Governments, organizations, and citizens are increasingly concerned about the effects of climate change. This is causing businesses ranging from SMEs to huge multinationals to assess their impact on the environment and move toward a more sustainable future.

Reducing carbon emissions is one of the most efficient ways to start mitigating a business’s environmental impact. And it starts by creating a first well-thought-out carbon reduction plan. This might seem daunting, but doesn’t have to be.

This Coolset Academy article will take you through the five simple steps that will show you how to make a carbon reduction plan. We will discuss the hows and whys of carbon reduction plans, providing the right knowledge and tools to help you through your emissions reduction journey.

What should be included in a carbon reduction plan?

A carbon reduction plan is crucial to a company’s sustainability strategy. It must identify and detail the processes and procedures that a company will take to minimize its carbon footprint and attain net zero emissions.

A carbon reduction plan may differ depending on a variety of circumstances, including the nature of the company's activities and the breadth of its emissions and resources. There are three essential components that should be included in any carbon reduction plan.

If this is your first time creating a carbon reduction plan, this is a great place to start.

1. Comprehensive carbon footprint analysis

Building a carbon reduction plan begins with assessing your company’s current greenhouse gas (GHG) emissions. Understanding your carbon footprint provides the foundation for informed decision-making and sustainability planning.

Here is a simple step-by-step guide to follow:

1. Gather data and information: Collect data on all sources of carbon emissions from scope 1 to scope 3 emissions categories. Those range from direct GHG emissions, such as fuel burning and vehicle emissions, to indirect emissions, like goods purchased from suppliers.

2. Convert the data to actual carbon emissions: Collected data can be hard to convert to carbon emissions. Make sure protocols are in place or carbon accounting software is available to take this burden out of your hands.

3. Report and document: Take the opportunity to dive into your carbon footprint and identify emissions hotspots. Conducting this analysis will be incredibly beneficial to the success of your upcoming carbon reduction plan. It will help you to catch the low-hanging fruit actions that bring most of the results.

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2. Clear carbon reduction targets

Now that you are able to analyze your company’s carbon footprint, it is time to dive into carbon reduction means.  As with every strategy, it begins with establishing specific and measurable carbon reduction targets. Here are four fundamental principles they must adhere to:

• Carbon reduction targets must be set within a defined time frame that is considered short-to-medium term. Consider aligning your timeframe with relevant regulations (such as the CSRD regulation if you are based in the EU) or industry standards.

• Emissions reduction targets must be defined in relation to a baseline year in order to accurately monitor progress. Your carbon reduction plan should identify your baseline carbon emissions and categorize them, from emissions sources to emissions scopes.

• Targets must be clearly defined in order to be measurable, achievable, and to customers, regulators, and stakeholders.

• Finally, carbon reduction targets should be aligned with Science-Based targets (SBTs). SBTs provide a climate-science-backed framework to set targets that will mitigate climate change.

3. Monitoring and reporting mechanisms

This stage is sometimes overlooked, but it is critical since it ensures quality and actual results for your carbon reduction plan. These procedures should enable you to track emissions reduction efforts, foster transparency, and effectively communicate with customers and stakeholders.

Companies worked with spreadsheets to develop their monitoring systems, which eventually resulted in low engagement, inaccuracies, and inconsistencies in the data. Carbon reduction plan reports are now being closely examined by regulators, so it's critical to provide yourself with the best tools for tracking your success.

Regular data updates, combined with third-party expertise and powerful carbon accounting software, ensure the success and reliability of your carbon reduction plan.

Committing to carbon net zero: what should you know?

Global energy-related emissions grew by 0.9% in 2022, reaching an all-time high again. Committing to carbon net zero is, therefore, crucial to mitigate climate change and prevent its present and upcoming consequences.

Achieving net-zero greenhouse gas (GHG) emissions for an organization simply implies that the total carbon emissions released as a result of its activities are offset by carbon removal.

Many businesses have taken advantage of the ambiguous concept of net zero as well as a lack of tools and resources to verify and track carbon removal initiatives. This is why, if you wish to commit to net zero emissions and contribute to a more sustainable future, you must develop a well-thought-out and documented carbon reduction plan.

