How to use your financial management software to enhance your business carbon footprint 

All business carbon footprints rely to some extent on an analysis of your business expenditure. In fact, some footprinting solutions rely solely on this approach (not advisable!). 

However you are measuring your footprint, the task can be made more simple and more accurate by accurately categorising your expenditure in whichever financial management you are using – Xero, QuickBooks, Sage etc. 

If you regularly use such software you will know that they come loaded with expenditure categories for use in reconciling all of your transactions – Travel & Subsistence, IT Software & Consumables etc. 

We recommend adding further breakdowns of these categories so that the data is more usable for carbon footprinting. 

We have just gone through this exercise in our own business. We use Xero so, from the main Dashboard we navigated to Accounting > Chart of Accounts and added some new accounts, as follows: 

Extra overhead accounts under ‘412 – Professional Services’: 

  • 412a – Professional Services – IT 
  • 412b – Professional Services – HR 

Extra overhead accounts under ‘463 – IT Software & Consumables’ 

  • 463a – IT software 
  • 463b – Office Consumables 
  • 463c – Small IT & Electrical Equipment 

Extra overhead accounts under ‘493 – Travel & Subsistence’: 

  • 493a – Travel – Car 
  • 493b – Travel – Train 
  • 493c – Travel – Subsistence 
  • 493d – Travel – Taxi 
  • 493e – Travel – Parking 

We will keep revising the account codes over time, to make them as precise as possible. This will streamline our footprinting process and make our business footprint more accurate, as well as giving us improved understanding of our business costs. 

Why not do the same? Check with your accountant first. 

Rethinking your coffee habits

For many of us, that fresh cup of coffee makes mornings manageable, and the last thing we want to hear is that we should be depriving ourselves of this simple pleasure. So don’t worry, we’re not going to tell you to drink less coffee, but we are going to talk about what the carbon emissions are from your cup of coffee, and how you can reduce these. 

The emissions: Poore and Nemececk (2018) estimate that one average cup of coffee is equivalent to 0.4 kg CO2e. This is roughly equal to the emissions associated with driving an average car 2km. However, these emissions vairy depending on many factors:

Certification of beans:

Not all coffee is produced equal, and some coffee can have detrimental effects on the biodiversity and deforestation. None will be perfect but certification schemes like the Rainforest AllianceFair for Life or Bird Friendly are good to look out for. Your local coffee sellers might have a direct trade agreement with producers, so it’s worth asking them about the environmental impacts of their coffee.

How do you make your coffee? 

Do you have a habit of guessing how many beans you need to grind, or overfilling your spoon with granules? Measuring out the right amount of coffee can often make for a better cup, and also means you don’t need to replenish your stock as soon.

The way you make your coffee can help reduce leftovers being thrown away. Using an AeroPress or a French press can help with this. AeroPress requires a filter, which are often thin paper sheets but reusable metal filters are also available.

Single-serve capsules are a more wasteful method of coffee preparation, with many of the capsules being tricky to recycle. There are some compostable pods available, but we advise experimenting with minimal waste techniques first. 

Experiment with different milk types

Dairy milk from cows, has a high carbon footprint. In fact, the dairy milk in your coffee will likely have a higher carbon footprint than the coffee itself. So you can easily reduce your carbon footprint by switching to alternative milks. Oat and soy milks have the lowest environmental impact. Barista-style oat milk seems to be the most popular choice for hot drinks. 

If you already drink your coffee black, you won’t have to think about any emissions from milk!

Coffee cups

Next, we need to consider drinking coffee on the move. Every year in the UK, we throw out 2.5 billion coffee cups! With less than 1% of these being recycled, it’s worth investing in a reusable coffee cup and keeping this in your work bag ready for those trips out for coffee. You could also consider prioritising time to sit inside and use a mug. 

The coffee grounds conundrum:

The final issue is what to do with the leftover coffee grounds. There are a lot of innovative projects out there. Used beans can be turned into burnable coffee logs, but the best solution for the home-user is to add them to your compost or to use them as fertiliser in your garden. Some coffee-selling businesses will participate in dedicated coffee ground recycling schemes.

We hope these suggestions help you think about your coffee habits, and how you could reduce the emissions associated with these. 

A Guide to Ethical Banking

Exploring ethical banking is an excellent way to ensure your business practices align with your values, especially concerning environmental and social responsibility. Surprisingly, switching to an ethical business bank account is one of the easiest steps your company can take to significantly reduce its environmental impact. 

For a quick check of the extent to which your current bank is investing in projects that contribute to the climate crisis, see bank.green.

