The road to becoming operationally carbon neutral

This editorial was featured in the Financial Reporter.

Climate change remains a pressing global issue, with greenhouse gas concentrations having reached record highs[1] and the UN warning that urgent action is needed to achieve the goals laid out by the Paris Climate Agreement.[2] Concluding the COP27 summit in Egypt, UN Secretary General, António Guterres, reiterated that more needs to be done to drastically reduce emissions now, stating that “the world still needs a giant leap on climate ambition.”

However, many around the world are claiming their power to enact change, for example, through everyday measures, such as opting for ethical finance providers. This is the case particularly among younger generations, where a recent study commissioned by Gatehouse Bank found that almost two thirds (65%) of those aged 18 to 24 would continue to choose an ethical savings account, even if it offered lower returns.[3]

While banks and other financial services companies are becoming more aware of their impact on the planet, Carbon Neutral Britain calculates that businesses account for over 85% of the UK’s total greenhouse gas emissions. Corporate action must therefore continue to take place if we are to achieve global climate targets, beginning with significantly reducing our greenhouse gas emissions to reach net zero.

So, what steps could those at the start of this journey take towards becoming an operationally carbon neutral business?

Capturing data

For any business wishing to lower its carbon emissions, an important first step is to identify and measure its existing operational emissions to determine where the most impactful changes could be made.

At Gatehouse Bank, we first measured our operational carbon footprint for the year 2019, which involved capturing data on our existing emissions, including Scope 1, Scope 2, and selected Scope 3 emission categories.

Setting targets

Setting standardised, industry-wide targets lies in the hands of the government, but organisations should also set individual targets which are tailored to their business and sustainability goals.

For example, at Gatehouse Bank, one of our targets is to reduce emissions from business travel by 20% from the base year of 2019. We also aim to reduce our financed emissions in the future and have set targets to align our home finance portfolio with the temperature goals set by the Paris Climate Agreement.

While these targets are specifically tailored to our sustainability commitments, other organisations will choose to set their own ambitious goals. For example, businesses may consider the energy efficiency of their office buildings as well as whether they could reduce emissions caused by business travel. It also goes without saying that when office working is required, waste reduction and recycling policies should be in place.

Consistency is vital and an ongoing measurement of the impact the changes are having will help ensure the benefits of reducing operational emissions are acknowledged and celebrated along the way.

Carbon offsetting

An effective way to achieve carbon neutrality is through carbon offsetting – a process by which a company can balance out its carbon footprint by investing in environmental projects.

At Gatehouse Bank, we have been working closely with Carbon Neutral Britain, who have independently certified the Bank as operationally carbon neutral for two consecutive years. In practice, this means that Gatehouse Bank’s total organisational emissions are offset via the Climate Fund™ Portfolio of verified carbon offsetting projects around the world.

However, the road to reduced carbon emissions must not only consider a business’ operations, but also its supply chain. Sourcing and working with responsible suppliers should be an important consideration factor due to its marked positive impact on the environment. For this reason, Gatehouse Bank has strengthened its sustainable procurement process, which has been embedded into the supplier onboarding procedure to ensure that the Bank’s suppliers align with its sustainable values. Again, the first step here will be to capture accurate supplier data and then set targets by working alongside the supply chain.

Sustainable business practices

As consumers become increasingly environmentally conscious, more and more organisations are identifying multiple avenues through which they can help combat the effects of climate change.

In the case of Shariah-compliant Banks, which attract ethically minded customers of all faiths and none, they are often naturally aligned to sustainable development frameworks as they do not invest in sectors perceived to be harmful to society. Deposits cannot be used to fund the alcohol, adult entertainment, tobacco, gambling, or arms industries, which is often a key decision-making factor for customers looking for more ethical finance options.

Considering this, organisations may also opt to enhance their product offering to help customers have as much of a positive impact as possible. For example, Gatehouse Bank launched its Woodland Saver accounts in February 2021, which plant a tree on behalf of the Bank’s customers for every account opened or renewed. These types of products make it possible for Banks to help address deforestation and improve carbon sequestration, all the while attracting younger generations of savers. The possibilities are endless – there is nothing to stop businesses driving forward their own innovative policies to combat climate change.

Organisations may also choose to formalise their responsible business strategies by signing up to sustainability frameworks that are best suited for their industry. For example, Gatehouse Bank is a founding signatory to the UN Principles for Responsible Banking, a vital partnership to help align the Bank’s core strategy with the United Nations’ Goals for Sustainable Development and the Paris Climate Agreement.

Finances, both personal and institutional, can have a huge impact on the way the world operates and play an important role in the path to net zero. In these unprecedented times, it is essential that organisations work together in continuing to create positive social outcomes and reduce their impact on the planet.

[1] https://public.wmo.int/en/media/press-release/more-bad-news-planet-greenhouse-gas-levels-hit-new-highs

[2] https://www.unep.org/resources/emissions-gap-report-2022

[3] https://gatehousebank.com/news/young-adults-still-prioritising-ethical-savings-amidst-cost-of-living-crisis-marking-shift-in-attitude-finds-gatehouse-bank