As climate change continues to dominate the global agenda, large businesses are under increasing pressure to reduce their carbon dioxide and take a more proactive approach to carbon management.
In this article, we explore five key trends that businesses can expect to see in carbon management over the next few years. From the growing adoption of carbon pricing and the rise of net zero commitments to the increasing focus on scope 3 emissions and the use of technology to monitor and reduce emissions, it's clear that the landscape of carbon management is rapidly evolving.
Read on to learn more about these trends and how they could impact your business in 2023.
In order to begin, let's outline a few terms and definitions so that we have a common understanding.
Carbon management is the process of reducing the amount of carbon dioxide (CO2) that is produced and released into the atmosphere. It involves a range of activities that aim to reduce carbon dioxide from sources such as power plants, industrial facilities, and transportation, as well as to increase the amount of carbon that is stored or removed from the atmosphere through activities such as reforestation and carbon capture and storage. Carbon management is an important aspect of efforts to address climate change, as the excess of CO2 in the atmosphere is a major contributor to global warming.
Carbon management research is the study of strategies, technologies, and policies that can be used to reduce GHG emissions and increase carbon storage. This research can encompass a wide range of topics, including the development of low-carbon energy sources, the design of more energy-efficient buildings and transportation systems, the implementation of carbon pricing mechanisms, and the evaluation of the effectiveness of different carbon management strategies. Carbon management research is typically interdisciplinary and may involve collaboration among scientists, engineers, policymakers, and other stakeholders. The goal of carbon management research is to identify and promote the most effective and efficient approaches for reducing carbon and addressing climate change.
Carbon management has become increasingly important in recent years due to growing concerns about climate change. The Intergovernmental Panel on Climate Change (IPCC) has reported that the concentration of CO2 in the atmosphere has reached levels not seen for at least 3 million years, and that this increase is primarily due to human activities such as the burning of fossil fuels, land use changes, and deforestation. The IPCC has also warned that without significant reductions in carbon dioxide, the Earth's average temperature is likely to rise to levels that could have serious consequences, including more frequent heatwaves, sea level rise, and more severe storms. As a result, there is increasing pressure on governments, businesses, and individuals to reduce their carbon dioxide and adopt more sustainable practices. This has led to a rise in carbon management initiatives at all levels, including research, policy development, and the deployment of new carbon management technologies.
If your organisation is aiming to reduce emissions, here are the trends you should monitor.
One of the key trends in carbon management that businesses can expect to see in 2023 is increased adoption of carbon pricing. Carbon pricing refers to the use of economic instruments, such as taxes or cap-and-trade systems, to put a price on carbon emissions and encourage companies to reduce their carbon footprint. This can be done through internal carbon pricing, where a company sets its own internal price for carbon and uses this to guide decision-making and incentivise emissions reduction, or through external carbon markets, such as the European Union Emissions Trading System (EU ETS) or the Chicago Climate Exchange (CCX).
The adoption of carbon pricing is on the rise as more and more companies recognise the benefits it can bring. By putting a price on carbon dioxide emissions, businesses are incentivised to invest in low-carbon technologies and practices, driving innovation and helping to reduce their overall carbon footprint. Carbon pricing can also provide a financial benefit for companies that are able to successfully reduce their emissions, as they can sell excess carbon credits or use them to offset their emissions.
Examples of companies that have implemented internal carbon pricing include Microsoft, which has set an internal price of $15 per tonne of carbon, and Unilever, which has set an internal price of €40 per tonne. Both companies have reported significant emissions reductions as a result of their carbon pricing programs. In terms of external carbon markets, companies such as BP and Shell have participated in the EU ETS, while Goldman Sachs and JPMorgan Chase have participated in the CCX.
Another significant trends in carbon management over the next few years is expected to be the growing focus on scope 3 emissions. In the past, companies have typically focused on reducing scope 1 and 2 emissions, which refer to direct and indirect emissions from their own operations. However, as the importance of the value chain in driving emissions becomes more apparent, more companies are beginning to recognise the need to reduce scope 3 emissions as well.
Scope 3 emissions refer to indirect emissions from the use of a company's products and services, and can include things like emissions from the transportation of goods, emissions from the use of products by customers, and emissions from the disposal of products. These types of emissions can often be significant, particularly for companies in industries with large supply chains, such as retail and manufacturing.
To reduce scope 3 emissions, companies can take a number of steps, including working with suppliers to reduce emissions in their own operations, developing more sustainable products, and implementing programs to encourage customers to use products in a more sustainable way. For example, a clothing retailer might work with its suppliers to reduce emissions in their manufacturing processes or develop a program to encourage customers to donate used clothing instead of disposing of it in landfills.
Overall, the trend towards reducing scope 3 emissions is likely to continue in 2023 and beyond, as companies become more aware of their role in driving global emissions. By taking steps to reduce scope 3 emissions, businesses will not only be helping to reduce their environmental impact, but also creating a more sustainable value chain that can help them remain competitive in an increasingly carbon-constrained world.
Net zero commitments refer to a company's pledge to reduce its carbon dioxide to a level that can be offset through the use of carbon credits or other mitigation strategies, effectively resulting in zero net emissions. These commitments are becoming increasingly popular as the impacts of climate change become more evident and the push for decarbonisation intensifies.
