Despite the gridlock in Washington over climate change legislation, and one of the worst economic downturns in the last century, 2009 was a year of growth for the emerging Enterprise Carbon Accounting (ECA) software market. According to a research study recently released by Groom Energy Solutions, EnerNOC , IHS and SAP made acquisitions in the sector, software giants Computer Associates and Microsoft entered the market, and more than $46 million in venture capital was invested in ECA startup companies. Meanwhile, the number of corporations now disclosing greenhouse gas emissions (GHG) increased significantly in 2009 and Groom Energy predicts that ECA software purchases will increase 600 percent by 2011.
The research report, “2010 Enterprise Carbon Accounting: An Analysis of Corporate-Level Greenhouse Gas (GHG) Emission Reporting and a Review of GHG Software Products,” presents three principal factors that are behind the momentum of the ECA market.
1. Increased pressure from customers and investors for companies to
create a ‘greener’ public image
2. Cost and energy savings from sustainability investments
3. Mandates from buyers, like the Walmart Supplier Sustainability Assessment Program that was implemented to measure the environmental impact of supplier operations.
“In light of the economic climate, sales growth for ECA software shows the importance of this emerging category,” said Paul Baier, report author and vice president of consulting services for Groom Energy. “From politicians like Al Gore and Condoleezza Rice getting involved with startups, to Microsoft, CA, and SAP, entering the market, our prediction that 2009 would be the year of enterprise carbon accounting came to fruition. Our on-going customer and vendor research reinforces our belief that the ECA market will see explosive growth in size and global importance in 2010 and 2011.”
The first version of the report was released in Jan. 2008 with an addendum in May of 2008, to provide a guide for organizations beginning to track and report their GHG emissions. At the time 40 vendors were already present in the market and it appeared that that many companies had grown beyond the use of spreadsheets, which was the traditional tool used to track GHG emissions. Despite the early stage of the current ECA market, the 2010 report now identifies a total of 60 vendors and profiles 20 of them in four category types: environmental health and safety vendors (EHS), new products from large firms, startup companies, and energy management firms. Market consolidation is expected to occur in the next two years.
Eight companies were named 2010 ECA Emerging Leaders in the report. Ranking was weighted and determined by: number of customer deployments, technology features, market vision and financial stability.
The current leaders are:
Enablon - Enablon offers management and performance software solutions for: corporate responsibility and QEHS management; risk management and internal control; and corporate governance and legal management. Enablon software solutions are used by more than 200,000 users in 250 global companies and ten thousands SME's around the world. Customers include Airbus, Carrefour, PGE, Timberland,Tyco, Armstrong, Beiersdorf, Del Monte, L’Oréal, McGraw Hill, Pinnacle West, Texas Instruments and Woolworths. Enablon is the world’s largest sustainability software provider,
Enviance - The Enviance Environmental ERP system is comprised of the three components of sustainability: air, water and waste. It is a Cloud-based, on-demand platform, that comes with a Software Developers' Kit (SDK) so clients can integrate the Enviance system with other information systems, and has a mobile platform. There are 12,000 users from 45 countries that use the Enviance System.
Hara - Hara attracted investor attention recently, securing $20 million in funding from Kleiner Perkins Caufield & Byers, JAFCO Ventures, and Nth Power. The startup has seen significant recent customer success, having closed a number of deals in 2009 with industry leaders including Coca-Cola, News Corporation, the City of Palo Alto and the City of San Jose.
IHS - The 50 year old company provides a full suite of environmental and chemical management software and service solutions for EHS and sustainability management. Solutions include: greenhouse gas management from compliance to emissions trading; material Safety Data Sheet (MSDS) and chemical lifecycle management; air, water and waste data management; sustainability tracking, management and reporting; regulatory compliance management; chemical supply chain greening; and REACH.
Johnson Controls - The Energy and Emissions Management System provides global organizations with the capability to analyze energy trends and calculate greenhouse gas levels. The Web-based system measures, manages and forecasts activities related to energy cost, consumption, energy efficiency projects, fleet emissions, and waste. Johnson Control annually monitors 63 million metric tons of greenhouse gas emissions for 5,000 buildings in 88 countries. The system has identified more than 8,000 energy and cost savings solutions for global organizations such as Pfizer, Dell and Xerox. They currently manage $1 billion in annual energy spend.
PE International - SoFi-Software provides data collection supported by interfacesto ERP systems; carbon footprint measurement in compliance with requirements of CDP and the ISO 14064 standard; performance tracking; and the ability to identify cost reduction opportunities. Gabi Software provides tools and databases for product and process sustainability analyses.
ProcessMAP - ProcessMAP’s software platform measures and tracks environmental and carbon footprint as well as, inform on their performance in the Global Citizenship and Annual Sustainability Reports.Customers include: Allergan, Cardinal Health, CR Bard, Ingersoll Rand, ITT, John Deere, Shaw (Berkshire Hathaway), and Watson Pharmaceuticals. ProcessMAP was also recently recognized as a leading provider of Carbon Management Software by Verdantix, business research firm focused on climate change, carbon markets and corporate responsibility.
SAP- Carbon Impact - Carbon Impact enables reporting from a single repository to voluntary or mandatory registries, such as the Carbon Disclosure Project and U.S. EPA Climate Leaders Program; allow you to conduct abatement analysis by using financial insight to find the optimal mix of reduction projects and offsets; gain insight via pre-built dashboards for emissions trending analysis and visualization to help identify problem areas; you can also consolidate environmental impact data into a single repository, and organize emissions data by using flexible hierarchies that represent your facilities, departments, product lines and other operational entities.
Both Enablon and Hara are newcomers to the list, while the others were named 2009 ECA Emerging Leaders.
Surprisingly, the top driver among purchasers, is not pending GHG
regulation, but rather protecting and enhancing company image.
Responses among many purchasers indicate that supply chain initiatives like the Walmart supplier assessment program will motivate purchases.
Accord to the Groom study, the number of organizations using ECA software is expected to increase five fold by 2011 and much of the investment will be made by companies that have not traditionally invested in environmental software. A report a recently released study from Pike Research backs up these figures. Spending for software and services in the carbon management market between 2008 and 2009 grew nearly 84% globally, representing a total market of $384 million. That same report forecasts that in North America alone, the 2008-2017 compound annual growth rate (CAGR) will be more than 44%.
According to Stephen Stokes, an analyst at AMR Research, companies offering a "one size fits all" package that not only tracks greenhouse gases but performs sophisticated analysis of things like water consumption were most likely to succeed. Otherwise, companies that excel at one niche aspect of emissions management, such as in the transportation sector, likely will gain an edge.