Decarbonization certifications for mid-market companies: how to get them

November 14, 2023
min read

Businesses today face growing pressure to reduce their environmental impact. With small and medium-sized enterprises (SMEs) responsible for 64% of Europe's industrial pollution, decarbonization is not only crucial in the fight against climate change but also for ensuring the long-term success of your business.

From regulators to financial institutions, stakeholders are now demanding clear information on a company's carbon emissions. For instance, under the EU's Corporate Sustainability Reporting Directive (CSRD), starting in 2026, many mid-market companies will need to present a detailed plan for reducing the environmental and social impact of their business.

Consumers, too, are leaning toward businesses that prioritize sustainable practices.

In this blog post, we'll dive into decarbonization certifications for mid-market companies. We’ll outline who issues these certifications, the types available, the challenges companies may face, and nine straightforward steps to secure your own.

But first: decarbonization certifications vs. carbon credits

Decarbonization certificates and carbon credits are both tools in the fight against climate – but they operate differently. Decarbonization certificates recognize direct actions taken by businesses to actively reduce emissions at their source. Think transitioning to renewable energy, or switching to electric vehicles. 

Carbon credits, on the other hand, are about offsetting or compensating for emissions rather than eliminating them. They are essentially permits that allow a business to emit a certain amount of carbon dioxide or other greenhouse gasses.

The general rule of thumb is to decarbonize first and offset second – and only if it’s necessary. KPMG’s 2022 survey of the 100 largest companies across 58 countries, territories, and jurisdictions found that only 2% intend to rely solely on carbon credits to reach emissions reduction targets, while nearly 60% intend to use only decarbonization strategies.

In short: Decarbonizing will always be the better solution as we transition to a low-carbon economy.

Why decarbonization certifications are crucial for mid-market companies

Reducing your carbon footprint is no longer a nice-to-have for your business – it’s a vital part of any successful business strategy. Here are several reasons why decarbonization certifications are a no-brainer (besides fighting climate change, of course):

Boost your reputation

Decarbonization certifications showcase your business’s commitment to sustainability and environmental responsibility. They can help enhance your brand image and attract environmentally conscious consumers and investors.

Remain competitive

Sustainability is a top priority in most industries. Decarbonization certifications can give your business that competitive edge. They can help to differentiate your business from competitors who may not be as committed to environmental initiatives.

Stay ahead of legal requirements

Governments globally are implementing stricter environmental regulations for businesses. The EU, for example, aims to spend 30% of its overall budget for 2021-2027 on tackling climate change and its effects.

Proactively obtaining decarbonization certifications can keep your business a step ahead of these legal mandates. This can reduce the risk of non-compliance and penalties.

Improve operational efficiency 

Obtaining decarbonization certificates often involves taking a good look at your operations and improving processes to reduce emissions. Better processes usually go hand in hand with increased efficiency and reduced costs.

Access funding and incentives

Looking to take advantage of government incentives? Secure funding from a financial institution? Attract investors? Decarbonization certifications provide the solid proof you need to access these benefits. 

Attract and retain employees

Candidates prefer socially responsible companies. IBM’s Institute for Business Value (IBV) study found that 67% of respondents are more willing to apply for jobs from environmentally sustainable companies. Decarbonization certifications can help you to attract these potential employees and boost employee loyalty and satisfaction.

Achieve long-term sustainability

Prioritizing decarbonization highlights your company’s investment in long-term sustainability. Not only are you mitigating the impacts of climate change, but also ensuring your business remains relevant in a future where low-carbon operations will be non-negotiable.

Who issues these decarbonization certificates?

Various organizations issue decarbonization certifications. Make sure to choose one that aligns with your specific needs and environmental goals. Here are some of the key players to be aware of:

  • Government agencies: In many regions, government bodies are responsible for issuing decarbonization certificates. Getting verified via these bodies can ensure your business complies with regional or national regulations and standards.
  • International Standards Organizations: The International Organization for Standardization (ISO) offers certifications like ISO 14064 for greenhouse gas accounting and verification.
  • Third-party verifiers and certifiers: Many independent organizations like Carbon Trust or TÜV Rheinland specialize in environmental certification and auditing. They can assess your company’s carbon emissions and reduction practices against verified standards. 
  • Industry-specific organizations: Numerous industries have certification bodies that concentrate on industry-related challenges and decarbonization standards. For example, BREEAM technical standards offer certifications for the built environment lifecycle.

Types of decarbonization certifications

There are many different types of decarbonization certifications to choose from. Each caters to different aspects of environmental impact and sustainability. Here are some common types to consider:

  • Carbon footprint certifications: These assess and verify the total amount of greenhouse gas (GHG) emissions your business generates directly and indirectly. Examples include ISO 14064 and The Carbon Trust Standard.
  • Energy efficiency certifications: These focus on reducing energy consumption and improving energy efficiency in operations. The ISO 50001 standard is a notable example.
  • Carbon neutral or net-zero certifications: These certifications are for businesses that have effectively balanced their carbon emissions with carbon removal or offsetting efforts. Programs like PAS 2060 and the Science Based Targets initiative (SBTi) fall under this category.
  • Green building certifications: Relevant for companies focusing on sustainable infrastructure, such as the Leadership in Energy and Environmental Design (LEED) green building rating system.
  • Product lifecycle certifications: Certifications like the Cradle to Cradle Certified Product Standard focus on the environmental impact of a product throughout its lifecycle.

