The Commercial Importance Of Carbon Reduction Plans For Family Businesses

Do you really need a carbon reduction plan? In 2024, the answer for UK family businesses is a resounding yes – and not just because it’s the right thing to do for the planet. Today, it’s becoming an essential part of doing business in the UK.

At AXIOM, we’ve written about the importance of carbon reduction plans before. At that time, the UK government had set out that all firms bidding for major contracts worth over £5m for Central Government and arms-length public bodies had to have a carbon reduction plan in place.

Things have moved on quickly since then. Now, companies must also publish their net zero plans online with annual updates. The NHS has introduced similar stipulations for suppliers wishing to tender for their contracts.

Today, it’s never been more important for businesses to report on their carbon emissions and demonstrate their commitment to net zero.

What’s Driving Carbon Reduction Plans?

In 2024, we’re seeing an increasing number of private sector organisations follow the government’s lead, and asking to see proof of their suppliers' carbon credentials.

This reflects a wider trend of companies being more focused on reducing their own Scope 1, 2 and 3 emissions.

Scope 3 emissions (those linked to an organisation’s supply chain) account for 80%+ of the emissions for most organisations and cutting them depends on supplier engagement.

Companies depend on data, proof and carbon reduction plans from their suppliers to deliver on their own net zero ambitions.

As part of this, organisations are introducing sustainability criteria into the procurement process that includes ensuring suppliers are committed to cutting emissions.

For family businesses without a carbon reduction plan in place, dealing with these companies is becoming increasingly difficult – and they are likely to be excluded from the procurement process.

Downward Pressures – Key Drivers Behind Supplier Net Zero Demands

There are several factors that are encouraging suppliers to report on and cut emissions. These include:

• A Focus on Scope 3

  As we mentioned above, for many industries, a large portion (80%+) of carbon emissions come from the supply chain (Scope 3).

  Unlike Scope 1 and 2 emissions, Scope 3 emissions are more challenging to report and reduce (having the right software platform like AXIOM makes it much easier!).

  By embedding net zero requirements into procurement processes, organisations can gain both visibility and control over supply chain emissions. It allows them to see where their Scope 3 emissions are coming from, and where they can focus their efforts in reducing these emissions.

  This can either be by putting pressure on the existing suppliers, or looking elsewhere!
  

• Government Legislation

  With its procurement rules on major contracts and NHS work, the government has set a precedent that the private sector is following.
  

  It’s also creating a chain reaction – as companies that want to work with the government themselves put pressure on their own supply chains to follow suit.
  

• Reputational Benefits

  People have never been more aware or concerned about climate change, and businesses know that!
  

  Getting serious about sustainability and cutting emissions isn’t just a positive for the planet, it has wider organisational and reputational benefits too. Whether a family business wants to attract employees, enhance its environmental credentials and market reputation, or gain access to finance, having a carbon reduction plan in place can help.
  

• Derisking The Supply Chain In many areas of the world, climate change is already having an impact on supply chains - whether it’s crop failures, or disruption and damage from extreme weather.
  

  For family businesses thinking on a generational timeframe, working with suppliers to achieve net zero is an investment in mitigating these risks and building long term resilience.

Carbon Reduction Planning - Key Takeaways

The key takeaway is that if you don’t have a carbon reduction plan in place, you need one!

Without a Carbon Reduction Plan, your organisation is leaving opportunities on the table, and you are limiting the kind of contracts you can win. Outside of this, you may also be risking losing customers, negatively impacting employee recruitment and retention, and damaging your reputation.

Having a carbon reduction plan in place puts you in the best position to take advantage of current and future business opportunities with the ever-increasing number of companies that demand one as part of the procurement process.

Scope 3 Emissions and Carbon Reduction Plans

With Scope 3 making up the lion’s share of emissions for most organisations, cutting these is an essential part of achieving Net Zero – and to do that, you need to be able to measure and report on them.

This can be challenging and complicated, as it requires engagement with your suppliers. One way of overcoming this challenge is by utilising dedicated and specialist software that has been specially designed to calculate and monitor key emissions.

About AXIOM

AXIOM provides family businesses with complete visibility, access and control over the data required for quick and easy reporting. This is done using carbon reporting software which seamlessly collates emissions data across the year, automatically calculates GHG emissions and accurately reports on scope 1, 2 and 3 emissions.

AXIOM help make the reporting process simple to ensure compliance and maximise chances of securing the contracts that matter, so that a business can grow to its full potential.

Supporting family businesses in their sustainability journey is a genuine passion of theirs– and they are committed to providing the right tools to make this easier.