How the transition to net zero can help create value for privately owned businesses 

How the transition to net zero can help create value for privately owned businesses 

Fri 08 Sep 2023

For small to privately owned businesses (POBs) at the start of their environmental, social and governance (ESG) journey, meeting net zero goals may feel like a regulatory obligation rather than a value creator. Yet by changing the narrative, POBs can use the transition to net zero as a driver for positive change, boost market resilience and create value. 

The pressure on companies to reduce their carbon footprint is high on the agenda for many governments. Simply put, supplying goods and services is no longer just about quality and cost; it’s also about the sustainability of your business model. 

Consider reporting as a learning exercise 

As part of new Taskforce on Climate-related Financial Disclosures (TCFD) regulations, large organisations must report on their Scope 3 greenhouse gas emissions which companies in their supply chain are a key contributor. It means POBs not yet reporting under TCFD should expect more frequent customer questions on greenhouse gas emissions used to produce goods or supply services. Companies that cannot respond accurately and swiftly risk limiting their potential market or losing customers. POBs that consider reporting requests as an incentive to measure and improve their carbon footprint will not only gain a competitive edge but are likely to reduce operational costs as they improve their understanding of more efficient use of energy and resources. 

Use a mindset shift to lower costs 

Becoming more energy efficient doesn’t always require big budget changes. It’s often a case of encouraging a mindset shift that allows low or no-cost changes to achieve bigger and long-lasting 

impacts. For example, where automated lighting technology is not in place, putting ‘turn off’ signs on light switches can result in significant energy savings at no cost. Equally, initiatives encouraging less water use or enhanced waste management can produce additional savings. Changing habits is often an easy and low-cost way to improve energy efficiency and raise awareness of sustainability issues among the workforce.

Appeal to new talent 

A new generation of employees now considers purpose important; they want to work for companies that look at business through an ESG lens. POBs that demonstrate they are reducing their carbon footprint and taking sustainability seriously will have a strong advantage when looking to employ and retain the talent required to expand and create value.

Look long-term to pivot strategies 

Taking a long-term view is one way to ensure that new product and service strategies are future-proofed and fit for purpose. For example, knowing that a customer expects less or no use of fossil fuels in production or that the shift to electric vehicles will impact your value chain can help prepare for change. Engaging with stakeholders on ESG requirements can highlight strategic challenges and open up new opportunities. 

While the need for POBs to reduce their carbon footprint and engage with ESG may not yet be a top priority, it increasingly impacts every aspect of the business. If good business practice means becoming more efficient and connected with your stakeholders, early engagement with ESG is now necessary for all POBs looking to create long-term value.