As the world shifts towards a low-carbon economy, businesses of all sizes are under increasing pressure to reduce their carbon footprints. For small and medium-sized enterprises (SMEs), decarbonisation might seem like a daunting task, but it’s an essential step toward future-proofing your business, improving efficiency, and contributing to a healthier planet.
At A&C Chartered Accountants, we believe that decarbonisation isn’t just for big corporations. SMEs play a critical role in the global economy, and with the right plan, they can lead the charge toward a more sustainable future. So, how can your SME develop an effective decarbonisation plan?
1. Understand Your Carbon Footprint
The first step in decarbonising your business is understanding where your carbon emissions come from. This is known as your carbon footprint and typically falls into three categories:
- Scope 1: Direct emissions from sources owned or controlled by your business (e.g., company vehicles, on-site fuel combustion).
- Scope 2: Indirect emissions from the generation of purchased energy (e.g., electricity).
- Scope 3: Other indirect emissions from your value chain (e.g., suppliers, product use, waste).
To create a decarbonisation plan, you’ll need to assess all three scopes and pinpoint where the bulk of your emissions come from. While some SMEs may find it challenging to measure Scope 3 emissions, focusing on Scope 1 and 2 is a great start.
2. Set Clear, Measurable Goals
Once you have a clear picture of your carbon footprint, the next step is to set decarbonisation goals. These should be specific, measurable, and aligned with national and international targets, such as the UK’s goal to achieve net zero emissions by 2050.
Some examples of decarbonisation goals include:
- Reducing energy consumption by a certain percentage over a set period.
- Transitioning to 100% renewable energy within the next five years.
- Reducing company vehicle emissions by introducing electric vehicles (EVs).
Setting realistic and time-bound goals will help you stay on track and make your decarbonisation journey more manageable.
3. Implement Energy-Efficient Practices
One of the most effective ways SMEs can decarbonise is by improving energy efficiency. There are several simple yet impactful measures your business can take, such as:
- Upgrading lighting to energy-efficient LED bulbs.
- Insulating your premises to reduce heat loss.
- Installing smart meters to monitor and reduce energy consumption.
- Switching to energy-efficient equipment (e.g., office appliances, heating systems).
Even small changes can lead to significant reductions in your carbon emissions—and your energy bills.
4. Embrace Renewable Energy
Transitioning to renewable energy is a key part of any decarbonisation plan. SMEs can switch to a renewable energy supplier or consider installing on-site renewable energy sources, such as solar panels, wind turbines, or heat pumps.
If installation is not feasible, choosing a green energy tariff ensures that the energy you purchase comes from renewable sources, which can dramatically reduce your Scope 2 emissions.
5. Engage Your Supply Chain
Decarbonisation doesn’t stop with your own business—it extends to your supply chain. Collaborating with suppliers to ensure they are adopting sustainable practices is crucial, particularly when it comes to reducing Scope 3 emissions.
Ask suppliers about their own decarbonisation efforts, consider working with low-carbon suppliers, and promote transparency throughout your supply chain to help reduce the carbon impact of the products and services you use.
6. Monitor and Report Progress
Decarbonisation is an ongoing process. Regularly monitoring and reporting on your progress helps you stay accountable and adapt your strategy as needed. Many businesses use key performance indicators (KPIs) to track their emissions reductions, and you can include this in your annual reports to show clients and stakeholders your commitment to sustainability.
Additionally, reporting on your progress is a great way to engage your team, customers, and suppliers in your decarbonisation efforts, ensuring that sustainability becomes part of your company culture.
7. Offset Where Necessary
While the goal is to reduce emissions as much as possible, there may be some unavoidable carbon emissions that can’t be eliminated immediately. In these cases, SMEs can consider carbon offsetting, which involves investing in projects that remove or reduce emissions elsewhere, such as tree planting or renewable energy initiatives.
However, it’s important to note that offsetting should complement, not replace, your direct emissions reduction efforts.
The Benefits of Decarbonising Your SME
Reducing your carbon footprint isn’t just about meeting regulatory requirements—it can have significant business benefits:
- Cost Savings: Energy-efficient practices and renewable energy can reduce your utility bills, while improving resource efficiency can cut operational costs.
- Enhanced Brand Image: Consumers are increasingly choosing businesses that prioritise sustainability, helping you build a stronger, more loyal customer base.
- Access to Green Funding: Many investors are now focusing on green businesses. Decarbonising your SME could make you eligible for grants, loans, or other sustainable financing options.
- Future-Proofing: As more regulations emerge around carbon emissions, being ahead of the curve will ensure your business remains compliant and competitive.
At A&C Chartered Accountants, we understand the challenges SMEs face when developing a decarbonisation plan, but we also know the incredible opportunities it presents. Our team is here to guide you through each step of the process—from assessing your carbon footprint to creating a sustainable, cost-effective plan that benefits both your business and the planet.
Contact us today to learn more about how we can help your SME decarbonise and thrive in a low-carbon economy.
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At A&C Chartered Accountants, we’re not just accountants; we’re your partners in success. Based in Manchester, our experienced team handles everything from managing limited company and sole trader accounts to expertly navigating tax returns. Beyond financials, we play a crucial role in driving your business’s growth, strategically steering it towards success with confidence and clarity.
