Recently, lines between mandatory and voluntary energy and carbon management initiatives have been blurred as businesses in nearly every sector face increased pressure from consumers, customers, investors, and regulators to implement sustainability initiatives. Over the last few months this point was reinforced by several new requirements on businesses to develop and disclose sustainability efforts:
These new requirements provide confirmation that businesses must remain focused on energy, carbon, and environmental performance. External pressures aside, sustainability is proving good for business performance.
A Recent MIT Sloan Management Review (Sustainability and Competitive Advantage) survey of executives demonstrated that companies have identified multiple tangible and intangible benefits from sustainability initiatives. These benefits frequently include enhanced profits from improved brand and customer loyalty, reduced costs tied to better energy management and increased operational efficiencies, and strengthened employee recruitment and retention.
Aberdeen Group, in their recent research (Sustainable Production: Good for the Plant, Good for the Planet), determined that 85% of surveyed companies responded to the current economic downturn by either sustaining or increasing investments in their sustainability programs. Significant reductions or improvements across energy efficiency, waste reduction, environmental impact, and reuse and recycling amounted to enhanced financial performance directly attributable to sustainability program investments. Common amongst Best-in-Class manufacturers was a corporate-wide energy and emissions data program.
Pace Globals’s integrated energy and carbon data management solution, ECM HubSM, provides businesses with a foundation for their sustainability programs. These tools centralize enterprise energy, carbon, and sustainability data in a web-enabled environment that provides management with line of sight to key performance indicators at enterprise, business unit, facility, and unit-level resolution – and at a price point 50% to 70% below the cost of internally developed efforts. For more information, please contact us or click here to learn more.
The days of simple corporate roll-ups of greenhouse gas (GHG) emissions are fading into the past. Historically, a company could be viewed as proactive by tracking and disclosing aggregate, enterprise-wide GHG emissions. Today, competitive advantages are going to those organizations that can provide transparent carbon accounting details at product, activity and process levels.
Wal-Mart made headlines in 2009 by requiring 100,000 vendors to disclose energy, carbon, and sustainability metrics for products sold by the global retailer. However, this concept of pushing a company’s climate and sustainability initiatives onto its upstream supply chain extends far beyond Wal-Mart. Businesses are now beginning to view carbon as a proxy for efficiency and have integrated carbon management strategies into their supply chains.
New standards have emerged to help businesses understand the environmental impact of their supply chains. Initiatives from the Carbon Disclosure Project (CDP) and the World Resources Institute/World Business Council for Sustainable Development (WRI/WBCSD) are currently in pilot phases with over 100 participating companies representing more the 20 industry sectors.
Participants in these programs are asking for details that cannot be addressed using a corporate summary of energy usage:
- Allocations of GHG emissions by customer according to the goods or services sold
- Efforts to verify GHG inventory records and reduce uncertainty
- Forecasts of how GHG emissions will change over the next 5 years
- Future plans to improve capabilities for allocating emissions based on specific products and services
- Measures to reduce GHG emissions in the lifecycle of products
- Climate change related business strategies to take actions on risks and opportunities; including emissions reduction targets, public policy engagement, and external communications.
- Strategies for engaging suppliers on their GHG emissions
It’s clear that this issue has tremendous momentum when a Google search for “green supply chain” yields over 15 million results. A February 2010 Fast Company Magazine article effectively articulated the completive side of this issue – “When every package is awash in claims of using less plastic and water, a standardized measure would separate sustainability lightweights from products that truly deserve their green halo”.
There has never been a more critical time for businesses to focus on carbon and environmental sustainability issues. Even now, in a time marked by a global economic downturn, accounting for greenhouse gas (GHG) risk is an increasingly relevant cost of doing business. It is the expectation put on businesses by customers, shareholders, and regulators.
Historically, prior to 2009, the U.S. GHG regulatory environment had been defined by fragmented state and regional initiatives. Federal carbon regulations are now on the horizon with US Environmental Protection Agency GHG reporting mandates set to commence in January 2010 and a clear directive by President Obama to the US Congress to pass cap and trade legislation. In 2009 to date, environmental policies impacting the energy sector have been progressed with unprecedented speed and urgency.
March 2009 saw the release of the U.S. EPA's draft mandatory GHG reporting rule which is arguably the most stringent GHG protocols drafted to date. These GHG reporting regulations will cover 85 - 90% of the nation's GHG emissions and will require reporting from approximately 13,000 facilities. Pace anticipates that this proposed rule will be finalized this fall and compliance obligations for U.S. businesses will commence in January 2010. As organizations were beginning to come to terms with the complexity of the EPA GHG reporting requirements, the U.S. House of Representatives passed a landmark bill that has the potential to define carbon and energy regulations for decades to come. "The American Clean Energy and Security Act of 2009" (a.k.a. The Waxman/Markey Bill) seeks, amongst other provisions, to establish a Federal cap-and-trade on Greenhouse Gas (GHG) emissions.