One example of a company making a net zero commitment is Google, which announced in September 2020 that it would become carbon neutral by 2030 and reach net zero emissions by 2040. To achieve this goal, the company plans to use a combination of renewable energy, carbon offsets, and electrification of its operations. Other companies that have made similar commitments include Microsoft, Amazon, and Unilever.
Net zero commitments are not without their challenges, as they require significant investments and changes to business operations. However, they also present opportunities for companies to innovate and differentiate themselves in the market, as consumers and investors increasingly prioritise sustainability in their purchasing decisions. Companies that can successfully implement and achieve their net zero commitments may also benefit from cost savings and increased competitiveness in the long run.
One of the key trends in carbon management that businesses can expect to see in 2023 is the increased use of technology to monitor and reduce greenhouse gas emissions. With the growing awareness of the importance of sustainability and the need to reduce carbon dioxide, companies are turning to advanced technologies like IoT sensors, data analytics, and machine learning to help them track and reduce their environmental impact.
For example, IoT sensors can be used to monitor energy consumption in real-time, providing valuable insights into how a company's operations are impacting the environment. By analysing this data, businesses can identify areas where they can make changes to reduce energy use and lower their GHG emissions. Similarly, data analytics can be used to analyse large sets of data to identify patterns and trends, helping companies to better understand their carbon footprint and identify opportunities for improvement.
Machine learning, on the other hand, can be used to automate the process of analysing and interpreting data, making it easier for companies to identify areas where they can reduce their emissions. For example, machine learning algorithms can be used to analyse patterns in energy consumption data and predict when energy demand is likely to be high, allowing companies to take proactive measures to reduce their energy use during these periods.
In addition to these individual technologies, there is also a growing trend towards the use of carbon management platforms. Net0 offers a comprehensive solution for businesses looking to measure and reduce their emissions, all in one place. Through its comprehensive suite of tools, Net0 allows businesses to accurately track and monitor their carbon footprint, identify areas for improvement and take action to reduce emissions. By leveraging advanced analytics and machine learning algorithms, Net0 provides insights that help organisations make informed decisions about their sustainability efforts and become more efficient in their operations.
The platform also provides benefits for other stakeholders, such as investors, customers, suppliers and regulators. By providing an easily accessible point of reference for managing carbon emissions, Net0 enables businesses to demonstrate their commitment to sustainability and build trust with these external stakeholders.
Overall, the increased use of technology in carbon management is likely to be a key trend in 2023, with more and more companies leveraging these advanced tools to monitor and reduce their greenhouse gas emissions. So, it is important for businesses to stay up-to-date with the latest technological advancements in order to effectively track and reduce their GHG emissions.
As businesses strive to reduce their carbon emissions, it's important to consider the role of stakeholders in this process. Engaging with employees, customers, and investors can not only help to build support for sustainability efforts, but can also provide valuable insights and ideas for reducing emissions.
One example of this is through employee engagement programs. Many companies are now offering training and resources to help employees understand the impact of their actions on the environment, and encourage them to adopt more sustainable behaviours at work and at home. This can not only reduce emissions, but can also improve employee satisfaction and productivity.
Net0 revolutionises the process of economically measuring and accounting for employees' carbon emissions. Sustainability managers, department heads, operations teams and even individual employees can be incorporated directly into the platform to track their emissions - from commuting to work to working remotely. This platform not only provides a transparent view, but also offers insight on how to reduce emissions and provides action cards that empower team members to make an impact in their efforts towards emission reduction.
Customers are also becoming increasingly aware of the environmental impact of the products and services they consume. Companies that engage with customers and seek their feedback on sustainability efforts are more likely to build trust and loyalty. For example, a company that consults with customers on the environmental impact of its products, and provides information on how they can reduce their carbon footprint, is more likely to win customer loyalty and support.
Finally, investors are also taking a closer look at the sustainability efforts of companies they invest in. Companies that engage with investors and provide transparent and comprehensive reporting on their sustainability efforts are more likely to attract and retain investment. As the demand for sustainable investment continues to grow, businesses that prioritise engagement with stakeholders will be well-positioned to succeed in the future.
Net0 offers businesses the opportunity to share their public dashboard with investors, thus bolstering transparency and demonstrating progress towards net zero.
In conclusion, it's clear that carbon management is a rapidly evolving field, and businesses can expect to see several key trends emerge over the next few years. From the adoption of carbon pricing and the rise of net zero commitments to the increasing focus on scope 3 emissions and the use of technology to monitor and reduce emissions, it's important for businesses to stay up-to-date and proactive in their approach to sustainability.
Additionally, the importance of engaging with stakeholders, including employees, customers, and investors, cannot be underestimated. By seeking input and feedback from these groups, businesses can build support for their sustainability efforts and create a more comprehensive and effective approach to reducing emissions. As the world continues to grapple with the challenges of climate change, the trend towards more proactive and innovative carbon management strategies is only set to continue.
Book a demo to see how Net0 can help your business to reduce carbon emissions and protect the planet. Together, we can make a difference.