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Introduction
The growth of a company, whatever its form, is a sign that it's doing (economically, at any rate) well. A company with green KPIs can structure its development in a number of ways, one of which is to buy out other companies.
However, the acquisition of a company means that the scope of carbon-emitting activities expands. In this case, a number of questions arise: How to integrate it into the Bilan Carbone? How to communicate? What about efforts already made and actions taken? We answer all your questions in this article!
Defining a company's scope of activity: a strategic advantage.
What is a company's scope of activity?
A company's business perimeter represents all the different activities it carries out. This perimeter encompasses a variety of activities, which in turn encompass the skills and know-how that enable the company to compete in the sectors in which it operates.
Depending on the evolution of the company's strategy and health, it may be faced with two choices:
- Refocusing: reducing activities and refocusing them on the company's core business.
- Diversification: extend the scope of your business, to consolidate your position in a sector, face up to competition, improve your mastery of the value chain...
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Clearly defining the scope of a company's activities is of strategic importance. It gives you a precise overview of your presence in a market, and enables you to make the right decisions about how to develop it.
Changes in a company's scope of consolidation therefore have an impact on its activities, and consequently on its carbon emissions. In the case of a refocusing, the manipulation is fairly straightforward: the company reduces its scope of activity, and its emissions by extension. But in the case of a takeover, how can it extend its perimeter, without erasing the efforts undertaken, while maintaining rigorous and accurate measurement? These are the questions we'll try to answer here!
What impact does a buyback have on the carbon footprint?
First of all, it's important to provide some context. The aim of this article is to discuss the integration of a company takeover into the Bilan Carbone. This implies, firstly, that the acquiring company knows what a Bilan Carbone is (which we explain here!), but also that it has already carried one out. Indeed, the complexity of the approach lies in its integration into an existing balance sheet.
For companies wishing to calculate their Bilan Carbone after a takeover, to reduce the environmental footprint of their activities on a more global scale, the subject is the same: you need to be rigorous, pragmatic and well-equipped (with a SaaS like Traace, for example).
Let's return to the case in point. A company which has already carried out its Bilan Carbone, has most probably also established a reduction trajectory, or at least has already defined the reduction actions to be implemented in order to play on the main levers of action. If this company acquires another company during the course of the year, this means that its carbon emissions are increasing, and de facto that it needs to address a number of points relating to the structure of its Bilan Carbone.
Enlargement of its perimeter
Initially, the main topic is obviously the evolution of the activities that need to be taken into account in the Bilan Carbone. The acquisition of a company involves not only the purchase of its economic activities (production, services), but also the integration of its fixed assets and employees. This means that a whole range of elements, over and above the simple economic dimension, will be added to the existing ones, and will require a review of the indicators taken into account for the Bilan Carbone and their importance.
Evolution of actions and reduction levers
As we mentioned earlier, a new perimeter means that the data taken into account in the Carbon Footprint will evolve. It also means that the levers for action, or the actions themselves, may evolve.
For example, a 100-strong company buying out a 200-strong one is likely to see the subject of employee travel-related emissions, and mobility in general, take on a more prominent role in discussions on carbon footprint. In this case, a mobility plan, which may not have been a priority before the takeover, can become an important lever for action.
Beyond this example, we can also talk about actions already implemented. Reduction actions defined for an initial scope will not necessarily have the same impact on the new scope. It is therefore important to decide, at the time of the takeover, on the durability and follow-up of the actions implemented, depending on their relevance.
Evolution of the trajectory
Finally, having addressed the previous two points, it is necessary to consider the evolution of the company's overall carbon footprint reduction trajectory. Changes in scope, in the data to be taken into account and in the actions to be implemented, necessarily involve redefining, or at least revising, the company's carbon trajectory.
On the one hand, the increase in total emissions means that the feasibility of previously defined objectives must be reviewed, to maintain a certain consistency despite the extension of the scope. What's more, the timeframe the company has set itself to achieve its objectives may become unattainable.
