Managing your business’s greenhouse gas emissions is tough!
What do you do?
Published July 28, 2023
The single bottom line, which solely focuses on financial profit, has long been companies' primary measure of success. In today's rapidly changing world, the triple bottom line has replaced it. In short, companies are responsible for their shareholders, society, and the planet, with a lot of focus on the last one, specifically your greenhouse gas emissions.
As emissions pressures continue to increase, companies across various industries are becoming increasingly aware of the need to measure and manage their emissions. But there has been no “easy” button to-date.
One company might not measure its carbon emissions at all.
Another company might measure its emissions but doesn’t know what to do with that.
A third company might measure its emissions, but lacks a systematic approach to manage them, instead favoring haphazard, reactive management practices that fail to reach all employees or maximize climate impact.
So, what do you do?
Voluntary Carbon Tax Provides Elegant, Effective Solution
Please welcome the voluntary carbon tax.
Yes, like it sounds, this is a self-imposed carbon tax. You are going to do what the government hasn’t been able to do. And it is an elegant, simple solution. Simple in that it requires a single annual ledger transaction. Elegant in that it will quickly change decision-making and behavior at all levels in your organization – from the boardroom to the front line.
A voluntary carbon tax is a self-imposed mechanism where companies charge a fixed rate per tonne of emissions and set cash aside accordingly.
There are two major benefits: the first stems from the act of “taxation” and the other is the “tax revenue”.
First, charging the “tax” to your business immediately has a deep and pervasive impact on how emissions are managed. It’s no longer a “nice-to-have” ancillary to the “core business.” Suddenly, it is the core business; emissions will be managed day-in and day-out by all your managers just like any other expense. Moreover, focus is allocated to managing emissions in proportion to the price you put on emissions.
For example, if a sales manager can take a flight with a fraction of a tonne of CO2 emissions to make a million-dollar sale, she’ll still do so. Likewise, if an idle factory engine is burning through diesel fuel at two tonnes per day for no reason, then the foreman will shut it off to avoid the carbon tax expense. And best of all, they will take these actions without directive because it’s now built into their existing incentives.
The second benefit is even juicer. As a result of the carbon tax, you’ll have a pile of “tax revenue” that can be reinvested in a variety of creative ways. This can decrease your carbon footprint, decrease your future “carbon tax,” and foster company culture, all while creating a positive impact on the climate.
Best of all, it’s not subject to the perverse incentives that most companies who purchase carbon offsets face: namely, they’re trying to buy the cheapest credits possible to offset their emissions, which of course are the lowest quality credits. When you have a pool of money to deploy, you instead focus on the highest value rather than the lowest cost. Which is exactly where Sky Harvest credits are most helpful.
For next steps on how to implement a voluntary carbon tax in your organization, see Perspective: How to Implement a Voluntary Carbon Tax (Part 2).
For more ideas on how to deploy your “tax revenue” check out Perspective: With "Tax Revenue" Companies have Limitless Possibilities to Effect Change (Part 3).