CEOs need to take ownership of carbon management as a business
transformation challenge, to prevent their firms from failing to to
achieve absolute reductions in CO2 emissions, according to a new report
from independent research firm Verdantix. The Verdantix report, Best
Practices Carbon Management, provides detailed advice on the development
and implementation of a carbon business transformation plan. They recommend four strategies: Use of an integrated carbon management technology platform, the appointment of a Chief Sustainability Officer, co-ordinated business process changes, and a cross-functional strategy for reductions with a 2020 target.
“Dumping carbon management responsibility on CSR Directors without providing them with the authority or budget to execute dooms many carbon reduction plans” commented Peter Charville-Mort, the Verdantix Analyst who led the study. “Our research with 33 industry experts shows that underneath the green-wash, most firms flounder with weak carbon management initiatives.
To achieve absolute CO2 reductions firms need to:
Create a 2020 strategy for carbon management. CEOs first need to get the right people on the bus – with the CSO in the driving seat – and then buy into the carbon journey to 2020. Post-2020 firms need a transformation vision due to much tighter regulation and intense customer pressure for sustainability credentials. Climate change and sustainability advisors at firms like Deloitte and Ernst & Young are well-positioned to provide strategic input.
Strengthen governance to deliver transformational change. Dumping a broad, carbon-related change programme on the CSR Director is doomed to fail. Best-in-class carbon management requires a Chief Sustainability Officer (CSO) with a small Program Management Office that quantifies value and risk, co-ordinates initiatives and engages stakeholders. The CSO should be picked from a general management role internally.
Implement integrated carbon management systems technology. To reduce carbon emissions firms need accurate, timely and complete data on energy and fuel consumption. World class carbon management requires not just energy and carbon software from that track energy consumption or refrigerant leakage at the asset level.
Design cross-functional process changes across energy, operations and finance. Ongoing cuts in carbon emissions require a portfolio of projects such as building management systems and electric vehicle fleet trials. To succeed with multiple, simultaneous changes firms need a program based on granular energy and fuel data, financial analysis of projects and assessment of unintended consequences.
“Absolute reductions in CO2 emissions require transformational change across governance, strategic thinking and process redesign. But today, firms only achieve incremental change.” added Verdantix Director, David Metcalfe. “Time is running out for CEOs to act before the jaws of GHG compliance regimes and competitive pressures on sustainability close around them. Seventy-six per cent of the global industry expert panel believe weak carbon management will pose a material risk by 2012.”