Starting your journey to reduce emissions and save on energy costs

April 27, 2023 | 7 minute read

Every business, large and small, has an environmental impact. This is because most daily business activities – using electricity, disposing of waste, searching the internet, commuting to the office, sending packages – generate greenhouse gas (GHG) emissions. It can all add up fast and seem impossible to reduce. But you can start by calculating your company’s carbon footprint, or the sum of all emissions generated by your business activities. Then, with an understanding of how big your impact is, you can start taking steps to cut back and save money.

  • Lowering your energy costs is one tangible benefit of reducing your small business’s carbon footprint. For example, improving energy efficiency by switching to LED lights can save the average small business more than $500 per year. Environmental sustainability is also an increasingly significant consideration in many corporations’ procurement decisions and supplier relationships, and it matters for customer and employee retention. According to a recent IBM report, 71% of employees want to work for a company with a strong green footprint.

Companies of all sizes have to think about their environmental footprint and what they can do to reduce it. Bank of America has been thinking about this for decades; its strategy is simple, the four Rs:

 

  1. Reduce energy consumption.
  2. Purchase energy from renewable sources.
  3. Realign business operations to save costs by installing more energy-efficient equipment, reducing waste and implementing cool roofing. These actions can also result in cost savings.
  4. Remove carbon and lower emissions through the use of offsets.

 

In 2019, Bank of America achieved a goal of balancing the amount of carbon produced with energy savings efforts, also known as being carbon neutral, across its operations. It took a lot of people and a lot of work, but it began the way any business, no matter the size, would start. And that is by asking – what goes into a company’s environmental footprint?

 

Understanding your company’s carbon footprint

Your carbon footprint, also referred to as an “emissions footprint,” is all the carbon dioxide, methane and other greenhouse gases generated directly and indirectly by your company. The sources of emissions in your footprint fall into three categories called scopes:

 

  • Scope 1: Includes emissions that occur directly from sources that the company owns or controls. These can result from running machinery, burning fuel to heat buildings and driving company vehicles.
  • Scope 2: Includes emissions that occur through purchased electricity, steam, heat and cooling from a utility company.
  • Scope 3: Includes emissions that occur up and down your value chain, such as business travel, waste disposal, employee commuting, purchased goods and services, transportation and distribution, investments, franchises, leased assets, and use of sold products. This category typically makes up the largest portion of a company’s carbon footprint and is the hardest to tackle because it is affected by decisions made outside of the company.

 

This framework was developed by the Greenhouse Gas Protocol, the leading authority on GHG emissions accounting, and is the basis for calculating your carbon footprint.

 

How do you measure the size of your company’s carbon footprint?

Now that we know what makes up a company’s environmental footprint, the next question is: How do you measure it? According to a survey conducted by Bank of America, it turns out that 86% of our small business clients don’t know the answer to that question.

 

There are many tools to help measure your carbon footprint. The SME Climate Hub has one of them, offering a free calculator designed for small businesses to measure their direct and indirect emissions. The U.S. Environmental Protection Agency (EPA) also has a guide and calculator designed specifically for small businesses looking to take inventory of and estimate their annual emissions. Scope 1 and Scope 2 emissions tend to be more straightforward to measure than Scope 3 emissions – consider starting there and adding Scope 3 down the road.

 

How do you reduce your emissions and energy costs?

Once you have calculated your emissions footprint, there are several ways to start reducing it.

 

Easy, low-cost steps include:

 

  • Reducing energy consumption overall: Improving your energy performance isn’t just about choosing renewable energy. You can make significant strides by reducing the amount of energy your business uses. For example, you could replace lighting with low-energy alternatives like LEDs or adjust the temperature in your building.
  • Taking steps to reduce waste: Waste generates methane while it decays in landfills, contributing emissions that count toward your footprint. Some ways to reduce waste include switching your plastic forks in the break room to reusable ones, starting a composting program, reusing materials and even implementing a zero-waste policy. Although this last one may sound ambitious, minimizing waste can generate significant financial savings. Setting stretch targets can help you focus on tackling the challenge.
  • Implementing work-from-home days: Reduce emissions associated with commuting through work-from-home days. Also, encourage video meetings instead of in-person meetings when possible. Work-from-home days can also cut down on costs required to light, heat and cool your office.
  • Benchmarking your performance: You can benchmark the performance of commercial buildings via the EPA’s Portfolio Manager, using a tool on the Energy Star website.

