Building business resilience through carbon neutrality

Stuart Lemmon, Managing Director, Carbon Clear (part of the EcoAct Group) and member of Business in the Community writes of the business benefits of being carbon neutral

Since the signing of the Paris Agreement in 2015 companies, cities and countries have started to declare their commitment to becoming carbon neutral. This objective follows the commitment to limit global warming to well below 2 degrees by reducing our carbon emissions so that we can avoid the catastrophic impacts of global warming.

The World Economic Forum now consistently ranks climate change as one of the top global risks. For businesses specifically, this risk constitutes both the physical implications of a changing climate as well as the impending legislative and market changes. Businesses need to be ready for both.

What does carbon neutrality entail?
To become carbon neutral, businesses need to achieve net zero emissions of CO2. This involves accounting for and reducing your emissions across the entire value chain of your business and offsetting any unavoidable emissions, by developing projects or purchasing carbon credits.

Building resilience through carbon neutrality
Achieving this may seem a big commitment for some organisations, but the benefits in doing so are numerous and increasingly vital for future-proofing your business:

  • Operational resilience.  This summer, we are already witnessing some of the extremes of a warming climate, but other risks include increased flooding and even hurricanes. This can put your operations, your assets and your insurance premiums at risk. We must all act collectively to reduce our emissions and minimise these impacts for all of us.
  • Legislative readinessThe likelihood of tightening regulatory demands for businesses is growing. In July this of this year (2018) the UK government announced plans to streamline but also broaden the scope of carbon and energy reporting legislation. This legislation now includes almost ten times as many businesses as the existing regulation. Becoming carbon neutral enables a business to provide the data required to comply and to avoid the costly implications of future non-compliance as the regulatory landscape continues to change.
  • Stakeholder satisfaction. Consumers are increasingly motivated by environmental factors and employees want to work for responsible and ethical companies. Investors and asset managers are starting to look for climate-related credentials too. Climate neutrality can have positive reputational benefits and help retain and attract key investment.
  • A competitive edge. At present carbon - neutral companies are still considered climate leaders. There is a golden opportunity now to stand out in the crowd and benefit from this. Particularly if your competitors are not doing it yet. Now’s the time to find those opportunities to innovate and take that lead.

    Cost reduction. Reduction in emissions goes hand-in-hand with making your business more efficient. A strong strategy for minimising your energy consumption to reduce emissions can save money and ultimately make your organisation (and your supply chain) considerably more efficient.
  • Better sustainability disclosuresThe landscape of sustainability reporting is changing. In light of the new recommendations of the Task Force for Climate-related Financial Disclosures (TCFD), expectations for transparency and governance on climate-related risk are rising and will continue to do so.  A climate-conscious business, who can accurately demonstrate neutrality, will find themselves with better sustainability disclosures and ultimately satisfying the demands of their investors.
  •  Alignment with the Sustainable Development GoalsTo achieve climate neutrality, some companies will choose carbon credits to offset their remaining emissions. Choosing credible offsetting projects (verified and certified to international standards) can enable you to demonstrate action towards these important global goals.

It is recognised that we need to make our businesses more resilient to the impacts of climate change and to contribute to mitigating these impacts for the future of our planet. A carbon neutral commitment is important to this collective goal but also to the future resilience of businesses. It is, therefore not just about climate risk. It is also about opportunity.