Why your carbon emissions can affect business success

Corporate carbon footprint impacts not only the environment but also businesses themselves. We delve into its causes and consequences, plus some possible green solutions you can adopt.

Ever since the Industrial Revolution, the earth has seen increased carbon emissions. The effect can be felt with climate change, the key driver of many global challenges, from famines and wildfires to smog and air pollution.

In Australia, the estimated volume of greenhouse gas emitted as of June 2022 was 486.9 million tonnes of carbon dioxide equivalent. This is a 0.4 million tonne increase from the previous year, as noted in a report by the Australian government.

To understand how to reduce your carbon footprint to make a difference, noting the causes of your carbon footprint is a good starting point.

Causes of carbon footprint in business

In general, what carbon footprint refers to is the impact humans make on the environment in terms of greenhouse gas emissions, measured in carbon dioxide units. In the business sense, it is the total volume of greenhouse gases produced by an organisation, also known as corporate carbon footprint.

Several factors influence corporate carbon footprint. For instance, the dependence on fossil fuels for power generation, excessive electricity usage, and minimal carbon-neutral transportation for business operations lead to higher emissions of greenhouse gases. The figures shared by CSIRO, industrial processes and transport, which include supply chain logistics, make up a considerable portion of greenhouse gas emissions. Therefore, your supply chain’s green activities can also impact your carbon footprint.

So, how does carbon footprint affect a business?

1. Economic impact of corporate carbon footprint

Based on projections in Australia’s October Federal Budget, retailer power prices are expected to increase by 30% between 2023 and 2024. Thus, a higher carbon footprint is indicative of greater energy costs, meaning an opportunity cost in business terms since the expenditure on energy bills could be channeled to other areas of the business that require more attention.

2. Political impact of corporate carbon footprint

Today, increased attention to national green policies and corporate social responsibility practices have pushed businesses to be more socially accountable to their employees, stakeholders and the wider public. It also encourages companies to be more aware of how their business practices impact society and the environment.

According to the Australian Government, Australia has implemented federal, state and local environmental laws to regulate this area of business, imposing organisational requirements that differ across industries. An example is the pledge to take action against companies making false sustainability claims outlined in the Australian Competition & Consumer Commission (ACCC)’s priorities for 2022/2023. Complying with such regulations is key to acquiring necessary licences and permits from governing bodies. What this implies is that sustainability is now a necessity rather than a value-added practice.

3. Social impact of corporate carbon footprint

On the consumer side, 76% of Australians are willing to pay a premium for sustainable products, as detailed in Bain & Company’s report. They also expect brands to assume primary responsibility in the sustainability charge, meaning that brand reputation is no longer only tied to quality products and customer service but also towards a business’s green practices.

More importantly, societal and environmental irresponsibility carries far greater consequences for companies — consumers may choose to boycott the brand, inevitably leading to huge losses. This is supported by Nature and The Lab’s findings, which showed that every four in 10 Australians will stop purchasing from a company that does not support sustainability.

How to reduce your carbon footprint?

The effect carbon emissions have on business success is telling. What can you do to mitigate it?

1. Reduce energy consumption

Opting for energy-saving appliances and machinery will save you plenty in energy costs. For instance, LED light bulbs are known to provide better light quality and last five to 10 times longer than fluorescent bulbs, significantly driving down the replacement costs for your business. With fewer bulbs ending up in landfills, you can also reduce your carbon footprint and boost your business’s green image. As a bonus, LED bulbs are seven times more energy efficient and consume less electricity than traditional fluorescent bulbs, enabling further cost savings on electricity.

Estimates shared by the government of Australia showed that replacing 10 halogen light bulbs with LEDs can help you save AU$650 on electricity over 10 years. If an average small business uses 50 light bulbs, this translates to cost savings of AU$6,500, which can be used in other critical business functions to boost your bottom line.

Choosing the more energy-efficient ENERGY STAR-rated appliances is another option. Assuming that electricity costs AU$0.28 per kWh, operating a TV with a seven-star label will only cost about AU$60 a year, enabling you to save more than a TV with a three-star label that costs AU$146 per year or a non-rated TV.

2. Reuse & recycle

For a start, always choose durable materials for corporate assets to minimise the frequency of waste and the need for upgrades. Should you wish to revamp your assets, consider donating to charity or selling them to other organisations. Apart from the positive environmental impact, this benefits your company in ways beyond boosting your corporate image. In states like Queensland, commercial waste going to the landfill is subject to a 10% GST and a levy of AU$90 per tonne from 2022. By reusing or recycling items, you can reduce your overall waste management expenses.

3. Reduce food waste

Be mindful of the amount of food catered for corporate events. For example, the industry standard for calculating the servings of food for an event is 3 to 5% above the guaranteed attendance. However, by checking whether your attendees require meals, you can order just enough to avoid extras that tend to go to waste. In practice, doing so helped ReFED achieve 95% less food waste than similar events for their three-day event. In addition, choose catering from businesses that support local farmers. By sourcing local produce, these vendors minimise transportation in the food trail, reducing their carbon footprint and thus your own.

4. Review your supply chain