Moreover, you can take advantage of Coolset-certified carbon removal projects to help your company reach net zero emissions and achieve regulations compliance.

The regulatory frameworks guiding net zero

Reaching net zero emissions is a top priority for many governments and regulators, such as the European Union. Regulatory frameworks are developed to incentivize companies to reduce their emissions and contribute to the nation’s goals to achieve net zero.

One of the main regulatory frameworks in the European Union (EU) is the Corporate Sustainability Reporting Directive (CSRD). This new regulation is considered one of the building blocks allowing the continent to reach net zero emissions. It requires more companies to start reporting on their non-financial sustainability information.

The Science-Based Targets project (SBTi) additionally assists companies in following ambitious corporate climate action, guiding them towards net zero emissions.

What are some examples of carbon reduction projects for companies?

Energy efficiency improvements

Energy efficiency is often the first and easiest way for companies to start reducing their carbon emissions. The actions you can take will differ depending on whether you rent or own your building.

Start by focusing on insulation, as heating and cooling represent almost 50% of energy consumption in the EU. Improving building insulation is by far one of the most effective carbon reduction solutions for the majority of businesses. You could also upgrade your equipment to use low-energy technology such as LED.

Sustainable supply chain management

According to the UN Global Compact, Scope 3 emissions account for more than 70% of an organization's carbon footprint. Because a company's supply chain is the primary source of its scope 3 emissions, investing in sustainable supply chain management can be a critical initiative to include in a carbon reduction plan.

It can be challenging to find sustainable suppliers to green your supply chain. Take advantage of the Coolset marketplace and discover vetted sustainable suppliers.

Product lifecycle management

Investing in sustainable product lifecycle management can also have a major effect on your carbon footprint, as it generates a significant amount of category 3 emissions. Additionally, strong sustainable product lifecycle management demonstrates concrete proof of your engagement with customers and stakeholders.

Sustainable commuting and transportation

It goes without saying that transportation has a substantial impact on climate change. However, more and more low-carbon alternatives to commuting and transportation are emerging. Make use of these alternatives: promote car-sharing, biking, or public transportation. Choose rail over road and sea over air for transportation.

Carbon offsetting

Even when you incorporate all the possible carbon-reduction projects feasible to accomplish given the resources, there will still be carbon emissions that cannot be decreased.

Carbon offsetting enables you to fund beneficial environmental projects while also removing irreversible carbon emissions from the atmosphere.. However, be careful of shady carbon offsetting projects and use certified climate projects instead.

How to create a carbon reduction plan in 5 simple steps

Now you know all about a carbon reduction strategy, let’s guide you through 5 straightforward steps to create your first carbon reduction plan.

1. Set your baseline emissions

Baseline emissions will be used as reference emissions to set your carbon reduction targets. Therefore, you must choose a baseline year to include in your carbon reduction plan.

2. Report on current carbon emissions

Assess your organization’s carbon footprint from Scope 1 to Scope 3. Reporting on these emissions will help you to get a clear understanding of where your emissions sources come from.

3. Spot carbon reduction opportunities

Having access to a comprehensive analysis of your carbon emissions will allow you to spot the best carbon reduction opportunities. Catching that low-hanging fruit is crucial to create a successful carbon reduction plan.‍

4. Determine the costs and the impact

Calculating the costs and impacts of your carbon reduction programs can be difficult and time-consuming unless you have access to strong carbon accounting software that can take this weight off your shoulders.

5. Prioritize and implement your plan

Once your carbon reduction plan is ready, you must figure out the best way to implement it.  Prioritizing measures based on your carbon reduction targets and the carbon reduction opportunities identified in your carbon accounting software will help you to implement the plan smoothly.

Get started on your decarbonization journey with Coolset

Getting started doesn’t need to be rocket science. Powerful automated carbon accounting software can help you to create your first carbon reduction plan.

No idea where to start? At Coolset we’re very happy to help. Our user-friendly technology allows you to measure, control and lower your carbon footprint.

Our customers streamline data gathering and concentrate their efforts on lowering and reporting their effect in weeks rather than months. Discover how 175’s years old Royal Boom publisher used Coolset’s automated carbon analytics to support its SDGs.

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