Carbon neutrality. It’s not a phrase that’s top of mind for many small business owners. Typically, if you’ve just started up, you’re more concerned with the bottom line than the effect of your business’s emissions on the environment.
The reason most businesses shy away from it has to do with the effort and cost involved. If you’re operating on a shoestring budget, you don’t want to spend a single cent on anything that isn’t going to earn you money. The beauty of carbon offsetting these days is that it can do just that.
“Energy efficiency can help offset the impact of carbon tax, as well as ensure that we’re not sending any more emissions into the environment than we need to,” says Val Duncan, CEO of Energy Action.
Beyond that, an increasing number of consumers make purchase decisions based upon the extent of a product’s environmental impact. If your business is carbon neutral, you can then use this fact to market to the growing number of consumers who make purchase decisions based upon a product’s environmental impact.
The most crucial thing to understand about the process of carbon offsetting is that it needn’t be a huge undertaking.
“If you’re looking at making some changes, understand what you’re doing now, make your changes, and then track what you’re doing so that you know that you’ve made the improvements, that you’re getting the savings,” says Duncan. “That then gives you the impetus to go to the next step with further energy efficiency projects.”
When Alison Vickery started skin product business Pod Skincare, she struggled to find a carbon consultant that could offer practical advice. Eventually settling with Climate Friendly, Vickery discovered that the biggest carbon pain points in her business were electricity, packaging, and travel or transportation. Determined to make the business carbon neutral, she resolved to start simply, and to focus on reforming the parts of the business that had the biggest environmental impact, rather than fretting over the enormity of the undertaking.
“Basically, our carbon footprint broadly relates to energy and manufacturing, packaging, and moving goods around,” says Vickery. “Now, to a certain extent, you have to move goods around when you’re a wholesaler, but you can choose where you buy things, and take that into account. By costing that carbon footprint into your calculations, you get a really true feel of what the total cost of the product is.”
Instead of building carbon neutral processes from the ground up, Vickery sought out a carbon neutral industrial estate that had already taken those measures for her.
“We actually manufacture with renewable energy – we were lucky enough to find a manufacturer in a purpose-built industrial estate that is environmentally friendly,” she says. “If we did not do that, we would have, in effect, had to purchase renewable energy to put onto the grid.”
The second major concern was the business’s packaging – a crucial part of any skincare business, let alone one aiming for carbon neutrality. The first step in this instance was to find a commercial grade paper that was 100% post-consumer recycled. Other than the expense of using such materials, Vickery had to invest a certain amount of her startup budget into making sure the design of the packaging was carbon-friendly.
“Making packaging carbon-neutral is mostly about having very few moving parts – having parts that are of the same formation, so that they can be recycled in one,” she explains. “It’s about not having things sticking on things that make it a mixed medium, and it is about having packaging that is either recycled or capable of being recycled.”
For businesses faced with the task of creating carbon-friendly packaging, Vickery recommends seeking out the recycler used by your business’s local council.
“In the council I live in, they put me in touch with one of the big multinational companies. They give very good advice on how they recycle and how to minimise the recycling waste,” she says. “You can actually go and tour their plants, and make sure that you are producing goods that are easy for them to recycle. The actual recycling places are the most authoritative on what to use and what not to.”
Scope of emissions
Before you start actually changing how your business functions, it’s important to understand the extent of its current emissions.
“Understand what you’re doing now – get your monitoring in place, so you know the impact that you’re having at the moment, then make your changes, and measure your results,” says Energy Action’s Duncan. “That way, you’re continually building on what you’ve done in the past and are actually adding to the benefits you’re delivering to the organisation as well as to the broader environment.”
It’s essential to keep close tabs on the amount of energy your business currently uses, in order to properly monitor the effect of any changes you make. Energy usage should be tracked on a half-hourly basis over a period of between two weeks and a month before any changes are made. This will give you something of a benchmark to measure against when comparing changes in power consumption.
Once measurement processes are in place, it’s time to invest in a carbon audit to see how your numbers weigh up as actual emissions.
