Making the decision to analyse and report on sustainability is a lot easier than putting it into practice, so FSN contributing editor, Lesley Meall, looks at the software, systems and services that organisations are using to do this.
Earth day may have passed you by, on 22 April 2009, but many organisations saw it as an opportunity to reaffirm their commitment to the environment, and gain a little free publicity by sharing their sustainability plans. Take L'Oréal, for instance. “At the dawn of the 21st century, the world’s leading beauty company needs to be an authentic example in terms of sustainable development,” asserted CEO, Jean-Paul Agon, who went on to woo customers and other stakeholders with some of the cosmetic giants’ environmental achievements.
During 2008 L'Oréal reduced its total CO2 emissions by 6.6 per cent, reduced its water use per finished product by 3.8 per cent, and reduced its waste per finished product by 0.5 per cent, while increasing its recycling rate to 95 per cent. It’s been working hard to achieve a series of self-imposed targets since 2005, and it wants everyone to know that it will continue to do so. Environmental initiatives are good for business – particularly when they result in efficiencies that can help to save money as well as the planet.
When the management consultants A T Kearney took an early look at how companies are coping with the financial crisis (between May and November 2008), it found that organisations that were focused on sustainability were outperforming their peers by 15 per cent. The recession has worsened since, of course, but although recent coverage in the Economist reports some cutbacks in corporate social responsibility initiatives, they seem to be hitting philanthropy budgets, not the sort of initiatives that can have a direct and positive impact on the bottom line.
So it should come as no surprise that BP Group plc, Coca Cola Enterprises, HP, HSBC, Marks & Spencer, Tesco, Virgin Media Inc and Vodafone are just a few of the household names now taking sustainability (and reporting on it) very seriously. You can read about what they’re getting right by taking a look at Corporate Register, or reading case studies for the top ten companies according to the Accountability Rating 2008 (which was published at the end of last year). Following their lead is more of a challenge; but when you start your journey, the Global Reporting Initiative (GRI) is one place to begin.
Learning curve
The GRI is a network made up of thousands of experts and stakeholders in dozens of countries; it has pioneered sustainability reporting (since before it went mainstream), and it developed the world’s most widely (and voluntarily) used sustainability reporting framework G3. A visit to the website is worthwhile, for organisations of all types and sizes, because the guidance and support available ranges from free downloads such as Sustainability Reporting in the Food Processing Sector, to publications such as the GRI Sustainability reporting cycle: a handbook for small and not-so-small organisations (which can be purchased in 5 languages).
But even with the support of the GRI, implementing efficiencies that can improve an organisations sustainability record is a lot easier than analysing and reporting on it, unless you have access to the appropriate tools and resources. Any organisation can introduce conservation and efficiency initiatives, but collecting quantifiable data on this, then sifting through it and reporting on it in a meaningful manner, is only practical with the support of software and systems (of which more, later), or the specialist services of organisations such as BT, The Green House, PricewaterhouseCoopers (PwC), and Two Tomorrows.
The Green House is one of a number of organisations that help organisations to better manage and report on sustainability by focussing on specific areas; in this case, environmental management. “We started out by helping organisations to move away from waste to recycling,” recalls Phillip Mossup, development director, “but over the past few years we’ve experienced a growing thirst for knowledge.” So today, among other things, The Green House also provides organisations with the information and systems they need to better manage, monitor and report on their recycling and sustainability initiatives.
“It’s hard for an organisation to move forward with its corporate social responsibility aspirations if it doesn’t know where it is starting from,” he suggests, so as a first step, a lot of Green House clients start with a waste audit. It also provides an end-to-end service for organisations that want to outsource their waste management, which ranges from waste collection services to the provision of related business intelligence. Customers decide how much information they want and how often. “We provide monthly reporting and statistics and online reporting capabilities,” explains Mossup, “and customers can also log into our CRM and ERP systems, for real time updates.”
Free for all
PwC offers a much broader range of services, and uses its climate change expertise to assist clients with: business ethics, corporate governance, environmental health and safety management, social responsibility, strategy and economics, responsible supply-chain management, and reporting and assurance of non-financial information – for which it (quite understandably) charges a fee. But it also contributes to the CBI Carbon Reporting Group, so it recently published a (free) template that can be used for greenhouse gas emissions reporting, based on the CBI’s suggested common business approach to emissions reporting.
