Environmental responsibility is becoming increasingly important for businesses of all sizes. From reducing waste and energy use to considering carbon emissions, small businesses are looking for practical ways to reduce their environmental impact.
But does a small business actually have to offset its carbon emissions?
For most small businesses in the UK, carbon offsetting is not currently a legal requirement. However, there are still good reasons for SMEs to measure their emissions, reduce them where possible and consider offsetting unavoidable emissions.
What Environmental Responsibilities do Small Businesses Have?
Being a small business does not mean you are exempt from environmental responsibilities. The rules that apply will depend on the type of business and the activities it carries out.
For example, businesses in England have responsibilities when dealing with commercial waste. These include taking reasonable steps to prevent, reuse, recycle or recover waste, storing waste safely and using registered waste carriers.
Some industries also have specific environmental regulations. Businesses in certain energy-intensive sectors, for example, may be covered by schemes such as the UK Emissions Trading Scheme.
However, these requirements are different from a general obligation for every small business to measure and offset its carbon emissions.
Do small businesses have to offset carbon emissions?
For most UK SMEs, no, there is currently no general legal requirement to offset their carbon emissions.
This means a small business does not automatically have to purchase carbon credits simply because it operates in the UK.
However, that doesn’t mean there is nothing a business can do about its environmental impact.
Many businesses are choosing to take voluntary action by measuring their carbon footprint, reducing emissions and supporting projects that remove or reduce greenhouse gas emissions.
There may also be circumstances where environmental requirements become relevant to a business. For example, larger organisations may ask suppliers about their environmental practices, while environmental considerations can also form part of procurement and tendering processes.
Why should a small business consider carbon offsetting?
Although offsetting may not be a legal requirement, it can form part of a wider approach to reducing a business’s environmental impact.
1. It can complement emissions reductions
The first step should generally be to look for ways to reduce emissions.
This could include:
- Reducing unnecessary business travel
- Improving energy efficiency
- Switching to renewable energy where appropriate
- Reducing waste
- Reusing and recycling materials
- Considering the environmental impact of suppliers
Once a business has taken reasonable steps to reduce its emissions, carbon offsetting can be considered as an additional measure for emissions that remain.
2. Customers are increasingly interested in sustainability
Environmental considerations can influence how people view businesses and the products or services they purchase.
For an SME, demonstrating genuine environmental action can therefore be an important part of communicating its values.
However, businesses should be careful about how they communicate these efforts. The UK’s Competition and Markets Authority (CMA) states that environmental claims should be accurate, clear, supported by evidence and should not leave out important information.
This is particularly important when using terms such as “carbon neutral”, “net zero”, “eco-friendly” or “sustainable”.
What is the difference between reducing and offsetting carbon?
Carbon reduction and carbon offsetting are not the same thing.
Carbon reduction means changing the way a business operates to produce fewer greenhouse gas emissions.
For example, a business might reduce its emissions by using less energy or travelling less for work.
Carbon offsetting involves supporting projects that reduce, avoid or remove greenhouse gas emissions to compensate for emissions elsewhere.
Offsetting should therefore not be seen as a replacement for reducing emissions.
Instead, businesses can consider a simple approach:
Measure → Reduce → Offset
First, understand where emissions are coming from. Then take practical steps to reduce them. Finally, consider offsetting emissions that cannot currently be avoided.
How can a small business offset its carbon emissions?
The first step is to estimate the business’s carbon footprint.
Depending on the business, this could include emissions associated with areas such as:
- Electricity and gas use
- Business travel
- Company vehicles
- Employee commuting
- Purchased goods and services
- Waste
- Other relevant business activities
Once emissions have been estimated, the business can identify opportunities to reduce them.
For emissions that remain, a business can choose to support appropriate carbon projects through carbon credits or other verified schemes.
It is important to understand what a carbon credit represents and what project it supports. Businesses should look for credible projects with appropriate standards, measurement and verification.
Can a small business claim to be “carbon neutral”?
Businesses should be particularly careful with environmental marketing claims.
The CMA’s Green Claims Code states that environmental claims must be truthful and accurate, clear and unambiguous, supported by evidence and should not hide important information. Businesses should also consider the wider environmental impact rather than focusing on one positive aspect.
This means that simply purchasing carbon offsets does not automatically mean a business should describe itself as “green”, “eco-friendly” or “carbon neutral”.
If a business does make a claim about carbon neutrality or offsetting, it should clearly explain what the claim means and have evidence to support it. The CMA specifically highlights the importance of explaining whether emissions have been reduced, offset or both.
Being transparent helps customers understand what a business has actually done rather than creating the impression that its operations have no environmental impact.
How eTrees can help small businesses
For small businesses that want to take voluntary action on their carbon emissions, eTrees provides a simple way to support carbon offsetting projects.
Rather than requiring businesses to commit to a large, complicated sustainability programme, eTrees offers a pay-as-you-go approach to carbon offsetting, allowing SMEs to purchase the amount of carbon offsetting they need.
This can make it easier for smaller businesses to start taking action while considering their wider plans for reducing emissions.
Carbon offsetting is one part of the bigger picture
Small businesses don’t necessarily need to offset their carbon emissions by law, but that doesn’t mean environmental action should be ignored.
For many SMEs, a sensible approach is to start by understanding their environmental impact, identify where emissions can be reduced and then consider offsetting emissions that remain.
Carbon offsetting isn’t a substitute for reducing emissions, but it can be one part of a wider sustainability strategy.
For small businesses looking to take their first steps towards addressing their carbon footprint, measure, reduce and then offset can provide a straightforward place to start.
