About 100 companies are responsible for 71 per cent of the world's greenhouse gas emissions, says a report published by UK-based renowned organisation CDP in 2017. These companies had produced about 923 billion tonnes of carbon dioxide-equivalents between 1988 to 2016. No wonder now-a-days carbon footprint is one of the key strategic issues being widely discussed in business world.
Traditionally most of the organisations' primary focus is on growing business by any means. Not many of them are truly concerned about environment. However, off late, because of increasing awareness of the adverse impact of carbon emission, there have been incessant pressure on businesses to play their part to fight this global crisis.
Increasing carbon footprint has profound effects on our planet. The world has been witnessing continuous rise in its temperature causing changes in the growth patterns of plants. Increased temperature will also cause rise of the sea levels which will eventually erode shorelines, displace human habitats and destroy the overall ecosystem.
In some of the geographies we see prolonged droughts while some of the areas experiencing unprecedented flooding. This adverse weather conditions naturally impact the overall food production. Consequently, people would suffer from hunger, malnutrition and also from different deadly diseases. Wildlife is also getting severely impacted due to this unusual behaviour of weather.
In a nutshell, climate change has negative impacts on economies, populations, resources and all these consequences ultimately boil down to increased cost of doing business.
It is quite evident that business organisations contribute significantly in greenhouse gases (GHG) emissions. Study shows, major sources of GHG emissions are electricity production as fossil fuels like coal and gas are mostly used here in transportations and manufacturing sectors. Therefore, businesses do have an ethical obligation to reduce their carbon footprint. Moreover, it has also got business justifications to do so.
Before getting into the in-depth discussion, we need to first understand carbon footprint which fundamentally refers to the amount of carbon dioxide (CO2) emissions associated with all the activities of a person or other entity. It includes direct emissions, such as those that result from fossil fuel combustion in manufacturing, heating, and transportation, as well as emissions required to produce the electricity associated with goods and services consumed.
In addition, the carbon footprint concept also often includes the emissions of other greenhouse gases, such as methane, nitrous oxide, or chlorofluorocarbons (CFCs).
World leaders signed an agreement in 2015 famously known as Paris Agreement to limit greenhouse gas emissions to levels that would prevent global temperatures from increasing more than 2 degree Celsius (3.6°F) above the temperature benchmark set before the beginning of the Industrial Revolution and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
This threshold was set as the experts believed, beyond this level the world would face catastrophic and irrecoverable climatic shock. However, to maintain temperature at 1.5 degree Celsius requires reducing emissions by 45 per cent from 2010 levels by 2030 and hit zero emissions by 2050.
Let's know focus on the rationales for reducing the carbon footprint:
i) Laws and regulations: Most developed countries are coming up with the regulations which are mandatory for the companies to abide by. For example, Energy Savings Opportunities Scheme (ESOS) is compulsory for every company which has 250 or more employees or an annual turnover exceeding €50m and a balance sheet exceeding €43m in the United Kingdom.
ii) Cost savings: Companies can save money and reduce energy uncertainties by using renewable energy sources which are obviously much cheaper.
iii) Customers' expectations: A survey conducted by Nielsen in 2014 found that 55 per cent of consumers in 60 countries worldwide are prepared to pay more for products and services provided by companies that are committed to positive social and environmental impact. Another online survey shows, 81 per cent of global respondents feel strongly that companies should help improve the environment.
iv) Tax incentive: Authorities in different countries are incentivising companies for the efforts to reduce carbon footprints.
v) Better brand reputation: Companies which are genuinely putting efforts to reduce carbon footprints are well appreciated by the customers resultantly they remain ahead of their rivals in the marketplace.
vi) Pressure from the investors and other stakeholders: Because of the increasing awareness investors and other stakeholders expect companies to take appropriate measure to reduce emissions.
Question naturally arises – how can the business organisations address this critical challenge? Following points would help:
i) Measuring the current status: An organisation should first know how much emissions it generates. Once that is done, it should then set a target and start taking measures to reduce GHG emissions.
ii) Switch to renewable energy: Renewable energy source like solar or windmill help drastically to reduce emissions. Moreover, these sources are much cheaper. Besides the energy sources, organisation should look for overall energy efficiency gain in all its establishments like corporate offices, factories, warehouses and in points of sale.
iii) Selecting right mode of transportation: Selecting appropriate mode of transportation helps to reduce emissions. For example: sea freight is always preferred to air freight.
iv) Reduce travel: With the advancement of technology organisation can easily avoid travel and accomplish many of its tasks by online meeting etc.
v) Reduce-Reuse-Recycle mindset: An organisation must look for reducing consumption of certain items, reuse certain products wherever possible and also to look for recycling opportunities to reduce waste.
Corporate leaders must keep in mind that business will only exist if mother earth exists. Therefore, they should immediately take all out measures to reduce carbon footprint for existence sake. Geoff Moore, professor of business ethics at Durham University Business School, appropriately said: "If we collectively do not address these issues, it is likely that the world will be largely uninhabitable by the end of this century. What more reason does business need?"
The writer is the chairman and managing director of BASF Bangladesh Ltd. Views expressed here are personal.