Telework and the Carbon Tax

Our accounting practices may soon change to include the carbon tax. We have spent years encouraging people to look at the benefits of teleworking versus its costs. Our cost-benefit analysis focuses mainly on the standard cost elements such as space rental, technology, training and unspecified “externalities”. But soon many organization will be thinking about another benefit of teleworking, the carbon tax.

Background

Our earlier cost-benefit analysis (CBA) concentrated on those elements that accountants would ordinarily consider. So the CBA for an employer of teleworkers would have one  bottom line outcome that is different than a CBA for an individual teleworker. For example, employers would consider the cost of the office space need for each worker (including hallways, etc.) while most teleworkers don’t consider the cost of the space in their homes when it is also used for other purposes than office space. Employers don’t consider the cost of employees commuting to and from the office although the employees do consider that cost. And so on.

But now climate change has added another factor to the equation. The 2017 United Nations Climate Change Conference confirmed the progress made since the 2016 Paris Agreement on Climate Change which all the world’s countries except the United States joined. So progress is being made on reducing emissions of greenhouse gases, particularly carbon dioxide.

But current progress is not enough to prevent the world’s atmospheric temperature from rising more that 2 degrees Celsius from pre-industrial times. A group of climate scientists has issued a new warning to that effect. Something more must be done. One of those somethings is a tax on all forms of carbon emitted into the atmosphere.

The Carbon Tax

A carbon tax (some prefer to call it carbon pricing) is becoming more prevalent since the early part of the century. It works this way: An organization can implement a carbon price through an internal emissions-trading program, a carbon charge, or a proxy price for the carbon it emits — or prevents from being emitted — into the atmosphere. That is, the organization (or subunit) pays a price for each ton of CO2 it emits. Sometimes the tax is imposed by the government, other times it is imposed within an organization as part of the organization’s goal to limit global warming. According the the journal Nature:

More than 500 firms around the world — three times more than a year ago — consider a carbon price of some kind when judging where to invest their money. Hundreds more are expected to start doing so in the coming months.

Also, according to the Nature article:

For the past five years, Microsoft has charged its business groups a carbon fee that appears quarterly in their profit-and-loss statements. The fee covers energy consumption (adjusted for employee count) from data centres, offices and software-development labs, as well as from business air travel [Emphasis added].

So why not apply this concept to teleworking as well?

The Telecarbon Credit

After all, one of the major benefits of teleworking is the reduction of teleworker travel. When I first tried to quantify that impact in the 1970s I mostly focused on savings in gas consumption and car maintenance expenses by telecommuters. Global warming hadn’t made the news then. But now we can start to think about the Carbon Tax avoidance issue as well. An employer might argue that the carbon not emitted by its telecommuters can be used as a credit against the carbon still being emitted by the employer’s facilities. For long-distance teleworkers who ordinarily use jet travel to go to company (or client) facilities the credit would be even greater. Furthermore, the credit could be traded with other organizations that want to lower their carbon tax bill.

For an organization with thousands of telecommuting employees this could be a significant and quantifiable bottom-line element in the fight to avoid the dreaded two-degree threshold.

Think about it.

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