What to Look Out for in an Ethical Bank:

Seek out banks that demonstrate a strong commitment to positive societal and environmental impacts. These institutions set themselves apart by financing only those companies and other investments that adhere to stringent ethical criteria. For banks primarily offering retail banking services, this approach is crucial in ensuring their operations contribute beneficially to society and the environment.

Ethical Banks to Consider:

If you were thinking about switching, see the Ethical Consumer guide to ethical business bank accounts, which highlights:

  1. Triodos Bank: Renowned for its dedication to positive environmental and social impacts. Listed as the strongest option, but they are currently not accepting new business customers.
  2. Co-operative Bank: offers a strong and robust ethical policy.
  3. Cumberland Building Society: the only major building society to offer business accounts and only lends for mortgage purposes, i.e. they do not invest more widely so the risk of significant environmentally damaging impacts is minimal.
  4. Starling Bank: is the one that most clients switch to because of the quality of their tech platform and service. They have made strong commitments on avoiding investment in certain industries such as fossil fuels and arms manufacture although its environmental reporting and transparency commitment is not comprehensive.

Making the Switch with the Switch Guarantee Service

If your business or organisation has less than 50 employees and an annual turnover of less than £6.5m, the transition to an ethical bank can be seamless and stress-free, thanks to the Switch Guarantee service. This service ensures the switching process is handled for you, at no cost. Notably, banks such as Triodos Bank, Starling Bank, The Co-operative Bank plc, and Cumberland Building Society, participate in this scheme. Not only is much of the switching process managed on your behalf, but any losses incurred during the switch are covered by the guarantee.

Steps to Switching Your Business Bank Account:

1. Open an Account: Select and open an account with your chosen ethical bank.

2. Set a Switch Date: Decide on the date for the switch to occur.

3. Update Details: Modify your invoice template and Terms and Conditions with the new bank details.

4. Inform Your Staff: Notify your team about the change in wage payments.

5. Notify Customers: Communicate your new banking details to regular customers.

6. Transfer Funds: Use the Switch Guarantee service to move your funds to the new account, if eligible.

7. Update Payments: Transfer regular payments to the new account, also facilitated by the service.

8. Adjust Payment Systems: Update settings on platforms like Stripe or GoCardless.

9. Integrate Bookkeeping: Set up the new bank feed on systems such as Xero.

Considering Long-Term Actions and Alternatives:

If an immediate switch isn’t possible, consider it as a future objective. Meanwhile, you might move any reserves to a climate-friendly bank as an intermediate step.

The Bottom Line:

Switching to an ethical business bank account is an effective way to ensure your company’s finances reflect its commitment to sustainability and ethical practices. It’s a move that not only aligns with your values but also contributes to a larger movement towards responsible and climate-conscious finance. Sharing your journey can inspire others and amplify the impact of ethical banking choices.

Data Storage and Measuring Cloud Computing Emissions

In this blog post, we delve into two primary questions: Is opting for cloud storage more environmentally friendly than utilizing internal data servers, and how can one assess the carbon footprint of using the major cloud storage providers?

When it comes to the environmental impact of storing data, the answer isn’t black and white. For individual users with hard drive storage, it’s generally more eco-friendly to use the storage built into your device, as it avoids the need to power and cool additional devices. Businesses, however, often require more extensive storage solutions. Here, they face three main options:

1. Internal, On-premise Data Centres – The traditional, and increasingly rare option, and often less energy-efficient.

2. Colocation Data Centres: Where customers rent servers in an off-site location – an intermediate option.

3. Hyperscale Data Centres (Cloud Data Centres): These are the most energy-efficient, optimizing machine use, employing advanced cooling technologies, and frequently integrating on-site renewable energy.

Supporting this assertion is a study titled ‘The Environmental Footprint of Data Centers in the United States’ (Siddik et al, 2021), which indicates that hyperscale cloud data centres are superior in delivering more computing workloads with lower water and carbon intensity per workload.

How can we assess the carbon impact of our cloud storage use?

Moving to the second question: how can we assess the carbon impact of our cloud storage use? The good news is that big three – Amazon Web Service (AWS), Microsoft, and Google Cloud – offer tools for this very purpose:

– AWS: Customer Carbon Footprint Tool

– Microsoft (Azure): Emissions Impact Dashboard

– Google Cloud

But what do these tools cover?

Ideally, they would take a comprehensive approach including all emissions (Scope 1, 2, and 3), and with separate reporting of  market-based and location-based emissions for Scope 2. It would also be beneficial to understand onsite renewable energy production at the data centres.

