It is almost 10 years since I was involved in an Enterprise Greenhouse Gas Management initiative for a major organization. We worked on the complete E2E framework for meeting US EPA Greenhouse Reporting and developed many business scenarios and data management framework for the GHG management. I was involved in an activity of mapping the Organizational Carbon Footprint using SAP Carbon Impact software at that time for development of emission and GHG calculation scenario. Now again we see a surge in the interest for GHG management and more and more organizations are started to investigate GHG management activities. Given such renewed interest how would an organization start the GHG or Carbon Management journey? What is the general framework which can be adopted? In this blog I would like to share my experience in embarking into the journey of GHG management.
As mentioned by Dr. David Suzuki, in his famous book on “Doing Business in a New Climate” – the message is clear from the scientific community that GHG has devastating consequences on the world and organizations needs to manage those emissions. World needs to act now to avoid any runaway climate change consequences. Business from diverse sources contribute to such emissions, whether those use electricity, transportation of goods, even employee travel, manufacturing or agriculture or allied activities. Whatever may be the sources one thing is common they all emit greenhouse gas emissions.
For any activity which involves management of emissions in a defined boundary, one can adopt the four-step framework suggested by Dr. Suzuki to get started with GHG management, i.e., Defining business case, establishing goals, getting stakeholder buy in and finally create an organization for management of the program. Once Program structure is established organizations can involve measuring the GHG emissions using GHG management standards developed by various organizations. A careful planning of boundary layer taking care of various scope 1, scope 2 or scope 3 emissions, followed by collection of actual activity data using various tools and calculation using various equations. Once the data is established organizations can plan to reduce the emissions by planning various reduction strategies like setting up a target, identifying opportunities and periodic tracking so on. A final step is getting into carbon neutral by incorporating various measures like Microsoft running their Data Centers using Hydrogen or Google using Solar Energy or other industry specific strategies. I will let you read book by Dr. Suzuki and others on “Doing Business in a New Climate’ which must have been revised by now. I remember going through the document in year 2010.
Now coming to the topic of IT framework for managing such requirement the overall framework for managing carbon emissions consist of 1. Framework for data collection 2. Data Collection and preliminary Analysis 3. Detailed Data analysis and derivation of insights and finally 4. Data visualization and presentation.
During the framework of Data collection an in-depth analysis of Enterprise emission data, enterprise carbon strategy and organizational framework is established. Various tasks needed to be carried out like plant inspections, Policies and frameworks on various carbon emissions management, identification of data collection framework and templates. The outcome of the exercise is various emission factors, scope of study, data collection templates etc.
Once Framework is established, a detailed activity is needed to be taken up using the data collection templates, operational boundary to capture the actual emissions, establishing emission factors, identifying performance indicators. The output of the activity is detailed current scenario of the emissions which are established for an organization and specified organizational boundary.
Using various analytical tools an in-depth analysis is performed during the 3rd step of data analysis and derivation of insights. Based on the data established in step 2, different analytics are performed to identify the reduction targets, create enterprise emission reports for stakeholder communication. Few organizations can make using of this step to perform bench marking and competitive analysis as well.
Finally, in step 4, a detailed carbon emission at various levels of organizational boundaries or product levels are established for detailed analysis and communication. Organizations can make use of the data to publish enterprise carbon reports or include them under Sustainability Reports.
Some of the IT challenges in managing the carbon emissions is capturing data from diverse sources, identification of business rules which apply for the organization especially around organizational boundaries, data cleansing activities, data validation principles and a system to merge the data and perform analysis and present the data for stakeholder use.
Many ERP vendors started offering the tools to manage the Product GHG or Carbon Emissions. SAP recently launched a tool named SAP Product Carbon Footprint Analytics. The software tool is based on Analytics works by capturing various carbon emission factors, raw materials, activity types, outbound transport and finally activity types on product level. Followed by analysis different actions are identified. This tool helps visualize data at various Product carbon footprint views at Plant View, Sold product view and others. Details about the application can be found in SAP.
SAP offers another tool called SAP EHSM Emission Management which can also be used to capture the data from various sources and perform calculations. Though details analytics at product carbon levels can be performed by earlier tool. This module offers SAP provided content for Carbon Calculations, GHG emission equations and other functionality like task management and data historian integration.
Though SAP and other vendors offer GHG, Emission or Carbon Management systems there are other options available for organizations. For an organization to create Enterprise Wide Carbon Management software it can use the standard out of the box applications or can create its own architecture consisting of multiple software components, workflows, data consolidation and analytics tools. The creation of such systems are company differentiators which needed to be planned carefully. How a system is designed and what should be the capabilities needs a detail discussion with each individual organization. Besides GHG, Carbon other pressing scenarios of circularity, and waste management can also be included for a wider context based tool development.
To conclude the management of product carbon management and sustainability is gaining industry acceptance and calculation of Product carbon or disclosure of Carbon emissions in entire supply chain and product or raw material purchase is shaping up as an industry criterion to do business. It is the right time for organizations to start planning the journey for carbon neutral economies in years to come.