Reducing greenhouse gas (GHG) emissions has become a critical priority globally, especially within industries like tourism and food, where sustainability practices play a pivotal role.
For New Zealand's Small and Medium-sized Enterprises (SMEs) operating in these sectors, understanding and calculating their GHG emissions are imperative steps towards adopting more sustainable practices aligned with consumer demands, investor expectations, and global legislation, which is driving supply chains to act.
In most sectors, supply chain emissions account for 80% + of a business's carbon footprint, which means gaining an in-depth understanding of your supply chain will help you identify not only your carbon footprint but also your waste - literal and monetary. Both of which are costing you money.
Tourism and Food Sectors GHG Emissions and the Environment
We can't get away from the facts,
Tourism contributes to emissions: Tourism accounted for 3.4 per cent of emissions in 2020. Post COVID-19, and as travel restrictions eased and traveller numbers increased, tourism emissions have rebound and pose a challenge to NZ's climate goals illustrated through the Paris Agreement, the Glasgow Declaration on Climate Action in Tourism and NZ's Climate Change Response Act.
Food production is a significant source of emissions: Agriculture is a key to New Zealand's economy, but nearly half of the country's GHG emissions come from the sector. This is mainly due to methane and nitrous oxide emissions from livestock and fertiliser use. Reducing emissions from food production would help NZ meet its commitments, and this includes inputs such as equipment, energy and plastic wrapping and plastic use.
Emissions reduction can benefit the economy and the environment: Reducing emissions in these sectors can create opportunities for innovation, efficiency, and competitiveness. Adopting a circular economy is one example. With NZ's international reputation as a clean and green destination, it's important we protect our natural resources and biodiversity and maintain our social licence to operate.
Consumer and Investor Demands
Today's consumers and travellers are increasingly eco-conscious, demanding transparency and sustainability from businesses, particularly from those where distance from the market is part of the story. investors prioritise companies demonstrating a commitment to reducing emissions and embracing sustainable practices, considering these factors as indicators of long-term viability and responsible stewardship.
The reasons are broad but include:
Climate change is a global challenge: Consumers and investors are aware of the serious threats of climate change, such as rising temperatures, extreme weather events, rising sea levels, biodiversity loss, and human health impacts. They want businesses to take responsibility for their contribution to GHG emissions and to take action to mitigate them, regardless of size or location.
Sustainability is a competitive advantage: Consumers and investors are increasingly looking for products and services that are environmentally friendly, socially responsible, and economically viable. They want businesses to demonstrate their commitment to sustainability through transparent and credible reporting, verification, and certification of their GHG emissions reduction efforts. Companies that do so can enhance their reputation, customer loyalty, market share, and profitability.
Regulation and policy are evolving: As governments and international organisations respond to the climate crisis and implement regulations and policy. Investors and financial institutions in New Zealand want businesses to be prepared. Companies that start or continue to reduce their GHG emissions and prove their claims will be in a stronger position to avoid compliance costs and benefit from continued access to markets, finance, and innovation.
Calculating GHG Emissions for SMEs
Calculating GHG emissions is relatively straightforward for SMEs. It begins by identifying emission sources, including transportation, energy consumption, waste, and purchased goods and services.
Businesses need to choose a carbon accounting standard that suits their goals. The most common one is the GHG Protocol Corporate Accounting and Reporting Standard.
Businesses need to identify and measure the sources of GHG emissions in their operations. These sources are divided into three scopes: Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from the generation of purchased energy), and Scope 3 (all other indirect emissions that occur in the value chain).
Businesses need to collect data on the activities that generate GHG emissions, such as fuel consumption, electricity use, waste generation, etc. They can use various methods to collect data, such as invoices, meters and surveys.
Businesses need to convert their collected data into GHG emissions using emission factors. Emission factors are coefficients that estimate the amount of GHG emitted per unit of activity. Businesses can use the government-produced conversion factors for greenhouse gas reporting or other sources of emission factors found in purchased goods and services.
Businesses report their GHG emissions according to the chosen carbon accounting standard. They can use various formats and platforms to report their emissions, such as annual reports, websites, sustainability reports, etc. They can also use third-party verification or certification to enhance the credibility of their reporting if they want to, such as ISO 14064.
Utilising tools like carbon calculators tailored for these industries helps quantify emissions, but many don't dive deeply into Category 1, purchased goods and services, which can make up a large part of a business's carbon footprint.
Businesses can then devise strategies to mitigate emissions. This may involve switching to renewable energy sources, optimising supply chains, promoting local sourcing, reducing food waste, and implementing efficient transportation and waste management systems.
The Way Forward
The urgency to address GHG emissions within New Zealand's SMEs in the tourism and food sectors stems from consumer demands and investor expectations. The implementation of the TCFD in New Zealand and evolving global legislation means large players in the supply chain are and will continue to demand that their suppliers reduce their reliance on fossil fuels, whether that is for travel, energy or the production of goods and services.
Understanding, calculating, and mitigating these emissions aligns businesses with regulatory frameworks and positions them as responsible entities meeting consumer preferences while contributing to a more sustainable future. Embracing these measures is not just a choice; it's an imperative step towards fostering a thriving, sustainable economy in the long run.
To help you calculate your GHG emissions or Carbon Footprint, check out our How to Calculate a Carbon Footprint guide.
Free Sustainability Health Check
If you have found the information in this blog useful and would like to understand more about how your business can be sustainable, why not book a free Sustainability Health Check with SDG Changemakers.