The UK government has set targets to reduce carbon dioxide emissions by 80% by 2050. This is an ambitious target especially when compared to the targets of other nations; yet it is criticised by some environmentalists for not being sufficiently challenging.
Regardless of the whether this goal is sufficient, an economy-wide reduction in carbon dioxide emissions is urgently required and the UK's business community will have to play its part.
the role of UK businesses
The UK's business community is responsible for the direct production of about 30% of UK total annual emissions (DECC).
The policy response to this challenge has seen the introduction of a variety of regulations designed to curb the emissions produced by businesses in the UK. Most businesses are now aware of The Climate Change Levy, The Renewables Obligation, The Carbon Reduction Commitment, The Code for Sustainable Homes and The Climate Change Act 2008 to name but a few.
However, few businesses really understand what impact this
series of current and forthcoming legislative developments will
have on the day-to-day operations of their organisations.
There is little doubt the consequences of climate change and the
need to reduce carbon emissions are critical issues for business
today. Most companies acknowledge that climate change will have
some impact on their business. However, the extent and scope of
this is often not fully understood or quantified.
Indeed a survey of UK companies with over 500 employees carried out by the Carbon Trust in August 2010, showed 74% have not yet measured their carbon footprint. This was despite the fact that most of the 200 finance heads surveyed said they anticipated all businesses will be required to measure their carbon footprint and pay a price for the carbon they emit within the next decade.
the carbon opportunity agenda
The reaction of some businesses has been to do the absolute minimum required to achieve compliance within this increasingly complicated legislative landscape. However, some more forward thinking companies are waking up to the opportunity agenda associated with tackling climate change. As well as highlighting the increasing cost of inaction, The Stern Review argues that a shift to a low carbon economy will bring huge opportunities with markets for greener technologies being worth at least $500 billion by 2050.
Institutional investors are now awake to the economic implications of climate change. This is best illustrated by the Carbon Disclosure Project's annual request for information on the greenhouse gas emissions of over 3,000 organisations in some 60 countries worldwide. The request is backed by 551 institutional investors holding $71 trillion in assets under management.
benefits of a proactive approach
Cost reduction - Understanding the carbon impacts of your business presents opportunities to increase process and resource efficiency. This leads to cost reduction and can be one of the major drivers for organisations seeking to address their carbon agenda.
Legislation - There is already a raft of carbon related legislation affecting business today - with more to come as government shares the responsibility for reducing emissions with the business community. Future proofing against forthcoming legislation means companies have a clear idea of the costs of compliance and can stay ahead of the game in this increasingly complex area.
Investor expectations - Investment decisions are increasingly influenced by companies' performance in the area of environmental governance and carbon management plays a crucial role within this.
Customer expectations - The demonstration of credible environmental credentials in the public domain creates a positive perception amongst your customer base.
Brand / reputation - Carbon measurement and reporting present an opportunity to articulate brand and corporate values through innovative management strategies and related projects. Getting it right is essential however, as perceptions of greenwash can cause long term damage to corporate reputation.
Increase organisational resilience - Reporting company carbon emissions will identify opportunities to make the organisation more resilient in terms of cost reduction and sustainable procurement.
