Being Carbon-efficient Boosts the Bottom Line
28/05/2012 by STRATEGIC FINANCE
By Jae Mather
For the majority of SME directors, the Carbon Reduction Commitment
(CRC) Energy Efficiency Scheme (EES) is something they will probably
have heard of, but won’t be fully up to speed with — and understandably
Introduced by the previous Government in 2008 with the aim of reducing UK carbon
emissions and helping organisations to save money by reducing their energy
bills, the CRC EES is still only focused on the largest companies in the private
and public sector.
But that won’t be the case for much longer. The
changes that are being forced upon large companies will soon cascade down to
SMEs, too. Recently the Government launched a consultation to see if the CRC
should be simplified or even scrapped so that is can be replaced with another
form of emission taxation that would be easier to implement.
happens or not, the momentum of the global movement seeking CO2 reduction is
such that SMEs will be required to adopt sustainability strategies and reduce
their own emissions sooner than they think.
Ironically, the Government
recently failed to make greenhouse gas reporting mandatory for organisations
that are outside of the CRC, but this is only a blip. The dilly-dallying of the
Coalition Government will not prevent the structural changes that are taking
place — and being co-ordinated — globally in relation to CO2 reduction, embodied
in things like the Rio+20 Agreement or the EU 20-20-20
Sustainability is coming to everyday businesses but it’s
something they should embrace, not fear.
In the UK, for example, we have
a legal commitment to 50% CO2 reduction by 2027 and 80% CO2 reduction by 2050.
These are massive targets and there is no chance whatsoever we will meet them
unless CO2 reduction is also undertaken by small and medium-sized
It is therefore only a matter of time before we move to
mandatory reporting on CO2 by all UK businesses, not just large ones, which will
be closely followed by practical steps to reduce CO2 emissions.
SME directors, this will sound like another headache, another cost at a time
when the UK economy has just gone back into recession. But reporting on
emissions shouldn’t be looked at as a burden — quite the opposite in fact.
Making a business carbon-efficient is about saving money and reducing
As well as producing fewer emissions through the energy-saving
solutions they implement, carbon-efficient businesses are far more protected
from rising electricity, fuel, gas and other utility bills.
In 2011, for
example, gas bills typically went up by 12 per cent and electricity bills by 16
per cent. With these types of annual price rises increasingly becoming the norm,
SMEs are extremely exposed. But making themselves more sustainable reduces the
financial risk that comes from these annual utility bill hikes.
the risk to companies isn't just financial. SMEs also are beginning to
understand that their brands are also under threat if they fail to put positive
environmental practices in place. Sustainability strategies are not just about
reducing cost and reducing the impact on the environment, but are also key to
reduce exposure to negative PR.
The world is changing but by changing
with it — and changing before their competitors — SMEs can gain a competitive
edge in tender scoring processes, increased cost efficiency, improved brand
recognition and a reduced carbon footprint. With this in mind, change is no bad
thing at all.
Copyright 2012 Strategic Finance