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04/12/2010

2010 . . . the year of carbon management

Despite the less-than-stellar outcome of the COP15, there are still many reasons to be optimistic about the ongoing dialog about carbon management in 2010. Even without formal legislation in place, committed organizations still trudge forward, dedicated to reducing the carbon footprint of their operations before it becomes mandated. These companies believe their brand will benefit from being an early adopter, they will achieve a positive financial impact from increased energy efficiency, and they will accrue security benefits from decreasing their dependence on foreign oil. In addition to the “usual suspects” of companies in the CSR space, there’s a surprise newcomer to the party:  the United States government. In a bold effort to move the U.S. government from laggard to leader, President Obama issued Executive Order 13514 earlier this year, which requires the federal government to reduce its greenhouse gas (GHG) emissions by 28 percent. As the United States’ largest owner of property, this represents a huge undertaking, and everyone from sustainability consultants to carbon accounting software providers is scrambling to get their piece of the pie.

 

Furthermore, as of January 1, 2010, large emitters are now required to report on their emissions under the Environmental Protections Agency’s new reporting system. According to this ruling by the EPA, “suppliers of fossil fuels or industrial GHG’s, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHG emissions are required to submit annual reports to EPA.” Reporting will start in 2011 based on the data collected throughout 2010.

 

Even without executive orders or EPA rulings, more companies are beginning to measure their carbon usage. In the seven short years since the Carbon Disclosure Project’s first request to companies for information, the number of respondents has grown tenfold. As companies from all industries embrace the notion that “you can’t manage what you can’t measure,” software industry veterans and startups alike are moving into help them track their carbon emissions, a market that is “set to grow seven fold over the next two years,” according to Groom Energy Research.

 

However, while measuring and reporting on emissions is an important first step, it does nothing to actually help mitigate risk to the environment. In order to create a wholly sustainable enterprise, forward thinking companies must do far more than simply implement a carbon management software system. Armed with new emissions data, they must work to reduce their emissions when possible, and purchase offsets when they can’t. But given the uncertainty around a bill coming out of Washington and the recent instability of the carbon markets, companies hoping to buy their way through pending legislation might be out of luck. Forward thinking companies can differentiate themselves by their ability to make measurable reductions in GHG’s through building and energy efficiency, supply chain optimization, green IT, supplier management, and operational efficiency.

 

They can avoid the temptation of one-off, stand-alone software systems, and instead seek enterprise-wide business process and software solutions. And with the U.S. government’s efforts in 2010, there’s sure to be a case study or two from which we can all learn.

 

Daniel Gerding

Consultant, Deloitte Consulting LLP

 

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Thanks for enlightening us on this matter. This is truly very educational!

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