“The first question companies are trying to answer is, What is the source of greenhouse-gas emissions? What’s the big number? What is our risk?” says Mingay.
Which is to say, right now companies are not focused on the IT angle, a fact reflected in the tools they use for their initial rough cuts at carbon accounting. BB&T, a $143 billion retail bank, calculates CO2-equivalent emissions using spreadsheets available on the Website of the Greenhouse Gas Protocol Initiative. (The GHG Protocol publishes widely accepted standards for emissions accounting.) Rockwell Collins, a designer of communications and aviation electronics, relies on a third party to collect and manage its electricity and natural-gas usage, based on the invoices it receives from utility companies. In a recent report, the company stated that “we are still evaluating whether greenhouse-gas accounting information will be externally verified or audited in the future.”
Hitting the Limits
Many, if not most, large companies, in fact, currently make do with spreadsheets to collect and manage data on on-site emissions (Scope 1, as defined by the GHG Protocol standard), purchased energy (Scope 2), and “other” miscellaneous sources (Scope 3), such as employee business travel and waste disposal.
Spreadsheets, of course, incorporate a host of uncertainties: who filled in the data, was it checked and verified, and what was the source. “Large organizations quickly hit the limits on what an auditor would accept,” Mingay says. “As a company begins to capture data across multiple locations, countries, and divisions, it becomes too complicated for spreadsheets,” says Srini Pallia, a vice president of Wipro Technologies, which is developing a carbon-accounting tool.
A number of entities are developing more-sophisticated approaches. Climate Earth’s system, as one example, uses as its underlying data source Greenhouse Gas Emissions Factors for 480 U.S. commodities and services. The data is partly based on a UK standard, PAS 2050. On the auditability side, Climate Earth incorporates the verifiable, traceable data in a company’s financial accounting system and also hooks into ERP software and travel-reservation systems, among others. “We take your [general ledger] trial balance, upload it to our secure servers, and then our software maps every GL line item to a rule that maps it to a carbon footprint,” explains Chris Erickson, Climate Earth’s CEO.
Climate Earth’s method requires some client tinkering. Playworld had to modify its accounting system to break down purchases of materials into categories that correlated with Climate Earth’s database, Malriat says. Travel expense accounts were split between air and auto; office supplies had to be identified as paper, plastic, or other materials; and Playworld had to know how the electricity it consumed was generated. The changes took about three months, Malriat says.
Another option is Clear Standards, a Web-based platform available by subscription. Clear Standards tackles the problem of inventorying CO2-equivalent emissions and also helps companies factor the price of carbon offsets into capital investment decisions. If a company is analyzing the prospect of installing solar roof panels on a facility, for example, it might calculate the net present value based on savings on its electricity bill. But Clear Standards adds a financial modeling component that captures the future value of carbon emissions based on published market prices. Cash-flow analysis templates can be applied to the most common energy-efficiency projects.