Alison Smith explains why businesses should take advantage of developments in environmental management software.
It isn’t easy being green. As belts tighten, environmental departments often feel the pinch more than “core” business units.
Yet the need for effective environmental management systems has never been greater. Businesses need to be lean and green to prosper in a future of scarce resources.
They have to insulate themselves from spiralling fossil fuel prices, widespread water shortages and rising waste disposal costs.
And they need to deal with everchanging legislation as well as increasing demands for transparency from investors, customers and local communities.
Faced with these multiple pressures, many environmental managers are finding that the traditional environmental accounting approach of sitting down with a pile of utility bills and a spreadsheet is no longer adequate – and software and consultancy companies have not been slow to respond.
A flood of new tools has hit the market, initially driven by the need to report carbon emissions but now also expanding into wider aspects of sustainability such as waste, water use and social indicators.
More than 400 tools are now listed at the new Environment Tools website.
So why are more companies turning to software tools to help measure and manage their environmental impacts?
Handling complexity
For a small business with simple impacts, spreadsheets may be a good starting point. However, for larger organisations or those with complex impacts the limitations soon become apparent.
With multiple sites, processes and business units, often in different countries with diff erent emission factors, the sheer number of data points soon begins to overload most spreadsheet systems.
More worryingly, updates rely on emailing spreadsheets back and forth, introducing plenty of scope for version control errors.
Chris Szweda of Linde, the supplier of industrial gases, is emphatic: “There’s no way we’d contemplate going back to spreadsheets,” he says. “We have over 700 sites globally, each with different languages, cultures and timescales, and diff erent interpretations of the data required.
We had people adding in extra lines on the spreadsheets – all sorts of weird and wonderful things going on.”
Added to this, regulations are becoming more complex. In the UK, companies now have to deal with three strands of legislation – the EU emissions trading scheme (ETS), the climate change levy and the new Carbon Reduction Commitment Energy Efficiency scheme (CRC) – each with different reporting requirements.
Companies with operations abroad may also be subject to national schemes, such as the French Bilan Carbone or the US EPA regulations. Software can make the reporting process far quicker, cheaper and more reliable.
Analytical power
Spreadsheets may be able to handle simple data gathering and reporting, but commercial software can provide far more sophisticated and powerful tools for analysing data at the level needed to start reducing impacts.
Interactive dashboards allow data to be “sliced and diced”, instantly viewing indicators by country, site, business unit or process.
Software can automate tasks, such as monitoring progress towards targets, forecasting future emissions, and exploring the impact of future changes through “what-if” scenario analysis.
Software also makes it easier to extend analysis out to the supply chain – an increasing concern for many businesses. Brian Goodwin of Carestream Health, the medical imaging and healthcare IT company, is in charge of a complex supply chain extending across Europe, Africa and the Middle East.
His personal conviction that it was time to set up a green policy was backed by pressure from customers who were asking specific questions about issues such as whether their trucks had diesel filters.
“We need to be in the front line when it comes to responding to ecological pressures,” he says. “Yet, we had no idea how much carbon we were producing.”
Carestream invested in CarbonView software, which has specialised supply and logistics functions. Now it can view the emissions from each part of the supply chain in detail, and is starting to insist that its contractors set up their own green policies.
As supply-chain pressures spread, for example with retailers collecting product information for eco-labelling initiatives, there will be an increasing role for software that allows secure online data entry directly by suppliers – far more efficient than dealing with emailed forms.
Auditability
New laws, such as the CRC, often have a gentle introductory phase, but soon begin to bite, with fines and penalties for non-compliance.
Even voluntary reporting schemes, such as the Carbon Disclosure Project (CDP) and the Global Reporting Initiative (GRI), are tightening their assurance procedures, to maintain credibility and avoid the accusation of “greenwash”. As a result, companies increasingly need to provide audit trails for the data they report.
Software off ers the security of a standardised procedure that is far easier to audit than a complex trail of spreadsheets. It enables enhanced error checking – data can be verified as it is entered, to check that it does not fall outside the expected bounds – and some tools allow automatic collection of data direct from utility meters.
Customers need auditable evidence packs, and many software packages now store audit data such as the name of the person providing the data, a time and date stamp, and links to supporting documentation.
Jonathan Ellwood of investment business Man explains that being able to upload a copy of the utility bill onto their credit 360 system (a sustainability-data management system) is invaluable when data is being assured – it reduces the need for the assurers to travel out to each of their offces around the world. Both the GRI and CDP are now accrediting selected software suppliers.
Improved transparency
Software takes the hard work out of compiling data for company reports. A good software package can produce standardised reports in diff erent formats, such as an annual report to stakeholders, mandatory reports to comply with legislation, including the ETS or CRC, voluntary reports such as the GRI and CDP, and internal reports within the business.
