New operational, financial and regulatory risks, partnered with rising energy costs and increased customer demand, mean that environmental sustainability and carbon management are moving away from the corporate social responsibility (CSR) realm and into the sphere of business and finance.
Contrary to traditionally-held beliefs amongst many finance professionals, strategic carbon management can in fact have a substantial positive impact on the corporate balance sheet, by enabling business to manage risk, realise cost savings and build revenue.
Rising energy prices and the impact of extreme weather events, mean there has never been a better time for firms to take action to understand and mitigate the true costs of their environmental impact.
The qualitative benefits of investing in environmental sustainability are well known. Boosting the ‘green profile’ of a company can do wonders for brand reputation and corresponding customer loyalty, but it can also deliver employee and prospective employee engagement.
As the old adage goes, you can only manage what you measure, and there’s strong evidence to suggest that effective carbon measurement and management goes hand in hand with commercial success. A 2011 study by the CDP revealed that companies in the Carbon Disclosure Leadership Index and those in the Carbon Performance Leadership Index provide approximately double the average return of the Global 500 Benchmark, indicating a correlation between higher financial return, good carbon disclosure, and good carbon performance.
When faced with the irreversible trend of increasing energy prices, growing pressures on the supply chain and regulatory change, businesses need to take steps to understand their carbon footprint and how efficient they are, so that they can accurately quantify savings and protect against rising operating costs.
By revealing data on energy usage, staff travel and the amount of waste a business generates, carbon management practices allow firms to accurately track and identify where they can make effective reductions and manage costs out of the business to yield financial savings.
Companies deriving commercial and competitive value that directly impacts the bottom-line are common. Independent business services company, Commercial Group cites its carbon neutrality as one of the main contributing factors to its growth year-on-year.
By tracking and then reducing its emissions, the organization was able to drive down costs while reducing its carbon footprint by over 50 percent.
Companies must integrate carbon efficiency into the core of their business in order to realize its powerful potential as a driver of performance. Driven by leadership from the finance team, through this approach firms can combine the benefits of satisfying the concerns of stakeholders and enhancing reputation, with real and transparent bottom-line savings, risk management and business growth.