For many small and mid-sized businesses, measuring carbon emissions can still seem like something reserved for large public companies. There may be no immediate regulatory requirement to calculate a carbon footprint, publish a sustainability report, or establish formal reduction targets.
But there is another reason to pay attention: your customers may start asking.
Your Emissions Can Become Someone Else’s Scope 3 Emissions
Large companies are increasingly measuring not only the emissions from their own operations, but also emissions throughout their value chains. These are commonly referred to as Scope 3 emissions.
If your company supplies products, materials, transportation, packaging or other services to a larger organization, the emissions associated with what you provide may form part of that customer’s Scope 3 footprint.
That creates a simple business reality: even if your company isn’t required to report emissions, a major customer may need information from you to meet its own reporting or reduction objectives.
Carbon Data Could Become Part of the Buying Decision
Initially, customers may simply ask whether you measure your emissions. The next questions could be more specific:
What is your carbon footprint? Have you established a baseline? What are you doing to reduce emissions? Can you provide emissions information associated with the products or services we purchase?
Eventually, carbon performance could become another supplier consideration alongside price, quality, service and delivery.
For an SME, waiting until an important customer sends a detailed sustainability questionnaire may not be the best time to start figuring this out.
Start With What Matters
The good news is that establishing a useful carbon baseline doesn’t have to begin as an expensive or complicated exercise.
For many businesses, particularly manufacturers, the first step is identifying the major sources of emissions. Natural gas, electricity, company vehicles, transportation and other significant energy uses are logical places to begin.
Existing accounting and operating records often contain much of the information required: utility bills, fuel purchases, freight records and production data.
From a CFO’s perspective, this is also where carbon management becomes particularly interesting. Many sources of carbon emissions are also sources of cost.
Reducing energy consumption, improving transportation efficiency or eliminating waste can potentially lower emissions while improving profitability.
Be Ready Before the Question Arrives
SMEs don’t necessarily need elaborate sustainability departments or lengthy reports. But understanding your carbon footprint before a major customer requests the information can put you in a much stronger position.
The question may no longer be simply, “Are we required to measure our emissions?”
A better question may be:
“When one of our best customers asks about our carbon footprint, will we have an answer?”
The Carbon Trail helps SMEs understand where their emissions come from, determine which ones matter most, and develop practical roadmaps for reducing both carbon and cost.