At the Cleantech Forum in San Francisco this week, a panel of experts was asked about whether or not companies still care about carbon accounting. While the topic had a lot of buzz around it a couple years ago, it seems to have quieted down over the past year, despite the carbon accounting software market seeing a nice uptake. And the Cleantech Group, which hosted the event, wondered if this was a sign that companies are losing interest in tracking their carbon footprint. The panel, including Joel Riciputi of Hara, Robert ter Kuile of PepsiCo, and Sujeesh Krishnan of Carbon Trust, weighed in.
Carbon Accounting Is Simply Smart Business Sense
The overall consensus is that while there might not be as much talk around it, businesses are still very interested in getting started on carbon accounting. This is for two reasons, as pointed out by Krishnan. First, carbon accounting, and cutting carbon, is directly tied to cost cutting. The more efficient you can be with energy, the more efficient you are with your money. And secondly, there's a growing customer and consumer recognition about carbon accounting. So to maintain loyalty, businesses have to be able to answer questions about their carbon footprint, and that means keeping track of it.
Robert ter Kuile of PepsiCo stated, "Energy efficiency is just good global business sense. If you want to keep running on a global scale, energy efficiency is a must."
Carbon Accounting Greens Both Businesses and Supply Chains
ter Kuile continued, pointing out that carbon accounting is as much about bringing a company's supply chain into the loop as it is about saving money. "One of key tenants of sustainability is bringing others with you -- if 20 years from now you say 'Look how green we are' but no one you deal with is, then how sustainable are you? Making sure reaching into supply chain is really important."
Carbon accounting tools take a specific look at how one's supply chain affects the company's overall carbon footprint. Krishnan pointed out that one t-shirt manufacturer noticed that about 90% of the carbon footprint of one of its products was based on energy use in a factory in India, which used diesel generators to run the factory. The company worked with that supplier to install a wind farm that supplemented the diesel power source. All in all, it cut the carbon footprint of that product by about 80%. The example perfectly illustrates how carbon accounting can help a business cut costs, and help other companies be more sustainable in the process.
As Riciputi stated, "Looking both upstream and downstream in the supply chain for organizations is a must for forming strategies -- how to put these strategies into place, [viewing] data and having it available to different parts of the organization so everyone is working from same baseline."
Businesses Are Slow To Start, But Consumers Can Keep Them Interested
Krishnan noted, "When I look out 10 or 15 years from now, if more businesses have a Head of Carbon Footprinting, it's a good thing because it means the issues are integrated into the business. At the end of the day these functions need to be integrated into core operations for a company for the business to succeed."
The problem, though, is if the buzz about carbon accounting doesn't stay at a certain level, these important initiatives might get placed on a back-burner, despite their recognized importance. Keeping up that buzz is the consumer's job.
ter Kuile stated, "Initiatives are focused on a reduction. But what the consumer really cares about is 'What are you really doing about it?'"
Krishnan added that sales and revenues can increase when companies drive low-carbon products to their customers. An example he gave is of PG's cold wash laundry detergent. The company recognized consumer awareness that using the cold cycle for washing can significantly reduce energy use, and created a product meant to support, and grow, that awareness. Through innovating around carbon reduction, the company created a whole new revenue-generating product.
The growing requirement to show the carbon footprint of products and of supply chains to the consumer, and be creative around carbon, is what can keep carbon accounting at the front of a business's list of priorities.
Carbon Accounting Matters, But Only When It's Tied Into All Accounting
Once businesses get carbon accounting into play, it's important to make sure that decisions around reducing carbon don't increase their footprint in other areas. As ter Kuile pointed out, reducing energy in one area might increase water use in another, so it's not a perfect solution. Accounting for all aspects of resource consumption, and coming up with localized solutions that bring down consumption overall is what will make carbon accounting truly effective.
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[Image by Boaz Arad]