It is widely understood by that the levels of carbon dioxide (CO2) in our atmosphere are on the rise and that this rise has negative implications for the environment and society. However, the precise levels, or concentrations, of atmospheric CO2 are far less known, and as a result, so is the urgency of the matter.
A 2008 paper co-written by the then-head of the NASA/Goddard Institute for Space Studies, James Hansen, explains that, “if humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and on-going climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm.”
An initial upper safety limit of 350 ppm was consequently set for our planet.
The paper further elaborates that, “If the present overshoot of this target CO2 is not brief; there is a possibility of seeding irreversible catastrophic effects.” This condition was not realised. Not only had the overshoot persisted, but in June 2014 the concentration of CO2 in our atmosphere reached a new high of 401.30 ppm.
The urgency is undeniably clear.
The private sector is responsible for a significant portion of CO2emissions; in South Africa the 40 largest companies emit 20% of the country’s total CO2, and internationally, 90 large companies emit 63% of global CO2emissions. It is clear that the private sector is well positioned to have a meaningful impact on reducing global emissions and benefiting the environment and society. However, the private sector also stands to benefit greatly. This is because there is a strong business case for reducing a company’s emissions that includes significant added value and cost reductions.
The crucial starting point for reducing CO2 emissions is calculating one’s carbon footprint
A carbon footprint is defined as “the total sets of greenhouse gas emissions caused by an organization, event, product or person”. Calculating a company’s carbon footprint—to be used as an accurate carbon baseline—and developing a comprehensive emissions reductions plan, is a fantastic tool that management can use to measure and drive down costs and add significant value throughout the company.
Some of the benefits of an emissions reductions plan include:
- Cost Reductions: Since CO2 is largely linked to energy-use, reducing emissions means significant energy, operating and production costs savings. There are also reduced costs from less wastage and higher productivity. These sustained cost reductions are significant and can amount to an average of 20% annual reductions in energy/fuels costs. Behavioural change associated with reducing emissions, which have no CAPEX, also account for significant cost reductions.
- Market differentiation and new business: It has been shown that companies who calculate their footprint and implement emissions reductions plans experienced a 10% annual revenue increase. Achieving credentials, such as ISO14001, and improving a company’s public image by being environmentally responsible, attracts new business.
- Employee and customer retention: Emissions reductions plans also help retain staff and the current customer base by increasing satisfaction, loyalty and trust. Research shows that up to 92% of employees prefer working for environmentally responsible companies; increased workplace satisfaction means decreased employee turnover and higher productivity.
- Regulations and Carbon Tax liability: There are important liabilities and risks associates with climate-change and environmental issues, such as, carbon taxes, tariff increases, and climate change-related legislation. South Africa will impose a carbon tax in 2016, emissions reductions plans can help reduce carbon tax associated risk. The primary objective of the South African Carbon Tax is to change future behaviour; as a result, the carbon price will progressively increase over the years. Companies stand to benefit most by taking the necessary emissions reductions actions now before the cost of not doing so weighs heavily on their bottom line.
- Reputation and Branding: Attaining sustainability credentials enables a broader investment appeal through entering specific markets or indexes such as the JSE Socially Responsible Investment (SRI) Index. Being listed on the JSE SRI benefits companies through; improved stakeholder engagement, investor incentive, reputational benefit, enhanced integrated public reporting and global benchmarking. Other credentials and certifications have been shown to significantly improve an organisations reputation.
Terra Firma Solutions has developed numerous emissions strategies that optimise companies’ assets and efficiency goals. This has enabled many companies to increase their profitability and reduce their risks through the accurate measurement and management of the company’s carbon footprint. These vast and sustained benefits associated with emissions reductions strategies, both within a company and extending across the global environment and society, all begin with taking that one very crucial first step; knowing your carbon footprint.