As a responsible and forward-thinking automotive financing company, you will be looking for ways to reduce your carbon footprint and improve your ESG credentials. You may already have some initiatives in place, such as recycling or using green energy, but there is potentially more that you can do.
This article will discuss opportunities for funders to reduce their carbon emissions, including how a simple change will reduce carbon emissions and bring multiple additional benefits.
Why should companies attempt to reduce carbon emissions?
Increased regulation will likely drive change as governments introduce more stringent environmental policies.
But reducing carbon emissions is not only good for the environment, but it can also be good for business. Here are just a few reasons why companies should be aiming to reduce their carbon footprint:
- The new generation of consumers is more aware than ever before. They’re also savvy, ambitious and empowered with their spending power, using it to influence the change they want to see. A survey by Neilson revealed that 81% of respondents felt strongly that companies should help improve the environment.
- Reducing emissions can help to improve brand equity and corporate reputation, which can lead to increased sales, higher staff retention rates and attract new customers. The British Standards Institute (BSI Group) has a carbon-neutral programme that provides the credentials that the organisation has committed to a carbon reduction journey.
- As enterprises compete for top talent, they must be aware that employees consider businesses that care about social and environmental issues a positive factor, increasing their appeal as an employer of choice. This employer branding will become even more important when the next generation of employees enters the job market.
- By being more energy-efficient, reducing waste and avoiding needless trips, you can save money. In addition, increasing efficiency will help the business to be more competitive.
Let’s begin with a definition: what is a carbon footprint?
A company’s carbon footprint is the total amount of greenhouse gases generated, either directly or indirectly, through its business activities. It aims to identify emissions released into the environment each year due to its operations.
Various data sources are considered when calculating your carbon footprint, including your supply chain, the amount and means of travel, power sources and usage.
There are providers who can assist in measuring and reporting on the organisation’s carbon footprint if you would like support in gaining a benchmark of your current carbon footprint, against which you can monitor progress.
The Route to Net Zero
The UK Climate Change Committee recently published an independent assessment of the UK’s Net Zero Strategy, which concludes:
“Our overall assessment is that it is an ambitious and comprehensive strategy that marks a significant step forward for UK climate policy, setting a globally leading benchmark to take to COP26. Further steps will need to follow quickly to implement the policies and proposals mapped out in the Net Zero Strategy if it is to be a success.
“We welcome the Government’s recognition that reaching Net Zero and tackling climate change is not only achievable and affordable but essential to the UK’s long-term prosperity and can bring wider benefits for society, the economy and the environment.”
There’s a need for greater public and business engagement to generate positive collective action and reduce their individual and combined carbon footprints, in addition to policy shifts required to drive change in areas such as power, transport, buildings, and industry.
The UK’s goal of net-zero emissions by 2050 calls for all sectors of the economy to contribute, especially those that can make a significant positive impact on carbon reduction. It’s easy to point the finger at major emitters such as airlines, oil and gas, and freight firms—but companies from all sectors may contribute.
What practical steps can be taken to reduce a carbon footprint?
Many simple changes can be adopted to reduce a business’s carbon footprint. Here are some practical suggestions:
Buildings & equipment
Insulate buildings as much as possible to prevent wasted energy. For example, in the summer, window film may be used to reflect heat out and then switched back so that the heat can stay in during the winter.
Keep an eye on your heating and cooling systems to ensure they aren’t competing with one another. Also, check that systems aren’t being manually adjusted, resulting in dramatic swings in temperature.
Replacing items such as boilers or lighting systems with newer, more efficient versions can help improve operating efficiency.
Lighting accounts for 20% of all the energy usage in the UK and, therefore, a significant share of energy bills. Finding ways to make lighting more efficient makes it possible to cut costs dramatically. LED lighting provides a cheaper and more environmentally friendly way of lighting premises for many organisations, typically delivering fast payback on the initial investment.
Switch to renewable energy, either on-site or via green electricity rates. Switching to solar power, for example, will need an upfront investment, but there will be long-term payback as well as environmental benefits.
