As the green economy in the UK grows, we are seeing carbon reduction evolve from a CSR tactic to a business imperative and from a peripheral concern to an integral part a company’s strategy for long term profitability and growth. But why now? Climate change has been an urgent issue for a long time. In the UK, there have been two major triggers – increasing regulation and growing consumer demand.

Despite recent changes to the CRC Energy Efficiency Scheme in the Comprehensive Spending Review, which removed the financial incentives to taking early action, the legal requirements to reduce carbon emissions remain. In fact, the business community expects to face further regulation in the future.

According to research, most finance heads at the UK’s largest companies anticipate that all businesses will be required to measure their carbon footprint (72%) and pay a price for the carbon they emit (76%): 40% expect this to happen within the next decade, whilst 16% believe this will be the case within five years. Given that no company wants to be caught off-guard, these expectations are forcing businesses to examine their carbon posture sooner rather than later.

The rise of the carbon conscious consumer is also pre-empting change. A growing base of highly discerning, ethical consumers are using their purchasing power to demand ethical and transparent business practices from the companies they buy from; even in the recession. According to another survey, 62% of consumers said environmental concerns influenced their purchasing decisions as much as at the height of the recession as they did before the economic crisis infolded, and just over a quarter claim they were even more intent to buy green in 2009 than they were in 2008.

Companies are responding to these consumer demands and scrutinising their own carbon footprint up and down their supply chain, causing a ripple effect across industry. We’re now seeing a step-change on environmental awareness amongst all companies, large and small. Indeed, there’s evidence to suggest that small businesses can also make a difference. Government statistics show that SMEs account for 45% of business energy use.

As more and more businesses make a public commitment to sustainability, it’s becoming easier for consumers to target companies based on their carbon reduction pledges. And as an increasing number of sustainable products compete on price, the barriers to selectively buying green marketed products for the remaining few are being swept away.

And yet despite these drivers, companies are only just beginning the journey towards a low carbon future. The same survey with UK finance directors revealed that while business leaders believe that reducing carbon emissions is important to winning business and creating new market opportunities (48%), a similar proportion does not have a clear corporate target for carbon reduction. A further 16% do not even know if their company has a target, and three quarters (74%) of finance decision makers admit that their business does not currently measure its carbon footprint.

Clearly the business community has some way to go in terms of realising and acting on carbon reduction measures, particularly in the area of capturing carbon data. However, there is already a wide network of support and resources available in the marketplace to support businesses along the path to a low carbon economy.

The following advise may help companies take those all important next steps:

  1.  Put pen to paper: Before embarking upon a series of carbon cutting measures, it’s always advisable to set an end goal, develop a manifesto and flesh out a long term strategy. Articulating a vision for carbon reduction and communicating it to staff and customers will lay a strong foundation for change. Working within this framework will add form and impact to a company’s carbon reduction measures.

Take Benchmark Software for example. The accounting software company developed a comprehensive carbon reduction policy which was signed by all members of staff and displayed in the office, on its website and provided as a template for its customers to repurpose. In doing so Benchmark Software not only managed to operate as a more efficient and cost effective enterprise but it also built sustainability into its business offering, helping it win and maintain new business.

  1.  Mobilise staff: The impetus to act on green initiatives often comes from staff. Companies that take a stand on their environmental commitments may well experience a boost in employee morale.

Wiles Greenworld, an office supplies company, attributes its enviable staff retention rate to the affects of pursuing a strong sustainability agenda. Employees are clearly proud of their company’s values and the opportunities they afford them to make a difference.

However, setting and meeting ambitious carbon reduction targets also requires strong leadership. In Wiles Greenworld’s case, the sustainability development director runs comprehensive induction programmes for all staff and monthly departmental meetings are used to provide ongoing training for all departments.

It’s also important to recognise that while staff might buy into the idea of their company ‘going green’ they might not yet have fully entered into the mindset of taking responsibility themselves, particularly when work presents so many other distractions. In which case, a business might want to consider how they can enforce change without eroding staff autonomy. For example a well known pharmaceutical retailer recently banned all waste paper baskets from their offices to encourage staff to recycle.

  1.  Neutralise claims of greenwashing: An increasing number of companies are awake to the commercial opportunities associated with laying claim to a sustainability strategy. However, many of these environmental pronouncements have later proved hollow and misleading. This practice of greenwashing is eroding consumer trust. According to a survey, 59% of consumers are sceptical about the environmental claims that companies make. However, by applying for a robust, independently audited carbon certification it is possible for a company to differentiate itself as genuine and true to its commitments.
  2.  Wear your badge of honour: Having achieved certification with a credible body, it’s also important to market this success and indeed any other badge of honour, including the Carbon Reduction Label, by incorporating these achievements into a wide range of marketing activities – from overall brand reputation; through to point-of-sale promotion; internal communications and external recruitment, as well as a differentiator in business development and customer marketing.

Capitalising on these marketing opportunities not only serves the enterprise well but also adds credence to a company’s overall brand values. In first direct’s case, it was able to reinforce its brand values and establish the retail bank as a place people wanted to work because of its record for being ‘environmentally responsible’.

Everyone is invited to jump on the sustainability bandwagon – but not everyone deserves to be credited for doing so. Fortunately it’s getting easier to differentiate between those who genuinely trade with integrity and those that fall short. Crucially those businesses that truly embrace their role in a low carbon economy will thrive.