New reporting requirements make environmental a financial necessity for large companies, but SMEs could see the issue reach them quicker than they realise
WHILE SOCIAL & ENVIRONMENTAL responsibility and financial necessity are now aligned for many larger organisations, SMEs have been slower to recognise sustainability as a driver of bottom-line business success, rather than a nice-to-have. However, the imminent introduction of Mandatory Carbon Reporting (MCR) for listed businesses gives SMEs a chance to get on the front foot when it comes to managing their carbon footprint. For many, it could be the start of a wider environmental sustainability programme that benefits business as well as the environment.
The UK already leads the rest of Europe in carbon emission reductions. The imminent introduction of MCR – which makes it compulsory for companies on the London Stock Exchange to report their levels of greenhouse gas emissions in their annual reports – is set to propel environmental sustainability even further up the corporate agenda, providing a catalyst for action and accelerating changes in business practice across UK plc.
MCR will put carbon data on a par with financial data for companies on the LSE, demanding a new approach to reporting. While it’s the UK’s largest listed companies that are obliged to act, the impact of MCR is going to ripple downwards. And it will do so fast, as it will initiate a domino effect for small and mid-sized businesses as larger firms place increased value on building their sustainability profile and reducing emissions in their supply chain.
Get ahead of the curve
With only three months left before MCR begins (in April), there’s never been a better time for small businesses to manage their environmental assets. Understanding emissions is the first step in planning reductions and proving environmental credentials.
Ultimately, immediate and decisive action is the key to gaining a competitive advantage. This can be achieved by implementing a carbon management programme that uses an ongoing programme of internal emissions reductions and by investing in external reductions by supporting forestry or renewable energy projects. These avenues are certainly not mutually exclusive and combining them gives the advantage of being able to make a credible statement of environmental action can engage staff and customers, from the very outset of the programme.
Accurately measuring a carbon footprint is the first step in any programme, and with the wealth of support available it does not have to be an onerous task. Third-party tools like the CarbonNeutral Footprint Reporter provide an easy, convenient and fast solution for small businesses, allowing them to get third-party verification of their action. Seeing data for energy usage, staff travel and the amount of waste the business generates will also reveal where a business can make effective reductions, and save money through more efficient practices.
As many SMEs don’t own their own premises, measures such as changing to LED lighting and addressing building insulation require a landlord’s involvement and can appear to be a barrier to a very effective programme. However, significant reductions can be made through encouraging behaviour change. For example, simply turning lights off when an area is not in use can save 30% on fuel bills, and changing computers to hibernate mode will use just 1 to 2W compared to the average 60W used by a screensaver programme. Setting up ‘Green Teams’ and rewarding personal efforts to reduce emissions can generate significant savings and a wealth of new ideas which can all benefit the business.
The net effect is a combination of cost saving, slashed energy usage and a reduced carbon footprint. A win-win scenario. The use of external emissions reductions provides a means for companies to mitigate the unavoidable part of their carbon footprint, and to meet targets while internal emissions programmes are being implemented. Certifying a business as carbon-neutral provides a clear statement that a business has taken action to understand and reduce emissions.
While sustainability might have once been considered a ‘big business’ issue, there’s no question it now filters right down the supply chain. MCR legislation means carbon management is the foundation of any environmental programme – it’s embedded in business, not an add-on. As SMEs come under increased pressure to demonstrate their environmental credentials, this in turn empowers them to capitalise on their environmental efforts by identifying cost savings, which can drive tangible business value and support the retaining and winning of business from their discerning customers.
Real benefits, realised now
With legislation like MCR on the horizon and the cost of running buildings and travel programmes rising, reducing carbon emissions is no longer a CSR luxury but a business necessity. There are different ways to tackle sustainability initiatives, yet we can all make a difference by behaving differently. As the economy begins its attempt to recover, it is those SMEs taking action to assess their environmental policies and capitalise on the opportunities in a greener marketplace that will reap the benefits and become a business success story. Those that don’t will be left behind.
Nathan Wimble is commercial director at the CarbonNeutral Company