A new report released by independent research firm, Verdantix, explains why firms are floundering with carbon management and putting the future of the business at risk due to flawed governance and strained business processes. It warns that unless CEOs take ownership of carbon management as a business transformation challenge their firms will fail to achieve absolute reductions in CO2 emissions.
by Tracey de Morsella, Green Economy Post
According to a new report release by independent research firm, Verdantix, unless CEOs take ownership of carbon management as a business transformation challenge, their firms will fail to achieve absolute reductions in CO2 emissions. While hundreds of companies have implemented sustainability programs designed to reduce CO2 emissions, surprisingly, very few have been successful. One fatal flaw with many carbon management strategies is that that it is handled like a social responsibility issue. Verdantix advises that world class carbon management requires the appointment of a Chief Sustainability Officer, a cross-functional strategy for reductions with a 2020 target, coordinated business process changes and an integrated carbon management technology platform.
“Dumping carbon management responsibility on CSR Directors without providing them with the authority or budget to execute dooms many carbon reduction plans,” warned Peter Charville-Mort, the Verdantix Analyst who led the study. “Evidence of failure includes CSR and energy managers who don’t get the opportunity to explain carbon issues to senior execs, decision-makers who struggle with terrible energy data, unachievable CO2 reduction goals and initiatives that progress at a snail’s pace due to insufficient staff and funds.”
The Verdantix report, Best Practices Carbon Management, provides detailed advice on the development and implementation of a carbon business transformation plan based on four best practice strategies uncovered based on interviews with 33 industry experts. They site the following organizations, as having already harvested the benefits of carbon management and carbon accounting; BAE Systems, BHP Billiton, BP, Cisco, Dow Chemical Company, HP, Proctor & Gamble, SAP and Wal-Mart they cite as having success with their carbon management programs.
To achieve absolute CO2 reductions year-on-year firms need to:
Strengthen governance to deliver transformational change. Dumping a broad, carbon-related change program on the CSR Director is doomed to fail. Best-in-class carbon management requires a Chief Sustainability Officer (CSO) with a small Program Management Office that quantifies value and risk, co-ordinates initiatives and engages stakeholders. The CSO should be picked from a general management role internally.
Create a 2020 strategy for carbon management. CEOs first need to get the right people on the bus – with the CSO in the driving seat – and then buy into the carbon journey to 2020. Post-2020 firms need a transformation vision due to much tighter regulation and intense customer pressure for sustainability credentials.
Design cross-functional process changes across energy, operations and finance. Ongoing cuts in carbon emissions require a portfolio of projects such as building management systems and electric vehicle fleet trials. To succeed with multiple, simultaneous changes firms need a program based on granular energy and fuel data, financial analysis of projects and assessment of unintended consequences.
Implement integrated carbon management systems technology. To reduce carbon emissions firms need accurate, timely and complete data on energy and fuel consumption. World class carbon management requires not just energy and carbon software, but also metering systems that track energy consumption or refrigerant leakage at the asset level.
“Absolute reductions in CO2 emissions require transformational change across governance, strategic thinking and process redesign. But today, firms only achieve incremental change.” added Verdantix Director, David Metcalfe. “Time is running out for CEOs to act before the jaws of GHG compliance regimes and competitive pressures on sustainability close around them. Seventy-six per cent of the global industry expert panel believes weak carbon management will pose a material risk by 2012.”
