Lucy Brialey
Following COVID and the energy crisis, it’s understandable that many companies haven’t prioritised the reduction of their carbon footprint. However, with CBAM coming down the tracks it’s time to act.
Being unprepared when this legislation is enforced will affect business activity: the cost of reacting to legislation will end up being far higher than being prepared for it in the first place and those who are engaged with sustainability and carbon measurement will be better prepared for both CBAM and the legislation that will inevitably follow.
The best place to start is by understanding the carbon footprint of your business: conducting a comprehensive assessment of the emissions associated with your operations, supply chain, and services, then identifying the areas with the most significant emissions and potential for improvement.
Solutions such as the sustainability management platform FuturePlus (www.future-plus.co.uk) can help you understand what you need to do and communicate this to your customers and stakeholders, even if you’re only just beginning on your sustainability journey.
Investing in carbon reduction strategies for your own business can often save you money and have a much greater effect than just offsetting your emissions. Remember, the global net-zero plans suggest that 80 per cent of emissions should be reduced, and only 20 per cent offset, not the other way around.
Offsetting can help a business achieve carbon neutrality; but it’s not the answer to our bigger problem, and it doesn’t help us reach net zero. Reduction is the key. We believe a company can reduce their footprint more quickly if they use the money spent on offsetting to make infrastructural or operational improvements.
If you have to offset some carbon, it’s essential that you consider the environmental cost of your reduction strategies, as poor sequestration programmes can have catastrophic environmental consequences and negatively impact biodiversity. Always look at the offsets you buy and get expert advice on how legitimate they are. This is a very complex market with a lot of dubious and downright fraudulent practices.
Although the launch is coming this October, CBAM’s final form and its impact on various industries is still to be confirmed. It’s likely to affect large manufacturers and distributors first, so the operational teams in these businesses should be learning techniques for sustainable procurement to make sure their partners are compliant. Remember, most of your suppliers are probably SMEs, who might not be as advanced as you in GHG measurement. Without them reporting to you, you won’t be able to report your Scope 3 emissions.
If CBAM imposes a carbon price on imports, it could affect the competitiveness of your products and services if they come from regions with weaker climate policies. Businesses may need to consider sourcing from suppliers with lower carbon footprints.
Implementing environmentally-positive strategies may involve upfront investment but can also lead to long-term cost savings and improved brand reputation, attracting eco-conscious customers and avoiding future eco-taxes and tariff.. Consumers are increasingly drawn to responsible brands and may be willing to pay a premium for eco-friendly products and services.
Cost is often cited as a reason not to implement improvements, but the cost of not adapting is far higher in the medium term – both in monetary and planetary terms. In the short term, adapting to regulations and optimising supply chains to comply with CBAM requirements might incur some small transitional costs, but in the long term there will be huge cost savings.
Policymakers often consider the potential impact on businesses and the economy when designing new legislation, so they can strike a balance between environmental goals and economic interests, while also giving businesses due warning. CBAM is that warning.
Lucy Brialey is founder and director at Sustainable Wellness
Policymakers consider the potential impact on
businesses when designing new legislation, so they
can give them due warning. CBAM is that warning