environmental strategies for manufacturing companies

Introduction

This page concerns environmental strategies for companies involved in all types of manufacturing, from small-scale cottage industries to large-scale industrial production lines.

Many of these companies have the potential to have relatively high carbon footprints and should therefore be at the forefront of taking responsibility for their emissions.

Whether or not taking action on the environment is worth doing right now will depend primarily upon the moral stance of your staff and management and, perhaps most importantly, the impact on demand for your services.

The usual starting point is for us to create a tailor-made Environmental Action Report for your company, to serve as a framework within which you can outline your ambitions, quantify your emissions and assess progress on your various positive actions.

The second part of the process is the attainment of carbon certification, the primary mechanism through which you can broadcast your environmental achievements.

Carbon certification is usually achieved through the purchase of carbon credits (most commonly from tree-planting projects), with the required quantity being determined by the annual calculation of your emissions and the level of certification that you select.

If your company advertises direct to market, then achieving carbon neutral status can send an immediate and hugely positive message to your customers. Many manufacturing companies are making huge commercial gains by promoting their environmentally credentials.

If your products are promoted by resellers, then your need to take action on carbon is more likely to be defined more by their brand values and sourcing strategies.

If your product is a component of a larger product, then the carbon offsetting is usually best done further down the chain, leaving you to simply offset your infrastructure.

For manufacturing companies there are three levels of certification.

Carbon labelling

One thing that you can do irrespective of your carbon certification level is to label your products with the amount of carbon emissions for which they are responsible.

We can run some calculations to estimate the emissions of your various products and you can print it clearly on your packaging and/or invoices.

This measure both demonstrates to your customers that you are aware of the issues and enables them to make comparisons across their purchases.

We charge a modest amount per product to undertake the calculations for you.

Carbon aware

Carbon aware is the entry level certification. It tends to work well for companies which are just getting started with the whole process and want to keep their initial expenditure to a minimum.

Being carbon aware means that you simply offer your customers the option to offset the carbon footprint of the products that they buy from you, which typically adds around 0.2-0.8% to the invoice value.

We can help you set this system up in such a way that you can purchase the appropriate quantity of offsets from us retrospectively and we will then plant the requisite number of tropical trees.

It is important to make the point that your carbon aware certification is not affected by the proportion of customers who choose to pay for the carbon offsets. So long as you have introduced them to the concept, that is as far as your obligation goes.

If a customer chooses not to take up the offsetting option, the product’s carbon debt remains unpaid. Becoming carbon aware is therefore not an ideal solution from an environmental perspective, but it is a decent step in the right direction.

A major attractions of this level of certification are that it let’s your customers know that you are taking action on carbon, it typical involves very little direct cost to the company and the offsets can represent a significant source of additional income, as they carry a modest retail margin.

Whether or not it is appropriate or practical to add carbon offsets to your invoices will depend very much on your specific circumstances.

For example, a car manufacturer could easily add a carbon offset option when selling a vehicle to either a distributor or end-user. Given the widespread public awareness of carbon emissions due to transport, some car brands might anticipate a reasonable take-up under this scenario.

At the other extreme, for a manufacturer of baked beans would likely find that the addition of optional carbon offsetting surcharges is met with widespread disinterest and take-up is likely to be too low to make it worthwhile.

When it comes to guide prices for the first year, the Environmental Action Report typically works out around GBP 1000 / USD 3600 per million turnover. You may also like us to assist with implementing your Surcharge Process for around GBP 1000 / USD 1200. These costs tend to be around 70% lower in subsequent years.

Carbon neutral certification

Carbon Neutral is the most popular level of certification and is suited to a very wide range of forward-thinking brands.

Being carbon neutral means that you offset the carbon footprint of your company infrastructure, but you do not take responsibility for the carbon generated by your products (which remain the responsibility of your consumers).

It’s a great place for most companies to start, being simple to achieve and usually relatively low cost.

Carbon neutral status is achieved through the payment of an annual fee, based upon our assessment of your carbon footprint.

For a manufacturing company that usually means assessing the footprint created by your staff, manufacturing facilities, equipment, transport and associated extras.

Carbon neutral status does not include taking responsibility for the carbon footprint associated with the products that you manufacture (including their raw materials, input energy and distribution).

Depending on your brand, products and customer expectations, you may also choose to offer your customers the chance to offset the carbon footprint of the leisure products that they buy from you. This can be done in on the voluntary basis described in the Carbon Aware section above or on the more onerous way described in the Carbon Free section below. But this is not an obligation under Carbon Neutral certification.

When it comes to guide prices for the first year, the Environmental Action Report typically works out around GBP 1000 / USD 3600 per million turnover. If you choose to go Carbon Neutral, that usually falls in the range GBP 275-800 / USD 330-960 per employee, depending on your level of emissions. These costs tend to be around 70% lower in subsequent years.

Carbon free

Carbon Free is the highest level of certification.

It is usually associated with companies which have environmental values deeply embedded in their brand strategy and whose customers who are highly responsive to positive environmental messaging.

For the right type of manufacturing company, carbon free status can be a very powerful motivating factor for customers, delivering commercial advantages which far outweigh the relatively modest costs.

For manufacturers of products such as premium vehicles, carbon free status is a great way to counter any consumer guilt that may be associated with their purchase.

Going carbon free means that you take full responsibility for the carbon footprints created by both your company infrastructure and the products that you manufacture.

The infrastructure footprint is usually offset by the direct purchase of carbon credits by the company.

The product footprint can be charged to the customer visibly or invisibly on their invoices, or simply wrapped into the prices and paid directly by the company.

For manufacturing companies we usually recommend that you add carbon supplements to your invoices, typically around 0.2-0.8% of the total value. This can either be done as a compulsory “invisible” charge, or as as a separate and visible surcharge, which can be compulsory, opt-out or opt-in.

Since you are taking full responsibility for the carbon emissions, where customers decline to pay the surcharge, you will need to settle the outstanding carbon debt. The level of uptake is therefore critical in defining the cost to the company.

You can test the water by trialing surcharges at the carbon aware level and then take on the additional responsibility of carbon free certification once you have an understanding of how to achieve suitable take-up rates.

It is usual to pay for the offsetting of you infrastructure up front, but the offsetting of the product is usually done retrospectively at the end of a convenient accounting period, after you have received payment from your customers. So it’s actually cash positive.

The required number of tropical trees will be planted in advance, so there’s no delay in getting your carbon sequestration underway.

When it comes to guide prices for the first year, the Environmental Action Report typically works out around GBP 1000 / USD 3600 per million turnover. You may also like us to assist with implementing your Surcharge Process for around GBP 1000 / USD 1200. The cost of purchasing carbon credits can vary enormously (depending on your company description and the level of take-up from your customers), but typically falls in the range 0.0-0.6% of turnover. These costs tend to be around 70% lower in subsequent years.

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Services and costs

In this article we describe the services that we offer and the process through which we would guide you, on the way to fulfilling your environmental ambitions.