Replacement technology should be viewed holistically. IT equipment is one category that has a high rate of replacement. While some new technology will be more energy efficient to run, it’s also important to consider the overall greenhouse gas emissions generated throughout its manufacture and distribution.
According to an Edinburgh University study, extending the life of a single computer and monitor from four years to six years saves carbon emissions equivalent to about 190kg CO2.
When technology needs to be replaced, ensure it is disposed of responsibly and is recycled wherever possible. Any electronic waste should be recycled in line with WEEE standards.
Simply finding ways to reduce business travel is a straightforward way to reduce the business carbon footprint and make cost and time savings!
One straightforward way for wholesale funders to make an impact here is by moving from manual stock auditing to a technology-based solution, switching to dealer self-auditing using a tool such as CheckVentory Audit.
Traditionally, stock audits have been carried out via a manual, paper-based process, with funder audit staff travelling to each dealer location to physically audit the financed vehicles on site.
This manual process has clear disadvantages:
- The expense (and opportunity cost) of travelling to multiple locations to do the audits with expensive resources.
- As the funder staff complete their evaluations, the dealers’ day-to-day activities are interrupted.
- Degradation of information collected before it can be input to funder systems
- The elapsed time between audits done periodically
- The fundamental issue of carbon emissions resulting from the unnecessary miles being driven by auditors.
A digitised approach, carried out in conjunction with dealer groups, is one that many finance companies have begun to use, with multiple benefits.
Systems, like CheckVentory Audit, replace funder audit visits with cloud-based software accessed through mobile devices. This allows on-site dealer staff members to record stock quickly and easily, delivering the stock data instantaneously to the funder’s back office. Solutions like this facilitate more frequent audits and richer, more accurate data to be collected.
And significantly reduce those unnecessary road miles, contributing to carbon emissions reduction!
This is another easily implemented area that will also save money.
Simple steps such as reducing paper waste and avoiding the use of single-use plastics can all add up.
Consider reviewing whether you can:
- Replace paper records with electronic document storage
- Digitise processes to replace paper-based procedures with electronic alternatives
- Discourage unnecessary printing
- Minimise use of disposable cups
- Begin by reviewing current waste levels and take practical steps to reduce waste that emphasises recycling, reusing, and reducing.
- Educate and engage employees
It’s key to involve the wider team when making improvements or proposing new initiatives. As a result, they will be more likely to support than resist the environmentally-friendly changes. They’re also more likely to have energy-saving ideas and suggestions.
Achieving carbon reduction and moving towards a net-zero future will differ for each business.
What about carbon offsetting?
Carbon offsetting is a market. By purchasing an offset, you are trading to fund projects which reduce greenhouse gas emissions.
On one side of the trade are those creating the greenhouse gases; on the other, the projects to attempting to eliminate the problem by planting trees or building machines to capture carbon dioxide. Such a market turns a ton of removed carbon into a commodity, just like oil or gold. Through trading activities, the money will flow from those emitting carbon to those removing it from the environment.
A common use of carbon offsets is to compensate for the carbon dioxide generated by a journey. A frequent misconception about carbon offsets is that they can cancel out emissions from a flight, which is a well-known use. However, this is not typically the case. According to research completed in 2017, 85 per cent of offset projects either overestimated their impact or failed to deliver any carbon reduction at all.
And there’s also the danger is that cheap offsets are used to avoid the hard work of actually cutting emissions.
However, there can be benefits to these schemes. For example, they are often operated in developing countries, where they can help generate jobs or support projects that wouldn’t otherwise happen. And planting trees can help to increase biodiversity and provide habitats for wildlife.
Next steps towards carbon reduction
If you are interested in finding out more or starting to implement carbon reduction initiatives within your business, several organisations can help provide support, including some certifications such as Carbon Neutral.
This DEFRA Business User Guide provides help in calculating the carbon footprint for a business.
It may be helpful to use a business carbon footprint calculator such as this – Carbon Footprint Calculator – created as part of The Carbon Trust’s Green Business Fund to help businesses manage and track their carbon emissions.
CheckVentory for Funders
Discover how a simple step will reduce carbon emissions and bring you multiple additional benefits by adopting CheckVentory Audit in place of a physical audit – read more or request a short demo here.