Hot Topic: Carbon footprint – an investment opportunity for innovative application developers?

by Allan Behrens

With the roll out of the European Emission Trading Scheme, businesses are coming under increasing regulatory pressure.  

Companies have numerous ways to address their energy use, but often no way of knowing how effective their actions will be.  What companies need is a quick and easy way of seeing how much carbon they are emitting, and from which part of their operations.  

To calculate carbon emissions, one needs two things – a comprehensive view of operations, including incoming and outgoing supply chains; and a carbon calculation model to convert business operations into tonnes of carbon.  There are many such calculation engines; typically amongst the most reliable are those that convert energy bills, such as electricity or gas.

Once the carbon footprint is known, focus needs to be made in the areas of business where most savings could be made.  Rather like balanced scorecards for optimising profit and revenue, one needs a balanced scorecard for carbon.  This is where many of the carbon calculation engines fall short.  Simply using an electricity bill to calculate footprint does not tell a business where electricity is actually being used.  Nor does it allow one to model how much impact each potential process change might make.

However, some inroads are being made in this area – for example in the ERP world, Access Accounting has worked with the Carbon Trust and Defra, the UK’s environment agency, to develop a module for their ERP solution.  Its aim is to help companies to work out how best to reduce their carbon footprint.  As an example, Healeys Printers discovered that around 20% of their carbon footprint was generated by attendance at two events, which had necessitated flights by both staff and resellers.  

Infor has developed a “Sustainability Edition” of their Enterprise Asset Management (EAM) solution.  This monitors energy usage by metering each asset, allowing managers to benchmark the performance of specific parts of the business.  They can then re-engineer the processes in that business, or simply replace the asset with a more efficient version.  

Similarly, ILOG has developed a tool to track the carbon footprint of a company’s supply chain.  The extension to its Supply Chain Applications, called Carbon Footprint, allows users to track which activities in the supply chain generate the most carbon emissions.  It allows one to set an emission cap as a non-negotiable constraint on supply chain planning.  ILOG’s proposition is that the tool will help to identify inefficiencies in the supply chain.  

More to the point, vendors with “carbon footprint” solutions are appealing to companies’ wallets by pointing to the cost savings that can be made using their solutions.  With the possibility of selling carbon savings on the European carbon exchange, as well as improved efficiency in business, solutions with ‘carbon focused’ capabilities could be a more compelling investment.