Choosing the right certification for your business

When selecting a decarbonization certification for your business, it's important to choose one that aligns with your business goals and boosts your sustainability profile. Here are some key factors to consider:

  1. Understand your needs and goals: Are you looking to reduce your carbon footprint? Improve sustainability practices? Adhere to new regulations? Get specific about your sustainability objectives and how certification can help to achieve them.
  2. Research and compare certifications: Research the various certifications out there. From achieving carbon neutrality to transitioning to renewable energy, each has its own criteria and focus.
  3. Evaluate costs and requirements: Take some time to assess the costs, resources needed, and requirements of each certification to make sure they're feasible for your business and relevant to your goals.

Key challenges of the decarbonization certification process

The decarbonization certification process can present some key challenges for businesses:

Various definitions and methodologies for carbon neutrality

A major hurdle in the decarbonization certification process is the lack of a universally accepted definition and methodology for achieving carbon neutrality. 

Different certifications use different benchmarks and criteria for what qualifies as 'carbon-neutral.' This can make it difficult for companies to align their strategies with specific certification requirements. It also makes it complicated for customers, investors, and regulators to rely on and compare carbon neutrality claims effectively. 

Availability of up-to-date data

Collecting accurate and up-to-date data poses another obstacle for businesses. A study from the IBM Institute found that more than 40% of executives rank data as a top barrier to ESG progress.

These challenges highlight the importance of doing your homework and seeking expert advice from platforms like Coolset to help you successfully navigate the complex path to decarbonization certification.

How to get a decarbonization certification as a mid-market company in 9 steps

Obtaining a decarbonization certification might seem complex at first. Here are nine simple steps to help your company achieve this important recognition:

1. Understand certification requirements

Research which decarbonization certifications align best with your company’s goals, industry, and region. Obtain the standards from your chosen certification body. Make sure you understand the scope, what emissions you need to track, and the certification level you’re aiming for.

2. Assess your current emissions and environmental impact

Conduct a thorough assessment of your company’s current carbon footprint and environmental impact. This should include direct emissions from your business activities (scope 1), indirect emissions from the energy you buy (scope 2), and other indirect emissions from suppliers or product use (scope 3). Did you know that Scope 3 emissions account for a whopping 92% of your total emissions on average? 

You should also consider other environmental impacts such as water usage and waste generation. Understanding your baseline emissions is essential for setting reduction targets.

Emissions management software like Coolset can help your business efficiently track its emissions with minimal input. These tools use the latest climate science and machine learning to deliver precise insights into your carbon footprint.

3. Set clear sustainability goals

Define sustainability goals that are specific, measurable, achievable, relevant, and time-bound (SMART). Make sure your goals align with the certification requirements and your long-term sustainability vision.

4. Create an action plan

Create a detailed action plan to achieve your sustainability goals. Do you need to upgrade your tech stack? Change your processes? Start using renewable energy? Ensure to include specific steps, who is responsible, and a timeline for implementation.

5. Allocate resources and train employees

Allocate the human and financial resources to support the implementation of your decarbonization plan. Offer employees training and awareness programs to make sure they understand their roles in achieving sustainability targets. 

From promoting business travel by public transport to serving low-emissions food, getting employees meaningfully involved can encourage more sustainable action.

6. Collect and manage data

Implement effective data collection and management systems to track and monitor your emissions data. This data is essential for measuring your progress and reporting it to certification bodies.

Using an emissions management tool such as Coolset can ensure your data collection methods are robust and verifiable, and meet all certification standards.

7. Engage with suppliers

Work closely with your suppliers to collect emissions data and encourage sustainable practices. From greener packaging to better waste management, collaboration helps cut down emissions and improve the environmental impact of the materials and services they provide. 

This effort can create a ripple effect where more sustainable practices are embedded throughout the supply chain leading to more impactful carbon reduction. You can also consider adding sustainability criteria to your procurement policies.

8. Document everything

Keep detailed records of all of your sustainability-related activities and initiatives. Make sure to note down all changes made, the data collected, and your progress toward your decarbonization goals. Remember: Documentation should always be clear, up-to-date, and readily available for auditing and reporting purposes.

9. Select a decarbonization certification body

Choose a reputable and accredited certification body that aligns with your decarbonization targets. Reach out to the certification body to begin the process. They will guide you through the necessary steps. The process typically involves a detailed review of your documentation, and thorough audits to verify your emission reduction and sustainability measures.

Received the decarbonization certification, what’s next?

Once you’ve received your decarbonization certification, take a moment to celebrate. This success proves your company's commitment to sustainability. Make sure to communicate this milestone with your customers, investors, and other stakeholders. Sharing your sustainability progress can build trust and improve your reputation. 

While achieving certification is something to be proud of, the hard work doesn’t end there. Maintaining certification requires ongoing monitoring, reporting, and effort to maintain and improve your sustainability performance. Keep your action plan up to date, adjust when things change, and always be on the lookout for new ways to cut down on emissions.

Ready to fast-track your certification journey? Understanding your current carbon footprint is crucial. Using emissions management software like Coolset can give you the data and insights needed for certification. Request a free demo with a decarbonization expert today.

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