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Ten steps to manage your carbon footprint

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?

Carbon Pollution 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).

[Next: CPRS?]

6. Exploit market opportunities: As soon as the proposed CPRS scheme is initiated in 2013, businesses will be able to offset their residual emissions through the purchase of carbon permits or certified credits.

7. Communicate: Your carbon footprint can serve a number of purposes. The primary goal is to manage emissions risk and identify reductions opportunities. It can also be useful to inform stakeholders and manage their needs. Engagement with employees may prove a useful way to identify carbon reduction opportunities, however carbon data and reduction opportunities will also be of interest to shareholders and voluntary reporting programs (Carbon Disclosure Project).

8. Benchmark and improve: Compare your carbon footprint with those of your peers and benchmark your performance to industry standards.

9. Stay informed: Manufacturers who have foresight of environmental requirements improve their chances of producing compliant, cost-effective products that meet customer demands. This includes monitoring regulatory developments and attending industry group events.

10. Obtain expert advice: To ensure the continuous improvement of your carbon management strategy including all its components, it is recommended to source expert advice from business advisory professionals who are technically competent. They will provide insight into your exposure to emissions reporting and support your business in defining the right scope to measure the carbon footprint and provide independent verification and assurance on your emissions reports.

A comprehensive carbon management strategy can give a manufacturing business significant advantage over its competitors in the future low-carbon economy.

–Benjamine Lahousse is responsible for the Climate Change and Sustainability Risk Services practice at RSM Bird Cameron (www.rsmi.com.au). It provides carbon risk business advisory services and Greenhouse Gas Emissions Statements assurance services.