 

After calculating your footprint, also consider having the data assured – meaning validated by a third party – through a vendor such as The Carbon Trust, which can then provide a statement of verification. This step is a best practice, as it helps confirm your calculations and gives vendors, customers and employees confidence in the integrity of the data.

 

Setting goals and minimizing your carbon footprint

Setting goals and targets is the next step, helping you focus and measure progress. Determine what emissions scopes to include in your target and set a percentage reduction to work toward – for example, a 14% reduction in Scope 1 and 2 emissions by 2026. You could also set short-term goals like switching to renewable energy. These targets should be milestones to bigger, longer-term goals, such as halving emissions within ten years.

 

With goals in place, start thinking about more systemic strategies to minimize emissions. Also, consider talking with other businesses to learn how they are approaching sustainability, or reach out to your local chamber of commerce or the U.S. Small Business Administration to see if they offer any programs or resources to help.

 

Systemic, higher-cost steps include:

 

  • Transitioning to renewable energy: One of the most important strategies for reducing your carbon footprint is switching to renewable energy. You can do this in several ways, including through power purchase agreements.
  • Creating operating efficiencies: Implementing manufacturing and operational efficiency improvements can include installing low-carbon cooling, heating and ventilation systems as well as switching to electric cars and trucks. These activities also help promote the conversion to EVs.
  • Taking supply chain actions: Include environmental and carbon footprint data in your supplier decisions or request that your suppliers set GHG emissions reduction targets.
  • Reducing or optimizing business travel: This could involve anything from hosting a meeting virtually or over the phone instead of in person to taking a train or bus instead of flying or driving.
  • Purchasing carbon offsets: Carbon offsets cancel out emissions by supporting emissions reductions elsewhere. You can buy offsets that support renewable energy projects, plant trees or distribute cleaner cooking stoves in developing countries. When buying carbon offsets, look for certifications like Green-e.

 

How to bring employees along for the journey

To be successful in your carbon journey, employees must play a part. To help ensure they are, you can:

 

  • Make colleagues at all levels accountable for contributing to your business’s success.
  • Create a workplace incentive program that promotes the reduction of carbon emissions in employees’ everyday work lives, such as low-waste lunches and low-emissions transportation.
  • Find ways to celebrate achievements along the way.
  • Utilize the UN Climate Change Global Innovation Hub – a resource for employees to become involved in helping to create transformative innovations for a low-emissions future.

 

Other resources

You can find a deeper dive into the Greenhouse Gas Protocol on their website. Also, check out the SME Climate Hub and the 1.5°C Business Playbook, both of which are designed to help companies and organizations of all sizes align with a low-carbon future. These resources contain guidelines for companies to set targets, strategy and actions to help them achieve emissions reductions and associated cost savings.

Important Disclosures and Information

 

Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. Consult your own legal and/or tax advisors before making any financial decisions. Any informational materials provided are for your discussion or review purposes only. The content on the Center for Business Empowerment (including, without limitations, third party and any Bank of America content) is provided “as is” and carries no express or implied warranties, or promise or guaranty of success. Bank of America does not warrant or guarantee the accuracy, reliability, completeness, usefulness, non-infringement of intellectual property rights, or quality of any content, regardless of who originates that content, and disclaims the same to the extent allowable by law. All third party trademarks, service marks, trade names and logos referenced in this material are the property of their respective owners. Bank of America does not deliver and is not responsible for the products, services or performance of any third party.

 

Not all materials on the Center for Business Empowerment will be available in Spanish.

 

Certain links may direct you away from Bank of America to unaffiliated sites. Bank of America has not been involved in the preparation of the content supplied at unaffiliated sites and does not guarantee or assume any responsibility for their content. When you visit these sites, you are agreeing to all of their terms of use, including their privacy and security policies.

 

Credit cards, credit lines and loans are subject to credit approval and creditworthiness. Some restrictions may apply.

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S" or “Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC, and a wholly owned subsidiary of BofA Corp.

 

Banking products are provided by Bank of America, N.A., and affiliated banks, Members FDIC, and wholly owned subsidiaries of BofA Corp.

 

“Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets division of Bank of America Corporation. Lending, derivatives, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.

 

Investment products: