Net Zero – Can’t see the wood for the trees.
Posted on: 01 Feb, 22
Reuse? Recycle? Confused? We all know we need to reduce our carbon footprint both as business and individuals, but there really isn’t much clear guidance out there, but don’t worry Oury and Clark are on the case and looking to become Net Zero heroes in order to help you on your way.
I’m confused Oury, you’d have to be blind not to see that.
What’s the problem?
It’s Net Zero Oury, I want to make a full commitment for the business to reach it but I’ve no idea where to start. I mean after all the blah blah blahing at Cop 26 everyone is running around wanting to cut down our carbon emissions, but I don’t know the first thing about how to go about it.
Good job I came along, sounds like this is a job for an accountant, an auditor to be precise.
Oh! Really? They’re not very much fun are they?
How dare you, some of my best friends are auditors. Well some of my best acquaintances. And anyway who said saving the world was supposed to be fun.
Fair point, I don’t need it to be fun, but I would like some clear guidance on how to do it, and I don’t know where to get any. I mean should I be buying trees, how much carbon is a tree worth anyway?
Somewhere between 25kg and 250kg per year, no one is absolutely sure and it depends on a lot of things. Unfortunately there aren’t any common standards for auditing your exact carbon footprint either, but the important thing is to start somewhere, work with the right people, pick a reasonable methodology and stick to it.
Do you know anyone, I mean are you acquainted with anyone, save me having to run around?
Don’t worry I won’t desert you. On one hand B Corps are all the rage these days, they look at your business holistically, help you be transparent and send your customers a clear message about your intentions which is great but, for most smaller and medium sized businesses, it all boils down to the same questions…
What is my carbon footprint and what can I do to meaningfully mitigate it?
Exactly, So first off pick one of the internationally recognised standards for greenhouse gas accounting and reporting. The most widely used is the Greenhouse Gas protocol, but you should pick the one that is most useful and relevant to your business and region.
O.K. let’s go with that, what am I counting?
Well they define emissions under three headings. All direct emissions from activities under your control, indirect emissions from the electricity you purchase and use and all other indirect emissions from activities, from sources you don’t own or control.
This is starting to feel like that time you tried to explain Snapchat to me.
Snapchat? Ah, we’ve known each other so long. I forgot to tell you we all moved on to TIkTok a couple of years ago.
Oury! I rely on you to keep me up to date. Are you sure what you are telling me about this carbon stuff isn’t going to change next week?
I know, sorry. Fear not, the basics of counting your carbon footprint are going to stay the same, and the process should get much easier the more people do it and publish their data.
How so?
Well it’ll make it much easier to calculate the carbon footprint of your inward and outward supply chain for a start. But let’s start with the basics of what you measure.
Finally!
it all starts with an audit of what energy you are using, it’s most useful if you can look at a 12 month period. Your accountant might even be able to help. So look at your electricity and natural gas use - the kilowatt hours will be on your bill, and your total water supplied and treated should be on your water bill as well.
My finance team has all of that squared away, it should be child’s play.
You’ll also need to add in any fuel used in company owned vehicles (invoices and receipts are the most accurate way to do this). You’ll also want to keep track of receipts for details of any other travel and use a distance calculator for any road, rail or flights.
So far so simple, we run a tight ship on expenses and you accountants love a calculator don’t you?
Yes, yes we do, but we are still on the easy bit, next you’ll need to calculate your waste to landfill and recycling, many business will be able to get this direct from their provider but there will likely be some estimates involved and if your business is based in a serviced or shared office space they may be harder to make accurately. It may even be worth doing a waste audit, as it could help to bring your tax bill down by helping you reduce the waste you send to landfill
Well, I’m glad we had the foresight to buy our buildings, makes all this a doddle, now what was that about saving me money?
Don’t get carried away, things can get a bit trickier from here on in when we try and calculate indirect emissions…
But the tax savings Oury? What about them?
I’ll get to them soon, promise, first let’s talk about indirect emissions.
Is that like when I blame an unpleasant smell on the dog?
Pay attention to Clark, they are carbon emissions from all activities that you don’t own or control.
such as?
Emissions from your team commuting for one, though you should be able to make a reasonably accurate estimate, and any steps you can take to encourage people to walk, cycle or get public transport to work will all help.
Well that would certainly help people getting stuck in the one way system.
And finally, the really hard to calculate stuff, any emissions from the production and transport of stuff you buy, as well goods or services you supply. Depending on your supply and distribution chain these could be more challenging, but you can make a reasonable estimate
And the more transparent everyone else is with their data the easier it gets right?
I knew that you’d understand Clark, eventually.
I was never going to let you down, Oury. So, now I've got all my numbers together, what do I do with them?
Well, you’re going to need to convert the data you’ve collected into greenhouse gas emissions using something called an “emission factor”
Is that one of those Simon Cowell shows? I preferred the old days when Stock Aitken & Waterman manufactured the pop stars in the privacy of their own studio.
No, it’s much more exciting than a TV show.
Really?
Yes, it comes in a spreadsheet and helps you do sums.
You accountants are an odd lot aren’t you?
What!?!
Oh, sorry, that was for something else, it’s this link
I’m not going to tell a lie, Oury, that sounds like a lot of work.
Well I’m sure an accountant could help, and also there are online calculators like this one and this one that make things easier, such as the McKay Carbon Calculator which you can find on the Government website or this one from the Carbon Trust which they’ve designed specifically for SMEs.
You and your calculators, will they help me to answer the most important question?
You mean “What are the three ways that the Government would like businesses to commit to climate action?”
No, how much is all that going to cost and how am I going to pay for it all?
There are levy’s like the ones on Aggregates and the Climate Change Levy to encourage the use of more recycled materials in construction and incentivise energy efficiency in all workplaces. There’s also the Landfill Tax which…
…means that I pay less tax if I send less to landfill, you mentioned this earlier.
Very good Clark, you’re not too shy to say that you’ve been paying attention.
I know the game Oury, is there any other form of support, that seems all stick and no carrot.
There are a few, yes, for instance you can claim ‘enhanced capital allowances’ (a type of first year allowances, which is in addition to the Annual Investment Allowance) for things like new zero emissions delivery vehicles, some cars with low or no emissions as well as energy and water saving equipment providing they are on the government lists.
All sounds good, but what about help with the actual upfront costs?
There are some grants available from Innovate UK - which offers grants targeted at companies developing technology for sustainable purposes - and The Sustainable Innovation Fund - to help stimulate clean growth recovery in light of COVID-19 across all the sectors of the UK economy. There is even one to create woodland and plant trees.
Seems a bit thin.
I think we’d all like to see the Government do more, if you are lucky enough to be based in Scotland then you can access interest-free green loans up to £100k to help pay for energy and carbon-saving upgrades and potentially a cashback grant of up to £20k.
Clark is the fourteenth most popular surname in Scotland, does that help?
Sadly for you, no, the business has to be based there, if you were you would also be able to access the Low Carbon Transport Business Loan which offers up to £120,000 interest-free to help reduce the carbon impact and fuel costs of their transport arrangements through the purchase of new, more efficient vehicles.
It all feels a little bit of a let down I want to do my bit, but it feels quite overwhelming I wish there was more support
Don’t give up Clark, the important thing is to commit to making a change and then make a start by calculating your emissions. You can sign up to make that commitment and get some government support and tools to help you here. One thing’s for certain though.
What's that?
You’re going to need an accountant.
So are accountants going to save the world?
Not on our own. We'll need auditors too.
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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.
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How are you feeling Clark?