In his inauguration speech, President Joe Biden said he plans a $2 trillion investment in clean energy, with the goal of not producing any carbon emissions by 2035.
With that in mind, it’s a good idea for your business to review its current practices so you can be prepared to comply with any new requirements — and even better, get ahead of the curve.
What’s a carbon tax?
You’ve probably heard of a “carbon tax.” The Carbon Tax Center says it’s a government-imposed fee on the burning of carbon-based fuels, such as coal, oil and gas. Many large businesses have been instituting practices that reduce their carbon footprint. For example, Google has been carbon neutral since 2007.
With a carbon tax, businesses may be required to assess and report on certain environmental, social and governance (known as ESG) measurements and then pay for excess fossil fuel consumption and waste disposal. Do you have any clue where you stand now? Some sites, such as EcoAct, can help you assess your current carbon footprint and offer guidance.
What you can do now
Review your current business practices in light of their environmental impact. For example, how much plastic—a big pollutant—does your business use and what can you do now to make substitutions? If you are a retail store, are you using plastic or paper bags for customer purchases? If you are a deli or restaurant offering take-out, what types of containers are you using for food purchases? Consider using products compatible with sustainability, such as bags and boxes from PakFactory, a supporter of the National Forest Foundation.
You can support continued remote work arrangements for employees. This cuts down on their commuting, which in turn is an energy saver.
You can also make investments in green energy.
- Buy energy-saving office equipment. When you’re replacing or adding copiers and other office equipment, look for Energy Star options.
- Use sustainable office furniture. Find options through SustainableFurnishings.org.
- Change lighting. 1000Bulbs has a guide to energy-efficient office lighting.
- Change company vehicles to electric-powered and hybrids to reduce the use of fossil fuels. There are tax incentives to help underwrite the cost, such as a federal tax credit for buying certain all-electric and plug-in hybrid vehicles. Check DSIRE for state and local tax incentives.
You can obtain “green” certification if your business practices measure up. You can’t simply call yourself a green business or claim your products and services to be sustainable without a designation. SmallBizTrends has a list of 25 green business certifications.
Be prepared to adjust your budget to cover a carbon tax that may be imposed. On the other hand, to the extent you use energy saving strategies (e.g., making changes in your lighting and vehicles), you can reduce your utility costs and have a lower carbon tax if and when one is enacted.
Regardless of the immediate or long-term cost of green legislation, don’t lose sight of the beneficial impact that having green policies will have on your profitability. Barrons’ reported that two-thirds of consumers prefer to patronize eco-friendly companies, so you might see profits grow. Kermit the Frog said, “It’s not easy being green,” but who knows?
Barbara Weltman is the founder of Big Ideas for Small Business, Inc., which publishes Idea of the Day. She is the author of J.K. Lasser’s Small Business Taxes 2020 and other books that inform the small business community of tax, financial, and legal information they should know about.