse gas emissions no later than 2050, with a reduction of 51% by 2030.
While it’s easy to see the merit in a net zero future, the process brings with it considerable challenges, particularly for small and medium businesses. In late 2021, research commissioned by Lloyd’s Bank and conducted by Yonder found three consistent barriers when it comes to implementing the strategies needed to approach zero emissions, all of which disproportionately affect SMEs in comparison to larger businesses. These barriers are budget, control and assessment.
1. Budget
The research mentioned above revealed that 39% of SMEs were struggling with financial barriers, including insufficient budgets, prohibitively high levels of expenditure required and concerns over a low return on their investment.
While it’s understandable that making this transition may seem intimidating — especially when many smaller businesses are still struggling to right themselves as we move out of the pandemic — there are considerable long-term savings predicted for those who do slash their carbon footprints, in addition to real commercial gains.
Convincing stakeholders to spend money on green initiatives may pose a challenge without assurances around return on investment. However, the introduction of carbon taxes might make for a more convincing business case, while the future tightening of regulations is likely to add a further degree of urgency. It’s also worth noting that you might not experience any resistance in the first place — studies suggest that it’s not just consumers who look for sustainable business practices: many investors want to see the same thing.
Bear in mind that you don’t have to tackle everything at once; small, affordable steps in the right direction add up to significant change in the long term. Switching to a supplier that provides 100% renewable energy, implementing effective waste reduction initiatives or choosing energy-efficient technologies such as LEDs are examples of cost-effective strategies that can significantly reduce emissions. It is also possible to avoid capital expenditure by considering PPA schemes for renewable energy, or leasing solar panels or similar equipment.
For some businesses, more radical changes may be needed to reduce their carbon footprint, and financial assistance will be key in making these changes possible. If this is the case, be sure to do your research: you may be eligible for support such as government grants, funding schemes or interest-free loans.
2. Control over the supply chain
While individual businesses can make good progress on their in-house journey towards net zero, it can be difficult to ensure that this is replicated throughout the entire supply chain — the research by Lloyd’s Bank found that 36% of SMEs surveyed have difficulty controlling emissions outside of their immediate operations. As government targets draw closer, pressure will mount for businesses to report emissions. This means that, in order to ensure longevity, businesses must work closer with their supply chains to find greener solutions. It’s worth re-examining your current set-up to ensure you’re working with suppliers who offer both transparency and a commitment to sustainability that mirrors your own.
Building a green supply chain can take time, effort and resources, but the benefits are clear, adding a significant boost to your journey towards net zero emissions.
3. Knowledge and ability to measure
One of the main challenges facing companies is a lack of knowledge or experience with carbon management — crucial in order to plan effective solutions and to measure progress along the way.
The 2021 study by Lloyd’s Bank found that 30% of SMEs found it difficult to measure carbon emissions and environmental impact. Even more striking, a 2021 poll by O2 and the British Chambers of Commerce suggests that just 10% of UK businesses are actively measuring the carbon footprint of their operations, with many unsure of how to get started while still in recovery from the impact of COVID-19. Unsurprisingly, the smaller the business, the less likely it was to be undertaking this task. While cost was the most commonly cited barrier, a lack of in-house expertise ranked as the second most relevant; a considerable 22% of respondents said that nobody on their teams fully understands the meaning of ‘net zero’. Unfortunately, organisations that fail to record and reduce their emissions risk being left behind in the green economy of the future.
Without first understanding exactly where your emissions are created — and what processes can be used to reduce them — it is impossible to make any real headway. There are plenty of resources available that can help educate and engage your team. We also strongly advise that you make use of up-to-date software that can measure your carbon footprint with accuracy and highlight the areas in which you need to improve. Use this information to set clear, achievable targets with defined action points and interim goals to ensure you stay on the right path, and schedule regular reviews to keep tabs on your progress.
Smaller changes matter, too
While it’s often necessary to focus on large operational changes and the introduction of new initiatives and technologies, it’s important to remember that individual behaviours bear examining, too. These are easily overlooked next to bigger projects, but can have a large cumulative effect on overall carbon emissions. Many businesses have already encouraged staff participation in recycling and waste reduction, but there are other areas where changes can be made. Energy use on-site may be reduced through simply providing additional training around consumption. Emissions generated by transportation to work may be addressed by encouraging employees to work from home for a few days every week, and/or providing incentives for car-sharing, using public transport or ‘Bike To Work’ schemes.
In summary, a number of challenges lie ahead for any business embarking or continuing on a journey towards net zero emissions. However, for those who plan thoroughly, measure accurately and make best possible use of technology and government support, these challenges can be overcome — and there are plenty of benefits to be reaped in the long term.
Foodprint by Nutritics uses cutting-edge technology to calculate the carbon footprint of recipes through a comprehensive life-cycle assessment of every ingredient, making it easier than ever to reduce your environmental impact. Get in touch today at info@nutritics.com to find out more about how Foodprint can benefit your business.