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CFOs Will Be Compelled to Invest in Carbon Management Software in 2010 - Report
Compliance regimes, financial risk of carbon liabilities and a need for better management control over carbon data will push companies to spend on CO2 solutions, Verdantix asserts
Verdantix Director David Metcalfe
London — August 14, 2009 — In 2010 a combination of new compliance regimes, the financial risk of carbon liabilities and a need for better management control over carbon data will compel chief financial officers (CFOs) to invest in carbon management software, according to a new report from independent research firm Verdantix.
The report analyses the business case for investing in carbon software from vendors like CarbonView, Carbon Hub, ESS, Greenstone Carbon Management, Hara, IHS, PE International, SAP and SAS.
"Firms that have measured their enterprise carbon footprint, like Cisco, Crédit Agricole and Coca-Cola, now realize they need a more robust process to manage their greenhouse gas emissions," said David Metcalfe, a director with Verdantix and a software industry veteran. "These firms are in the vanguard of an army of private sector and public sector organizations that will invest in carbon management software over the next three years. CFOs need to get in the driving seat to assure the board that the management of carbon assets and liabilities is fully under control. "
Research into 20 implementations of carbon management software around the world found that a wave of CO2 compliance deadlines in Australia, the U.K. and the U.S., as well as tighter rules in existing schemes like the E.U.'s Emissions Trading Scheme, will pile the pressure on firms to strengthen their carbon management systems.
The global research conducted by Verdantix found that CFOs need to be able to assure the board that carbon liabilities are under control. Many Board members would be horrified at the low quality and poor verification of carbon emissions data that are released into the public domain through channels like the Carbon Disclosure Project, Verdantix said. When there is a price tag attached to CO2 emissions, the CFO's team will need to sign off the data for all carbon emissions communications.
CFO also must be able to:
"Today CFOs focus on cash management and cost reduction, but they can't dodge the carbon management bullet forever," said Metcalfe, author of the report. The good news, he added, was that by implementing carbon management software, CFOs were likely to identify energy cost savings that cover the cost of the software investment.
The report analyses the business case for investing in carbon software from vendors like CarbonView, Carbon Hub, ESS, Greenstone Carbon Management, Hara, IHS, PE International, SAP and SAS.
"Firms that have measured their enterprise carbon footprint, like Cisco, Crédit Agricole and Coca-Cola, now realize they need a more robust process to manage their greenhouse gas emissions," said David Metcalfe, a director with Verdantix and a software industry veteran. "These firms are in the vanguard of an army of private sector and public sector organizations that will invest in carbon management software over the next three years. CFOs need to get in the driving seat to assure the board that the management of carbon assets and liabilities is fully under control. "
Research into 20 implementations of carbon management software around the world found that a wave of CO2 compliance deadlines in Australia, the U.K. and the U.S., as well as tighter rules in existing schemes like the E.U.'s Emissions Trading Scheme, will pile the pressure on firms to strengthen their carbon management systems.
The global research conducted by Verdantix found that CFOs need to be able to assure the board that carbon liabilities are under control. Many Board members would be horrified at the low quality and poor verification of carbon emissions data that are released into the public domain through channels like the Carbon Disclosure Project, Verdantix said. When there is a price tag attached to CO2 emissions, the CFO's team will need to sign off the data for all carbon emissions communications.
CFO also must be able to:
- Integrate carbon costs into financial planning and budgeting. Power utilities like the National Grid started in 2009 to integrate carbon accounting into their core financial processes. Less emissions intensive firms that have made carbon reduction commitments, like The Gap, Vodafone and Weyerhauser, will need detailed financial plans to guide carbon abatement investments and hit their CO2 targets.
- Reduce compliance and audit costs. Multinationals like Caterpillar and emissions intensive firms like Xstrata face mounting costs from GHG reporting and audit work. The CFO needs to ensure change costs do not break the bank when mandatory reporting rules kick in and acquisitions dramatically affect emissions reporting and internal budget allocations, Verdantix said.
"Today CFOs focus on cash management and cost reduction, but they can't dodge the carbon management bullet forever," said Metcalfe, author of the report. The good news, he added, was that by implementing carbon management software, CFOs were likely to identify energy cost savings that cover the cost of the software investment.
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