How to reduce the carbon footprint of your business

Achievable steps to reduce carbon emissions

Reducing your business's carbon footprint is no longer optional for many businesses, including small- and medium-sized businesses (SMEs). Businesses face increasing pressure from customers, regulators, and investors to take meaningful action on climate change. In the UK, drivers like PPN 006 (formerly PPN 06/21) - requiring carbon reduction plans in public procurement, B Corp certification, and requirements to achieve EcoVadis sustainability ratings or set SBTi-validated targets are pushing businesses to act. There is also growing recognition that as well as reducing environmental impact, lowering emissions can improve operational efficiency, reduce costs, and strengthen your brand.

This guide walks you through practical steps to reduce your carbon footprint, from understanding your current impact to implementing effective actions and setting targets.

Step 1: understand your current impact

The first step in reducing your carbon footprint is usually understanding where your emissions come from. Without a clear baseline, it's more challenging to measure progress or identify priorities, although in straightforward small businesses it is not always necessary.

A Carbon Footprint Assessment involves measuring emissions from energy use, travel, waste, supply chain and more using data from within the business.

Carbon footprint calculations are carried out in line with the Greenhouse Gas Protocol. The Protocol specifies three scopes for consideration in a footprint:

• Scope 1: Direct emissions (e.g., fuel used in heating premises or in company vehicles).

• Scope 2: Indirect emissions from purchased energy (e.g., electricity).

• Scope 3: Supply chain and other indirect emissions (e.g., deliveries, business travel, employee commuting).

For a detailed guide to calculating your carbon footprint, check out our guide to carbon footprint measurement. Or contact us for help.

Step 2: identify key sources of emissions

Once you've measured your carbon footprint, you can analyse the results to identify the most significant sources of emissions. For example:

• Analyse travel and transport: review how much emissions come from business travel, deliveries, or commuting.

• Assess your supply chain: suppliers often represent a major share of Scope 3 emissions. Review which goods and services you are buying generate the most emissions.

This will give you a good understanding of where best to focus your efforts to reduce the carbon footprint of your business. Delving into the detail of your footprint will allow you to pinpoint where actions will have the greatest impact.

Step 3: scope out reduction actions

With your key emission sources identified, you can start planning actions to reduce them. Every business is different, but the following may be relevant in reducing the carbon footprint of your business.

1. Reduce energy use

• Conduct energy audits to assess where inefficiencies exist in your buildings or processes.

• Invest in upgrades like LED lighting, insulation, and energy-efficient equipment.

• Install smart systems to optimise energy use.

• Transition to renewable energy by switching to green tariffs and/or installing on-site solar panels.

2. Tackle travel and transport

• Reduce unnecessary business travel by adopting virtual meetings.

• Transition company fleets to electric or hybrid vehicles.

• Encourage employee carpooling, cycling, or public transport through incentives and policies.

• Facilitate access to electric vehicles and bikes for your employees through salary sacrifice arrangements.

3. Address supply chain emissions

• Start by identifying the most impactful goods and services being purchased - those with high emissions associated with their production, transportation, or use.

• Work with suppliers to gather data on their sustainability practices and carbon footprints, prioritising collaboration with those actively working to reduce emissions.

• Where possible, consider alternative suppliers offering low-carbon or more sustainable products.

• Evaluate opportunities to streamline procurement processes, reduce waste in purchased materials, and choose local suppliers to minimise transport emissions.

• If you sub-contract services, think about building environmental clauses into your sub-contracts to ensure that your sub-contractors follow similar environmental practices to your own when working for you.

4. Reduce waste and promote circularity

• Conduct a waste audit to identify areas for reduction.

• Reduce single-use items and improve recycling systems.

• Look for circular solutions, such as repurposing materials or partnering with circular economy providers. For example, partner with companies that offer material recovery services, remanufacturing, or closed-loop recycling systems. Purchasing from suppliers offering refurbished products or take-back schemes can also help reduce emissions while promoting circularity.

