SMART 2020: Enabling the low carbon economy in the information age, a new report published by the Global e-Sustainability Initiative (GeSi) and The Climate Group indicates that the technology industry’s unique ability to provide tools to monitor and maximize energy efficiency both inside and outside of its own sector could cut carbon emissions by up to five times the amount generated by its own carbon footprint.
SMART 2020, the world’s first comprehensive global study of the Information and Communication Technology (ICT), shows that information management is key to enabling organizations to reduce emissions. Global management consultants McKinsey & Company independently conducted the report’s supporting analysis
Transforming the way people and businesses use technology could reduce annual man-made global emissions by 15 percent by 2020 and deliver energy efficiency savings to global businesses of more than 500 billion euros (nearly $800 million USD), according to the report. This represents a reduction of 7.8 billion metric tons of carbon dioxide equivalent released into the environment by 2020 – an amount greater than the current annual emissions of either the U.S. or China.
Although tele-working, video-conferencing, e-paper and e-commerce are increasingly commonplace, the report notes that replacing physical products and services with the virtual equivalents is only a small part (approximately 6 percent) of the estimated low-carbon benefits the ICT sector can deliver. Far greater opportunities for emissions savings can be generated when organizations and industries implement a technology infrastructure to address carbon reporting and management.
The report cites four major opportunities where the use of information technology can make further transformational cuts in global emissions. These exist globally within smart building design and use, smart logistics, smart electricity grids and smart industrial motor systems.
I may have said this too many times lately, but it’s still true: we can’t reduce GHG emissions until everyone uses the right platform to measure and monitor them.
Tags: carbon emissions gesi global e sustainability initiative ict McKinsey Company smart 2020 the climate group
July 1st, 2008
In the race to put metrics around enterprise sustainability initiatives, there is now a published study that grades California public companies on their sustainability reporting. In this report, our client Chevron got an A+, while a leading IT company got an F. It’s not about what you say you are doing — this study grades how you are REPORTING what you are doing. The PDF of the report is available for download. The Roberts Environmental Center of Claremont McKenna College of Claremont, California, conducted the study and concluded that many companies do not adequately report their sustainability efforts on their websites.
This is a move to promote greater transparency in EHS and CSR reporting, much as Sarbanes-Oxley requirements encourage greater transparency in financial reporting.
On the environmental side, the most frequent reporting subject is accountability and the most frequently reported environmental performance topic is energy usage. Many companies have posted their intent to be accountable for executing on their sustainability goals. The one objective where they seem to have made the most progress is energy efficiency. Companies are reporting energy savings that are clear and measurable.
The Roberts Environmental Center rates sustainability reports on the basis of intent (based on a discussion of a topic and an example of an initiative undertaken on a reported topic); reporting (transparency in public discussion of the issues); and performance (measured by meeting industry standards, external awards or achievement of numerical goals).
We are moving in the direction of greater transparency and greater inspection of sustainability efforts, which can only be proven by better data. How is your organization’s data? Why not share in the comments section what your company is doing and how you are measuring your efforts.
Tags: csr reporting environmental roberts environmental center sustainability reporting
June 27th, 2008
New international product laws and regulations are impacting nearly all industry sectors. According to a report recently published by Ernst & Young, regulatory compliance risk is the greatest strategic challenge facing global businesses in 2008. “The continually escalating burden, as well as ever more complex compliance challenges, means this is still the biggest business risk to be addressed.” The report went on to say that “as companies become more and more global, compliance becomes an even greater challenge, forcing them to manage diverse regulations in different markets. Industrial groups have speculated that by 2010, more than 75% of all electronic products will be sold in countries with legislation similar to the European Union (EU) Directives.”
Recent international environmental laws and regulations require comprehensive product requirements and chemical substance registrations designed to restrict the toxic effects of chemicals in products during one or more phases of the products’ life cycle. The most comprehensive regulations are referred to as “directives,” and have been adopted by the EU. It’s not just EU driving this trend. Similar environmental regulations are being adopted around the world, including China, Taiwan, Korea, Japan, Central and South America, as well as several Canadian provinces, and U.S. states.
Noncompliance is really not an option for companies selling their products internationally. Companies that fail to comply with such directives may not be able to sell their products in the EU and other countries. Market pressures like this now require companies to manage the health and environmental impacts across their products’ life cycles.
Three of the most important new EU regulations are the Waste Electrical and Electronic Equipment Directive (WEEE), the restriction of the use of certain hazardous substances in electrical and electronic equipment, or RoHS and the Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH).
