Blog - Archive for 'Sustainability and CSR'

What Does the Carbon Reduction Commitment Mean for SME’s?

The Carbon Reduction Commitment, now called the CRC Energy Efficiency Scheme, was introduced by the Department of Energy and Climate Change’s (DECC) and starts in April 2010.  The DECC claims that it has been “designed to raise awareness in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure.”

It is a mandatory scheme that is “central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide (CO2) emissions, as set out in the Climate Change Act 2008.”

Basically, if any organization, including the Public Sector, used more than 6,000 MegaWatt-hours (MWh) in 2008 they will have to comply with the scheme or face penalties. The penalties will, according to the DECC, be “recycled” back to the organizations, depending on “how well they perform”. Only a cynic would suggest that this won’t be the case.

Anyway, each organization buys “allowances equal to their annual emissions” and there is a cap on the allowances that should encourage them to reduce their emissions. Interestingly, they can “buy” extra allowances.

You can find out more here

So how is this going to affect Small and Medium-Sized Enterprises (SMEs) ?

Well, organizations can be considered to be responsible for their emissions in different ways, both directly and indirectly, but it is generally accepted that organizations are expected to have some responsibility for the activities of their suppliers. (Remember the child-labour scandal that hit Primark a few years ago?) This means that they are expected to purchase “ethically”, or go somewhere else, so creating pressure on suppliers to be sustainable and ethical.

Now, the CRC doesn’t include any requirement for supply-chain emissions to be reported (although it does include subsidiaries of each organization). But at some point, SME suppliers are going to start being asked questions and those that have at least some answers are going to be considered more favourably. Also, in time, it is not unlikely that the scheme will be expanded to included organizations that use less than 6,000 MWh of energy. How long will it be before EVERY business has to report the energy it uses? Five years? Ten?

Back in September last year, I participated in a “Webinar” hosted by 2degrees. During it, I asked the question “How will the CRC affect SMEs? The answer, from Trewin Restorick of Global Action Plan, was that initially organizations participating in the CRC were going to be very inwardly focused on the cost of complying with the CRC, how they were going to reduce their emissions and where they appeared on the league tables. Ah yes. Each organization in the CRC is going to appear in league tables, so there is going to be a lot of concern about where their competitors or peers appear in the tables.

But, it was generally felt that eventually it was going to hit SME’s eventually. At a meeting on our sustainability projects in the Cornwall Council offices on 1st February, one attendee said that following discussions with Defra, it was felt that the one thing that was going to get SME’s moving on sustainability and reducing their carbon footprint was “fear”. Fear of losing business; fear of increasing energy costs and fear of their competitors getting ahead of them. It’s a good point.

At this stage, it’s still pretty easy for SME’s to ignore all of this. However, anything an SME can do at this stage to get ahead of the game, without being too much of a burden on time and money, will put them ahead of their competitors and ready for what the future holds. And probably save a lot of money on their electricity bills!

This question is obviously part of the larger issue of how the move towards sustainable business is going to affect SMEs and what it means to them. Stay tuned for more blogs on the subject.

Posted on 01/02/2010 in Sustainability and CSR by Simon Harvey (3 comments)