Carbon Accounting Software:

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1 Carbon Accounting Software: Choosing the Right Solution for your Business Choosing a carbon software system can be overwhelming with more than 200 packages currently on the market (1), several of which are identified as leaders in the field. This paper will walk you through the steps critical in choosing the right tool for you. Section one briefly introduces the reader to carbon management software and talks about some of the benefits of implementing it. Section two provides you with tools to identify the best carbon software system for your needs. We outline the three key steps you will need to follow to better understand the relevant criteria for selection and the appropriate questions to ask when running a procurement process. The first step of the three-step process is to evaluate your key businesses drivers for selecting and implementing a carbon accounting software system. This is important since the main carbon accounting packages on the market can be categorized into different areas of speciality. We refer to these specialities as primary function categories. In this section, we provide you with tools to identify what your company s objectives are in selecting a software system in order to ensure you re looking at the right types of systems to meet those needs. After reading through it you will be able to identify which of the primary function categories are most important to your business. Once you have identified what the main primary functions of your software system are, in the second step you will learn more about the main characteristics of each category. This will ensure you are more informed about the different areas as you put together your criteria to run a software procurement process. The third and last step of the selection process is to determine what features are required to make the system meet your core needs. We provide you with a list of key questions to ask when running a procurement process. We include a list of general questions which may be used to procure all carbon software systems. We also provide a list of specific questions which align with each of the primary function categories from section two. This way you will be able to include the questions relevant to your primary needs. After providing you with all the information you need to run a procurement process, the final section of this paper briefly describes the process Carbon Clear undertook between March and June of 2012 to evaluate the twelve leading software systems. By following the steps outlined in this paper, you will be better prepared to buy the best software package to help your company achieve its objectives. (1) Carbon Clear

2 Section 1: What is carbon software? Carbon accounting software is designed with the specific purpose of helping organisations measure, monitor and report their energy consumption and carbon emissions. Many systems can also capture other environmental or CSR data such as waste or community volunteer hours. At a high level, carbon reporting can be broken down into two categories: 1) Corporate and value chain reporting and 2) Product footprint reporting. There are different software systems designed to meet the needs of these two types of carbon reporting. For the purpose of this research, Carbon Clear has chosen to focus on software systems which specialize in corporate and value chain carbon reporting only. Why can t I just use Excel? Many organisations use excel spreadsheets to report their corporate carbon emissions. Excel is sufficient for calculating a basic carbon footprint where an organisation doesn t have a complex organisational structure or sophisticated reporting requirements. However, as more complex organisations with hundreds of facilities, potentially across multiple regions report their carbon emissions, they are finding that spreadsheet-based systems are overly complex and unmanageable. Carbon accounting tools are built specifically for the purpose of gathering, managing and processing large quantities of data, and allow the user to generate reports that are relevant to their business when, where and however they need them. The features provided by each software system are different, therefore the benefits of using each vary from company to company. There are, however several general benefits of using carbon accounting software. What are the benefits? The general benefits of using carbon software are as follows: Reduce manual manipulation of data to minimize human error Streamline data collection and reporting processes Improve ability to respond to complex reporting demands quickly and accurately Standardise calculation methodologies across an entire organization Facilitate audit processes with audit-trails and a clear record of changes made Keep up to date with changes in emissions factors Reduce resourcing requirements on environmental reporting Integrate carbon reporting with general environmental, health and safety and CSR reporting Allow several users to work at the same time from multiple locations including remote access from mobile devices Data recovery Excel spreadsheets can get lost, or updates made by one user will not automatically change in all copies of the spreadsheet uniformly as it would in a centralized software system. For these reasons, businesses with complex or large-scale operations are increasingly moving to carbon accounting systems. 2 Carbon Clear

