Posts Tagged ‘Enterprise Carbon Accounting’

ECA becomes EECA (i.e. Energy > Carbon for the Enterprise)

In 2008, when Groom Energy named and published the first report on “Enterprise Carbon Accounting” (ECA) the corporate world was just starting to track their GHG emissions as a new metric for their company’s sustainability efforts.  The financial markets hadn’t yet collapsed and EHS managers were using speadsheets to build GHG baselines and begin regular reporting to the EPA’s Climate Leaders and the Carbon Disclosure Project.  We tracked initially 40, and later 75, software vendors with GHG tracking and reporting solutions for this new market.

My how the world changes.

Today energy has risen front and center as the primary method for both saving money AND tracking environmental progress by these same companies.  Accordingly in our newly released report today we rename this category Enterprise Energy and Carbon Accounting (EECA) and begin the next chapter of tracking this new market’s growth, challenges, our customer’s learnings and the leading vendors.

Our analysis concludes that the EECA market is growing at 3oo%.  So don’t be surprised when our list of vendors grows as well – I predict we’ll cross 100 in the next few weeks.

    “Full Cost” Sustainability Accounting – The Key to Growth for Greener Products?

    This morning Jeffrey Hollender, the Chairman of Seventh Generation, gave the keynote for our Green Enterprise 2010 Seminar.

    One powerful concept he described was “full cost” sustainability accounting whereby companies are required to include their external environmental costs (ie. things like pollution or resource consumption) into their corporate earnings. Read the rest of this entry »

      Groom Energy’s April 15th Green Enterprise 2010 seminar

      We’ve excited to announce our next Groom Energy seminar, entitled Green Enterprise 2010, which will be held April 15th at the Embassy Suites Hotel near Boston’s Logan Airport.

      As with our previous seminars our target audience remains corporate energy and sustainability managers who wish to hear and discuss best practices, case study based observations.

      Last year our first two seminars had a direct focus on the emerging market for Enterprise Carbon Accounting (ECA), a market we had identified and about which we published research.  Our February 25th Boston ECA event featured Mindy Lubber from Ceres who likened climate impact to an off balance sheet risk which should be disclosed by public companies.  Our follow-on May 14th San Francisco ECA event was highlighted by a practical case study panel with presentations from Applied Materials, HP, Intuit and Sony. Read the rest of this entry »

        The ECA Market grew up quickly

        Today Groom Energy published our newly updated ECA research report, 2010 Enterprise Carbon Accounting, which also included our selections for the market’s 2010 ECA Emerging Leaders.

        The basis for our research report started back in 2006.  At that time, as Groom Energy engineers were working with a F500 customer to build a GHG reduction budget, it occured to us that GHG tracking and reporting would eventually represent a fundamentally new process within every large company.  Even by then, staying on top of reporting for the EPA’s Climate Leaders was requiring more and more time for our customers.  It was no surprise that spreadsheet tools were not going to scale – but it was the collaboration necessary to even gather and manage the data where the gap was most obvious.

        What most people don’t know is that we even made a concerted effort to start our own Groom Energy spin-out GHG software company.  We had surveyed the market through our customers, found only a few third party software packages, and thought we saw a path to a new class of enterprise software, calling it “enterprise carbon accounting” or ECA for short.    (all new markets need a name, right?)

        Within a few months we had detailed the basic software functionality and even recruited a software team to start building it.  After several initial meetings with traditional software VC’s in Boston (most of whom couldn’t spell G-H-G, but all of whom understood enterprise software) we sensed it was going to be a long slog to get early stage funding based on our powerpoint-ware.  Either we had bad breath, couldn’t convey the opportunity correctly or needed to live on Sand Hill Road…

        Within a few months of our effort we starting uncovering more new ECA vendors, some established EHS vendors with GHG extensions, some VC funded pure start ups, some larger software companies who added GHG modules.  It seemed each week we were adding a new entrant to our wiki list, which was more and more daunting.  At 10 known players we were concerned.  At 20, we knew were were too late and abandoned our effort.  At 30, we knew that our customers were just as overwhelmed trying to understand the offerings, all while building their own strategies internally.

        And hence the idea for our ECA research report was born.  We saw that the best way to leverage our effort was to help our customers with a more concrete deliverable – customer based research which could be regularly updated as the market developed.  Not as profound as an entirely new company, but worthwhile nonetheless.  The good news is that market response has been a bit overwhelming…

        Check out the latest report and, if you’re an entrepreneur considering your own ECA software start up, study the vendor list carefully – its up to 60 and still going….

          The Wal-Mart effect – a Sustainability Index for every industry?

          So first off apologies that I’ve been remiss in updating our blog the last few months – it’s Columbus Day weekend and I’m finally catching up….

          Since our Wal-Mart Supplier Readiness Seminar a few weeks ago the broad impact of this program is clear – we’ve seen multiple suppliers rushing to learn how to respond to the Wal-Mart Sustainability Index (WSI) and how to boost their performance once they’ve completed the initial fifteen question survey.

          As with any new Wal-Mart initiative, even companies not in it’s retail supply chain are studying the WSI’s relevance to their own business and industry.  These companies are left wondering whether the WSI is a precursor to their own industry’s environmental report card or whether this is just another Wal-Mart false start RFID project.

          While the US considers its climate position going into Copenhagen, the SEC ponders whether to force climate reporting on financial statements, and CDP offers an emerging standard for voluntary corporate reporting, the WSI has already become today’s most important mandated environmental reporting trend for US corporations.  Unlike these other programs, this reporting has near term and real business consequences.

