The Defra consultation for measuring and reporting green house gas emissions by UK companies is currently underway. The options being considered include business as usual, enhanced voluntary reporting or different mandatory regimes related to business size or energy usage. Whatever the outcome of the consultation, it is worth noting the benefits that accrue to an organisation which has a detailed understanding of the green house gas emissions associated with its activities and operating practice.
Most business leaders and managers can accept that Scope 1 and Scope 2 emissions represent hard earned cash and that identification of the carbon ‘hot spots’ can help in the planning and development of more efficient processes leading to reduced operating costs and an improved bottom-line. However the emission intensive areas also represent future risk, for example exposure to volatile energy supply and cost and climate change.
It can be argued that the responsibility for an organisation to understand and monitor its GHG emissions and the likely impact of climate change is already enshrined in the Companies Act 2006. This Act dictates that potential risks to a business should be identified and where possible addressed. Recent supply chain surveys by the ‘The Business Continuity Institute’ indicate that 75 per cent of respondents had experienced disruption to their supply chains due to adverse weather or disruption to energy supplies or transport services.
Rising energy costs, fluctuating commodity prices and flu epidemics were also cited as reasons for disruption to supplies. In addition 20 per cent of respondents thought their company reputation and brand had suffered as a consequence of this disruption. Poor understanding of company carbon emissions and what they can mean for your business demonstrates a flawed approach to risk assessment and management and any stakeholder or investor would be right to question the company’s overall approach to other business related risks.
A detailed understanding of your own company emissions raises awareness of the potential climate change impacts on your business both in your supply chain and in your everyday business operations. Future legislation will become more demanding, potential disruption to supply chains will increase and energy costs will continue to rise. These certainties mean that a detailed understanding of company emissions is required now to inform business strategy, inform investment decisions and build adaptive capacity to future proof your business. Today we require effective action plans and an integrated strategy for business development, simply measuring emissions is not enough. This is sound governance which allocates ownership and responsibility for action within the company management structure.
Whatever the outcome of the current consultation, no organisation can continue to ignore the many benefits associated with a detailed knowledge of GHG emissions and effective action plans to ensure future business viability and resilience.
Ask yourself how company emissions and climate change have influenced your business strategy. If the answer is not at all then think again, this is one case when the mentality and phrase ‘it is never too late to start’ poses a significant risk to the future of your business.