For example, a company needs to integrate the takeover of another company that is not very mature in terms of carbon issues and is a major polluter. In this case, the entire environmental policy has to be built up, from the trajectory to the reduction actions, via the provision of human, financial and material resources. The time spent building this policy has an impact on the time the company originally set aside for itself, and means that the trajectory and timeframe defined to achieve its objectives must evolve.
How do you integrate a new perimeter into the Balance Sheet?
The decision has been taken to include this recently acquired company in the Bilan Carbone. There are two possible situations, with varying degrees of constraint.
Simple" scenario
The first situation in which a company may find itself is one in which the acquired company already has carbon data, does its balance sheet on a regular basis, and so on. As soon as this company has a structured database, all that needs to be done is to integrate this information into the balance sheet already produced by the company, with the only constraint being to harmonize the methodology. The "calculation" part is therefore relatively simple, and decision-makers can concentrate on the evolution of actions and the trajectory.
Complex" scenarios
In this second situation, the acquired company has no structured carbon data, or at least none that enables it to visualize the carbon footprint of all its activities. Unfortunately, there is no miracle solution.
Given the impact of the buyout on the acquiring company's activities, it is necessary to recalculate the entire perimeter in order to define a new reference year. From a methodological point of view, this is the only feasible option for maintaining rigorous measurement and limiting errors. This is also the recommendation made for the calculation of Science Base Targets (SBT ): "Triggered target recalculation".Triggered target recalculation Significant changes in company structure and activities, e.g. acquisitions, [...]".
Adapt internally and communicate with stakeholders: How do you go about it?
Adapting strategy to context
As we have seen, the integration of a new entity modifies the structure of the company and its Carbon Footprint. We have also discussed the impact of these changes on the trajectory and measures implemented by the company. This raises a number of questions: what happens to actions already in place? What if the sum of my new balance sheet completely wipes out the year's efforts? In reality, as with all carbon footprint calculations, there's one watchword: pragmatism.
It's clear that buying a company is a lengthy process, and calculating the Bilan Carbone can be just as time-consuming (although much less so thanks to SaaS, as we've pointed out here). So, if we combine the two, it's likely that a company won't have time, for fiscal year N, to recalculate its reduction trajectory, and rebuild a complete action plan adapted to the new objectives.
In this case, it can decorrelate its analyses. By retaining its original scope, the company can continue to benefit from the results of actions already implemented. It also saves time when deciding on the trajectory to adopt with this new scope.
On the other hand, it has the carbon footprint of the activities of the newly acquired entity (either because it is available historically, or by calculating it), and can also act on it. This approach has several advantages:
- It 's better to carry out a rigorous, accurate analysis on two perimeters, with a view to merging them in the following year, than an inaccurate, approximate analysis on year N.
- Preserving existing initiatives: Buying a company is a sign of strategic intent, but it does not call into question existing initiatives, the results of which must be shared.
- Save time: postponing the merger of perimeters allows decision-makers to make well-considered decisions on future trajectories, rather than rushing into calculations that may also be rushed.
Communicate on the operation's carbon footprint
The other major dimension of carbon footprinting is the opportunity for companies who make the effort to promote their actions and their desire to reduce their impact on the environment. To this end, communication (well done, not greenwashing) is a key element in the environmental policy of most organizations.
Of course, this communication only makes sense if it is based on rigorously calculated figures and clear, achievable objectives. On this point, companies need to adapt their discourse in the event of takeovers of other entities and changes in given objectives.
Depending on the target audience (financial stakeholder, business partner, customer, etc.), it is once again entirely possible to communicate on ongoing actions and their results in various forms, as well as on the reduction of the carbon footprint of the "historical" perimeter. This enables the company to showcase its efforts, at a time when the environmental dimension is becoming a strategic issue for businesses. However, it is imperative to remain transparent about future developments. A company cannot conceal its acquisition indefinitely, and its commitment to environmental performance also requires rapid decision-making on how to evolve its ambitions.
