Green Business: Outsourcing the Carbon Accounting Chore

CRM News

By Ned Madden
E-Commerce Times
Part of the ECT News Network
01/04/10 5:00 AM PT
Accounting for the amount of carbon a business emits is already a fact of life for some firms, and it could soon become business as usual for many more. Doing the carbon accounting work in-house could be a major obstacle for companies worldwide as they scramble to deal with rising regulatory and market forces. Solutions for outsourcing the work are emerging.
Carbon accounting outsourcing (CAO) could be the next big thing in the US$80 billion business process outsourcing (BPO) industry. …
While numerous green consultancies offer firms advice on how to comply with carbon reporting requirements, none have been able to undertake the complex and time-consuming work necessary to collect and report on energy use and carbon emissions, according to Ian McGowan, director of FirstCarbon, a carbon data management subsidiary of global outsourcing services provider ADEC Solutions.
"We don't pretend to have huge expertise in carbon offsets and strategy and so on," McGowan said. "But we are able to look at the granular level and pull together the information firms need to work out their carbon footprint and report on it."…

In-House Accounting Challenges

Counting carbon -- specifically, measuring and reporting the emission levels of its dioxide form (CO2) -- is big news. Carbon emissions made headlines worldwide in December, when delegates from 193 countries gathered in Copenhagen, Denmark, at the U.N. climate summit to discuss how to fund global greenhouse gas (GHG) emission cuts.
Doing the carbon accounting work in-house could be a major obstacle for companies worldwide as they scramble to deal with the rising regulatory and market forces currently driving major organizations to establish public goals for reducing energy and resource use -- and all the carbon emissions that result from such activity.
U.S. companies are gearing up for operating in an economy characterized as "carbon constrained" -- that is, one in which the government limits yearly carbon emissions and requires big emitters to accurately report them.
Mandatory reporting of greenhouse gases (GHG) in the U.S. is now required for some companies nationwide. The U.S. Environmental Project Agency (EPA) Final Mandatory Reporting of Greenhouse Gases Rule requires reporting from most large U.S. GHG emissions sources. The stated purpose of the rule is to collect accurate and timely emissions data to inform future policy decisions. Initial reports, covering emissions during 2010, are due on March 31, 2011.
Energy management outsourcing is a way of addressing the current energy challenges facing all organizations, namely high and volatile energy prices, the need to mitigate climate change and potential supply constraints as oil production peaks. … Carbon impacts are a growing consideration for managers deciding whether and how much to outsource…
"The coming mandate for carbon management, while placing unwanted burdens on many enterprises, will certainly be keeping law practices busy helping their clients comply with carbon reduction legislation," said Shekhar Chitnis, president and CEO of Chisk, with offices in the U.S., UK, Germany, Japan and India. "Since tracking carbon credits is a non-core activity for most corporations, doing the work themselves offers very little direct economic advantage, which makes it an ideal activity for outsourcing to dedicated specialist third parties."…

Enterprise Carbon Accounting Software

Many companies begin the carbon accounting process internally by manually gathering baseline information, then using spreadsheets to calculate and track initial results.
"If a firm needs to outsource this process, they hire a consultant who brings expertise and has a preferred tool," said Groom Energy Solution's VP of Consulting Paul Baier, who told the E-Commerce Times that "99 percent" of such consultants use Microsoft (Nasdaq: MSFT) Excel spreadsheets.
However, according to Baier, a growing number of companies are also turning to new sustainability enterprise carbon accounting (ECA) software offerings, primarily Web-based tools intended to help businesses manage, analyze and report on their carbon footprints. …
This development is giving rise to a global market for carbon accounting, collecting data and consulting services that is expected to reach $7 billion to $9 billion … by 2012, according to a Groom Energy June 2009 report.

Knowing Your GHG Physics and Chemistry

… BPO service providers have a strong potential future in implementing sustainability accounting software initiatives and GHG management, said Larry Goldenhersh, CEO of Carlsbad, Calif.-based Enviance, provided that outsourcers fully understand the business processes involved in achieving compliance with air, water and waste permits, and know how to use centralized software systems like the Enviance platform grounded in the physics and chemistry of GHGs.
Given strict adherence to those constraints, "I believe carbon accounting will drive multi-billion dollar opportunities for all companies in this space," Goldenhersh told the E-Commerce Times. …