“You need to get an energy audit of your business done to find out how much emissions it is producing,” says Ben Stewart, director of carbon strategy at Carbon Trade Exchange.
An audit takes into account all of the emissions a business produces in order to function, and places each of them into one of three categories, or ‘scopes’. Scope one encompasses all the direct emissions produced by the business.
“Scope one is emissions that you as a business are directly accountable for, like the power you’re using on your machines, or the fuel you’re using in cars that you own,” says Danielle King, director of Green Moves Australia. “If your power bill says you use 500 kilowatt hours a quarter, then that’s your scope one emission and you cross that out on the kilowatt per hour rate.”
Scope two groups the indirect emissions, from consumption of purchased electricity, heat or steam.
“Scope two is the emissions that go into producing [things like electricity or gas] and getting them to your door,” says King. “Even though you’re not generating the power on site, and you’re not burning the black coal, it still needs to be accounted for because that’s where it’s coming from.”
Scope three is considerably more complicated, and covers further indirect emissions – things like the emissions created in the production of materials purchased for the business, transport costs in vehicles not owned or controlled by the business, and waste disposal.
“Scope three is things you don’t have control over but you use,” continues King. “It is for things like outsourcing, for waste that you send to landfill. If you do air travel occasionally, the emissions from the plane trip come into that.”
The extent of your emissions and how they are grouped into the various scopes can be quite a complex process. While it’s possible to carry out yourself, one of the benefits of outsourcing the process to a professional auditor or consultant means that you’ll end up with a more accurate impression of your carbon footprint, and what can be done to offset it. To read more about the global carbon classification standard, head to GHGProtocol.org.
Putting it into practice
Any carbon assessment should be accompanied with an action plan that shows which types of waste in the business will yield the biggest results. Typically, the areas that hold the greatest potential for savings are electricity – particularly lighting – and water usage.
“Lighting usually accounts for about 30-50% of a typical office’s power usage, which is pretty surprising to most, when they work it out,” says Nathan Barton, managing director of Easy Efficiency. “Now, with LED lighting, you can actually save about 60% of that usage of the lighting. It’s a really good solution for most businesses.”
Green Moves’ King explains that her business’s current client is a call centre that’s trying to find ways of reaching carbon-neutrality.
“One of their biggest emissions is electricity. We’ve started working on actions to reduce electricity bills, and that will reduce scope one and scope two, because electricity falls into both categories,” says King. “We’ve replaced the lighting down to LED lights, which has saved them 40% off their bills already over the last 12 months.”
In addition to the simple exercise of replacing standard bulbs with LED lighting, Green Moves has also incorporated a few simple, broad strategies into the action plan for the call centre.
“Cutting off standby power wastage, making sure machines are off when they’re not used, minimising the heating and cooling system requirements,” says King. “Also, making sure that they’ve got purchasing policies in place so that they only purchase highly efficient equipment for their businesses and that sort of thing.”
Often, the simplest way to reduce wastage in a business comes down to simple common sense.
“Making sure you turn your PCs off, making sure you don’t have leaking hot water taps, turning off your lights when you go home – all of these standard housekeeping practices are probably the best starting point for saving energy.” suggests Energy Action’s Duncan. “Train staff to be really aware of energy and how they’re using it, and help them to understand that, by using it better, they’re saving the company money, and saving the environment carbon emissions.”
Although it might not seem like it in an office-based business, water usage, particularly hot water, is another common source of unnecessary waste.
“If you look at where things were a few years ago, we had a lot of electricity and hot water storage which wasn’t energy efficient,” notes Duncan. “Moving to instant gas hot water will reduce your emissions immeasurably, and help the bottom line.”
If the business runs lots of electrical devices, it’s also worthwhile considering the use of timers on power outlets. That way, no-one in the office has to remember to turn things off, as the timers turn everything off automatically – and you avoid the rigmarole of having to lecture staff on power consumption.
“It’s amazing how many devices get left on after hours that really don’t need to be,” says Nathan Barton, managing director of Easy Efficiency. “A zip hot water system, for example – running it only during office hours, and not for the rest of the day or the rest of the week, can save over $200 a year. It’s not a lot of money, but if you have three of those machines, it starts to add up pretty quickly.”