3 Section 2: Three Steps to Choosing the Right Carbon Software Tool for Your Business All carbon accounting software systems, if implemented properly, have the potential to provide the benefits described in the first section of this paper. However, it is important to find the system that best meets your specific business needs. Investing time in the selection process ensures that you avoid ending up with a system that doesn t work quite how you d like it to, or spending more time or money than you need to. Carbon Clear has developed a methodology that will help you select the software that most closely matches your company requirements. By following the three steps described below you will get a better understanding of the criteria to consider when choosing a software system and the appropriate questions to ask when running a procurement process. Step 1 - Define Your Business Objectives The first priority is to determine what your primary drivers are for using a software system, by identifying what your organisation plans to use the system for on an on-going basis and what your long-term goals are. In order to help you define your business needs, use Carbon Clear s questionnaire below. After filling in this questionnaire you will be able to identify which of the primary function categories are most important to your business. Read through each of the questions below and tick Yes or No as appropriate. Please note that the sections below are not in any particular order. Large Scale Data Management Does your organisation plan to include all energy, carbon and other environmental data (e.g. waste, paper) in your carbon software system? Do you have monitors or meters which automatically capture data? Do you currently store any utility data in another platform? Does your organisation have more than 1,000 locations for which you wish to capture data? Yes No Do you wish to record data half-hourly and be able to run reports on half-hourly meter data? Auditing Is your carbon data audited annually, or do you plan to have your data audited annually? Do the results of your audit process inform your external messaging to stakeholders? Do you report, or plan to report, your emissions publicly? Does your company need a central location to store documents such as utility bills, certificates, methodologies? Has your company found it difficult to answer questions in previous audits regarding data version control or data approval processes? Yes No 3 Carbon Clear

4 Engagement Are you expecting your employee s actions to be a primary driver of your organisation s emission reductions? Do you believe your employees care about sustainability issues including carbon emissions? Are you planning to engage stakeholders outside of the organisation with your carbon reporting? Do you want to integrate the system into your employee s daily work routine? Do you plan to reward employees for their efforts on reducing energy consumption and carbon emissions? Yes No Reporting Do you want to be able to customise your reports? Do you need the system to be able to generate reports in any document format (e.g. word, excel, pdf)? Do you want to schedule reports to be ed regularly to you or other personnel? Do you need your software system to generate reports with your company s branding? Do you usually report to the CDP, GRI, DJSI Sustainability Index or any other voluntary carbon reporting initiative? Yes No Carbon Strategy Yes No Do you plan to use your carbon software system to track performance against targets? Do you need to forecast your future energy use, emissions, or other environmental performance? Do you plan to include financial data in your carbon system? (This may be used to calculate return on investment or payback periods) Do you intend to use your carbon software system to help your company allocate time and resources to existing reduction projects? Do you expect to use your carbon software system to simulate a variety of reduction opportunities to determine the most cost-effective initiatives? 4 Carbon Clear

5 The responses to the questions you just answered in the previous section will inform how your company is positioned on the diagram below. For each of the question sections: 1. Add up the number of positive responses from each group of questions. 2. Locate the heading of each question group on the diagram below. 3. Count the number scored in each section from the centre outward. Each axis represents one of the areas that carbon software systems specialize in. 4. Mark your score on each axis to reveal your organisational preferences for a carbon software system. Large Scale Data Management Carbon Strategy Auditing Reporting 5 Engagement The closer you are to five, the more important this section is to your organisation. 5 Carbon Clear

6 An additional area of attention when evaluating the functionality of your software system is the completeness and quality of the data set available to you. Some organisations have a very complete set of data, while others have to deal with missing data or substantial data gaps for some divisions, sites or operations. The latter might need to fill in the gaps for the places where no data is available in order to get a more complete picture of their total emissions. There are different ways to fill in these gaps in a credible way: estimating / extrapolating data based on comparable data in your organisation, using industry benchmarks to estimate your own emissions, etc. The diagram below summarizes a few of the most common estimation/extrapolation methodologies. Whether your data set is complete or not, if you plan to estimate or extrapolate data to make up for any gaps in your data set, we believe it is advisable to let a carbon software tool do this calculation for you. By doing so, you ensure that the methodology you use is consistent and transparent to any auditors. It also allows for complex calculations to be built based on your unique organisational requirements, which may not be possible in excel-type tools. If you have a complete data set, all carbon tools available on the market should suit your data needs. If your data is incomplete, you should select a tool that is designed to support missing data. 6 Carbon Clear