These are clear signals that the timeframe wherein companies can maintain an unmanaged carbon position is fast closing and the need to begin incorporating carbon into corporate strategy and energy planning is now. Whether your organization is directly impacted by these regulations or not, carbon compliance costs passed through by power generators and distillate fuel suppliers are a guarantee and will represent a significant variable expense. Without a clear project and energy management strategy, this risk is unmitigated. Businesses that proactively manage their carbon risks before they occur will establish a competitive advantage.
About Pace - Pace is a full-service, energy and carbon management firm with over 30 years of experience. Pace provides full-scale GHG inventory services to a variety of energy consumers, from commercial to heavy industrial companies as well as utilities.
About the Author - Sean Metivier has over 8 years of combined experience related to project management and product management within the environmental consulting and retail energy industries. At Pace he provides consulting and project management support for a variety of Carbon-related engagements. Sean is also the product manager of Pace's robust web-based, enterprise carbon accounting and project tracking service (ecolinkTM) designed to support corporate-wide sustainability, GHG emission management and energy management programs. Sean holds an M.S. in climate change science and a B.S. in environmental biology from Syracuse University.
Pace has learned through multiple channels that the long-awaited final EPA mandatory greenhouse gas (GHG) reporting rule is expected to be released this week. This GHG reporting regulation will cover 85 - 90% of the nation's GHG emissions. Facility-level reporting requirements will be triggered by specific industrial processes and/or stationary combustion emissions in excess of 25,000 metric tons of CO
2e. When the proposed GHG reporting rule was published in March 2009, U.S. businesses from a wide range of industry sectors were caught off guard by the complexity of data management, calculation, and record retention requirements
The proposed methodologies for calculating GHG emissions go well beyond the requirements of the leading voluntary reporting programs like The Climate Registry. Impacted facilities will be expected to collect, manage, and report facility-level and unit-level details such as fuel carbon and high heat value results, monitoring and QA/QC records, and data collection and emission calculation methodologies. Complicating the matter further, EPA established unique reporting methodologies for several industrial process emission sources (e.g. cement production, electric generation, petroleum refineries, food processing, electronics manufacturing, metals production, pulp and paper manufacturing, and others).
Now, with just over three months remaining in the year, it is apparent that affected U.S. companies will be challenged to prepare for this groundbreaking and complex regulatory requirement. While Pace does not anticipate wholesale changes between the draft and final versions of the rule, EPA clearly solicited comments associated with several aspects of the rule. These areas included, but were not limited to the following:
Even subtle changes in the rule could have significant implications to affected businesses. Download a summary of the EPA rule and learn how Pace can help you address these complex challenges.
Enterprise carbon accounting (ECA) software solutions have received a significant amount of media attention during the first half of 2009. The confluence of emerging Federal, GHG regulations with announcements of new market entrants, has spurred this heightened attention.
Much of the recent media attention has focused on software vendors that are new to this space and offer pure turnkey software solutions. Carbon management is primarily an energy data issue and it occurs to me that ECA software solutions integrated with established energy consulting services are not receiving appropriate attention. Integrated carbon and energy solutions of this nature tend to be better equipped to solve complex data management issues and at a price that is more economical than traditional enterprise-scale software solutions. Vendors with extensive experience providing energy and carbon data management and advisory services to proactive businesses fully appreciate the fact that carbon and energy are inextricably linked. Further, the most complex and labor intensive aspect of developing a carbon footprint is the establishment of data collection processes. Vendors with comprehensive data management solutions are better prepared to address these market challenges.
I also observed that much of this media attention around ECA solutions, and many of the vendors themselves, tend to focus exclusively on voluntary, sustainability drivers for implementing enterprise carbon accounting initiatives. These initiatives are both commendable and decidedly more vital as energy costs rise under a carbon constrained economy and stakeholders increasingly expect clear carbon risk disclosure from businesses. However, the first half of 2009 was also marked by unprecedented speed and urgency around newly proposed, Federal GHG regulations. Specifically, the U.S. EPA's Proposed Mandatory Greenhouse Gas Reporting Rule is arguably the most rigorous GHG inventory protocols designed to date. Those organizations with compliance obligations will benefit from compelling ECA software solutions that integrate regulatory carbon reporting requirements with energy data management and carbon advisory services.
While the calculation and data quality requirements of the EPA rule exceed those of voluntary reporting protocols, organizations without compliance obligations also benefit from partnering with a firm that has the ability to provide compliance solutions. It is conceivable that, as the EPA reporting requirements are established as the industry best practices for carbon accounting, other stakeholders will adopt aspects of the Federal GHG reporting rule. The U.S. Securities and Exchange Commission (SEC), for example, is under significant pressure from investors to require corporations to disclose climate risks with financial reporting. Will the SEC look to the EPA guidance related to carbon accounting standards?
Whether your organization's drivers for establishing carbon management practices are tied to voluntary or regulatory needs, it is important to partner with a service provider that competently addresses the data management challenges and is capable of delivering a true, regulatory-quality solution.