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Why your carbon footprint needs to lead your business sustainability strategy

Updated: Feb 14

As 2024 begins, the pressure to cut carbon emissions becomes increasingly urgent.


We are now just six years away from 2030 – a year that is considered the critical checkpoint by which the world must make significant emissions cuts to avoid the most severe impacts of climate change.


men standing on solar panels working on a business sustainability strategy

New Zealand has (via the Paris Agreement) some major commitments to meet by 2030, and as we get closer to the deadline, this is going to have a flow-on effect for your business.



Mandatory Reporting is here


In New Zealand, XRB Climate Standards require NZ-listed companies, banks, and government agencies to publicly report their emissions, including those from their supply (or value) chain.


This is because under the Metrics and Targets section of the NZCS1 entities must disclose their Scope 1 (direct), 2 (indirect from imported energy) and 3 (indirect from all other sources) emissions.


Supplier emissions are covered under Scope 3 categories such as purchased goods & services, capital goods, freight, travel, and leased assets.


Internationally, similar regulations are already in place or on the horizon for likes of the US[1], the EU[2], UK[3], Japan[4] and Hong Kong[5] and the domino effect of this is significant.


Organisations wanting to supply to these reporting companies are likely to be asked for their carbon footprint in the coming months or years.



Boosting your wider sustainability Strategy


A carbon footprint is an effective tool that helps organisations assess their environmental impact and reduce their contribution to climate change.


Your carbon footprint identifies the best areas for emissions reductions and energy efficient cost savings by measuring the emissions generated from all the operations of your organisation.


It also provides relevant information about other environmental areas such as waste minimisation. By analysing emissions data, organisations can track progress in various sustainability initiatives and identify opportunities for improvement.


An organisation’s carbon footprint aligns their sustainability goals with measurable outcomes to demonstrate and drive ongoing progress. This makes it an integral part of their broader sustainability strategy.



The cost of carbon is set to increase, and it might affect your bottom line


The emissions trading scheme puts a price on carbon emissions in New Zealand. This means that any products or services purchased in New Zealand have a cost of carbon included in them, although this is usually hidden within the price.


The new government sees the ETS as a primary tool to reduce New Zealand’s emissions – which means that over time it is likely that the cost of carbon will increase, potentially by a significant amount. This will directly affect the price of any petrol or diesel you buy, flights that you take and any energy you use.


By measuring your emissions, you can understand where your carbon exposure lies and take action to mitigate future cost increases.



Cashing in on the Benefits of Climate Action


Increasingly, investors are moving money into more sustainable funds. Getting ahead of regulation and measuring your carbon footprint poses financial benefits if you’re wanting to access capital for growth.


Companies that are reporting and reducing their carbon footprint will have a higher ESG score. As money flows into green funds, the cost of equity and debt is pushed down for companies with high ESG scores and these companies are able to raise capital at a lower cost[6].



Meeting Expectations


Providing transparent and measurable data about an organisation’s environmental impact enhances a company’s corporate reputation. Demonstrating environmental action fosters trust, credibility, and positive perceptions of the organisation among stakeholders.


These perceptions have become more important in recent years because customers, staff and stakeholders have increasing expectations that businesses are taking action to minimise climate change.


81% of New Zealand consumers want businesses to do more to reduce their environmental impact[7].


While in a recent global survey[8], approximately 40% of younger employees (millennials and Gen Z’s) say they have already changed or plan to change their job or the industry they work in due to climate concerns.


As we face more and more extreme climate-related events, it seems that these numbers will continue to increase.



Long term viability


It is becoming increasingly important for organisations to manage and consider their carbon footprint in terms of their long term viability.


By integrating carbon footprint considerations into their sustainability strategy, companies can future-proof their operations and adapt to changing environmental conditions.


A carbon footprint promotes efficient resource use and innovative solutions, which enhances productivity and competitiveness, and contributes to economic resilience.


Carbon footprints also build resilience by accounting for the impacts of supply chains. Long term viability relies on supply chains that are resilient to disruptions such as natural disasters and climate related disruptions.


Collaboration with suppliers to reduce emission and improve the transparency and traceability of their operations helps reduce risks, promote resilience, and build long term sustainability.



Start by Measuring your Footprint


Measuring your emissions allows you to quantify your contribution to climate change, providing necessary evidence to support environmental claims.


Measuring and reporting your carbon footprint gives you a competitive edge because it provides your audience with proof of your environmental commitments and ongoing progress.


It allows your organisation to set realistic and ambitious emissions reduction goals that contribute to New Zealand’s international commitments.


Be proactive and measure your business’ carbon footprint before you miss out on a contract, tender or before a potential employee chooses to work elsewhere.





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