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What to Consider when Establishing a Decarbonisation Budget

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Written by Gemma - Plan A Support
Updated over a year ago

Due to pressure on resources, time, and budget, some businesses need help convincing stakeholders that budget allocation to decarbonisation is necessary and not 'nice to have'. C-suite leaders who effectively allocate resources towards reducing emissions by understanding how to structure a decarbonisation budget will be able to realise the vast potential of sustainable transformation.

Several critical considerations that sustainability managers can take to convince their company decision-makers to allocate budget towards reducing emissions include:

Identify your sustainability goals

This requires determining your organisation's sustainability objectives, how a decarbonisation strategy can help achieve those goals, and what financial and human resources are required to meet these goals. This, in turn, will allow you to ensure your budget covers the scope of your decarbonisation plan.

Engage stakeholders

Involving stakeholders from different departments, including finance, marketing, and operations - as well as your board and executive team - is an important step to gaining buy-in and support. A cross-functional team is essential to ensure the decarbonisation initiatives align with your organisation’s strategic goals and objectives. This will make a decarbonisation budget easier to justify.

Show the business benefits

Emission reduction initiatives can bring various benefits to a business, with studies highlighting cost savings, increased efficiency, improved brand image, and access to new markets. Researching and presenting facts and case studies demonstrating the positive impact of sustainability initiatives on other businesses in a given industry can help illustrate how peer companies address the topic.

For more information on selling the return on investment in decarbonisation, see ‘How to Approach Engaging your Board and Executive Team on Decarbonisation’.

Demonstrate the risks of inaction

Explaining the risks and potential costs associated with not implementing a decarbonisation strategy, such as regulatory fines, reputational damage, and lost market share, helps leadership understand that investing in sustainability is an increasingly common practice in today's business landscape. For example, not acting on reducing emissions will lead to an increase in external costs - such as carbon taxes, with the price of carbon increasing from €15.05 per metric ton in 2018 to about €88.59 per metric ton in 2023.

Start small

Pitch a pilot programme or a small-scale initiative to show proof of concept and demonstrate the potential benefits. Identify what works and what doesn't, how to spend resources, and how to secure buy-in from stakeholders most effectively.

Further, setting metrics to measure the success of the decarbonisation strategy and evaluating progress regularly helps to make adjustments to ensure goals are achieved efficiently and align with your organisation's business goals and objectives. This can help build momentum and gain future support for more significant sustainability initiatives.

Be prepared to make a business case

The decarbonisation strategy should be supported by a clear and compelling business case that includes a detailed budget, expected return on investment, and a timeline for implementation. Showing that decarbonisation can be profitable and provide long-term benefits to your organisation will increase the chances of gaining support from leadership.

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