WEEE requires producers of electrical and electronic equipment to register, arrange and pay for a product’s end-of-life collection and recycling. WEEE shifts responsibility from governments and the key enforcing authority to the manufacturers themselves.
RoHS requires manufacturers to restrict the use of certain metals and chemicals beyond a specified concentration value in electrical equipment. These substances have historically been critical components in the production of electronic products.
As I’ve mentioned in earlier posts, REACH impacts nearly all chemical manufacturers. The directive requires companies to identify and manage risks from chemical substances and provide safety information to all downstream users. Specifically, REACH requires every importer or producer of more than 1 metric ton of a chemical substance to register the substance and provide detailed information on the risks, hazards, uses and end-of-life characteristics.
As supply chains continue to become more global, these directives will have a significant impact on companies, their production processes and their ability to compete globally. For example, the U.S. electronics and automotive industries have spent millions of dollars complying with the WEEE and RoHS requirements since 2002, and more recently, U.S. chemical manufacturers, pharmaceutical companies and other manufacturers are working toward achieving compliance with other directives such as REACH.
To insure successful compliance with these directives, organizations need to take a proactive approach. This starts with developing a sound strategy, a regulatory road map and incorporation of information management systems to collect the required data, organize it and enable reporting both internally and externally. We are working hard at ESS to insure our software makes this effort easier, faster, more reliable and reduces the costs of compliance.
Tags: chemical substances ernst young eu regulations product stewardship reach rohs weee
June 25th, 2008
Deere & Company is one of a growing number of companies that have announced plans to reduce their total global greenhouse gas emissions by a specific number — in this case 25 percent per dollar of revenue from 2005 to 2014. The company has committed to the reduction goal in conjunction with its participation in the U.S. Environmental Protection Agency’s (EPA) Climate Leaders program, which Deere joined in 2007.
Climate Leaders is a voluntary industry-government partnership that works with companies to develop long-term comprehensive climate change strategies. Participants set a corporate-wide greenhouse gas emissions reduction goal and annually report their progress to EPA. Through program participation, companies create a credible record of their accomplishments, reduce their impact on the global environment and identify themselves as corporate climate leaders.
Becoming a corporate climate leader can’t be easy for companies in industries such as oil, energy and equipment because direct greenhouse gas emissions are generated from both plant operations and from the final product. Monitoring and collecting data across the organization as well as tabulating and benchmarking against publicly stated goals requires an enormous amount of data integration and reporting capability.
We have been seeing this trend across the enterprise lately, in all industries, as corporate social responsibility becomes a matter of setting and reaching sustainability goals that are expressed in numbers and percentages. Moreover, we’re seeing a need to allow this kind of data aggregation and reporting from mobile platforms as well as from desktop PCs. As a result, we have set out a product roadmap that meets these needs for our customers more completely and fully than any of our competitors. Fortunately, we have the talent on our team to get this done!
Tags: climate leaders deere & company epa ghg greenhouse gas emissions
June 19th, 2008
Be careful with uncontrolled use of spreadsheets to track and manipulate corporate data. Spreadsheets can become a huge problem for companies that have regulatory reporting requirements or planning requirements, according to a KMPG study. The study concluded that the basis for as many as 95 percent of financial models were flawed. Spreadsheets that collect and manipulate data were deemed inadequate to save companies from corporate risks associated with data quality.
I just finished reading an article in Information Age about analysts at market intelligence company, The Data Warehousing Institute (TDWI), which in 2007 set out to investigate the uncontrolled use of spreadsheets by end-users when undertaking data analysis tasks.
The findings make for sobering reading: of the 200 companies surveyed, including companies of all sizes and from a wide range of industry sectors, 90 percent reported that they were living with the problem of so-called spreadmarts. Spreadmarts are shadow data systems that extract, transform and format data and publish reports.
If you have EHS reporting requirements or if your CSR reporting goals will be measured, you can’t afford to have data aggregated from separate PCs across the enterprise. You must have an integrated platform to collect, analyze and report out uniform data.
In case I haven’t alerted you sufficiently, the article highlights the experience of a major U.S. utility that hiked consumer gas prices by between $200 million and $1 billion due to a mistake in a spreadsheet file. In another example cited in the article, a U.S. mortgage company was forced to write down $2.4 billion in mortgages due to a change control error in a spreadsheet. Spreadsheets over 200 lines long are almost guaranteed to be flawed.
