In an era defined by climate change concerns and growing environmental awareness, the need to reevaluate and transform our relationship with carbon emissions has never been more pressing. This article aims to shed light on the importance of carbon baseline reporting as the first step for UK-based small and middle-sized enterprises (SMEs) towards environmental responsibility.
What Is the Carbon Baseline?
A carbon baseline, also often interchangeably referred to as a carbon inventory or carbon footprint assessment, serves as a comprehensive measurement of an organisation’s greenhouse gas (GHG) emissions. It acts as a one-year snapshot, essentially providing a starting point for organisations to not only comprehend their current emissions but also track changes and progress over time. In essence, a carbon baseline functions as a historical record of greenhouse gas emissions produced during a specified period (typically a year) before any active efforts to reduce emissions are initiated.
This record then becomes a benchmark against which future emissions levels are compared. It plays a crucial role in setting goals, monitoring performance, and developing effective strategies for reducing emissions and contributing to sustainability and climate goals.
5 Key Reasons to Establish a Carbon Baseline
1. Setting targets
A measured carbon baseline is a first step in achieving net-zero emissions. Understanding where you stand will help an organisation set meaningful and achievable carbon reduction targets. These pre-set targets are important in guiding an organisation’s sustainability initiatives and help it track progress over time.
2. Identifying Emissions Hotspots
An established Carbon Baseline can help organisations recognise areas where carbon emissions are the highest. This will then allow them to initiate efforts to reduce carbon emissions in the most impactful and cost-effective manner, often leading to significant cost savings.
3. Monitoring Progress
To set effective measures that would lead towards carbon emission reduction, it is crucial to understand the scope of the emissions identified in the Carbon Baseline. The progress in carbon reduction can then be measured and monitored by comparing the emissions levels with the carbon baseline data.
4. Regulatory Compliance
In the UK, Streamlined Energy Carbon Report (SECR) is a compulsory program that targets large British businesses. Under the Companies Act 2006, large companies are those that meet at least two of the three criteria: turnover of £36 million (US$44.2 million) or more, a balance sheet total of £18 million or more (US$22.1 million), and at least 250 employees.
SECR reporting typically includes information on energy use and associated carbon emissions, along with any energy efficiency measures taken by the company. However, with the growing pressure to reach net zero, it is expected that the UK government will extend demands related to emissions reporting to smaller companies, too. The Carbon Baseline will help precede the future regulatory requirements for the companies in question.
5. Enhancing Sustainability Reporting
Beyond compliance with regulations, Carbon Baseline’s data will help companies communicate their sustainability efforts more effectively, attract environmentally conscious customers and investors, and enhance reputation.
The core principle that underpins the Carbon Baseline Report is encapsulated in the famous adage: “You can’t manage what you don’t measure.” This means that to effectively address and reduce carbon emissions, it is essential to have a clear and accurate measurement of the current carbon footprint of a company or entity. Without this foundational data, it is nearly impossible to set meaningful reduction goals, track progress, and implement targeted strategies to achieve sustainability and contribute to carbon emission reduction objectives.
The Carbon Baseline Report serves as the tool that provides this initial measurement and insight, empowering businesses, especially SMEs, to take meaningful steps toward a more sustainable future.
Why Do SMEs Play a Crucial Role in Reducing Carbon Emissions?
SMEs are vital to the economic health of any country. They offer the backbone to communities, provide economic growth, job creation, and innovation. SMEs constitute a staggering 99.9% of all businesses in the UK and play a pivotal role by employing more than 60% of the country’s workforce.
The role of SMEs in the fight against climate change and the pursuit of the Paris Agreement’s objectives is undeniably significant. While individual SMEs might appear to have a relatively small carbon footprint, their collective impact is significant due to their sheer number. In the UK, there are around 5.5 million small or medium-sized enterprises, yet, only 9% of small businesses, and 5% of microbusinesses, are measuring their carbon footprint, according to a survey of around 1,000 companies conducted by the British Chambers of Commerce.
Any single SMEs climate impact may seem small at first glance but the combined effect of the category is sizable, with SMEs making up 90% of business worldwide.
Is the Carbon Baseline a Solution for SMEs?
While large enterprises in the UK are legally bound to comply with Streamlined Energy Carbon Reporting (SECR) requirements, the situation for SMEs is different. Although SMEs are not under any legal obligation, many of them would like to actively support government legislation aimed at achieving net zero by 2050. For these SMEs, the Carbon Baseline Report represents the ideal solution. Carbon Baseline is similar to the aforementioned SECR and typically includes a comprehensive set of information related to an organisation’s initial or historical carbon emissions.
Neil Sullivan, Head of the Projects at Boxfish, a company with 27 years of experience in utility management and over four years of expertise in sustainability projects, explains what SMEs can do to align with the growing demand for sustainable and responsible business practices in today’s global market.
“For SMEs who are just under the threshold where they don’t have to comply with the UK legislation, there is a way to set them on the carbon reduction journey,” Sullivan said. “Carbon Baseline, which follows the same methodology of SECR, but is a ‘lighter version’, allows them to get the same benefits and support the government in their goals.”
The Carbon Baseline Report is more than a mere compliance document, it can be used as a compass to guide businesses towards a greener future. It helps organisations gain power to set meaningful emissions reduction targets, prioritise investments in efficiency and renewables, and engage with investors and clients who increasingly demand a commitment to environmental responsibility. It is not only about reducing the carbon footprint, but also about maximising the positive impact on the world.