Green Business

Karl Campbell (UK) - Carbon Reporting: What You Can't Measure, You Can't Manage

A new clampdown on companies' contributions to the UK's carbon footprint will demand greater consistency in the way they measure and report on resource consumption. To ensure the practice is more than an administrative burden, organisations must exploit this opportunity to uncover wasteful ‘leaks' in their use of energy and other carbon-intensive resources. The answer is formal carbon accounting, says Karl Campbell, head of sustainability at CarbonSystems UK

Ambitious new carbon reduction targets set by the Coalition will leave no room for careless or half-hearted business practices when it comes to environmental sustainability. Not only will organisations be expected to do more to enhance their green contribution, they will also come under pressure to measure and report on their energy use and carbon emissions more systematically.

Although this may sound like a burden many businesses could do without, leading companies already view energy efficiency, carbon abatement and environmental performance reporting as essential to their broader strategic goals in areas such as risk management, business continuity and business transformation.

The discipline is not without its challenges, however. To be of value, carbon accounting needs to be done accurately and in a way that can be reliably measured against other organisations' performance. Many organisations feel confused and burdened by the disparate demands of numerous carbon reporting regimes currently in operation. These include the Carbon Trust Standard, the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), and the government's mandatory Carbon Reduction Commitment Energy Efficiency Scheme (CRC).


Seeing the wood for the trees

A recent report by Deloitte noted that more than 90% of listed UK companies fall short of Department for Environment, Food and Rural Affairs' (Defra) current carbon accounting recommendations. As few as 20% were able to report progress against specific emissions targets, while only one in a hundred had identified carbon as a designated business risk in its annual report.

This situation isn't sustainable. Defra is in final consultations with business about the introduction of broader mandatory carbon reporting legislation due to take effect in 2013. Four options are under consideration: enhanced voluntary reporting; mandatory reporting for all quoted companies; mandatory reporting for all large companies; and mandatory reporting for all companies whose UK energy consumption exceeds a given threshold.

For carbon accounting to be more than an administrative expense to a company, organisations need to look for additional ‘wins' from the exercise, by aligning sustainability goals and practices with broader business strategy - in areas such as cost reduction, increased efficiency, business transformation, risk management and business continuity.

Capturing more information - about energy usage and costs across an organisation, for example - could help trigger significant efficiency gains, certainly. In the UK, Balfour Beatty has committed to a 2020 sustainability vision and roadmap targeting a minimum 10% decline in carbon emissions by 2012 - increasing to 50% by 2020 against a 2010 baseline. It aims to achieve this by embedding sustainability in every aspect of the business - finance, procurement, supply chain, business development, design, human resources, project management and service delivery.


Financial grade environmental reporting

Closer, systematic monitoring and reporting requires specialist accounting software that streamlines data capture, tracking and analysis so that organisational environmental performance reporting meets financial grade compliance and audit standards. Further, executives need clear, accurate and timely access to their organisational environmental metrics - energy, water, fuel, waste - to target efficiency and abatement programs, and to support strategic decisions supporting business transformation more aligned to a looming low carbon economy. It is no coincidence, then, that figures published by market analyst firm Verdantix reveal that UK companies with revenues of more than US$1bn (£609m) will spend US$46m (£28m) this year on enterprise carbon and energy management software - rising to US$110m (£67m) by 2013.

Although formal carbon and energy reporting is an expectation, soon to be enshrined in law, in its broadest application it could be a powerful business tool, shining a light on whole areas of wasteful practice that may have been costing companies dearly. It is here that companies should focus their attention, thereby ensuring a maximum return on investment.

By Karl Campbell, head of sustainability, CarbonSystems UK



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