Here’s how each service stacks up in terms of emission scopes:

Microsoft’s tool is the most comprehensive, covering all scopes and offering both market-based and location-based options for Scope 2 emissions. Their sustainability efforts are well-documented, with detailed research and updates readily available on their website. They’ve pledged to be carbon negative by 2030 and aim to offset all historical emissions by 2050.

Google Cloud’s tool omits several categories in its emissions reporting, making it less comprehensive than Microsoft’s offering. The excluded categories are:

  • Electricity Loss: Emissions from electricity lost during transmission and distribution.
  • Fuel Extraction and Transportation: The life cycle emissions from fuel extraction, transportation, and the infrastructure used in generating grid electricity.
  • Fugitive HVAC Emissions: Emissions from HVAC system coolants that escape into the atmosphere.
  • Small Equipment Emissions: Emissions from minor equipment used by internet service providers’ partners.
  • External Networking Equipment: Emissions from Google’s networking equipment located outside of data centres.
  • End-of-Life Emissions: Downstream emissions from the disposal and decommissioning of data centre equipment and buildings.

Although less detailed compared to Microsoft’s tool, Google Cloud’s tool does account for some Scope 3 emissions. Google has set targets to achieve net-zero emissions across all operations and its value chain by 2030. This involves reducing the total of Scope 1, 2 (market-based), and 3 absolute emissions by 50% from their 2019 baseline before 2030. Google plans to invest in both nature-based and technology-based carbon removal solutions to offset their remaining emissions.

The Amazon Web Services tool accounts for Scope 1 emissions and market-based Scope 2 emissions but does not cover Scope 3. As a corporation, Amazon has made a commitment to reach net-zero carbon emissions by 2040 and, as of their 2022 report, 90% of their operations were powered by renewable energy. 

In conclusion, the decision to opt for cloud storage versus internal servers carries significant environmental implications. For individual users, leveraging built-in storage is generally more eco-friendly, while businesses with larger data needs might find cloud storage, particularly through hyperscale data centres, a more sustainable option. These centres, renowned for their efficiency and renewable energy use, offer a compelling argument because of their reduced environmental impact.

And, thanks to the new tools available, it’s now possible to quantify the emissions associated with the use of cloud computing.  However, the tools provided by AWS, Microsoft, and Google Cloud each offer varying degrees of insight into emissions, with Microsoft’s Emissions Impact Dashboard leading in comprehensiveness. It’s essential for users, especially corporate entities, to dive into these tools to obtain a detailed view of their emissions across all scopes. Despite their differences, each tool provides valuable information that can guide users in making more informed and environmentally conscious decisions.

EU legislation to combat greenwashing

The European Parliament has taken a key step forward in the fight against greenwashing with the adoption of the “Empowering Consumers for the Green Transition Directive.” Although the directive still requires Council approval before publication in the Official Journal, it was agreed in the European Parliament last week with 593 votes in favour, 21 against and 14 abstentions, hopefully marking a new era in consumer protection and environmental marketing.

Key Features of the Directive:

  1. Generic environmental claims and other deceptive product information will now be prohibited. The new rules target clearer and more trustworthy product labelling, specifically banning vague claims like “environmentally friendly” or “eco” without substantial proof.
  2. The prohibition of claims regarding neutral, reduced, or positive environmental impact solely based on emissions offsetting schemes. This change is crucial in ensuring that companies can’t just offset emissions but need to prove actual sustainable practices.
  3. Only sustainability labels based on approved certification schemes or established by public authorities will be permitted.
  4. The directive also aims to shift focus towards the durability of goods, mandating more visible guarantee information and a new label for goods with extended guarantee periods. This transparency will empower consumers to make better decisions based on the realistic lifespan of products.

This crackdown on misleading terms is a welcome change, ensuring consumers are not duped by false advertising. While these regulations are promising, we hope they don’t make it overly challenging for genuinely eco-friendly products to market their benefits. It’s crucial that this doesn’t lead to ‘greenhushing’ – where companies shy away from promoting their sustainable practices due to fear of breaking rules.

We welcome the emphasis this places on direct reductions in emissions and hope that it is the first step towards the abolition of the concept of offsetting altogether. Whilst businesses must continue to invest in high quality carbon sequestration projects, the idea that these can somehow compensate for emissions produced by business activity undermines the change we need to see.

The EU Council’s approval is the next step for this legislation. Once enacted, member states will have two years to incorporate these rules into national law. Alongside this, the EU Commission has proposed a “Directive on Green Claims,” to further protect consumers and ensure companies substantiate their environmental claims.