Carbon reduction: the two most impactful approaches for your business
Drive carbon reductions throughout your business by using these two types of initiatives
It has become a business imperative for your company to reduce its carbon emissions.
There are mounting pressures in the form of expanding climate-related legislative requirements and increasing consumer expectations. But there are also advantages: carbon reduction comes with cost-saving benefits like reduced energy bills and better supplier agreements, which can affect profits by up to 60% as McKinsey has found.
With these motivations in mind, how can your business actually achieve reductions?
There are two basic approaches to cutting emissions: substitution and efficiency improvements. These categories can help you identify, understand, and implement reduction initiatives – and thereby make significant progress toward net zero.
This article explains the two approaches, cites examples of reduction initiatives, and shares real-world success stories to inspire you.
Substitution
Substitution means reducing your business’s emissions by changing from high-emitting materials, suppliers, or technologies to lower-carbon options.
In practice, this means swapping out materials, vehicles, energy sources, or technical processes within your operations or supply chain.
Substitution can have an impact on all three emissions scopes, but your company will likely have more control over activities in your scopes 1 and 2 than in scope 3, which includes the upstream and downstream activities in your value chain.
What substitution initiatives can I implement?
Some scope 1 and 2 changes that your business may have control over implementing include electrifying your vehicle fleet (scope 1) and switching to renewable energy sources for your offices (scope 2).
By contrast, take the example of material purchases, which fall under the upstream scope 3 category “Purchased goods and services.”
If your business manufactures physical goods, your choice of materials is subject to various parameters such as quality requirements, design specifications, and cost considerations, which can complicate the process of switching from one material to another.
However, if you are able to find suitable substitutions, you can make significant reductions in your business’s scope 3 emissions, as the use case below demonstrates.
Use case: beverage production company
Say you work for a beverage production company which uses 1,000 kilograms of glass bottles in a year.
The virgin glass bottles you source from your supplier have an emissions cost of 1.10 kg CO2e per kilogram.
By switching from virgin glass to recycled glass, which emits only 0.64 kg CO2e per kilogram, you reduce your glass bottle emissions from 1,100 kg CO2e to 640 kg CO2e – a 42% decrease.
Even businesses that don’t produce physical goods will find emissions hotspots – and accordingly, significant reduction opportunities – in scope 3.
For example, a Normative customer in the legal sector worked with our Climate Strategy team to identify business travel (scope 3.6) as an emissions hotspot. Using data insights provided by Normative, the firm is engaging its flight providers to work on emissions reduction initiatives.
Regardless of your business type, scope 3 reductions will often require you to engage with your suppliers through strategies including setting environmental requirements, subsidizing renewable energy, and promoting responsible sourcing and circularity.
When suppliers refuse to adopt reduction initiatives despite concerted efforts, switching to lower-emissions suppliers may be necessary.
Scope 3 emissions may be challenging to reduce – but as they account for around 90% of emissions for most businesses, it is well worth the time investment to see the sizable impact on your business’s carbon footprint.
Efficiency improvements
Efficiency improvements give your company the same business outcome using fewer resources.
The most straightforward efficiency improvement initiatives to identify are the ones that involve reducing waste by minimizing superfluous and/or excessive consumption. These same types of efficiencies are found in cost-cutting initiatives and often have the win-win effect of reducing your expenditures as well as your carbon emissions.
What efficiency improvements can I implement?
If your company’s premises generate substantial emissions, improvements might involve enhancing the energy efficiency of your buildings; for example, installing timers and occupation sensors for lighting, or upgrading the sealing on doors and windows to reduce hot or cold air loss.
If you produce physical products, you can seek efficiency improvements in every step of your products’ cradle-to-grave lifecycles, from using energy-thrifty processing methods in manufacturing to the way the products are packaged. Taking packaging as an example: by changing your packaging shapes, you can minimize the package volume to enable more goods to be transferred per vehicle; you could also try reducing packaging weights – “lightweighting” – to increase fuel efficiency during transport.
These efficiency improvements can continue to have impacts even after you’ve sold your products. By improving the efficiency of your products, or extending their lifespan and allowing them to remain in circulation longer, you will reduce emissions in your “Use of sold products” category within scope 3.
Another efficiency strategy is to reduce fuel consumption by optimizing driving routes or reducing business travel. For a real-world example of this type of efficiency improvement – and why carbon calculations are vital for driving these improvements – see the success story below:
Success story: Eltel Group implements a win-win for cost savings and emissions reductions
Eltel Group is a field service provider with more than 50,000 employees.
In 2019, Eltel Group began to comprehensively account for its emissions. It identified an emissions hotspot in its fuel usage for company cars – which was an indicator of inefficiency that was hurting the organization’s finances and carbon footprint.
Eltel used this data to optimize technicians’ driving routes, saving both time and fuel – and, of course, reducing carbon emissions.
Within two years, Eltel had reduced its scope 1 emissions by 24.6% – which is a total of 5,012,748 kilograms of CO2-equivalents.
Table: reduction initiatives by approach
The table below gives an an at-a-glance reference to help you identify substitutions and efficiency improvements that can drive carbon reductions in your business.
The initiatives come from Normative’s experienced Climate Strategy Advisors, and are informed by hands-on experience in helping Normative customer companies reduce emissions.
| Type | Initiative | Description |
|---|---|---|
| Substitution | Electrifying your vehicle fleet | Switching the company’s vehicles to electric versions to reduce emissions directly controlled by the company. |
| Switching to renewable energy | Using lower-carbon renewable sources of energy for company operations such as offices. | |
| Engaging travel providers | Working with travel providers to switch from higher-carbon transportation (like flights) to lower-carbon alternatives (like trains). | |
| Switching to lower-emissions suppliers | Finding suppliers that offer lower emissions when current suppliers refuse to adopt environmentally friendly practices. | |
| Efficiency improvement | Reducing waste and excess consumption | Minimizing unnecessary consumption of resources, often resulting in cost reductions as well. |
| Enhancing building energy efficiency | Installing energy-saving features such as timers and sensors for lighting, and improving building insulation to minimize energy loss. | |
| Efficient packaging methods | Modifying packaging designs to reduce volume and weight, which enhances transport efficiency and reduces emissions from transportation. | |
| Optimizing product lifecycle efficiency | Implementing energy-efficient manufacturing processes and extending the lifespan of products to reduce their environmental impact over time. | |
| Optimizing driving routes and reducing travel | Adjusting driving routes and minimizing business travel to cut down on fuel consumption, exemplified by Eltel Group’s approach. |
How to implement reduction initiatives
The adage “You can’t manage what you don’t measure” holds true for emissions reduction.
Both substitution and efficiency improvements rely on accurate and comprehensive emissions calculations, especially for scope 3 emissions. This carbon data is the foundation that supports every strategic move toward net zero.
Aligning with an expert carbon accounting partner like Normative will help you transform your good intentions into measurable progress.
By embracing carbon accounting not just as a tool for reporting your emissions, but as the catalyst for decarbonization and a source of competitive advantage, you will ensure your business is well-equipped for long-term success.
Executive summary
- Businesses have substantial opportunities to reduce their carbon footprint through strategic substitution and efficiency improvements.
- By understanding and applying these approaches, companies can make meaningful progress toward sustainability and compliance with increasing environmental regulations.
- Accurate and comprehensive carbon data builds the essential foundation for these reduction initiatives.
Use Normative’s carbon accounting to accelerate your net-zero journey
Normative’s science-backed carbon accounting and expert Climate Strategy Advisors empower your business to make significant emissions reductions.