Companies continue to allow employees to take corporate data out of their primary systems, massage it and write it back to a core transactional system because it is very hard to stop that process. We are trying to alert the key decision makers worldwide about the risks associated with inconsistent and poorly manipulated data and encourage the use of an integrated data collection and management platform to reduce the associated complexities, costs and risks.
Tags: csr reporting data quality risks ehs reporting information age kmpg spreadsheets
June 16th, 2008
As a result of ESS’ continued expansion and the growth in global adoption of our sustainability software platforms, ESS has hired Scott Lockhart as Chief Operating Officer. Scott will be responsible for executive oversight of ESS operations, as well as a member of our executive strategy council.
Scott has 15 years of experience in leveraging enterprise software for asset optimization, EHS and compliance with clients representing a variety of vertical industries, including oil and gas, electric utilities, chemicals, aviation, metals and pulp industries.
Scott comes to us from his previous position as Vice President and Executive Board Member of Data Systems & Solutions (DS&S), a division of Rolls Royce. He was focused on enterprise asset management and optimization, equipment health monitoring, process safety and compliance. In addition to business management and growth objectives on DS&S’ executive board, Scott was responsible for the operations, services and software groups. His previous experience also includes key leadership roles at Trinity Consultants and SAIC.
I have known Scott for many years and admired his proactive approach and success in connecting the dots between environmental, health & safety (EHS) and crisis management software and asset management and optimization information systems (EAM) to enhance enterprise-wide business performance and operational excellence. We both strongly believe that by more closely integrating these key information systems, organizations can identify and ensure common data work together to drive improved levels of EHS compliance while increasing reliability and performance of assets. This translates to increased availability of critical assets to improve both compliance and profitability. Reducing complexity and risk that is associated with disparate data silos within EHS and EAM information systems also ensures higher quality data is delivered to the other sources throughout the enterprise that rely on that information.
I am very excited to have Scott on board and look forward to his contribution toward our future growth and success.
Tags: chief operating officer compliance coo eam ehs enterprise software ess scott lockhart
June 9th, 2008
I saw an article this morning from the CSR Reporting Manager of Timberland that underscores what I was talking about in my post earlier this week regarding emerging trends in CSR reporting. While Alex Hausman admits that CSR reports now contain more data, he goes on to make a point I think is the crux of the entire CSR problem: It’s not more data that is needed; it is better, more consistent, data that is material to stakeholders.
“I think the duty of corporate CSR reporting managers is to relentlessly refine the information they release in public reports. Their guidance should be based on what is most material for their stakeholders,” Hausman said.
This clearly indicates the need for the same quality of data that is used in financial accounting.
“Focus on material impacts, provide quantitative targets and then, next year, tell us your progress against that metric. Trend data leads to the understanding of trends. This insight allows companies to allocate resources to the areas of business that most need them,” Hausman concluded.
Today, CSR reporting is an important component of an organization’s overall strategic focus on sustainability. Once the right pieces are in place - strategic alignment, trend data, collaboration, sustained effort - we can start to see progress against some of the most significant challenges our society faces.”
Data. Good, consistent data. Integrated. If you can measure something, you can manage it. We have always believed in this management principle. It’s a trend that helps our business keep growing, too.
Tags: alex hausman csr reporting financial accounting sustainability
June 6th, 2008
As a result of increasing public interest in CSR reporting in the boardroom—a trend that primarily is being driven by a vocal minority —many 2007 CSR reports are showing a trend toward more data-intensive reporting and less emphasis on “soft” information, such as community activities. While they used to be about cleaning beaches and adopting schools, these reports now provide information such as percentage reductions in GHG emissions.
Interest in environmental “accounting” seems more evident, as evidenced by the detailed and data-focused 2007 CSR reports of such industry leaders as ExxonMobil, Chevron and BP. More demand from institutional shareholders such as Goldman Sachs for good benchmarking information is encouraging this trend and companies are starting to back up their claims with non-financial accounting systems like the kind we sell that can be third-party assessed against standards such as the GRI G3.
Non-financial accounting systems enable a company operating Facility A and Facility B to generate data that are consistently calculated, so that when it is rolled up by division and geographic region, you can count on the numbers at each level of the organization. That’s not so certain with companies that have not yet implemented an integrated, enterprise-level solution. Many companies still record their environmental reporting on spreadsheets, like they used to do their financial accounting more than 20 years ago. Would that be acceptable for financial data today? We see a continued trend as organizations migrate to more accounting-style platforms, including auditable work processes and links to other enterprise systems, to bring non-financial reporting up-to-par with financial systems.