7 Step 2 Learn More About Your Primary Use Categories Once you have identified what the key functions of your software system are, the next step is to learn more about the main characteristics and features of each of the primary function categories Carbon Clear has identified. It is important to note that these categories are not mutually exclusive. Some software systems perform excellently in more than one category. In addition, by performing well in one of the categories, it does not mean that they are inadequate in other areas, simply that there are other software systems that are more specialized in this area. The five primary function categories we have identified are: 1. Large Scale Data Management 2. Auditing 3. Engagement 4. Reporting 5. Carbon Strategy 1. Large Scale Data Management Description Systems which perform best in this category are usually built originally for the purpose of managing energy meter data. Some carbon accounting tools can connect their systems to smart meters and other energy monitoring equipment to capture data. This data can be stored up to the half-hourly meter level so that in-depth analysis can be run on energy reduction hot-spots within the business. This is not, however, exclusive to energy management. These systems can connect to many other systems or databases and pull in massive quantities of data, for example line by line flight data. This data can then be easily processed and reports can be run using this data at any level of frequency (from half-hourly to annually), and at any level of the facility (site by site, or a summed total for the entire organisation). Key Features: Accept, store and easily analyse massive quantities of data without a substantial calculation lag-time Connect to smart meters and other monitoring equipment Connect automatically to other external databases 2. Auditing Description Many organisations choose to undergo a third party audit of their data and environmental statements. All carbon systems should have at least basic audit functionality built-in, however, the systems that really stand out in this category are those that have specialized tools built in for auditors to facilitate an audit process. Such systems will allow the auditor to use the system and delve into specific areas of interest independently, which removes a great deal of the burden of the audit process from the organisation. Key Features: An ability to freeze data in one part of the system which the auditors can work on while the rest of the system can continue operating Document libraries where supplementary files can be stored (e.g. invoices, evidence packs, or governance documents which detail system processes and calculation methodologies) Audit trails on individual data points and calculations, to determine when data or calculations have changed, who changed them, and reasons why the changes were made. 7 Carbon Clear

8 3. Engagement Description Software products listed in this category are set apart by their ability to involve stakeholders in the carbon management process. They aim to align employees, customers and/or the whole supply chain with the organisation s sustainability strategy. Carbon software systems identified as best in class in engagement include various tools such as gaming or social networks to engage with stakeholders. They also usually provide positive reinforcement and feedback to the employees through various mechanisms explored in the features listed below. Employees must play an active role in engagement software tools. They can share ideas, make suggestions and participate in different initiatives. Key Features: Games that include challenges, badges and rewards Social networks and spaces for employees to communicate with each other Dashboards to track and report emissions Visually stimulating graphs 4. Reporting Description Reporting is always one of the key elements users look for in a software system and this functionality should be a standard feature with any system. It should be easy for any non-expert user to create presentable, accurate reports on any of the data in the system. Moreover all quality systems should allow users to run analysis on the data in the system. Companies that perform highly in this category are those that, in addition to these standard features, offer additional reporting functionality built in that may be relevant to your business. Some of the best features we have seen in this category include: Carbon Reduction Commitment (CRC) reporting modules to help with UK legislative compliance Carbon Disclosure Project (CDP) modules which ensure all relevant metrics are included for voluntary reporting Ability to create and upload personalised company branded reports to be used when needed 5. Carbon Strategy and Planning Description The best carbon accounting tools included in this category have the ability to track, manage and forecast progress against targets. They can help businesses plan carbon savings initiatives, project future energy use and emissions, and manage existing programmes by comparing the efficacy and return on investment of these measures. Key Features: Financial analysis, measuring return on investment, payback periods and other financial metrics Evaluation of project and reduction activities Optimisation of performance through baseline simulation Dashboard views of performance against targets Interactive maps to visualize information spatially Forecasting future emissions Marginal Abatement Cost Curves (MACC) 8 Carbon Clear

9 Step 3 Use this checklist to evaluate the features of the different Carbon Accounting Tools After determining the primary function(s) of your software system, the next main consideration in your procurement process is to determine which features are required to make the system meet your core needs. The following questions will help you to understand which general features, both technical and commercial, you will need to make the tool work across your company. You will also find more specific questions below which align with each of the primary function categories identified above. General System Requirements Basis System Use Set-Up Data Entry Reporting Auditing Emission Factors Does the system calculate carbon emissions or just store data inputted by the user? Can the system store energy data? Can I store other CSR data? E.g. Health and safety, waste, water Can I document LEED certification information about our green buildings? If my data set is incomplete: How do I set up calculations to estimate or extrapolate data gaps? If you would like to estimate or extrapolate data, and/or create complex calculations, you should be looking at software systems that allow company admin to set up bespoke calculations. How would I represent my company s facility in the system? (e.g. physical geography, assets, etc.) Each organisational has their own unique structure which needs to be considered when setting up a system. This is an important criteria for particularly complex organisations. Can I set the system up so different users have access only to the parts of the system they need to see? Can I upload data from Excel spreadsheets? Can data be entered manually? Can I import data from other data storage systems? Will the system send out reminders to people responsible for data entry? What kind of graphing tools are available and how do I do this? What kind of tables can I produce from my data and how do I do this? What reporting templates are available with the system? How do I create a new report? Is there somewhere I can store documents, invoices or any supplementary information? Does the system keep a record of any changes made and the user who made the changes? Are emission factors updated automatically in the system when new factor sets are released by the relevant agency? Can I set my own emission factors? If yes, how do I do this? Which emission factor sets will be automatically available to me? How quickly are emission factor sets updated after a new set has been published? 9 Carbon Clear

