Reducing Carbon Footprints, how SMEs can lead the way with a smart action plan.
Somewhat tongue in cheek, but our blog title and the latest tomato and cucumber crisis highlight that climate change increasingly impacts all aspects of our lives.
While fossil fuel companies and corporations have a huge role to play in changing their behaviour, the issue of climate change requires action from all of society, including small and medium-sized enterprises (SMEs).
According to the International Council for Small Business (ICSB), small and medium-sized enterprises (SMEs) account for over 90% of all businesses worldwide and employ around 60% of the global workforce. Combined with approximately 50% of GDP - this group's influence is not to be underrated.
One of the most critical ways SMEs can contribute to this effort is by developing a carbon reduction plan and understanding the concept of scopes 1, 2 and 3 emissions.
Three key reasons to adopt a Carbon Reduction Plan
A carbon reduction plan is a strategic document that outlines the steps a company will take to reduce its carbon footprint. It typically includes a baseline assessment of the company's emissions, identifies key areas for improvement, and sets targets for reducing emissions over a specified period. Developing a carbon reduction plan can be valuable for SMEs for several reasons.
First, a carbon reduction plan can help SMEs to save money by identifying opportunities to reduce energy consumption and operating costs. For example, a company might switch to more energy-efficient lighting, improve insulation or install solar panels on its premises. By reducing energy consumption, SMEs can lower their energy bills and improve their bottom line.
Second, a carbon reduction plan can help SMEs to comply with regulatory requirements and demonstrate their commitment to sustainability to stakeholders. Governments around the world are introducing policies and regulations to encourage businesses to reduce their carbon emissions. By developing a carbon reduction plan, SMEs can ensure that they comply with these regulations and demonstrate their commitment to reducing their environmental impact.
Thirdly, a carbon reduction plan can help SMEs to differentiate themselves from their competitors by demonstrating their commitment to sustainability. Consumers are becoming increasingly environmentally conscious and are more likely to support companies taking steps to reduce their carbon footprint. By developing a carbon reduction plan, SMEs can demonstrate their commitment to sustainability and attract environmentally conscious customers.
What are Scopes 1,2 and 3?
Understanding the concept of Scopes 1, 2, and 3 emissions are also critical for SMEs that want to develop an effective carbon reduction plan. These scopes are defined by the Greenhouse Gas Protocol, which is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.
Scope 1 emissions are direct emissions from sources owned or controlled by the company, such as emissions from combustion in boilers or from company-owned vehicles.
Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the company.
Scope 3 emissions are all other indirect emissions that occur in the company's value chain, including emissions from the production of purchased goods and services, transportation of goods and employees, and the end-of-life treatment of products sold.
While Scope 1 and 2 emissions are generally easier for SMEs to measure and manage, Scope 3 emissions can be more challenging to quantify because they are often outside the control of the company. However, understanding Scope 3 emissions are critical because these emissions often represent a significant portion of a company's overall carbon footprint.
SMEs can reduce their carbon footprint by implementing measures that address each of the three scopes of emissions. For example, a company might switch to renewable energy sources or invest in more energy-efficient equipment to reduce Scope 1 emissions. To reduce Scope 2 emissions, a company might purchase renewable energy certificates or invest in on-site renewable energy generation. Finally, to address Scope 3 emissions, SMEs might work with their suppliers to reduce emissions throughout the value chain or invest in greener transportation options.
SMEs have a critical role in reducing carbon emissions and helping mitigate the effects of climate change. By developing a carbon reduction plan and understanding the concept of scopes 1, 2 and 3 emissions, SMEs can identify opportunities to reduce their carbon footprint, comply with regulatory requirements and demonstrate their commitment to sustainability. In doing so, SMEs can contribute to a more sustainable and equitable future while improving their triple bottom line and brand reputation.
To understand Scope 1,2 and 3 in more detail - download our Guide on How to Calculate your Carbon Footprint or book one of our Carbon Literate Workshops.
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