Your business might not face regulatory reporting requirements yet, but it’s likely it will in the not-too-distant future. Why not get a head start?
Concerns are mounting over climate change and the long-term availability of natural resources. Energy prices are rising and manufacturing companies are finding it increasingly challenging to prepare for their transition into a low-carbon economy. Measuring your carbon footprint is the first step a business needs to take if it is to succeed in making this transition.
Your business may not already face the regulatory reporting requirements, but it may be sensible to start preparing as emissions and energy consumption thresholds are expected to reduce progressively over the years to come. The regulatory reporting requirements are likely to end up including the majority of Australian businesses. Here are ten easy steps on how to manage your carbon footprint.
1. Identify sources of emissions: The carbon footprint quantifies the greenhouse gas emissions generated by the various steps in the production process. These could include emissions from combustion, electricity consumption or transportation. It is expressed in tonnes of equivalent carbon dioxide (CO2-e) emissions per annum. It is therefore critical at this stage to map all relevant sources of emissions within key activities comprised in the supply chain of the company.
2. Measure emissions: Businesses can only manage the sources of emissions they can measure. For the majority of companies, the measurement stage comprises collecting data on metered electricity consumption and purchased quantities of fuels.
3. Estimate your carbon risk: Emissions are becoming a new commodity. It is expected that future accounting standards will treat emissions as liabilities and allowances as assets. Businesses need to identify the way in which emissions will impact on their operational costs and financial results.
4. Develop a strategy: Compiling a comprehensive emissions profile will inform management of the carbon intensity of their business and enable them to design an appropriate carbon strategy to address carbon risk throughout the supply chain of the company. The strategy can identify initiatives, objectives and targets to minimise the source of emissions.
5. Identify reduction opportunities: Even if your business is not currently required to report under the existing regulatory framework, significant cost savings may be achieved through minimisation strategies including reductions in energy expenditure. More efficient lighting, cooling and heating on premises for example all contribute to reduced energy use. The carbon risk management strategy should also identify sources of emissions in the company’s supply chain which may result in increased costs (upstream) or reduced sales (downstream).