The carbon economy has arrived; are you ready?
Green IT is now a reality. Organizations both large and small are embracing technology to help reach their sustainability goals. Integrating an enterprise resource planning solution with carbon accounting software aids in a company’s efforts to better track, manage and reduce its overall carbon footprint.
While the idea of Green IT is nothing new, the introduction of such a scheme would have a lasting impact on the nation’s sustainable business practices. Businesses will increasingly be required to quantify and report organizational greenhouse gas emissions, conduct audits and take into account the cost of carbon in investment decisions and business planning. Businesses will need to ensure that they have the right systems and controls in place to facilitate compliance. While vagaries around carbon accounting policies mean businesses still have some time up their sleeve, it’s never too early to start planning, especially where complex ERP implementations are involved.
What exactly is carbon accounting?
Carbon accounting involves measuring and benchmarking a business’ greenhouse gas emissions for a specific reporting period. All fossil fuels, when burned, emit different carbon dioxide. Once the amount and type of fuel is identified, carbon emissions can be calculated from fossil fuel combustion. Measuring a company’s emissions is a complex process, involving detailed calculations. A good carbon accounting system should enable businesses to become proficient in identifying, analyzing, auditing, tracking, managing, benchmarking and reporting on their carbon emissions, environmental impact and energy consumption.
How can businesses prepare for the carbon challenge?
Business managers should look to collaborate with departments across the entire organization, from CIOs and IT managers to procurement and financial, to ensure their ERP systems are up to not only today’s challenges, but tomorrow’s as well. On the one hand, an ERP system must be flexible and scalable, and on the other, it is becoming increasingly important to expand a company’s analytics programs. The system should empower businesses to meet evolving reporting and regulatory requirements, while optimizing the performance, cost and value of their governance, compliance and risk efforts.
Tactics for getting started
Organizations both large and small are embracing technology like a carbon accounting software system to get ahead of the curve of regulatory compliance, while providing efficiencies that will ultimately drive business performance. Integrating an ERP system with a carbon accounting solution further expands a company’s analytics programs and helps them reach their sustainability goals.
Coupled with ERP utility invoices and production schedules drawn from current or forecasted orders, companies can use carbon accounting systems to calculate expected emissions output and budget for environmental cost factors. Here’s five tactics for getting started:
- Board level buy-in – Whether it is the pursuit of a green corporate agenda, or the management of volatile energy costs, in order for any carbon accounting initiative to succeed there needs to be a desire from the top of the organization. The short payback time and high ROI associated with carbon accounting/energy management software can usually be used to help with this.
- Carry out a sustainability audit – It is important to understand where your organization is right now. This will enable you to identify any changes that can be made and give you a baseline in order to measure benefits and savings against. There are many firms that offer these services, as well as the vendors of carbon accounting software.
- Set realistic goals – Customers using carbon accounting/energy management software such as Epicor Carbon Connect typically see between 10%-20% cost savings in the first year. Setting goals for your organization will give you something to work towards.
- Investigate taking part in a carbon trading scheme – As well as helping you identify cost savings, carbon accounting/energy management software will give you the reliable data required to take part in carbon trading these schemes. These schemes have really taken off in the last couple of years, whether they are mandated by legislation or voluntary schemes. Partaking in these schemes can lead to a totally new revenue stream for your organization.
- Minimize the manual work – Efficiencies shouldn’t just be about your energy usage, they should also be in your back office processes. The more successful instances of integrating carbon accounting/energy management solutions come when the time and effort of resources is kept to a minimum. Solutions that integrate using information already available in your ERP system that then not only tracks greenhouse gases but performs sophisticated analysis were most likely to succeed.
HARBEC takes the next step
HARBEC Inc., a contract injection molding and precision manufacturer located in upstate New York, prides itself on sustainability efforts over the past few decades – whether it be the way they produce clean, sustainable energy using a wind turbine and a combined heat and power plant, or through their sustainable building design and recycling programs, the company has always had a vested interest in “being green.”
Despite their advanced methods of carbon reduction, HARBEC only had manual systems of measurement and data collection to track their carbon output. The company determined that a more accurate and credible solution was necessary in order to reach their goal of being carbon neutral by 2013. HARBEC was already using an ERP solution and decided to integrate it with a carbon accounting solution to further produce the results they wanted.
“Ultimately we needed a monthly report of how we’re doing in terms of sustainability metrics,” said Bob Bechtold, president and founder of HARBEC. “Those metrics are as serious to us as other common business metrics like financial reporting.”
HARBEC is also in the process of pursuing certification to the newly released ISO 50001 energy management systems standard, which requires systematic documentation of carbon emissions using solutions such as its carbon accounting software. Bechtold added that many companies claim to be environmentally friendly with little or no substantiation, but this new certification and solution will give HARBEC the competitive advantage of actually proving they are a leader in sustainability.
“Having credible documentation that comes from a robust ERP solution will allow us to quantify what we’re doing,” Bechtold said. “Any company can compensate for its carbon emissions by purchasing offsets, but this solution will enable HARBEC to efficiently and accurately track our carbon footprint, helping us to manage it toward zero through efficiencies and smarter power generation.”
Purcell is product marketing manager for Epicor (www.epicor.com).
In a recent poll conducted by Epicor
- 58% had not heard the term “carbon accounting”
- Of those who had heard the term, less than 25% could accurately describe what carbon accounting meant
- 20% regularly monitor their carbon footprint
- 33% don’t know if their company is legally obligated to report emissions.