Carbon Accounting Amid Corporate Silos: Will It Add Up?

For the past few years, I’ve talked with executives from long-established software companies as well as start-ups about the market potential for applications that will automate the tasks associated with tracking and reporting greenhouse gas emissions.

They explain that their success is virtually guaranteed because of “impending regulations” and cite the explosive growth of software to support compliance with regulatory legislation such as Sarbanes-Oxley.

I counter that for most companies (excepting emissions intensive and highly regulated industries such as utilities, cement and chemical manufacturers, and a few others) emissions tracking is a feature, not a category. After all, I remember spell-checkers as stand-alone applications at one time. But let’s face it, that debate is really only important for the venture capitalists backing these start-ups and the software CEOs allocating development dollars.

For sustainability and environmental executives, measuring what you want to manage is the key to success and a company’s carbon footprint is no different. The recently published “Enterprise Carbon Accounting Report” from Groom Energy Solutions and Pure Strategies Consulting sheds light on what some of the options are for companies that want to automate their emissions data collection. I recently talked with Jon Guerster, CEO of Groom Energy, and expressed my skepticism as to the potential size of a carbon accounting software market. While remaining on the sidelines of the debate, he notes that these are very early days.

The report surveys over 40 products ranging from free tools available on websites from Sun Microsystems and Cisco to highly sophisticated products from vendors like ESS. Of course, we also talked about the leading tool used by many companies — Microsoft Excel spreadsheets. At their core, all of these applications seek to address the underlying data management problem of aggregating emissions data, either from a single office or from widespread operations. In this respect, the degree of business complexity is the driver for whether a company should experiment with a new product that might prove more effective than their current spreadsheets.

The study estimates that more than 3,000 large and small companies worldwide track and report GHG emissions. These companies claim they are using GHG emissions reporting to measure their sustainability performance and are packaging the information for EPA’s Climate Leaders, the Carbon Disclosure Project and their own corporate responsibility reports. But in talking with Guerster, he sees a lack of connection between the environmental and sustainability departments and the folks responsible for facilities management.

In his work providing renewable and energy efficiency solutions to companies, he still sees facilities managers approaching projects individually as they manage their operational budgets. What is missing for many companies is collaboration between the sustainability and environmental executives who own the emissions reporting tools and the facilities management executives who own the facility budgets.

Guerster noted how he continues to be surprised by the lack of a comprehensive GHG emissions strategy at companies large and small and how this causes companies to miss tremendous opportunities for reducing emissions and energy use. In other words, those who are measuring aren’t the same people who are managing.

When it comes to reducing GHG emissions, that kind of math just won’t add up. To avoid a miscalculation at your company:

• Make sure measuring your GHG emissions is part of the scorecard associated with a broader program focused on your environmental and sustainability strategy
• Identify clear targets for your program (even if you don’t make them public)
• Make sure the heads of each major business function and operational unit understand their contribution to GHG emissions and commit to their part of the overall plan.

Eventually, Guerster notes, companies will move toward calculating both GHG emissions alongside financial savings from facilities based energy projects. Together, these can provide a metric for connecting capital allocation with broader sustainability goals.

John Davies is vice president of the GreenBiz Intelligence unit.