10 Who do I contact if I need support after the initial implementation is complete? Technical Support Who will be responsible for implementing the software system? Will I have a dedicated implementation team? How quickly can I expect a response if I raise a query once the system is up and running? Does the technical support have coverage 24/7? Does the technical support cover all time zones? This is a consideration if your company has multiple international locations How often do system updates happen, and how much notice is given prior to the updates? Is user training provided for new users to the system? Security Where is my data hosted? (E.g. my own company server, the software company s server, third-party hosted, etc.) What security precautions are in place to limit access to my data? Are there concerns about conflict of interest? This may depend on your company s requirements for exclusivity. If the software system is being used by a competitor does your company have any concerns about using it as well? Commercial Criteria Establishment Client portfolio Cost What was the year of the software s official market launch? What is the average length of your typical client engagement? How often is your software system updated / which version of your system are you on? Is the system s development done in-house or is it out-sourced? How many companies have implemented the software system to date? In which sectors have you worked? If vendors have experience working in your sector they may have a better idea of your requirements and needs. May we review the company s client portfolio? Or can the company provide case studies? For how many clients with more than 1,000 sites have you implemented systems? As an organisation considering large scale data management, it is important to consider whether the software company you are looking at has been able to handle a similar volume of data in the past. What is the average number of data points stored by your clients in the system? Avoid unanticipated problems by working with a software system which has already proven its ability to easily handle large volumes of data. What is the base price for the software licensing fee? What is the cost per number of users? What is the cost for adding on additional modules? Is there an annual licensing fee? What is the cost for initial set up / implementation? What is the cost for on-going technical support? 10 Carbon Clear

11 Primary function s requirements The following questions relate to the primary function areas and should be considered in addition to the general requirement questions. 1. Large Scale Data Management Criteria What frequency of meter monitoring data can the system store and analyse? Set-up Data Entry Can the software company give an example of calculation run-times for a system with 100 sites and 10,000 data points? Can they provide an example of calculation run-times for a system with 1,000 sites and 1,000,000 data points? Can the system link up directly to a meter or monitoring system? If you have smart meters or monitors at your facilities you can directly input this information into some software systems. Can the system directly pull data from another data storage system? Many companies already have some of their data stored in another system. By using a system that can connect up with these systems directly you can streamline your processes and avoid repeating work. 2. Engagement Set-up Reporting Technical Support Engagement Commercial Can I assign different access privileges to different users? Can I give access to my suppliers so they can enter THEIR data in the system for me? Can I link up reporting to my company s intranet to publish results to my employees? Will my users need user training or will they be able to interact on their own without any training? Does the system provide any equivalency calculations? For example, to show users what one tonne of carbon means in terms they understand? Does the system integrate other social media services that employees may already use on their own time? (E.g. twitter, facebook) Can employees chat with one another? Can employees earn rewards for their behaviour? Can the company customise the rewards employees earn? Can I use this tool to engage my company s supply chain? Do opportunities exist for collaboration? For example, can employees engage with each other across different companies? (E.g. competition for most number of community service hours) Are there concerns about conflict of interest? This may depend on your company s requirements for exclusivity. If the software system is being used by a competitor does your company have any concerns about using it as well? 11 Carbon Clear

12 3. Strategy Set-up Reporting Calculations Can I set up the system to report my company portfolio in a number of different ways without double counting? (E.g. geographically, by business divisions, by operational or financial control, etc.) Can I set strategic targets and see how we are performing against the targets? Can I forecast future performance based on historic performance? Can I determine my anticipated return on investment of projects implemented to reduce emissions? Can I create a project plan by running scenarios with different reduction projects to determine best possible reduction options for the least cost? Can I run a marginal abatement cost curve based on my own potential projects? 4. Auditing Set-up Auditing Can the system differentiate between where data is measured and where it is estimated? This will help determine % of actual data coverage for reporting purposes. Can reports be written and uploaded to the system, integrating any numbers, graphs and charts into the text. This will reduce manual manipulation of data, thereby reducing risk of human error. Is it possible to determine when new data was put into the system, how it was entered in, and by whom? Is it possible to see when changes were made to calculations, why, when and by whom? Can data be frozen so that no new changes can be introduced until after an audit process is complete? Is it possible to freeze a data set, but also still have another active version so that changes can be continued during an audit without affecting the audit? 5. Reporting Set-Up Data Entry Can you set up the system to report your company portfolio in a number of different ways without double counting? (E.g. geographically, by business divisions, by operational or financial control, etc.). This will allow you to report on your company in a number of different ways without doing any additional manual manipulation. Can the system link up to our meters or other monitors? Can I report on half-hourly data? Can the system automatically link up to other data storage systems? This could help streamline reporting processes by having one centralised database Carbon Clear