“This model is the first to demonstrate how reporting on emissions connects financial and non-financial data to see the value and impact of carbon emissions on a business and its strategy,” says Alan McGill, partner, sustainability and climate change reporting, PwC LLP. Although the “Typico” template sets out what PwC believes to be “good practice” for larger companies (who potentially face mandatory reporting of greenhouse gas emissions by 2012), it also provides a format that medium-sized companies can use (at no charge) to create “comparable” reports for inclusion in annual reports and account statements.
Because environmental management and sustainability now have such a high profile, organisations that do want to measure the impact their activities are having on the environment can choose from an ever-increasing range of measuring tools and support services. These range from the fairly simplistic online carbon counting tools provided by Climate Positive, Global Action Plan, Carbon Footprint (registration necessary), and others, to the much more complex and comprehensive monitoring and measurement that can be undertaken with tools such as those developed by IBM (and a number of partners.
These include Green Cert, which was developed along with Enterprise Information Management, and a carbon management solution it makes available in conjunction with Oracle. Tools such as IBM’s Business Activity Monitoring Software, WebSphere, can also be used to measure environmental initiatives, and you can read a detailed account of how IBM used this to measure the carbon footprints of its employees on its website. Other software suppliers are getting more involved too: SAP, for example, recently announced its intention to acquire Clear Standards, which sells software to manage carbon emissions, energy consumption, and water use.
New software sector
Also, specialist systems are being developed by start-ups such as Planet Metrics, which recently unveiled its on-demand Rapid Carbon Modelling (RCM) software. “It tracks a company’s carbon footprint, with a focus on providing metrics to help the company optimise its supply chain, “ explains founder and CEO Andy Leventhal. “We’re helping organisations in consumer packaged goods, retail and marketing, to understand the carbon associated with everything they make and do,” he adds, as its RCM software helps them to model and analyse the entire life cycle carbon emissions and energy use throughout the value chain, from cradle to grave.
Some financial software suppliers have also gone out of their way to help organisations that want to better monitor and report on sustainability. In February 2009, Microsoft introduced a new toolset, the Environmental Sustainability Dashboard, and made it available free to users of Microsoft Dynamics AX. “The dashboard helps companies gather and track environmental data,” explains Rob Bernard, chief technology strategist at Microsoft, and companies can use it to collect auditable data on four of the core environmental performance indicators identified by the Global Reporting Initiative.
Business processes such as accounts payable, inventory management, and expense management have been extended in Microsoft Dynamics AX to include the automatic collection of relevant environmental data, which then becomes available through the Environmental Sustainability Dashboard. This enables medium-sized businesses to easily capture the data they need to measure key indicators relating to energy consumption and greenhouse gas emissions. “Equipped with this information, companies will be able to make decisions that benefit their bottom line and the environment,” says Bernard.
The release of the dashboard was accompanies by detailed instructions on how businesses can implement environmental management accounting principles, within Microsoft Dynamics NAV and Microsoft Dynamics GP. So, organisations should find it easier to gain greater visibility into their environmental footprint, and report on this to customers, supply chain partners, and other interested stakeholders. You can read about the way it has helped one organisation, Seventh Generation, and learn more about the Environmental Sustainability Dashboard courtesy of Microsoft and some exclusive coverage in FSN earlier this year.
Knowledge is power
As FSN has highlighted in the past, Microsoft wasn’t the first business software supplier to take this sort of sustainability initiative, it was preceded a year before by the UK software developer Access Accounting (recently rebranded Access), and as a user of its own applications, it has first hand experience of the impact that better environmental analysis and reporting can have. “When we first started to use our own Accounting for Carbon Emissions (ACE) tool within Access Accounting, we were surprised by the results,” reveals the customer services director, Kevin Misselbrook.
One of the first shocks Access experienced was just how much of an impact flights had on its carbon footprint. “One overseas conference in Naples had seriously impacted the whole year’s figures,” says Misselbrook, but the news arrived after the event, which is unfortunate, as it could have been run in Nice without being less attractive, and it would have returned far better figures. Access was also surprised when it analysed individual employees. “We expected one of our field-based sales staff to be the worst emissions offender,” he says, but the FD, a regular visitor to the subsidiary in Ireland, was the worst offender.
But once the company and its employees were armed with the “hard facts” and “cost implications” proved by its ACE tool, they could measure the environmental impact of their actions before they became a forgone conclusion, and factor them into their plans and decisions, which has been good for the business and the planet. “We’ve made a number of changes,” says Misselbrook such as making use of video and telephone conferencing facilities and reviewing the way it schedules meetings, and as he adds: “This has not only reduced our carbon impact in certain areas, but also reduced associated costs.”
