How does Global Warming affect my business?

Most scientific experts agree that climate change poses a tremendous threat to our planet and to the way we live. If we are to reduce or even reverse its impact, we must act as soon as possible.

The UK, along with many other countries, have signed The Paris Agreement. This sets out various targets to reduce carbon emissions. As a result of this, policies have been put forward to reach these global climate change targets, and this pressure will no doubt be on businesses to do their part.

Companies throughout the UK rely on gas and electricity to operate day in day out. As the price of energy continues to rise, it becomes even more vital to compare business energy to get the best deal.

Even though climate change brings significant challenges to our daily lives, many of us still incorrectly take the short-term view. After all, it is a lot easier leaving the next generation to find a solution, but this won’t always be the case. To ensure we have a clean green world, we must act now and tackle the problem head on.

Conferences in different continents inviting business leaders to address the subject continue to take place throughout the calendar year. As activists demand for more to be done to reduce greenhouse gas emissions, businesses will need to take action to meet the economic challenges and strict regulations.

How can my business tackle climate change and keep costs low?

Utility Saving Expert has a whole range of advice and guidance to help businesses reduce their carbon footprint. We recommend that you carry out a business energy audit, as this will help you to reduce gas and electricity consumption and improve your overall energy efficiency.

Switching to LED lighting and investing in solar panels is a great starting point. Regardless of having a small or large budget, there are an abundance of tips available to make your business more sustainable and contribute towards reducing the impact of climate change.

If you want to start saving money straightaway, compare business electricity and gas prices to see if there is a cheaper tariff available for your company. Utility Saving Expert allows you to filter renewable energy plans.

The price of energy will continue to rise

In 2010, the then Department of Energy and Climate Change (DECC) released a report which estimated that non-domestic medium-size energy users would see their electricity prices increase be 43% by 2020. This would largely be as a result of climate change and energy policies put forward by the government to meet carbon emission targets.

Environmental policies mean significant change for UK businesses; however, the fossil fuel market and its volatile nature has meant that the price of energy will inevitably keep increasing over a longer period of time. Increased costs in the energy industry will require that businesses manage them as optimally as possible. New ways will need to be considered to comply with these climate change policies and reduce energy consumption.

There are many ways to achieve this. Accessing smart meters for business is a great starting point. These meters will help you monitor your day-to-day usage and better understand your commercial energy bill.

Microgeneration involves the small-scale production of energy. Businesses will use the most familiar type of micro generation through the use of renewable energy systems. This enables companies to avoid expensive unit rates from suppliers as they will be creating their own energy through this process.

Controlling carbon emissions

Using carbon-intensive energy sources such as fossil fuels like coal and oil has a colossal impact on the planet. To encourage businesses to decrease their reliance on carbon fuels, the UK has implemented a number of ‘green taxes’. These aim to reward energy efficiency initiatives and increase adoption of renewable sources.

Environmentally related tax revenue was reported to be £46billion and made up 2.5% of the UK’s GDP in 2015, according to ONS figures.

There are four different types of environmental tax. These are as follows:

  • Energy
  • Pollution
  • Resource
  • Transport

Around 75% of generated revenue comes from taxes imposed on energy.

Users will have also come across other charges on their energy bills such as the Climate Change Levy (CCL). This CCL taxes the use of commercial gas, electricity and solid fuels. Businesses that only use a small amount of energy will be exempt. Learn more on how this tax could affect your business in our Climate Change Levy guide.

Also, you will need to register for the CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment) if you run a large non energy intensive organisation. Examples include:

  • Banks
  • Hotels
  • Local authorities
  • Supermarkets

Larger businesses must monitor and report their CO2 emissions from the use of commercial electricity and gas. This enables them to purchase enough allowances to cover yearly emissions. Firms should also take note that failure to enter the scheme or incorrectly report data may result in heavy fines of up to £45,000.

Fortunately, there are a number of positives for energy efficient businesses too. For example, certain capital allowances allow you to deduct the full cost of an energy-efficient asset from your pre-tax profit. On top of this, you can generate even more profit and reduce expenditure by investing in EV charging points, solar panels and other renewable energy generation assets.

