“Companies will have to assume a price on carbon as they assume a price on oil today,” says Clear Standards co-founder Richard Mendis. “A big portion of what these systems deliver is content — the latest emissions factors, standards, and methodologies.”
To be sure, the Climate Earth and Clear Standards tools are leading-, if not bleeding-, edge. ERP vendors are entering this market more conservatively. While SAP has announced projects to halve greenhouse-gas emissions from its own operations by 2020, SAP software to track energy consumption and manage environmental risks in supply chains is still in development. Oracle has partnered with ESS, developer of environmental data-gathering software, to offer modules built on its Governance, Risk, and Compliance Manager and Business Intelligence Suite.
Microsoft, meanwhile, launched the Environmental Sustainability Dashboard for its Dynamics AX suite in February. It is targeted to midmarket clients that need to cut energy expenses and comply with the “greening” initiatives of their large customers, like Wal-Mart.
The dashboard draws on financial accounting data, like an AP entry for an electricity bill, to track direct and indirect energy consumption. It monitors relatively few sources of carbon emissions, but for midmarket companies that makes sense. “We came out of the box with only four indicators,” says Jennifer Pollard, a senior product manager at Microsoft. “If we tried to boil the ocean and tell customers everything about their environmental impact, the barrier would be too high.”
With shifting international standards for measuring and reporting greenhouse gases, and plenty of uncertainty regarding just how U.S. cap-and-trade policies will play out, IT advisers counsel companies to go slow. Says Mingay: “Tread carefully, look for short-term ROI, and be prepared to chuck what you’ve done in two years and start over.”
Why worry about it now at all? “It behooves CFOs to understand how to manage operations to minimize carbon emissions,” Mendis says. “CFOs can’t control the cost of a kilowatt hour or a barrel of oil — but they can control how much they use.” Since there promises to be a steep learning curve around carbon accounting, Mendis adds, companies that take some steps now will gain an advantage.
Vincent Ryan is a senior editor at CFO.