Tags: csr reporting financial reporting ghg emissions goldman sachs gri
June 3rd, 2008
Standard & Poor’s (S&P) has released its long-awaited direction on how it will incorporate Enterprise Risk Management (ERM) into its business analysis and reporting. This development is going to impact all kinds of businesses, so they’re going to take it slow: S&P isn’t expected to include ERM into its ratings until Q3 2009. Still, companies should consider reviewing their GRC strategies — or consider developing one.
S&P regards ERM, as:
- An approach to assure the firm is attending to all risks;
- A set of expectations among management, shareholders and boards of directors regarding which risks the firm will and will not take;
- A set of methods for avoiding risk exposure that would be outside of the organization’s tolerance;
- A method to shift focus from “cost/benefit” to “risk/reward;”
- A way to help fulfill a fundamental responsibility of a company’s board and senior management;
- A toolkit for trimming excess risks and a system for intelligently selecting which risks need trimming; and
- A language for communicating the firm’s efforts to maintain a manageable risk profile.
S&P is expected to assure the market that companies aren’t expected to eliminate all risks. But it’s prudent to show that the enterprise’s risks are known and well managed. That’s another reason why an integrated software platform that helps managers monitor and manage risk across the enterprise is a C-suite imperative right now.
Tags: corporate risk enterprise risk management erm grc s&p standard poor
May 21st, 2008
Geert Dancet, executive director of European Chemicals Agency (ECHA), is wrapping up a U.S. tour this week. He is here to raise awareness among U.S. exporters to the European Union (EU) about the REACH pre-registration period, which begins June 1 and runs through December 1.
Dancet is here to emphasize to manufacturers the importance of compliance with REACH, the EU law requiring companies to prove that chemicals that are sold and produced in the EU are safe to use or handle. It is designed to collect information on chemical substances (on their own, in mixtures and in articles) used in any of the European Union jurisdictions. Data will be used to evaluate chemicals’ environmental and human health effects; how they can be used safely; and whether a substance considered by regulators as dangerous can be replaced with a safer substance.
During the pre-registration period, companies are required to report to EHCA substances that are manufactured in, or imported to the EU in annual quantities of 1 metric ton or more per company.
The U.S. Department of Commerce recently signaled plans to help small and medium-sized companies understand what they need to know about REACH and make executives aware of the time frame for REACH compliance.
“Our objective is to make sure small- and medium-sized exporters can stay in the market,” said Rosemary Gallant, a Commerce representative. That is appropriate, since the EU is a market where many U.S. businesses have a significant customer base, partnerships or supply chain relationships. Not meeting REACH requirements opens exposure to significant business risks, including lack of continued access to the EU market.
Companies affected by REACH are advised to check now with EU suppliers. It is imperative that they ensure that substances they depend on will be pre-registered and subsequently registered by suppliers or further up the supply chain.
Companies also need to ensure that their EU-based importers are taking REACH compliance seriously and are acting accordingly. They are likely to need considerable support from their US suppliers. If a company has a question regarding its REACH-affected supply chain continuity, managers may need to consider identifying alternative sources for materials needed for manufacturing.
While some chemical companies outside of Europe have expressed concern about the potential impact of REACH mandates, it’s likely that their desire to continue doing business in EU jurisdictions will eventually assure compliance with the law. The good news is that some companies see REACH compliance as an opportunity to demonstrate how their products are consumer-friendly and their manufacturing practices represent best practices for environmental stewardship.
Even though there is no existing U.S. mandate that is similar to REACH, many companies are proactively responding to increasing demands for Corporate Sustainability Reporting to investors, NGOs and community organizations. Right now, companies’ CSR disclosures typically include information regarding greenhouse gas emissions, worker health and safety management and fair labor practices. However, REACH could prompt responsible companies to expand their CSR reporting to promote the fact that their use of chemicals meets rigid third-party standards that are deemed safe for consumers.
This is another example of the shift among businesses to use socially-responsible and environmentally-friendly practices as a competitive differentiator.
ESS is making the transition to address REACH more efficient with a roadmap and powerful software tools that help streamline REACH compliance. In addition, we are working on further enhancements to our software solutions to improve companies’ ability to execute efficient REACH compliance. Our upcoming enterprise software release includes new tools that provide the ability to export chemical substance information directly from ESS’ chemical inventory database into IUCLID 5, the international database for efficient REACH registration. This will reduce complexities of REACH compliance and make it easier for our customers to leverage existing information to address emerging REACH requirements.
Tags: chemicals corporate social responsibility csr echa eu european chemicals agency iuclid 5 reach rosemary gallant
May 20th, 2008
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