As corporate climate action becomes increasingly commonplace, there has been a corresponding rise in climate tech solutions, like carbon management or greenhouse gas (GHG) accounting software, to help corporations reach climate goals. These solutions can streamline the operational aspects of climate work such as measurement, tracking, and reporting so organizations can focus efforts on implementation of decarbonization tactics across their business and supply chain.
Over the last few years, the marketplace for climate-related software solutions has become crowded, with over 150 solutions available, covering anywhere from ESG reporting to lifecycle assessment.
Once you’ve navigated the densely populated marketplace to find the right tools for your organization, you will need to pay for licensing and implementation of those tools – and there can be significant costs for both. In order to secure executive approval for the adoption of such tools, we recommend putting together a comprehensive cost-benefit analysis to support your business case. This will help to uncover that while an initial investment in human resources and capital will be required, you can expect to realize a return in data reliability and the potential for deeper actionable emission insights.
We recommend building a business case for your carbon management software using the following outline:
Being able to report emissions data that is transparent, reliable, and auditable is becoming a requirement – both from a regulatory and stakeholder perspective.
Investors, customers, and suppliers are calling on companies to disclose for various reasons. Investors wanting to understand the climate-related financial risks of their assets are asking for Environmental, Social and Governance (ESG) data that includes GHG emissions and decarbonization plans, and customers wanting to better understand what’s going into their products are taking a closer look at supply chains.
We’re also seeing mandated disclosures emerging worldwide from several evolving regulations:
- In the U.S.: The proposed Securities and Exchange Commission (SEC) climate disclosure rule and California Bill SB 253
- In Europe: The Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CS3D), Carbon Border Adjustment Mechanism (CBAM), and climate-related financial disclosures for companies and limited liability partnerships (LLPs)
- Globally: The International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards (SDS)
These voluntary and mandatory pressures are pushing organizations toward a level of transparency and disclosure that is increasingly challenging and time consuming for organizations to sustain year after year. In your business case, you can outline this by identifying the specific pressures and requirements your organization expects to face in the next few years.
Completing a GHG measurement is a complex undertaking. There are both internal and external factors that need to be accounted for. This means that you or a designated team member responsible for tracking emissions will have a lot to juggle in order to complete your organization’s GHG measurement and reporting.
While challenges span the entire GHG measurement process, it’ll be crucial to highlight the complex nature of scope 3 emissions reporting in the business case. Scopes 1 and 2 emission calculations are often relatively straightforward compared to your scope 3. This is especially true for companies with complicated supply chains and many streams of data, but even applies if you’re just working with a handful of suppliers.
Even before delving into data management, you will need to determine what data you need, then, how you will get that data. There is a lot of data a company can collect from its own records, but in order to improve on data quality, eventually you, or your team, will need to coordinate with suppliers. They can share data through surveys or give you access to the data through another method. Once you have it, all of that data will then need to be reviewed and input into your chosen data repository.
In addition to these hurdles, there’s also the ever present risk of human error. Despite best efforts, there may be typos during data entry or formula errors within Excel, which can compromise the reliability of your reporting.
Now comes the fun part – dreaming up the ways your chosen carbon management solution will make your, and your team’s lives, much, much easier than tracking in an Excel spreadsheet. Software tools can do this by streamlining emissions measurement through:
Collecting primary data from your value chain (or scope 3)
Software tools have the ability to gather data directly from suppliers and customers, a crucial factor for moving your value chain measurement from a spend-based estimation to using supplier-specific data over time. The software also offers integrations that can connect to primary data sources either internally or with your suppliers. These integrations have the potential to automate the data collection process and allow you to get updates to emissions data in real time.
Also, you will likely not need access to all of your supplier’s data. Another benefit of using a tool is that it helps with determining the right assumptions to use to fill in gaps where supplier-specific data may not be available or necessary.
By using a digital tool, your team and executive leadership can feel confident in the integrity of the data for reporting purposes as many platforms offer APIs to streamline data collection or call out data abnormalities.
(It’s still important to review imported data to ensure accuracy, though!)
Ease of use and understanding
Software is built to be intuitive, allowing anyone at your company and any other stakeholders to pull information from the tool.
These tools have capabilities to serve as centralized data collection hubs, accommodating many users and enabling customized access controls for everyone from your sustainability team to your upstream suppliers, downstream customers, and consultants.
Large emissions factor libraries
Your team will get access to more precise measurement tools through the large emission factor libraries available in carbon accounting tools.
Ability to integrate reduction actions
Some platforms have capabilities for directly procuring renewable energy, buying carbon credits, and implementing your net zero strategy.
The cost of carbon management software can vary significantly depending on its capabilities, the level of support offered, as well as your organization’s size and specific needs. We have seen tools that cost anywhere from $20,000 to $200,000, with varying structures around annual licensing fees and implementation fees required for the successful integration of the software into your organization.
When evaluating the cost, it’s essential to understand and incorporate into your business case the services that will be bundled with the software. This is where you can outline the extent to which the technology will contribute to your team’s objectives, as opposed to areas where your internal team or consulting services may still be required.
CARBON MANAGEMENT SOFTWARE IS A BENEFICIAL INVESTMENT
Laying out the need, challenges, benefits, and cost of a carbon management software will help you demonstrate the value of the investment to your executive team. And in a world where the velocity of climate action is becoming increasingly interwoven with technology adoption, leveraging a business case to pursue climate software tools will help drive decarbonization actions for any organization that aspires to take urgent action on climate change.
If you have any questions about carbon management software, please contact us.