          Like with the CDP, large companies are already set up to respond to something like the WSI.  However, mid-sized and smaller companies are struggling to figure out how fast they need to gear up for their own industry’s version of the WSI.   Most of these companies care a lot more about their current cost of energy than their carbon emissions, much less their sustainability costs.  But Wal-Mart is a leading indicator they cannot dismiss….

          Three years from now we may look back at the WSI as having initiated regular sustainability reporting for Wal-Mart’s entire supplier base.  More profoundly, WSI’s bigger legacy might be having jump started industries outside of retail to develop their own sustainability reporting indices.  And, if that reporting leads to  more proactive management of environmental impact, our friends at Wal-Mart will deserve a lot of the credit.

            If Cap n Trade made electricity more expensive, would our behavior change?

            Not long ago we were all adjusting to an extraordinary increase in the price of a gallon of gas.   As prices accelerated economists speculated on how devastating it could be to our economy if it continued…

            Here we are a year later and the world looks quite a bit different.  The economy has cracked, but fuel prices, which started coming down heading into the September 2008 Lehman bankruptcy, were not the principal culprit.

            However, there is a lot to be learned from the period in 2008 when our gas prices briefly stayed above $4 per gallon.  At this price level something very logical occured.  Behavior changed.  People started driving less.  Visible energy pundits like Thomas Friedman encouraged us to study this accomplishment.

            So now in 2009, with the economy struggling and the US debate on carbon cap-n-trade in full swing, the same economists are debating the potential impact of this carbon utility tax on the price of electricity.

            It’s interesting to consider what would happen if the cost of electricity suddenly accelerated.  Like gas, electricity in the US costs significantly less than other developed countries and we have historically taken its availability and low cost for granted.  So, if kWh prices were to accelerate, do you think we might see the same logical result – ie. behavior change?

              United Kingdom – new Carbon Tax impact on Corporates

              A few months ago one of our customers told us that they were facing a significant carbon tax for their United Kingdom based operations.  With a newly implemented UK carbon taxation policy they expected to pay @ $750k for their 60+ facilities located throughout the UK.  I decided it was well worth a quick trip to learn more and now after a few days of meetings here in London, I understand a bit more about this program.

              It is called the CRC (Carbon Reduction Committment) and it’s goal is to extend the EU cap and trade scheme to the next tier of UK polluters, below the utilities and other large emitters (metals, cement, etc).   This will likely affect 5000 new organizations, including corporates, and it kicks off in April 2010.  Under the current program, your performance in reducing emissions gets ranked in what are called “league” tables.  These rankings impact your next year’s tax calculation.  The fund recycles the contributions to the payors, with better performers getting 110% of their initial tax payment returned and the lower performers getting 90% back.  In the following years the percentage for winners goes up (say to 120%) and the losers goes down (say 80%).

              The cap works because the UK government will successively rachet down the number of available credits at auction.  It is complex, to say the least, and it has already kicked off a new consulting industry for many UK based environmental consulting shops – if you want to buy a report on this for @ $1k just check this out :)

              Like any new carbon tax program there is stll a lot of debate about how these initial rules have been written.   One example I heard from James Murray at the  Under the CRC’s current form, British Telecom, who has been planning to build a significant wind farm and use it’s clean electricity for their operations, would NOT be given any credit against their CRC tax calculation.  The thinking being that as they had already received UK federal tax incentives on this project they would be “double dipping.”

                Enterprise Carbon Accounting seminar in San Francisco

                Yesterday we co-hosted our Enterprise Carbon Accounting (ECA) seminar at the San Francisco Airport Hyatt, bringing our successful Feb 25th Boston event to the Left Coast, this time with our new partner GreentechMedia.   As he had done for Boston event, Paul Baier did another great job at putting together a set of speakers and topics to be discussed.

                The ECA idea stems from the belief that as GHG emissions will ultimately have economic consequences  (ie. cap-n-trade or tax), a company’s GHG accounting system needs to be financial grade.   In the extreme, Mindy Lubber, CEO of Ceres, likened using this new metric for corporate performance to the need for understanding off balance sheet risk.  Hence, GHG reporting both now and in the future needs to be transparent and auditable.  Early voluntary corporate reporting through programs like Carbon Disclosure Project shows that these organizations understand the emerging problem and are proactively dealing with it.

                However, in listening to Pankaj Bhatia from World Resource Institute and case studies from companies like Allied Materials, Autodesk, HP, Intuit and Symantec, it became clear how very early we are in this journey.  Each of these companies has needed to develop a new process for building their GHG inventory and their comments highlighted how much subjectivity remains in their interpretation of the boundaries for their emissions.   This is especially challenging around Scope 3 reporting.

                The speakers also offered commentary about the Waxman/Markey bill and speculation about whether the US would or would not have a strong GHG regulation position going into Copenhagen in December of this year.  Speculation was high that cap and trade will prevail as the vehicle whenever policy gets enacted.

                The side story is that cap and trade will work principally for political reasons.  It would be the only program that would allow US policy makers from states who have each different consequences from GHG regulation (coal vs gas power, mfg vs farms, etc) to satisfy their constituents by shifting the battle to “how many GHG credits do I get?”   One can imagine it won’t be as simple as the DOE’s stimulus financed Energy Efficiency and Conservation Block Grant program which has been allocated on a $ per capita basis to unsuspecting cities and towns throughout the US, regardless of need.

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