In the third article in her series, Alison Smith outlines the best approach to choosing the right environmental management software for your organisation
With climate regulation in the US under fierce attack and the European carbon market hit by fraud, you might wonder whether this is the best time for companies to be looking at buying environmental software.
But it seems that the drive towards sustainability now has a momentum all of its own. A new report from Groom Energy predicts that the market for carbon-accounting software will triple in 2011, and reveals that the main driver now is not legislation but demands for information from customers and investors.
The market for environmental software is maturing – there were fewer takeovers and start-ups in 2010 than in 2009 – but there is still a vast range of products to choose from. So how should you go about finding the right tool for your organisation?
The previous article in this series (the environmentalist, March) discussed the different types of software that are available. This guide goes into more detail on the functions and features that can be found in different tools.
It can be used together with Aether’s free environment tools database, which includes more than 400 tools and can be searched by scope, sector and function.
The price tag
The cost of software varies enormously, from free online carbon calculators to six-figure sums for tools aimed at large companies. Small companies may be happy to continue with spreadsheets or to use a free calculator, but some vendors do offer software that is affordable for small and medium-sized enterprises.
Best Foot Forward, for example, has a range of tools starting with a free offering for single users and leading up to tools suitable for large organisations. Other vendors with flexibly priced products include Credit 360, CloudApps and CSRWare.
Even small companies can benefit from tools that offer analytical functions rather than just simple measurement and reporting, so it is worth looking around to see which vendors can meet your needs.
Most of the tools on the market are now offered as “software as a service”. That means the software is installed on the supplier’s own servers and is accessed online by the users, who pay an annual or monthly fee.
There might be extra one-off costs for the initial set-up, any necessary user training, and migration of old data into the system. After that, maintenance and upgrades should be all part of the service, including regular updates to official emission factors or currency conversion rates.
Of course, the cost should be considered against the potential savings that can be made, both in time and effort to compile sustainability data and in energy and resource savings that could be identified. As we saw in the first article in this series (January), these savings can more than offset the cost of the software.
Which vendor?
We have noted previously (March) how different types of tools have evolved to meet the needs of different sectors. Typically, heavy polluters tend to choose environment, health and safety software suites, which include carbon modules; office-based companies prefer specialist carbon software and companies with a strong brand image often look for corporate sustainability reporting suites.
There is a growing trend towards the use of energy-management packages with carbon modules attached, as companies increasingly see the link between carbon and energy-cost savings.
Four out of Groom Energy’s current top-10 carbon software vendors are energy management companies: AdvantageIQ, EnerNOC, Johnson Controls and Summit Energy – the others being Enablon, Enviance, Hara, IHS, PE International and SAP.
It is important to choose a product suitable for your sector, so ask vendors for evidence of successful deployment by similar organisations. And, with the market still maturing, you also need to check out vendor stability. Reports by Verdantix and Groom Energy assess the market strength and future prospects of the main players.
Beyond carbon
Which impacts do you need to manage? Many firms begin with carbon, but a range of other impacts is becoming increasingly important.
Most software follows the Greenhouse Gas (GHG) Protocol by reporting scope 1 and 2 emissions, covering direct use of fuel in company vehicles and buildings plus indirect emissions from electricity use. Reporting of scope 3 emissions – those outside direct company control – is optional. Scope 3 emissions include travel by company employees in non-company vehicles (including flying and commuting) and upstream emissions associated with materials purchased by the company (eg paper, chemicals, metals).
Of these, most carbon-accounting tools include employee business travel, because cutting down on unnecessary journeys (especially flights) with techniques such as video conferencing is a major opportunity for cost and carbon savings. Some also include commuting, which again presents opportunities for savings through flexible working and car-sharing initiatives. And many now include emissions from waste disposal.
The big new trend is to look at supply chain emissions. On average, more than half of a company’s emissions come from the supply chain. Companies such as BT, Wal-mart and Tesco are pressing their suppliers to cut energy use and carbon emissions. Others, such as M&S, are going even further and looking at ways of encouraging customers to save energy during product use and disposal. So some software tools now have the facility to collect and analyse supply chain information.
Other greenhouse gases
“Carbon” doesn’t just mean carbon dioxide – it is used as shorthand for all six Kyoto gases. Under the GHG Protocol, any significant emissions must be reported. Most small office-based businesses need only report carbon dioxide from energy use, but other companies may need to include methane from waste management, HFCs from refrigeration and air conditioning, and nitrous oxide, perfluorocarbons and sulphur hexafluoride from industrial processes.