Non-domestic consumers may also find it useful to learn more about business energy VAT too.

Supply chain disruption

You may put a considerable amount of effort and investment to increase your business’ energy efficiency and look towards more sustainable alternatives. However, this isn’t as straightforward as it sounds. Your supply chain may find this far more difficult to achieve.

Engineering and manufacturing are two of the most energy intensive industries (EIIs). These sectors in particular have struggled against carbon levies and their associated costs, in comparison to other industries. For this reason, it won’t come as a surprise that engineering and manufacturing want reassurances for their future operating conditions, especially when they are surrounded by economic and political complexities.

Even if your firm doesn’t directly work within these sectors, you are still highly likely to be affected as your supply chain will be pushing these larger costs your way.

EIIs should receive support from government planning. This will be done through being exempt from costs added by the Renewable Obligation (RO) and small-scale Feed-in Tariffs (FiTs). Nevertheless, this has not come without criticism, as other industries objectively believe that they will be asked to carry the load of this burden.

No matter what industry you operate in, Utility Saving Expert advises that all UK businesses, small and large, compare business gas and electricity tariffs on a regular basis. This will help you ensure you’re not overpaying for your supply.

Effects on international trade

The UK’s decision to leave the European Union will certainly have a colossal impact on international trade. There is also continued uncertainty from the COVID-19 pandemic to contend with too. The latter has a greater impact on the world as a whole, hopefully the successful rollout of a vaccine will alleviate most of these issues in due course. Even so, climate change isn’t temporary and is an order of magnitude above these two issues that will challenge the global economic landscape for decades and centuries to come.

The price of gas and electricity is highly likely to continue increasing in the coming years, inflation has a big part to play in this as the costs of transportation are also rising. Businesses may be able to moderately isolate themselves from some of these challenges if they are proactive in becoming energy efficient and self-sustainable today.

Any company that operates on an international level will have to jump through considerable challenges as different countries and markets will impose their own climate change policies affecting supply chains. Aside from price fluctuations, operational difficulties and economic uncertainty will be significant contributors to all of the above.

After leaving the EU, only time will tell if the UK continues to abide by the EU Emission Trading Scheme (EU ETS) carbon reduction targets that were previously established. China and India, two of the world’s largest emerging economies, may find it challenging to remain competitive as they still heavily rely on fossil fuels such as coal and oil. Policymakers have some big decisions to make in these two highly populated countries.

Corporate social responsibility

Businesses who have taken the initiative to becoming sustainable will want to boast their green credentials, especially as climate change becomes a central issue after a number of recent natural disasters.

Many energy suppliers in the UK already advertise their renewable energy tariffs to domestic and commercial customers. This marketing trend will continue in the years ahead.

Nielsen, a global consumer insight research company, has found that almost 55% of consumers across the world are willing to pay extra for products and services from companies that have committed to environmentally friendly policies. On top of this, young people aged between 21 and 34 appear to be more responsive to sustainability factors when purchasing a new product or service.

Through the use of digital platforms such as social media, many consumers are now publicly sharing their own commitments to reducing carbon emissions.

Changes to the environment

By 2050, it is estimated that hundreds of millions of people could be displaced. This is due to rising sea levels and other climate changes that may make some regions inhospitable. Over the next 40 years, sea levels are set to rise by several meters, this enormous amount of water is enough to flood coastal capital cities such as London and New York.

Countries that lack the necessary infrastructure and resources will find that their economies and governments will be even more dramatically impacted. Nonetheless, this doesn’t exclude coastal areas across the UK from being affected.

To conclude, climate change and global warming as a whole are set to have a vast impact on society and businesses across the world. The economic picture is shifting rapidly. Businesses that are slow to adopt sustainable policies could find themselves in difficulty. In the years to come, generating renewable energy and reducing carbon emissions will be the main goal for every country, especially those that have signed The Paris Agreement.