Step 4: consider setting targets for emission reduction

Target setting is a critical step, but it requires care to ensure targets are both meaningful and achievable.

Absolute vs. intensity-based targets:

• Absolute targets focus on reducing total emissions (e.g., reduce emissions by 30% by 2030). These are ideal for businesses with stable or shrinking operations and/or with lots of opportunities for carbon reduction.

• Intensity-based targets measure emissions relative to a unit of output (e.g., emissions per product produced or per unit revenue). These allow for emissions reductions while accounting for business growth. They are better suited to rapidly growing businesses and/or those with fewer opportunities for carbon reduction.

For growing businesses, setting absolute reduction targets may not be realistic, and intensity-based targets can often be more appropriate. In some cases, even reductions in intensity may be unrealistic. Check out our article on how Green Business's carbon footprint is growing - and why we're OK with that.

Setting near- and long-term goals:

Setting both near- and long-term goals offers distinct benefits. Near-term goals, like "reducing carbon intensity by 40% over 5 years", can provide the incentive to pursue quick wins and help build momentum for action. Long-term goals, such as "achieving Net Zero emissions by 2040", can help to establish a strategic vision and ensure alignment with global climate targets. Together, these approaches help maintain focus on immediate progress while enabling the flexibility to adapt strategies over time.

Target-setting can be tricky to get right. It can be tempting to pluck round numbers and dates out of the air or simply to follow what others are doing. However, every business is different, and account needs to be taken of:

• Planned or expected growth in the business.

• The scale of opportunities for carbon reduction across the different scopes.

• Wider changes, such as the ongoing decarbonisation of the electricity grid and of supply chains.

We employ a sophisticated target-setting tool, which allows us to model the impact of these various factors. Even with the most sophisticated approach however, it is always wise to keep targets under review and refine them as your understanding of the opportunities for carbon reduction develop over time.

Science-based targets:

If deep reductions in absolute emissions are feasible, you could consider setting targets in line with the Science-Based Targets initiative (SBTi), ensuring your goals are consistent with limiting global warming to 1.5°C. Note that there is a specific approach to setting SBTi targets for SMEs.

Step 5: implement, monitor, and improve

Implementing actions and tracking progress are key to achieving your reduction targets.

• Develop an action plan: detail specific actions, who is responsible, and timelines for delivery.

• Update your business carbon footprint annually: it's vital to monitor your emissions and track progress over time.

• Review and adapt: regularly review performance against targets. If progress stalls, revisit your actions to identify additional opportunities or barriers.

Step 6: engage and communicate

Sustainability efforts are most effective when employees, customers, and stakeholders are on board.

• Engage employees: build a sustainability culture by encouraging employee-led initiatives and providing training. Perhaps think about becoming a Carbon Literate organisation.

• Communicate progress: share successes internally and externally through reports, case studies, and social media.

• Be transparent: publish annual emissions data and highlight the steps you're taking to improve. This builds trust and credibility with customers and investors.

Begin your journey to a lower carbon future

Reducing your business's carbon footprint is a journey, not a one-time task. By understanding your impact, identifying practical actions, setting clear targets and engaging your team, you can make meaningful progress toward sustainability.

If you need expert carbon consultancy services to measure, plan, or implement your carbon reduction strategy, get in touch with our team.

But remember...

Your business carbon footprint is only part of your business’s carbon impact on the world.

To truly understand and manage your full carbon impact, you need to think beyond your measured carbon footprint to your influence on the carbon impact of your clients/customers, staff and stakeholders. For example:

• Clients/Customers: Consider how your products or services affect your clients’ carbon emissions. Are there ways to innovate or redesign offerings to help them reduce their footprints?

• Staff: Provide education on climate action and facilitate positive steps outside of the workplace, e.g. through initiatives like Climate Perks.

• Stakeholders: Use your influence to advocate for systemic change by engaging suppliers, investors, and partners in meaningful climate commitments. Joining initiatives like Business Declares can help to amplify your impact.

By broadening your perspective, you can ensure your business is driving significant, positive change beyond its measured carbon footprint.