The Business Case for Carbon Management

Jan. 11, 2010
Smart corporations are not waiting to take action.

As economic recovery worldwide begins to take hold, issues of sustainability in general, and carbon management specifically, that were temporarily pushed out of the frame, are now back in the picture.

Two years ago, most corporations were looking at their carbon management as a communications or compliance exercise. Today, the majority of projects around carbon management and greenhouse gas (GHG) emissions not only involve emissions tracking but also significant focus on forecasting and emissions reduction.

The shift from monitoring and compliance concerns to forecasting and reducing emissions, signals a growing acceptance of carbon management as a cost of doing business, and a potential source of cost-savings. Once a company has understood that bringing their environmental footprint under control and reducing their carbon emissions has a real and direct impact on the bottom line, carbon management strategies and projects take on a much higher profile within companies.

Recession's Impact

With evidence of a widespread recovery from the global economic crisis, corporations have been returning to carbon management and GHG emissions controlth programs or are initiating new ones. As always, such trends are regional, with North American companies still lagging behind their Australian and European counterparts in assessing their carbon footprints and devising ways to reduce them.

But most recently, U.S. corporations have picked up their efforts. The general political atmosphere has become more favorable. And, undoubtedly, the run-up to Copenhagen has helped spur corporate thinking regarding carbon management issues-independent of whether any binding accord actually issues from the talks. But the main motivator here has been the growing recognition that resource efficiency and carbon management have become an intrinsic part of doing business. Where becoming a better corporate citizen was once regarded as attractive, if not quite essential, it's now largely viewed as part of a much broader agenda with definable benefits, the most important among them being: cost-savings, new business opportunities and competitive advantage.

How are Corporations Responding?

Sustainability and environmental initiatives, including carbon management, fall into two main categories: short term tactical actions based on waste, energy use, and carbon emissions reduction; and longer term strategic actions focused on transforming the overall footprint of companies. At the moment, tactical actions predominate. But recent corporate projects are trending toward the strategic. 2010 may prove to be pivotal in this respect.

An IndustryWeek article cited a recent corporate survey in which 78% of the respondents identified sustainability initiatives as, "very important to somewhat important to their overall business strategy," with 87% reporting such initiatives as, "important to their future growth plans." Nearly the same percentage of respondents reported that sustainability can "enhance their company's revenue growth," and that revenue growth was among the primary motivators to pursue sustainability initiatives.

These general survey findings are supported by recent GHG emissions management projects initiated, with help from third-party software providers, by major U.S. corporations. Some of the most notable are the three companies cited below here.

A global management consulting, technology services and outsourcing company had been implementing a robust sustainability strategy for many years. But their recent deployment of a new software platform is helping them achieve a more systematic approach to measuring and managing energy use and emissions data, and facilitating faster decision-making. Their chosen software solution allows them to delve deeper into their supply chain, helping them find ways to partner with their suppliers to reduce Scope 3 emissions and farther reduce overall environmental impact. They project that they will reduce their own carbon emissions per employee by 25% for FY2009, and for FY2012 by 40% (compared to their FY2007 baseline). The company is also a member of the WWF's Climate Savers program, an alliance of corporations committed to voluntary reducing of GHG emissions. By 2010, the Climate Savers companies collectively will cut carbon emissions by some 14 million tons annually -- the equivalent of taking more than 3 million cars off the road every year. By supporting environmentally responsible business practices and increasing efficiency, these companies are saving hundreds of millions of dollars.

For many years, one of the world's largest producers of sports apparel has been sharply focused on corporate responsibility. To support this effort, the company was determined to implement a strong management system. Over a 12-month period, they carried out a vendor review process for a global climate database solution for all their facilities worldwide. The company selected a software solution not only for its immediate capability to drive corporate responsibility initiatives, including greening the entire supply chain, but also for its scalability to meet future EPA and international regulations. Also part of the Climate Savers alliance, the company has set a goal to be "carbon neutral" by 2011, and was recently cited among the top-tier corporations in Newsweek's 2009 environmental ranking of America's 500 largest corporations.

One of the world's largest global providers of specialized transportation and logistics services is an industry leader in environmentally responsible business practices. This past summer, they deployed a company-wide carbon accounting and carbon footprint solution to their entire fleet management effort. This initiative includes thousands of aircraft and ground vehicles for Scope 1 emissions, but also Scope 2 and 3 across the supply chain. The company has implemented several tools and procedures to optimize delivery routes, thereby reducing fuel consumption and emissions. They have also achieved significant noise, fuel, and emissions reductions in their air fleet: noise by 30%, nitrous oxide by 34%, and per-flight fuel consumption for savings of over one million gallons per year.

In each instance, these companies are not waiting on new environmental mandates like cap and trade to limit carbon emissions, or global policy agreements. They're pushing ahead, even expanding their sustainability and carbon management programs, with more comprehensive and holistic GHG emissions control projects, and more robust and sophisticated software solutions to support them. While many companies are committed to being better corporate citizens, their sustainability strategies are also being driven by the recognition that resource efficiency and emissions reduction are essential to both the bottom-line and longer term growth prospects. For industry-leading corporations, effective management of carbon use and emissions represents a business opportunity with both near and longer-term benefits.

Philippe Tesler is CEO of Enablon North America. Enablon is a provider of sustainability and QEHS software solutions. Enablon's solutions are used by more than 250 global companies in more than 130 countries.

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