Many users are finding that software completely changes the way they communicate with stakeholders. For a start, it enables more frequent updating of reports – several users now issue quarterly updates instead of just annual reports. Two users of credit 360 have gone even further, with near real-time data on their websites.
Produce World, which manages fresh produce supply chains, publishes sustainability data for each of its seven companies online, and shows progress towards its targets every month. Man’s corporate responsibility reporting is now completely paper-free – its website can be updated at the push of a button as soon as data are cleared for publication.
This meets increasing demands for transparency from investors.comes to have a financial value under trading and taxation schemes. Tesco, which uses CA Ecosoftware, treats its carbon data as it would financial data.
The retailer is worried about the potential for security breaches or data corruption associated with emailing spreadsheets around the world, and regards security as a key benefit of online data entry.
Cutting costs
Although software can appear expensive, it can save considerable time, money and eff ort by automating data collection and reducing errors. Independent analysts Verdantix cite a typical payback period of less than one year based on savings on reporting costs alone.
High up-front costs can be avoided with the “software as a service” (SaaS) approach, where users pay a monthly fee to access the software online, and the vendor is responsible for updating the software when there are changes in reporting requirements or emission factors.
The benefits are obvious for large, complex organisations. Dow Chemicals, for example, saved $2 million in reporting costs over its 200 facilities using ESS (Environmental Support Solutions) software.
Smaller organisations can also benefit. Ellwood at Man describes credit 360’s software as “very costeffective”, and vendors such as Best Foot Forward provide products tailored to any size of company.
A major benefit of software is that it improves data quality, so that companies can begin to make benchmarking comparisons across similar processes or sites and identify areas where improvements can be made. For Szweda, this is critical. “Now that we have accurate data, we can begin to poke the system,” he says.
Previously, if he asked a site why its energy use was high it could reply that the data was only accurate to within 10%. Now, with standardised systems for data collection, there is no such excuse.
Software is even more powerful when linked to a smart meter system that collects real time data, allowing instant identification of hot-spots where waste is occurring and even setting alerts to be triggered if exceptionally high usage occurs.
Helen Bowman at East Sussex County Council is pioneering the rollout of Carbon Hub software together with smart meters to all schools in the county.
The smart meters will be crucial in looking at energy use at weekends, holidays and overnight. “It’s a very powerful tool,” she says. “It will really illuminate where they can save money.”
Alistair Blackmore of credit 360 is finding that despite the recession, more companies are now actively looking for software. “Mike Barry [head of sustainable business at M&S] has made the argument clear,” he says.
“M&S thought that Plan A would cost £40 million – in fact they saved £50 million in energy and CRC costs.”
M&S, in common with some other green pioneers, uses an in-house system based on spreadsheets – but this has been developed over many years and is backed by a team of 28 people.
For companies starting from scratch, the new generation of off -the-shelf software tools offers a much quicker solution.
Engagement and workflow
One of the less obvious benefits of software is the way in which it can get stakeholders working effectively together, both within and outside an organisation.
Bowman at East Sussex County Council sees this as crucial. “In schools there is a lot of enthusiasm but not much time,” she says.
Carbon Hub makes all the information instantly visible to anyone – staff , pupils, energy managers, council staff , governors and parents have all become involved in setting targets and taking on responsibilities.
They will also be able to use Carbon Hub’s networking tools such as forums and bulletin boards to share information and tips with schools in Kent and Croydon who are using the same system.
Software with in-built workflow management, such as automated emails to request data and send out reports, can help to get staff in diff erent parts of the company working together rather than isolating staff in a bolton environment department.
It can crystallise how responsibilities should be shared between environmental managers, energy and facilities managers and staff in the health and safety, IT, CSR and finance departments.
It can also help to formalise the reporting process, and generate a sense of legacy and permanence. Some of credit 360’s clients use workflow management creatively to build engagement. Staff can view their energy use against similar business units, and can see their position in a league table.
High resource use generates a warning, and low use will result in a message asking how this was achieved, so that best practice can be spread around. In some cases bonuses are directly linked to energy-saving targets.
Perhaps the most important role for environmental software is to encourage senior management to be more involved in decisions about sustainability.
Some users report that it was not until they had several years’ worth of reliable data in the system that they felt able to start making the business case for investments in resourcesaving projects.
Interactive dashboards with scenario analysis and costing functions can make environmental data more meaningful and credible, helping to bring environmental management “out of the basement and into the boardroom”.
This is the first of three articles on environmental software. Part two will survey the types of tools available on the market, while the last in the series will provide guidance on how to choose the right tool to meet your business needs.
