Why should your business take sustainability seriously?
Combining technology with expert support to optimise your climate action strategy
As the planet continues to warm, the UK government has made legally-binding commitments to ambitious emission reduction targets over the next 30 years. With SMEs responsible for around 50% of all business-driven emissions in the UK, it’s clear that every business – regardless of size – has a role to play in driving the decarbonisation of the UK economy.
But the impetus for businesses to take action is no longer just ethical – it’s commercial too. In recent years, pressure from a range of stakeholders has led more to start taking sustainability seriously:
Clients. Sustainable businesses have a competitive advantage. A recent YouGov survey found that 72% of consumers consider sustainability when making purchasing decisions. And the preference can be even stronger in B2B markets. Most large enterprises and public sector bodies have (in line with the UK government) made ambitious emission reduction targets, which include the decarbonisation of their supply chains. As a result, they’ve made sustainability a core element of the tendering process for SME suppliers. This pressure will only intensify as incoming regulations (such as the CSRD in the EU) require large businesses to report on their supply chain impact.
Employees. As Gen Z enter the workforce, sustainability is becoming important in recruitment and retention. In a recent survey, 69% of prospective candidates said that, given two similar offers, they would compare each company’s values to help them decide; and 38% said they would consider finding a new role if they thought their employer was behind on ESG issues.
Investors. Investors are under pressure on ESG too. With the growth in demand for ESG funds, and regulation (such as SFDR in the EU) requiring more ESG reporting within the industry, more investors are integrating ESG across their deal lifecycles. According to Bain, 72% of private equity investors always screen for ESG factors during the diligence phase, and 70% agree that ESG can drive higher valuations.
So, what does a good sustainability strategy look like?
Climate change is a global challenge, but the solutions are multiple and best implemented at the local level. Focus first on your own activity – what impact does my business have on the planet, and how can I reduce or reverse this? Only then, when you’ve done what you can internally, should you look to influence and inspire others. In other words, get your own house in order before trying to save the world.
What does this mean, practically speaking? Here are 5 steps that any business can take now:
Measure your footprint. It’s hard to influence what you aren’t measuring, so step one is to understand your carbon footprint. And don’t assume that, just because you’re not operating a fleet or a factory, this step doesn’t apply to you. If you’re a fully-remote startup with a cloud-based tech platform then you might not own anything that emits CO2 directly, but your supply chain, employees, and customers do – and these all count in your footprint. The decisions you make (which IT kit to buy; which cloud provider to use; how optimised your software is) have a real, measurable impact.
Set reduction targets. Resolved in the 2015 Paris Agreement, the global ambition is to limit warming to 1.5oC – beyond which the effects of climate change will be severe. This ambition forms the basis of the government’s legally-binding reduction targets, and every organisation has a role to play. So, once you’ve measured your footprint, set reduction targets that align to the global effort. In numerical terms, this means aiming to cut your emissions in half by 2030 and 90% by 2050. This formulation isn’t random. It’s “science-based” – in the sense that (according to scientific consensus) we need everyone to get on this reduction pathway if we want to limit warming to 1.5oC. You can go further and make a “Net Zero” commitment, which means you also commit to offsetting the remaining 10% of your emissions by 2050 (read more on the website of the SBTi – the main framework for science-based targets and Net Zero).
Adopt an achievable reduction plan. It’s one thing to commit to an ambitious, long-term target, but quite another to start executing on it. Luckily, there are small changes that any business can make, and these can aggregate to make a real difference. Some are obvious (such as improving the energy efficiency of your offices, and travelling less), but others can be surprising. For example, manufacturing the average laptop produces emissions equivalent to flying from Bristol to Berlin and back – so can you buy refurbished? And always consider your policies holistically. Encouraging remote working may reduce emissions from commuting, but it can end up net negative because employees are heating and lighting multiple homes instead of a single, dedicated office environment. The balance depends on how far employees live from the office, and if they use public transport. Most businesses based in London (where employees generally take public transport or cycle) should actually encourage office work – from an environmental point of view, at least.
Offset what you can’t avoid. Despite the small changes any business can make, we can’t reach full decarbonisation without large-scale transitions in infrastructure (such as the shift to green energy) and technology (such as more efficient and affordable alternatives to diesel or petrol cars). But we can maximise our impact now by offsetting the emissions we can’t yet avoid. This involves investing in projects around the world that lead to the avoidance of new emissions or the removal of existing greenhouse gases from the atmosphere. There are a few governing principles when looking for a suitable project: the positive effect should be real, measurable, independently verified, and additional. The last one is key. Additionality means that, without your direct investment, the positive effect wouldn’t have occurred. That’s why most offsetting projects are based in developing countries which (given the lack of domestic investment) rely on foreign funding for initiatives like renewable energy and reforestation. The UN’s CDM and the Gold Standard organisation offer accredited projects which meet these standards, as well as supporting wider co-benefits (local economic stimulation and improvement in biodiversity).
Share your impact (greenwash-free). Once you’ve taken climate action, make it a part of your sales and marketing strategy. As well as helping you to stand out, this sets an example and encourages others to follow suit. But be careful to avoid green-washing – making your business appear greener than it is. This can come in many forms, but there are a few golden rules. First, focus on how you’re managing your own impact on the planet – offsetting is a bonus. Second, use the right terminology – don’t confuse Carbon Neutral with Net Zero, for example. Third, be clear and transparent. You can publicly report on your footprint and the specific actions you’re taking to reduce it, and if you’re offsetting, then provide information and links to the projects you’re supporting.
How do I get started?
Most startups and SMEs are in the early stages of the ESG journey. A recent survey by ESG_VC (a working group of investment professionals) found that only 16% of VC portfolio companies have measured their carbon footprint. Traditionally, climate action has been difficult due to the time commitment and budget needed to make a start.
At Seedling, we’ve built a climate action platform designed for startups and SMEs. We help you to measure, reduce and offset your emissions credibly, in a way that’s accessible and low-burden for growing teams. If you’re looking to get started, get in contact at hello@seedling.earth or click the button below.