Accounting for Corporate Carbon

92827871Five years ago, the notion of measuring your company’s carbon footprint might have seemed quaint, or foolish, or just plain impossible.  And not too many large companies were interested.  But a recent report from the consulting firm Groom Energy Solutions finds that corporate emissions reporting is fast becoming big business (Groom describes itself as a “provider of renewable and energy efficiency systems to commercial and industrial companies.”)

The Groom analysis focuses on “enterprise carbon accounting” software, or, in plain language, technology that helps companies track their emissions.  According to the report, venture capitalists invested $46 million in enterprise carbon accounting (ECA) software in 2009, and it predicts that purchases of the technology will increase 600% by next year.

According to Paul Baier, VP of consulting services for Groom, 60% of Fortune 500 companies currently report their carbon emissions, and that number is growing rapidly.

“By the end of 2010, if a company is not reporting, it will be seen as a laggard in the industry,” said Baier.  “It’s increasingly mainstream for corporations to be doing this now.

Ninety percent of reporting companies are using “spreadsheets and consultants” to determine their footprints, said Baier, and the rest are using ECA software.  Three years from now he expects that 80% will be using the software, which helps companies track hundreds of different data points related to operational emissions.

“They don’t keep track of their financial information with spreadsheets anymore, and they won’t be using them for carbon reporting much longer,” he said.

In general, corporate carbon accounting is limited to what the Greenhouse Gas Protocol Initiative (which sets the widely accepted standards) refers to as Scope 1 and Scope 2.  These include the direct emissions of company operations such as on-site fuel combustion and electricity use.  Significantly, Scopes 1 and 2 leave out the potentially enormous, yet elusive footprint of a company’s suppliers and the myriad of other associated carbon sources.  In the works are standards for measuring Scope 3, which Baier calls “everything else,” but for now, there is no generally agreed-upon template for measuring this wider footprint.

Which leaves room for debate, such as when The Wall Street Journal raised questions about the 2008 pronouncement by Dell Inc. that it had achieved carbon neutrality. The Journal article reported that Dell was measuring only a small fraction of total emissions associated with the company.  Dell had taken into account employee air travel and building electricity use, but not emissions produced from transporting products or the footprints of the factories around that world that supply it with computer parts.

Given the inconsistencies and uncertainties of corporate carbon accounting, not to mention the cost in employee time and technology investments, why are companies flocking to do it?

According to the Groom Energy report, the three main drivers, in order, are:

  1. Increased pressure from customers and investors for companies to create a “greener” public image
  2. Cost and energy savings
  3. Mandates from buyers, like the Walmart Supplier Sustainability Assessment Program, intended to measure the environmental impact of its 100,000 suppliers.

Reducing CO2 emissions to help mitigate the effects of climate change did not make the list.

  • http://ncwatch.typepad.com/ Russell Steele

    Why are all the articles on greenhouse emissions show smoke stacks spewing clouds of smoke or steam. CO2 is colorless, you cannot see it coming out of a stack.

    • Craig Miller

      Russ, if you can get a photo of an invisible gas, by all means send it to us and we’ll use it in our next post (carbonation bubbles in soda pop don’t count). :-)

      • James Mayeau

        Craig, since the bug is that co2 is a heater in the sky it should be a relatively easy task to take a picture of it with a long-wave infrared (LWIR) camera.
        That is if anthropogenic global warming exists.

        Big if.

      • James Mayeau

        In the instance of the smoke stack, with the LWIR it should show the water vapor pretty much as is, but also with a tail of heated co2 trailing away at a slightly lower angle (due to the difference in weight).
        Like a comet’s tail.

  • James Mayeau

    Let me get this straight. The Groom analysis says that their proprietary carbon acounting software is the bestest thing since sliced bread – and you pass this on without busting out in laughter how?

    • http://www.kqed.org/climatewatch Gretchen Weber

      James,
      While companies like Groom Energy are certainly likely to benefit as more corporations examine and seek to reduce their carbon footprints, Groom does not, in fact, make or sell the software in question.

  • http://www.mayercpa.com Accounting

    The articles on greenhouse emissions show smoke stacks spewing clouds of smoke or steam. CO2 is colorless, you cannot see it coming out of a stack.

  • Dixon Cruickshank

    No but the do sell a $600 report telling you about 20 programs you just have to have at least 1 of.

    carpetbaggers comes to mind

  • Dixon Cruickshank

    Five years ago, the notion of measuring your company’s carbon footprint might have seemed quaint, or foolish, or just plain impossible. And not too many large companies were interested.

    and they still should think its foolish and not bother with it

  • Makeda Fikremariam

    this is wrong slowly it is killing the planet and if we dont do anything FAST we will all be dead before we now it so if u care and want to make a diffrence email me at amkedafikremariam@gmail.com we can come up with ides and remember the SMALL thing make A BIG DIFFRENCE

  • Dixon Cruickshank

    No its not killing anything except business and if we don’t do anything we will have lush green folige – why are you against lush green folige

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