Carbon footprints are becoming as well known as Bigfoot himself and may feel just as mythical to some organizations. And yet they cannot be ignored. Shareholders and investors have been taking notice of carbon outputs and the associated risks for some time. Standards issued by the United States Environmental Protection Agency (EPA) continue to inch closer to mandatory carbon reporting. Europe has introduced carbon trading and is now in talks with Australia to commence international trade in carbon by the end of 2012. Fortunately, automated carbon monitoring software has matured quickly in recent years, and numerous guides and standard calculations exist to help companies assess and benchmark their carbon emissions.
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Beyond shareholder and regulatory pressure, some companies and organizations receive unwelcome exposure to the environmental grievances of nongovernmental organizations such as Greenpeace. This exposure can result in unwanted media attention, a hit to bottom line profits and a huge blemish on the company’s reputation and customer relationships.
In response to such pressures, organizations have made automated carbon monitoring one of the strongest focus areas of their sustainability programs because it involves one of the most measurable impacts. That’s the good news. The bad news is it can still be difficult to determine what to monitor.
Deciding what to watch with carbon reporting software
Not all carbon emissions are the same. They are categorized into three scopes:
- Scope 1 considers direct emissions from office buildings and company vehicles
- Scope 2 includes indirect emissions from purchased electricity
- Scope 3 involves indirect emissions from a host of sources including the supply chain required to create a product, the product’s entire and post-use lifecycle, outsourced and contractor work, air travel and waste.
While Scope 1 and 2 require some effort to collect the necessary data, there is more clarity on what can and should be measured. Scope 3 gets a bit more contentious when determining the bigger impacts and where to draw the line. Fortunately, there’s automated carbon monitoring software to help companies learn to speak fluent carbon.
Every company will have different monitoring needs based on its operations and culture. To determine what to monitor, follow these broad-based steps:
- Assess. Determine what is material to your business: where carbon impacts exist, including greenhouse gas (GHG) inventory management, root cause product assessments, supply chain carbon footprints and product lifecycles.
- Analyze. By applying role-based dashboards and benchmarks to the data, you’ll begin to see the best path to reducing carbon emissions.
- Select a framework. Reporting regulations vary by geographic location and industry. For example, organizations that operate in California are subject to California Air Resources Board (CARB) requirements, which differ from the EPA’s Mandatory Reporting Requirement (MRR) and would require them to report different information under both regulations. To further the confusion, not all companies are required to report under the EPA’s MRR because the court ruling around the 2011 deadline remains fuzzy. Such complexities make selecting a reporting framework and carbon monitoring software even more crucial.
- Act. This includes developing a carbon mitigation plan, telling stakeholders about it and measuring progress on achieving the plan.
Solving the dilemma of too much vs. too little information
Carbon monitoring add-on software has been available for several years. While many approaches focus on one or more of the four critical aspects of an automated carbon monitoring program, few are truly comprehensive. In addition, most early applications for reporting carbon footprints are based on a series of internal and supplier surveys that roll up into specific results that give an initial snapshot of the organization’s footprint. However, these early products weren’t specific enough to meet the regulatory reporting requirements facing institutions, commercial organizations, and public sector agencies, particularly for Scope 2 and 3 requirements.
In many small to mid-size organizations, data collection involved manually consolidating sources into spreadsheets often crafted by engineering companies and service providers. Large organizations are more likely to have sophisticated business intelligence (BI) software that can sift millions of data elements associated with carbon monitoring, but this is a two-edged sword. The deep repository of information potentially allows broader and more accurate carbon monitoring, but the information is often misrepresented, poorly calculated and even superfluous to the actual reporting requirements. In short, there is too much of the wrong information to provide accurate and reliable carbon monitoring.
Emergence of comprehensive carbon monitoring software
Particularly with the EPA MRR confronting several “all-in” manufacturing segments, including smelting operations, some carbon reporting tools are emerging that go beyond self reporting, surveys and value chain queries. Industry and trade groups such as ICLEI-Local Governments for Sustainability and the Electronic Industry Citizenship Coalition (EICC) have developed reporting tools that provide some consistency in their industry segments. These groups also maintain repositories of information on carbon and other GHG components.
Large software makers have also invested in their product portfolios to offer more comprehensive, integrated carbon monitoring to their customer bases. For example, in 2009 SAP purchase cloud-based Clear Systems, which formed the basis of SAP Carbon Impact OnDemand. While the trial product relies mostly on self interviews, the full version is extremely comprehensive and can work with a number of data sources across platforms. Other online carbon reporting software and monitoring tools such as e3 Software align closely with large Scope 3 initiatives, such as Walmart’s carbon reduction efforts. Broad sustainability performance applications, including product compliance elements, are available from many ERP and product lifecycle management (PLM) vendors such as SAP, Dassault Systemes and PTC as these large software vendors position themselves for growth in the carbon monitoring market.
In summary, organizations do not have to pay engineering companies hefty analysis fees to assess, analyze and report on carbon emissions. Depending on the nature of the business, options exist for centralized and automated carbon monitoring that can reflect the results of inquiries throughout the value chain or go deep into the chemical data required by Scopes 2 and 3, as well as other environmental regulations.
William Newman is managing principal of Newport Consulting Group, an independent management and technology consulting firm and SAP influence partner based in Clarkston, Mich. Contact him via email at firstname.lastname@example.org or follow him on Twitter (@william_newman).
Cindy Jennings is a principal with Newport Consulting Group in the field of sustainability management, helping institutions, mid-size companies, and Fortune 1000 enterprises develop, craft and deploy strategies. She is based in Denver, Colo. Contact her via email at email@example.com or follow her on Twitter (@cindyjennings).