Water, waste and resources
Water scarcity is becoming an urgent concern in many countries – the number of investors asking for water information through the Carbon Disclosure Project rose from 137 in 2010 to 354 in 2011. The costs of energy, food, materials and waste disposal are soaring. As a result, many carbon-accounting packages are expanding to measure water use, waste generation and energy costs, and some, for example Hara, can also track the use of other resources such as paper.
Other sustainability impacts
Corporate responsibility reporting tools typically include a wide range of indicators. In addition to carbon, water and waste, these may cover other environmental impacts such as land use, air pollution and water pollution, as well as social and economic indicators such as community donations, tax contributions, employee satisfaction, employment diversity (eg by gender, race and disability), working conditions and accidents.
Some tools are fully customisable so that the user can define their own indicators. This type of tool often comes with a separate, more detailed module for assessing energy and carbon impacts – or it is used in conjunction with a specialist carbon or energy management tool from another vendor. At first glance, many software tools appear very similar, but in fact there are differences in the range of functions they offer for measuring, reporting and managing impacts. The checklist of functions that may be included below to help identify those that are most useful for your organisation.
Looking long term
First-time buyers might look for a low-cost solution aimed just at measuring and reporting carbon emissions, to comply with regulations or pressure from stakeholders. However, many users soon find that this is not enough – they want to start cutting their impacts and so they need software that will help them to plan and execute emission-reduction strategies.
Soon they may also find that they need to look at energy costs, waste management and water use, or extend their analysis to the supply chain. So it pays to look ahead and choose a flexible solution that can be adapted to your needs as they evolve.
Function Checklist
Measuring impacts
- Defining scope and structure – Simple tools may measure a fixed set of impacts, but others will allow the user to select the scope of impacts covered and define the company structure, including operating divisions, locations, supply chain and so on. Users should be able to easily change the structure to reflect changes in company organisation or reporting requirements, for example by adding or removing business units or processes.
- Collecting data – Simple tools will be based on manual data entry, but automatic data collection from utility meters or building energy-management systems is very useful for large organisations. Data should be as detailed as possible, ideally using sub-meters to track energy use over time for particular processes or pieces of equipment. Some systems may also be able to link in with company software to gather data such as energy and water use (from utility bills), material purchases, waste disposal, product output, employee travel, goods transport or vehicle fleet mileage. Some can be set up to collect supply chain data, via automated questionnaires or direct input from suppliers.
- Auditing and checking – Automatic checks to make sure data are within expected bounds can help to ensure data integrity. If your organisation is audited as part of a regulatory regime, it will save a huge amount of time and effort if the software provides an audit trail with links to data sources, time and date stamps, staff names and supporting documents.
- Costing – Many tools look only at emissions, but some allow financial data to be included, such as the costs of energy, water and resource use, waste disposal, remediation, pollution taxes and fines for non-compliance. This may link in to company accounting systems.
- Reporting – You may need to produce reports in different formats to comply with national legislation, such as the Carbon Reduction Commitment Energy Efficiency scheme, voluntary initiatives such as the Carbon Disclosure Project or Global Reporting Initiative, company annual reports and internal reports. It can be useful to be able to customise reports, produce reports in different languages or to export data to spreadsheets. There is also a trend towards presenting data online, allowing more frequent updates than the traditional annual report format, or even allowing interactive viewing by stakeholders.
Managing impacts
- Analysing data – The core of most environmental software tools is the “dashboard”, which allows users to slice and dice data so that they can be viewed by process (eg heating) or by business unit, as well as viewing aggregate data for the whole organisation. This should allow users to look at trends over time and identify “hot-spots” of pollution where there are opportunities for reduction.
- Benchmarking – Using normalised data such as emissions per employee, per square metre of office space or per unit output, performance can be compared across different parts of the company or with other companies in the same sector.
- Targets and action plans – Some software allows the user to set targets and compare them with actual performance, or to generate automatic alerts if targets are not met. You may also be able to set up action plans – identifying, scheduling and monitoring actions to achieve the targets.
- Forecasting – Current trends can be extrapolated to check whether targets will be met.
- Scenario analysis – What-if analysis can be used to look at the effect of future price rises or changes to legislation, or to compare the effects of different strategies.
- Cost-effectiveness analysis – Different impact-reduction options can be compared, for example in pounds per tonne of carbon saved or as return on investment.
- Trading or offsetting – Some tools link to schemes for voluntary off setting or trading. For companies in a trading scheme, a surplus or shortfall of emission credits may trigger trading activity including deciding whether to bank or sell surplus emissions allowances. This may link to company financial systems.
User interface
- Workflow management – Automatic workflow control can be a valuable feature, especially in large, complex organisations. For example, emails can be generated automatically to signal when data entry or reporting tasks are due, or to warn of abnormal data (such as unusually high energy use) or if targets are likely to be missed.
