Special Report

Finding a match

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Special Report: Environmental Business Software


A practical guide showing how to choose environmental software tools that fit an organisation’s needs

Software can feed in data such as goods transport emissions into existing systems
Software can feed in data such as goods transport emissions into existing systems
Environmental software tools differ widely in their functions, scope, cost and complexity. This partly reflects vendors’ backgrounds, with some designing tools from scratch and others adapting or extending existing business or environmental software packages.

To help assess the tools on offer, this special report identifies the main features and functions that are typically available. Not all tools offer all these features, and not all organisations need all of them. The checklists will help potential users decide which are relevant to them.

The checklists can be used in conjunction with the Environment Tools online database of more than 300 environmental business software packages. The database is searchable by tool function, so once the most relevant functions have been identified, Environment Tools can help users locate the software that could work best for them.

Function checklist

For large organisations, the initial challenge is to gather and validate data. Many tools focus on measuring and reporting. Others offer functions to help manage and reduce impacts, such as evaluating reduction options, monitoring progress against targets and trading surplus emission credits. Some tools also enable workflow management or encourage networking between users.

Measuring impacts

Setting boundaries: This includes the definition of the type of impacts to be addressed (see “Scope of impacts”, page 10) and whether to include impacts associated with such activities as company operations in other countries, outsourced processes, impacts embodied in purchased goods and supply chain impacts. After the initial set-up, users should be able to change the structure to reflect changes in company organisation or reporting requirements, for example by adding or removing business units or processes.

Data collection: A variety of options could be used to collect data, such as manual data entry, file import, upload from spreadsheets or automatic collection from utility meters, emission monitors or building energy management systems.

Some systems can be integrated with company software to feed in data such as waste disposal, product output, employee travel, goods transport, vehicle fleet mileage or purchases of energy and materials. Some also allow collection of supply chain data, either from automated questionnaires or via direct input from suppliers.

Checking and validation: This is a crucial function for many large organisations that need credible data to comply with mandatory reporting or trading regimes. Alerts are generated if data is missing or faulty, for example if figures exceed expected limits or if they differ by more than a certain percentage from the previous period.

Calculating: Meter readings and other input data must be converted into estimates of environmental impact such as annual greenhouse gas emissions or percentage of waste recycled. This requires an approved database of emission factors (for example, carbon emissions per unit of electricity used or methane emissions per tonne of waste sent to landfill), which will vary by country, region or supplier, or could be specific to a particular process. These are often provided by national governments and should be regularly updated to reflect changes in, for example, power generation or waste disposal infrastructure.

Life-cycle analysis: Although most tools focus on corporate activities, some allow assessment of the environmental impacts of individual products or services across their life cycle from production to disposal (cradle to grave) or from production to sale (cradle to gate).

Costing: Some tools can estimate the financial impacts of environmental performance, for example the costs of energy, water and resource use, waste disposal, remediation, pollution taxes and fines for non-compliance. This may be able to link to company financial accounting systems.

Tracking, data storage and sharing: Data can be stored over time and consolidated at or split into different levels (perhaps by facility, business unit, country, product or process). Some packages also allow storage and sharing of supporting documents such as reports or notes to explain unusual data or remedial action.

Reporting and auditing

Auditing: This provides an audit trail with links to data sources, dates entered, personnel responsible and supporting documents.

Report formats: Standard report formats may be supplied for compliance with legislation such as the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, for voluntary reporting such as to the Carbon Disclosure Project (CDP) or the Global Reporting Initiative (GRI), for company annual reports and for internal reporting. Companies with global operations might wish to produce reports compatible with other national legislation such as the US Environmental Protection Agency or French Bilan Carbone.

Reports are usually able to reflect different degrees of aggregation, for example, by country, business unit or facility. There may also be the option to generate custom reports or reports in different languages, or export data to various formats such as Excel.

Managing impacts

Analysis of impacts to identify opportunities for reduction such as pollution or energy consumption ‘hot-spots’. This requires detailed ‘granular’ data – for example, energy use by process or piece of equipment – plus the ability to aggregate data across the company to see where the biggest overall impacts are.

Benchmarking to compare performance across different parts of the company, or with other organisations in the same sector. This requires normalised data such as emissions per employee, per square metre of office space or per unit output.

Target-setting: Targets can be stored and used to produce graphs showing actual performance against targets or to generate alerts if targets are not met.

Action plans: Identifying, scheduling, allocating and monitoring actions to achieve the targets.

Scenario analysis to compare alternative plans or examine the impact of changes to costs or regulations.

Cost-effective analysis of different options, for example in pounds per tonne of carbon saved, or in terms of return on investment.

Forecasting future impacts by extrapolating trends, to check whether impacts are on target. In the case of carbon emissions under a trading scheme, a forecast surplus or shortfall could initiate trading activity.

Trading or offsetting: For organisations caught by carbon trading schemes or wishing to voluntarily offset their emissions, tools can help them deal with emission credit surpluses or shortfalls, including deciding whether to bank or sell surplus emissions allowances.

User interaction

Workflow management: Some packages allow automatic workflow control, for example through generation of emails to signal when data entry or reporting tasks are due, flag up overdue tasks or assign responsibility for implementing reduction actions.

Networking: Some tools lets users exchange ideas or share best practice via blogs, discussion forums or online noticeboards.

