Greg Mills, CEO of Cincom Systems offers expert advice on weathering the upcoming carbon tax.
Greg Mills, CEO Cincom Systems of Australia has provided his insights to industry magazine, Electrical Solutions regarding the best ways businesses can prepare for the impending carbon tax.
We have all been told that the carbon tax has been designed to help restructure the economy with the aim of using less energy and lowering the amount of carbon dioxide (CO2) generated.
However, as the July 2012 deadline looms recent surveys show that less than 50 per cent of Australian companies are actually prepared for its introduction and this percentage is even lower if we only look at small to medium enterprises. Without adequate preparation the adoption of the carbon tax will become incredibly costly for businesses.
How do we prepare for the impacts of carbon tax?
Most companies will choose to focus on one of three key aims in their approach to preparing for the carbon tax;
- Reduce your business' carbon footprint
- Reduce your usage of carbon inputs
- Reduce costs
Regardless of which of the above strategies your business chooses to focus on, your first step will need to be an assessment of your current carbon inputs. CO2 or carbon inputs refer any materials or activities such as electricity or fuel, used in your business that will be impacted by the tax.
You can examine the cost of your carbon inputs by simply identifying your business inputs and then classifying them as a CO2 input or a non CO2 input. There are a number of organisations that can assist you in completing an assessment.
In the examination process you will also need to look into that input's supply chain. For example, a finished product which requires a large amount of electricity to be produced will be classified as a high CO2 input even if that input does not burn carbon itself.
Having identified the CO2 inputs to your business you then must assess how much of an impact these inputs have to your business and then how much it will cost you to reduce the use of these inputs.
Let's first look at a "cost minimisation" approach where the objective is to minimise the cost of the carbon tax. Having examined your CO2 inputs as discussed above, isolate the items which you can reduce use of, and make a saving with no or minimal investment, and focus on those.
A simple example would be to replace your existing light globes with low energy light globes or installing a solar hot water system. The investment in reducing energy usage would easily be covered by the savings made over time.
If you choose a strategy to proactively reduce carbon inputs then opportunities exist to re-engineer your business processes so that they are consuming less energy and materials.
We have all heard of the value stream where each step in a manufacturing or business process is examined and the value added assessed. "Green streaming" your business process is a similar method where each step is examined for the amount of carbon inputs it consumed.
Ways are then devised to redesign the process to reduce the CO2 impact of each process step. In a manufacturing process this could result in re-laying a factory to reduce the amount of time and energy moving materials and reducing the cost of fuel used to do so.
In an office it could mean using electronic payments to reduce paper and energy in printing. For a sales force it could mean using a mobile device for sales people to work with whilst on the road to reduce travel time and costs.
The third approach is to act in a way that not only reduces your carbon inputs but involves investment into decreasing your business' carbon footprint. The federal and state governments have both encouraged consumers with solar panel schemes aimed to generate electricity from noncarbon polluting solar energy that goes back into the electricity grid.
There are also other investments an organisation can make to reduce the total amount of carbon pollution and in fact can "sequester" that carbon out of the environment. Tree planting schemes are an example of this.
As an example of how to apply these strategies, let's look at a simple example like lighting.
|Strategic approach||Reduce carbon footprint||Reduce usage||Reduce cost|
|Install, solar panels, and skylights||Yes|
|Install timers or motion sensors||Yes||Yes|
|Install low energy globe||Yes||Yes||Yes|
Supporting tools and aids
As well as carbon reduction consultancy firms there are also a number of business operations software systems that can assist your company achieve its carbon goals. For example:
|Mobile Sales Force Automation||Sales||
|Warehouse Management Systems||Warehousing||
|Delivery Planning Systems||Distribution||
|Customer and Supplier Portals||Sales/ Marketing||
|Manufacturing Execution Systems||Operations||
The selection and implementation process of these supporting tools do require changes to your business process and change management for the people who use these systems. It is important to keep in mind the objectives of any such project and apply the appropriate, dedicated resources.
As you can see, the strategies and steps involved in preparing for the carbon tax vary from business to business and will depend on your company's goals and objectives. You may choose to focus on cost cutting, reducing your carbon inputs, proactively minimising your carbon footprint or do nothing at all.
Choosing to do nothing may seem the easiest path at this point however post July 1, you could be gambling with your business' future.
Greg Mills is CEO of Cincom systems and has a background in industrial chemistry and project management in the building products industry. Cincom have a number of software tools designed to help business reduce costs and the impact of the carbon tax. Mills acknowledges the contribution Level5Lean consulting group for their "green stream" methodology that helps business reduce CO2.