13 5. Reporting Does the system provide specific tools to meet CRC reporting requirements? Does the system provide specific tools to meet GRI reporting requirements? Reporting Does the system provide specific tools to meet CDP reporting requirements? Emission Factors Can I link up the results of the calculations to my company s intranet to publish results to my employees? Can I upload my own company s report templates into the system so they are automatically created with our branding and our report requirements? Can the system auto-generate reports and them to users? Does the system provide different sets of standard emission factors so I can choose which set to use? (E.g. DEFRA, GHGProtocol, egrid, Emission factors required for CRC reporting regulation, etc.) This might be useful if you want to use more than one set of Emission Factors for calculating your emissions. Does the system allow you to report on all 6 greenhouse gases? Can I set my own custom emission factors? If I can set my own emission factors, are these privately owned by my company or will they be made publicly available? Are multiple sets of emission factors available in the system? Can I decide which emission factor set to apply when running the reports or is this done at an earlier stage? Does the system include information about input / output models? This may be important if you need to include emissions from capital goods in your value chain. When evaluating carbon accounting systems, it is particularly important to include both technical and commercial criteria as you want to ensure the company operating your software system will be technically capable of meeting your needs and sufficiently well-established to ensure consistency and longevity. How much will it cost? We found that the cost of the systems ranges widely depending on the amount and types of features they offer. As to be expected, the less expensive systems tend to have all the functionality that a basic user may need and still offer a better solution than an excel-based tool. The more expensive systems, on the other hand, tend to provide greater diversity in the products they offer and also can be identified in several of the primary function categories. The more expensive systems also allow for more customisation based on the user s needs. The software tools we evaluated ranged in base prices from approximately 3,000 to upwards of 50,000. Each system also has a slightly different pricing model, usually depending on numbers of sites included, the amount of system users, and/or the types and number of modules employed Carbon Clear

14 Section 3: Carbon Clear Methodology Carbon Clear created comprehensive evaluation criteria in order to evaluate software systems that fall into each of the above categories. We spoke with and evaluated offerings from twelve of the primary carbon software companies including, in alphabetical order: Causeway, Carbon Counter, Carbon Systems, CarbonView, Cloud Apps, Credit360, Enablon, Enviance, Hubsphere, ManageCO2, Optima and Verisae (2). The figure below summarizes the evaluation methodology used. We looked at twelve of the market leaders and evaluated their technical and commercial criteria by way of teleconferences, webinars, demonstrations and questionnaires. A large number of key features were evaluated, which can be broken down in two main categories: technical and commercial. In the following diagram you can see a breakdown of the primary categories we evaluated for each of the participants. (2). In an effort to include all the major players in the carbon software accounting industry, we contacted several other companies as well. Some of the companies preferred not to participate in our research. These included Carbon Estates, Carbon Guerrilla, Greenstone, Hara, HIS, MapleCroft, PE International, SAP Carbon Impact, SimaPro, and Sedex Carbon Clear

15 We found that while the evaluated software systems have many overlaps in terms of the primary features that they offer, one of the best ways to distinguish them is through the area in which they are best-in-class. Using these evaluation criteria, Carbon Clear determined which of the primary function categories each software system identified with most and categorized each of them under the primary function (s) categories in which they specialize. All of the systems we evaluated are leaders in the market. We are happy to share the results of our analysis with organizations procuring a software system. Conclusion We found that the best way to approach the question of selecting the carbon software system that best meets your company s requirements is through identifying your primary need category, and then tailoring your assessment process to focus on the different functionalities that supports this. We believe that the steps outlined in this paper will guide you through the critical steps in choosing the most appropriate carbon accounting tool for your company and will provide you with a framework for evaluating the different software systems in the market. Carbon Clear used the methodology described in this paper to determine which of the primary function categories each software system identified with most and categorized each of them under the primary function(s) categories in which they are best-in-class. If you re interested in seeing more information about Carbon Clear s software evaluation criteria, or learn more about the specific software systems we evaluated, we would be happy to discuss this with you further. We can help you short-list a number of service providers based on your specific needs which will help you get the most value from your carbon management programme. We can even help you during the procurement process. If you are interested in further information, please contact us at com, or call us on and ask to speak with Katarina Jones Carbon Clear

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