Scope of impacts

Greenhouse gases: The term ‘carbon’ is often used as shorthand for the six greenhouse gases defined under the Kyoto Protocol: carbon dioxide (CO2), methane, nitrous oxide, hydrofluorocarbons (HFCs),  perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). Under the Greenhouse Gas (GHG) Protocol, which is the most widely accepted reporting standard, all significant emissions of these gases should be reported.

For many small office-based organisations, CO2 from fuel and electricity use will be the only significant impact, but larger organisations will need to include other sources such as methane from waste management, HFCs from refrigeration and air-conditioning, and nitrous oxide, PFCs and SF6 from industrial processes. The GHG Protocol also allows optional reporting of non-Kyoto Protocol greenhouse gases such as nitrogen oxides, volatile organic compounds and particulate matter.

The GHG Protocol divides greenhouse gases into scope 1, 2 and 3 emissions. Scope 1 emissions are direct from equipment owned or controlled by the organisation, such as from fuel burnt on-site, factory processes or company vehicles. Scope 2 emissions are indirect energy emissions, mainly from the use of purchased electricity.

Scope 3 emissions are indirect emissions from sources not owned or controlled by the organisation. They include upstream emissions associated with production, such as those embodied in material inputs, or travel by employees in non-company vehicles (including flying and commuting), and downstream emissions such as from waste disposal and use and disposal of company products.

Most software tools focus on scope 1 and 2 emissions, which must be reported for compliance with the GHG Protocol. Scope 3 is optional.

Other environmental impacts: Sustainability tools can include a range of environmental indicators such as water use, waste disposal and recycling, weight of packaging, air pollution (for example sulphur dioxide, particulate matter, dioxins), water pollution, resource use, pesticide use, land use and biodiversity impacts. These impacts can be combined into a measurement of the ecological footprint of a product, company or service.

Social and economic impacts: There is a wide range of potential social and economic indicators, which could include community donations, contribution to gross domestic product, profitability, tax contribution, pay levels, employment diversity (for example by race, gender and disability), working conditions, accidents, ethical sourcing and anti-corruption measures.

Custom indicators: Some tools are fully customisable, allowing the user to define their own indicators.

Implementation options

On-site or hosted? Most vendors offer their packages as a service. This means the software is hosted by the vendor and made available to customers via the internet. The advantage for customers is not having to install or maintain software. Updates and new releases are done automatically by the vendor and no in-house expertise is needed.

Nevertheless, a survey by Verdantix found that many organisations are equally happy to install software locally. In this case they need to check that the vendor’s platform (for example Microsoft, Java or Apple) is compatible with their own. A half-way house is also possible, where software is installed on company servers but updates and maintenance are managed by the vendor or a third party.

Accessibility and visibility: Some tools are designed to be used by a core team, whereas others might have wide visibility across the company or even to other stakeholders such as suppliers or customers. If the tool is to be accessible to large numbers of people, it may be necessary to have different degrees of security so that data cannot be accidentally corrupted.

A central administration function will probably be provided to allow users to be added or removed. Some tools offer personalised ‘dashboards’ showing the tasks, data and reports relevant to different users, so that a chief executive might see high-level analytical and reporting tools whereas an energy manager might have access to detailed meter readings. For companies with overseas operations, interfaces in different languages can be useful.

Integration: Some packages allow a certain degree of integration with existing company software and databases relating to finance, enterprise resource planning, human resources, health and safety, corporate social responsibility, sales and purchases or energy management systems.

This can allow automated data collection and more extensive data analysis and reporting. Integration with financial systems in particular may become increasingly important as carbon acquires a cost under trading regimes.

Cost: The cost of software typically depends on the number of users and the complexity of the organisation. Extra costs may be incurred initially for special adaptations, data migration or training.

Costs should be assessed against potential savings, both in resource and energy use and in the costs of data collection and ­management.
Independent analyst firm Verdantix has published a guide to making the business case for environmental software. As most of the major offerings are now provided as a service, they require monthly payments rather than a one-off up-front charge, and updates and maintenance are included.

Which tool is best?

Meter readings need to be converted into estimates of environmental impact
Meter readings need to be converted into estimates of environmental impact

The most suitable tool for an organisation depends on its size and complexity, the scope of its impacts and its regulatory or voluntary reporting requirements. For example, EHS suites are aimed at heavy polluters subject to multiple regulations, whereas light industry and office-based organisations often prefer lower cost carbon-specific products.

Big energy users might look for energy management-based packages, and some may need packages with a carbon trading functionality. Companies with a strong brand image may wish to go beyond regulatory compliance and show their commitment to sustainability using a broader corporate social responsibility (CSR) management product.

Another key question is whether software that will help reduce impacts is needed, or whether simply measuring and reporting is enough. Matthew de Villiers of Greenstone says that although organisations may initially look only for a ‘quick fix’ to comply with regulations, after a few weeks they start to want to use their data to model and cost potential reduction strategies.

In the longer term, they may wish to extend their analysis to the supply chain, include a wider set of impacts, integrate with company financial systems, automatically feed data in from utility meters or make benchmarking comparisons across different parts of the company. With the market being in a state of flux, users might also like to assure themselves that their chosen vendor will still be around in a year’s time.