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5 Benefits of Carbon Management

Climate change is listed among the top 10 risks to global businesses according to the Allianz Risk Barometer 2018.

As such, carbon management is a must for any company that wants to remain competitive in today’s economy.

Carbon management is the process of measuring and reducing carbon dioxide (CO2) and other greenhouse gas emissions related to your operations, including your supply chain.

When done effectively, carbon management offers many advantages. Here are five of the biggest benefits of carbon management:

1. Lower operating costs

2. Meet customer demands

3. Improve brand perception

4. Respond to investor pressure

5. Comply with regulations

Below, we’ll look at each of these benefits in greater detail.

5 Benefits of Carbon Management

1. Lower operating costs

The most obvious benefit of carbon management is that it can save your organization money. How? Many of the steps companies take to reduce their carbon emissions also result in a reduction in costs.

Reducing your energy usage, for example, shrinks your carbon footprint and your utility bill. For a 500,000 square foot office building, a 7% energy usage reduction over 3 years can result in a cumulative cost savings of $120,000 and an increase in asset value of over $1M, according to EnergyStar.

2. Meet customer demands

Today’s consumers have voiced concerns about the carbon footprint of the products and services they buy — and they’re ready to put their money where their mouth is.

According to the Carbon Trust, 45% of shoppers would be prepared to stop buying their favourite brands if they refused to commit to measuring their product carbon footprint.

As a result, 75% of companies consider consumers as one of the key drivers of risks and opportunities related to carbon emissions from their products and services, according to GreenBiz and Trucost’s State of Green Business 2018.

3. Improve brand perception

Effective carbon management can also influence brand perception — how consumers think, feel, and react to your company — and in turn, how much they’re willing to pay for your product or service.

According to the Carbon Trust, 56% of people said they would be more loyal to a brand if they could see at a glance that it was taking steps to reduce its carbon footprint.

What’s more, McKinsey found that upward of 70% of consumers would pay an additional 5% for a green product than for a comparable non-green alternative.

4. Respond to investor pressure

Consumers aren’t the only ones who care about your organization’s carbon emissions. Increasingly, investors are concerned about the carbon footprint of their portfolio.

If an investor owns 1% of a company, the investor also owns 1% of the company’s carbon emissions, says Marija Kramer, Head of Responsible Investment Business at Institutional Shareholder Services.

As a result, more and more investors are diverting capital away from inefficient, carbon-heavy companies to those that are taking steps to reduce their carbon footprint.

5. Comply with regulations

Today, there are over 1,260 climate laws around the world — a 20X increase since 1997. Or, to put it another way, the number of climate laws has doubled every 4-5 years. A large number of these laws focus specifically on reducing carbon emissions (and penalizing companies who fail to do so).

In order to comply with the growing number of regulations, companies will need to not only implement an effective carbon management strategy but also document and report on their efforts.

Your next steps

Now that you’ve seen the ways a carbon management program can benefit your organization, you might want to learn more about carbon management. We recommend checking out this article on air emissions data management trends to see what’s new in the field.

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