How climate change is changing businesses

green business

Climate change has taken dealing with weather patterns to a whole new level. Unpredictable weather patterns will mean harsher working conditions, price volatility and changes in the supply and demand chain.

How a business responds to proactively protecting the environment will also sway public perception. The rapid spread of bad press through social media means that companies are not afforded the luxury of time to implement a climate change strategy.

There are also several government policies that directly impact businesses. Regulations designed to mitigate the damage caused by pollution is at the top of government agenda.

Environmental Policy

Every business sector will be challenged with environmental policy in one form or other. Whilst the obvious changes are direct implications imposed by legislation, second-tier regulations will significantly influence boardroom decisions. 

The Climate Change Levy (CCL) in the UK and the EU’s Climate Change Agreements (CCA), are aimed at encouraging businesses to reduce carbon emissions and energy use will have an immediate impact on finances.

Beyond direct climate change policy, business owners also have to adhere to regulation around employee health and consumer demands around environmental issues.

Failing to establish an environmental plan could give rise to a number of legal issues including financial penalties, clean-up notices, director’s disqualification and imprisonment.

The EU Emissions Trading Scheme

Companies that fall into energy-intensive sectors have to report CO2 emissions under the EU Emission Trading Scheme(EU ETS).

The EU ETS is central to how governments across Europe intend to enforce the removal of excessive air pollution. Pre-determined targets set a cap on the maximum level of emissions allowed for each sector.

Businesses that fail to reach the targets will be served with a compliance notice or will be obligated to obtain an emissions permit in order to continue trading.  

The CRC Energy Efficient Scheme

In the UK, mandatory emissions reporting falls under the CRC Energy Efficient Schemewhich requires organisations that use more than 6000MWh per year of electricity and have at least one half-hourly electric meter.

Initially introduced in April 2014, the CRC scheme entered its third stage in March 2019. The scheme applies to emissions that are not already covered by the CCL, CCA or EU ETS.

Companies that fall under the scheme are obligated to measure and report how much gas and electricity they use via an online CRC registry. Organisations are also obligated to report on issues surrounding corporate responsibility and produce relevant evidence.

The CRC scheme requires a business to buy energy allowances from the government, or the secondary market if supplies are available. Companies also have the opportunity to lower utility costs, but failing to do so will incur financial penalties.

What’s more, energy and emissions data is published in the Annual Report Publication which is available in the public domain. 

New legislation and regulations around climate change are forcing businesses to change the way they manage business operations and provide a healthy environment for employees.

With such harsh penalties distributed for non-compliance, it is advisable for boards to seek legal assistance from climate change specialists.