As society and industry is progressing into a climate change focused era, one needs to look at the general perception both individuals and companies have to see that there is a major misconception of the financial implications an emissions reduction strategy (ERS) may have. This may be as a result of a lack of understanding or belief, however the simple fact is that there seems to be a flawed thought process by a majority of people.
As we know, money makes the world go around. It controls almost everything, including climate change. We also need to acknowledge that global warming is attributed to industrialisation. Money is the driver that influences decision makers, it is the focus of any organisation to stay functional and to grow, and this is why leaders of companies need to be immensely prudent when making decisions that have financial implications. To an extent this forms the real reason for this blog, to illustrate the misconception due to a lack of understanding of what a reduction strategy entails and why it is beneficial to both the company and the environment.
Firstly, we need to realise that the purpose of an ERS is to, well, reduce emissions. Let us examine how this is done: base-lining emissions, understanding the sources of emissions, researching alternative methods, and ultimately, implementing reduction strategies. What follows is a monitoring programme that will actively gauge if these strategies are in fact working and how effective they are. What are the implications for a company you ask?
An ERS looks at the full impact of a company’s activity. It seeks methods to streamline processes, which in turn leads to reduce cost and increased shareholder value. When one looks at placing a monetary value on a reduction strategy, all inputs and methods need to be understood to gauge if it will in fact be an expense, or an investment. The streamlining of processes and advancing of technological solutions allows a company to relook at how they produce. It provides the scope and means to research and understand how a process can be modified and optimised to improve efficiency.
The concept is simple enough, having a reduction strategy in place, by analogy means that a company’s processes and infrastructure are being optimised. This allows for a better turnaround time of goods and ensures better yields and potentially higher production, which if all strung together comes out as increased profits. If one attributes time to wages, burning of fuels and electricity usage, then time is the equivalent of money and emissions.
Three short examples of “investment” strategies:
Energy usage, although not directly attributed to the end user, but rather the producer, contributes a very lopsidedpercentage to South Africa’s total greenhouse gas emissions. It is a perfect place to start with strategy implementation. Yes, there is more often than not an outlay to initiate the systems needed for energy reduction, however this translates back into reduced usage, which directly correlates to savings, and with those savings an indirect reduction in emissions. These capital outlays also attract very aggressive returns on investment meaning that investment today reaps ongoing benefits very rapidly and for a sustained period.
Burning of fossil fuels such as petrol or diesel to power generators, cars, trucks and machinery is an unavoidable scenario. However ensuring equipment is in good working order, making sure a fleet includes as many fuel efficient engines as possible, route optimization and driver training all contribute to not only a reduction in emissions, but a reduction in cost as a result of using less fuel.
A myriad of computers on a network may use small amounts of energy each at night when not being used. Over a long period of time this accumulates into a considerable amount of wasted energy. Through the investment in IT infrastructure to manage power across an entire network, it allows a company to reign in unnecessary costs from energy expenditure, whilst reducing emissions from the energy producer’s side.
The point of these examples is to illustrate how an ERS is not necessarily about doing the right thing for the environment, they illustrate that these strategies are an investment in the short to medium term but have long term business benefits. It falsifies the misconstrued thought that reducing ones greenhouse gas emissions is a costly process. It is, in actuality quite the opposite if done correctly. It is the investment in the future for both a company, and the environment we all live in.
The time is fast arriving for companies to make decisions on their stance on climate change, if this has not been done already. Gone are the days of a bloated monetary value to reduce emissions. The shift from reduction to efficiency is a becoming the key to achieving a lower carbon economy.
Author: Matthew Kleinenberg