Purchasing carbon credits
A carbon credit is an official permit or certificate that represents the right to emit one tonne of carbon dioxide or equivalent emission. In Australia, the National Carbon Offset Standard (NCOS) defines what a carbon credit actually is. For more information on what constitutes genuine, official carbon credits, and where to buy them, visit climatechange.gov.au/ncos.
The purpose of carbon credits is to give businesses some way of accounting for emissions they can’t get rid of entirely. If your business can’t reduce the impact of its water usage to zero, for example, it’s still possible to become carbon neutral by purchasing the difference in carbon credits.
“Purchasing credits puts a dollar value on the carbon within your business,” says Carbon Trade Exchange’s Stewart. “If you say that you have 50,000 tonnes of emissions for your company, no-one really understands that, but if you put a dollar value on those emissions, it enables you to highlight where your inefficiencies are more accurately. It also helps with getting employee engagement, and to assess where your inefficiencies are within your business a lot more accurately.”
There are two types of carbon market in Australia: regulatory and voluntary. The regulatory market is reserved for large businesses with more substantial emissions. Most small businesses will only be concerned with the voluntary market.
“The voluntary carbon market, as the name suggests, is where people are taking a voluntary offsetting,” says Stewart. “They’re purchasing voluntary credits to offset their unavoidable emissions. Those credits are governed by some standards that are internationally recognised, such as the Gold Standard and Verified Carbon Standard.”
There are a number of companies, like Carbon Trade Exchange, that deal in carbon credits, but it’s essential that you do your own research before purchasing, and ensure that what you’re buying is actually a legitimate credit.
Pod Skincare’s Vickery suggests that it’s unwise for businesses to lean on carbon credits as a means of becoming carbon neutral.
“It’s actually quite easy to make those big steps in the areas that actually eliminate the footprint, as opposed to just buying carbon credits,” she says. “Our basic philosophy has been to take the big step to not produce the carbon footprint in those three areas, and then we buy carbon credits for the remainder. We’re audited, and then we get carbon credits for the remainder, and it’s minimal. It’s an incidental cost.”
There are many benefits to carbon neutrality beyond the purely environmental ones. While the process does cost, the expense can be put to use as part of your business’s marketing strategy. Pod Skincare uses its carbon neutrality to appeal to the consumers’ desire to lessen their own impact on the environment.
“Often, skincare for a woman is an affordable treat. The woman does not want to feel guilty as part of that purchase,” says Vickery. “There is an emerging view that if they can do something that’s good for the world without it costing them significantly more, that is the choice they’d prefer to make.”
Accordingly, Pod Skincare’s carbon neutrality is a subtle but core part of its branding and marketing strategy.
“We have a carbon neutral logo on our website, and on our packaging. We also have quite a detailed philosophy statement that’s very much pitted at this ‘naturally friendly, actively good’ perspective,” says Vickery. “We’re very emotionally selling that, not only does the product work, but it can leave the world a better place. A lot of skincare companies are heading in that direction.”
She points out that, while there are obvious marketing benefits to going green, there’s no point in sacrificing the functionality of a product for the sake of making it carbon neutral.
“In order to sell the product, you need to demonstrate that it can work first. If the product can’t work, people don’t care how environmentally friendly it is,” she continues. “Once you demonstrate that it works, and they’re interested, they basically will want to make a choice that makes them feel good. So if they have a choice between buying a product that’s not very natural and not very environmentally friendly, for a similar price to one that is, in my experience, most would choose to feel good about their purchase.”
At the end of the day, it’s also worth remembering that any reduction in emissions is going to save your business money. It might not purchase your fleet a new vehicle, or allow you to upgrade your office computers, but the dollars saved certainly can’t hurt.
“We get businesses all over the spectrum,” says Easy Efficiency’s Barton. “We’re typically seeing a 50-100% return on investment between one and two years. Whether we’re saving them 10% or whether we’re saving them 50%, at the end of the day, it’s real money. It certainly does pay for itself very quickly.”
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