The impact of climate breakdown is being felt on an increasingly frequent basis. With it comes a greater awareness and commitment to change and to take action to limit the future warming of our planet.
As a small business owner, you may not have to disclose your greenhouse gas emissions or carbon footprint yet, but there is increasing scrutiny on the subject. Sooner rather than later, your suppliers and customers will want to associate themselves with brands that reflect their environmental values.
Accordingly, a business's greenhouse gas emissions are becoming essential to know and communicate transparently. However, the task of carbon accounting to collate and measure these emissions can often seem overwhelming. There are different accounting approaches, varying global standards, and the ever-present sustainability jargon, and that's before you get to the work of planning how to reduce your emissions.
The task looks complex, and to a certain extent it is, but in helping businesses overcome the challenge, we have found five common myths that, once dispelled, can make the process seem that much simpler:
"I'm a small company, so I can't make a real difference."
Many New Zealand business owners would say that the problem of global warming sits with industries and companies that have little to do with their business, such as the more prominent industrial producers in China, the USA, or South America. This is understandable as it points to large companies whose impacts may be significantly larger than a New Zealand-based SME.
But even though others arguably have more responsibility, SMEs still have a role to play. Greenhouse gas emissions are a complex, interconnected system, with SMEs emissions often forming part of a supply chain that either input into the emissions of a larger organisation or takes the output of these organisations to meet the needs of its customers. In New Zealand, SMEs are over 90% of the business community, meaning collectively, they have a huge role to play in our country's Net Zero 2050 goal.
My customers don't care, so it's a low priority.
Thinking that a business gains little direct value from managing its carbon emissions is an understandable myth for longer-serving business owners. However, as every week passes, this becomes further from the truth as new consumers actively seek out environmentally responsible brands. Studies have shown that many consumers now actively seek out companies that promote sustainable living. A 2021 Deloitte report highlights that 32% of consumers were highly engaged in pursuing a more sustainable lifestyle.
Equally, many SMEs rely on larger organisations rather than high-street consumers for their trade. Through either regulation or shareholder directives, these larger organisations are increasingly looking to sustainability and publicly target lower emissions.
It's just too difficult to understand where and how to start
When considering a smaller business with a defined set of activities and facilities, the carbon accounting process comes down to a group of simple equations; the sum of each business activity multiplied by the activities relevant greenhouse gas emissions factor.
So the question of where to start rapidly becomes how do I quantify my business activities and what emissions factor do I apply to these activities? The great news is that emissions factors already exist. In New Zealand, the Ministry for the Environment has published a comprehensive list that takes account of our business operating environment and forms the basis for an auditable emissions number.
From a business activity perspective, the answer is also simple. Your existing accounting data tells you everything you need to know about what your business does. Assuming your accounts are accurate and up to date, it records everything your business purchases over a year and everything your company sells. That's all the activity information you need, already captured, stored, and just waiting to be used.
It'll take me weeks of effort just to get started.
The biggest myth is the expectation that the carbon accounting process will take days, even weeks, of effort. While that might have been the case previously, it is far from the truth now. Tools such as CarbonTrail, and accounting applications such as Xero and MYOB have made the process fast and efficient. An accurate measure of carbon emissions can be created for a business using such tools in as little as fifteen minutes. Enable the CarbonTrail software to access your accounting data, and the process begins. As explained above, the data already stored in Xero is sufficient to accurately measure business activity, while the CarbonTrail software provides over 220 emissions factors. Using AI to match the accounting data to the relevant emissions factors then calculates an emissions total with little, if any, human input.
It'll be expensive
Many businesses already have their accounting data sitting in an application such as Xero or, at worst, an Excel spreadsheet; the only additional cost to calculating your carbon emissions is the cost of a tool such as CarbonTrail. At just under $50 per month, this is far from expensive. And what's more, you don't just get to calculate your emissions once. The solution enables you to track and manage your carbon emissions over time, allowing it to become the cornerstone of a long-term carbon reduction strategy.
The first thing a company can do to take action against climate change is to understand its impact. By debunking some of the myths around carbon accounting, we hope that more businesses will realize that taking this first step is both easy and cost-effective. If you're ready to start your journey to becoming carbon neutral or want to understand more, then we are here to help.
Reach out to us at firstname.lastname@example.org, and let's start making a difference today.