Livabl

Okay, climate change is happening. What can my company do about it?

What is the problem?

Climate change is the most daunting problem that the entire human species is facing in the current decade. The effects of climate change have only been increasing day after day this year from the forest fires in Australia and Greece, Flooding in Canada and Germany, High intensity floods and cyclones in India, sea level rise sinking islands like Kiribati and the glaciers melting in record time. No place on Earth seems secured from the effects of climate change.

While we talk more about how we can mitigate the effects we need to understand and fix the cause. We no longer can go with Business as usual. We need to consider the long term sustainability of the planet. We need to change our personal and business plans to save our planet.

No form of business is secure from the effects of climate change either. Covid has taught us how fragile our businesses are and we need to adapt our businesses to the effects of climate change. We need to also solve the cause of climate change so the effects are reversed and we fix the problem.

The cause for climate change is the greenhouse gases that we put into the atmosphere. The greenhouse gases are carbon, methane, nitrous oxide and several such gases we emit into the atmosphere. We need to stop these gases being emitted into the atmosphere or nullify them by carrying out offset projects. If we don’t do so by 2050, we might increase earth’s average temperature by 1.5 degrees and that will lead to irreversible climate change effects and many ecosystems will be broken forever [1].

So what can companies do?

The first step is to understand what processes in the company’s operations have a carbon emission. While most processes will have a carbon emission, it is important to quantify and measure. It is difficult to manage what we can’t measure. Once we are aware of the carbon emissions and have the number quantified, we shall then focus on how we can reduce these emissions.

The company can then set up a plan to mitigate the carbon emissions and think of making changes in their processes that’ll reduce their carbon emissions. Going sustainable isn’t a costly affair. By reducing waste the company saves cost, by optimising the processes to reduce emissions the efficiency improves and on the larger picture the company is looked upon as responsible and credible by investors, customers and competitors. We’ll look in detail at how businesses can save costs by taking climate action.

What is carbon offsetting?

Not all the carbon emissions could be reduced, we need solutions and research to transit to a zero-emission world. We could offset our emissions through ecosystem restoration projects like planting trees, restoring coral reefs, mangroves etc. We could also offset this by investing in a solution that’ll reduce carbon emissions like a solar energy plant or a wind energy farm etc. Protecting nature and the ecosystem could lead to not just taking the excess carbon from the atmosphere but also repairing the damage done by restoring the climate. The offset isn’t taken as a band-aid. The company should keep plans to reduce carbon emissions while offsets help to mitigate the carbon emissions that couldn’t be reduced.

Will my business save money by taking climate action?

Most businesses work on balance sheets, they look at the top line and the bottom line of the finance sheet. Whatever is being implemented within the company should improve the revenue of the company or reduce the cost, that’s a basis at which most companies operate. Would you believe me if I told you that Tesla makes more money by selling carbon credits than selling cars[2]. We’ll look at some of the options that results in saving cost or generate new income by adapting sustainable solutions

1)Moving to a renewable source of energy — Though it comes with an initial investment. The amount of money it saves on energy bills is huge.

Considering a case of a manufacturing factory in Tamilnadu that decides to produce their own energy through solar to meet their demands. The company with a monthly demand of 20,000 KWh per month shall build a solar rooftop of 200 KW to meet their demand.The company pays close to 6.5 rupees per unit for their grid energy resulting in a monthly cost of 1.3 Lakh rupees which is yearly cost making upto 15.6 Lakh rupees[3]. Building a solar plant for this capacity would result in an initial investment of 70 Lakhs with a yearly maintenance charge close to a lakh. The company also gets support from the government in form of subsidy close to 60% of the initial cost being covered through subsidy. In less than 5 years, the company could cover the investment for solar and the solar could function effectively for close to 25 years.

2)Energy efficiency — Designing an energy management system to reduce your energy bills could be the most effective way of reducing the carbon footprint and saving cost. It could be done with very little investment. The company could also sell the energy conserved as carbon credits. For example, the company saves 10000 Kwh of energy from their previous year’s consumption. The equivalent emission saved could be converted into carbon credits and the credits could be sold on the carbon markets.

3)Reducing waste — By recycling and repurposing the waste, you reduce the demand to buy new raw material. Practicing 3R,4R or 5R waste principles in the company could help in re-purposing the waste eventually reducing the demand for buying raw materials

4)Offset projects — Planting fruit trees to offset your carbon emissions could result in your making profits in the long run by selling the fruits of those trees.

For example, Reliance during the year 1997 had planted mango trees in Jamnagar to offset the pollution it was causing. The mangoes produced from the area were exported and Reliance is currently one of the biggest exporters of Mango in India. Several NGOs in India are helping companies to carry out offset projects similarly in rural villages helping farmers with a source of revenue[4].

What if we go about our business as usual?

Several ecosystems are facing tipping points because we’ve been going with business as usual taking no action for the past few decades. The planet is already drowning and it’s no longer a matter of living but a matter of survival for our species on earth. We are the cause and we should take responsibility for the damage we’ve done. Every ton of carbon emission put into the atmosphere has a social cost of $86 in India and $50 in the US[5]. For India, this will mean close to $210 billion dollars loss in the economy every year for the carbon emissions that the country emits. Sustainable development putting profit, planet and people should become the core focus of growth for companies if we intend to live on this earth. It has to be done today with urgency else we’ll have let the damage be done and we could hardly repair the damage in the future.

Does your company have a climate adaptation plan?

Covid exposed how fragile most business systems and processes are. If we can take one lesson from the Covid is that we need to make our processes antifragile, be prepared for what could be coming in the near future. It is evident that climate change is already affecting all businesses at different levels. The effects of climate change are only going to be increasing in the upcoming decades, the demand for raw materials is going to increase leading to an increase in the cost of procurement.

Key takeaways from this article:

1)No place on planet is safe from climate change

2)Businesses play huge role in saving the planet

3)Know your company’s carbon and environmental footprint

4)Find ways to reduce your carbon emissions and offset through ecosystem restoration projects

5)Taking climate action has huge potential in saving cost and generating new ways of revenue

6)Make a climate adaptation plan to sustain and protect your business from climate change

What livabl does?

We at Livabl help companies to reduce and offset their carbon emissions making them become climate neutral. Get in touch with us to know how you can make your company climate neutral.

References:

[1] https://www.ipcc.ch/sr15/chapter/spm/

[2]https://www.autoweek.com/news/green-cars/a36266393/tesla-made-more-money-selling-credits-and-bitcoin-than-cars/

[3] https://solarrooftop.gov.in/rooftop_calculator

[4] https://starofmysore.com/how-reliance-became-worlds-largest-exporter-of-mangoes/

[5] Country level social cost of carbon, Katharine Ricke, Laurent Drouet, Ken Caldeira and Massimo Tavoni,Nature Climate Change, Vol 8, October 2018