The information technology (IT) sector’s efforts to reposition itself as a solution to sustainability issues has led to an influx of new environmental business software. This is part of a wider trend encompassing other IT innovations such as teleconferencing, smart grids and ‘cloud’ computing – delivering services over the internet.
But today’s market is immature and rapidly changing. Many organisations are starting to recognise the opportunities to use software to transform their sustainability performance, but few have a good awareness of the vendors and products available. This section looks at the key trends that will shape the market in the coming decade.
The market will continue to grow in size as legislation and competitive pressure spreads outwards from the energy-intensive industries to cover all sectors, including the commercial and public sectors. Smaller firms will increasingly be affected either through expansion of legislation, rising energy costs or supply chain pressure.
New vendors and products are still emerging and may continue to do so over the next few years. But experts also expect increasing consolidation. Big software firms want to get in on the act and many are opting to buy smaller environmental software specialists. This can be seen in the takeovers of Clear Standards by SAP, Ndevr by Oracle and ESS and ESP by IHS. Smaller vendors, such as CarbonView and CarbonNavigator, are also entering partnerships.
Perhaps the biggest threat to vendors comes from the entry of Microsoft into the market, which could boost uptake of carbon management software but potentially stifle the emergence of more specialised products.
Vendors are increasingly partnering with consultants to expand the market for their products and provide back-up support. Recent examples include Greenstone partnering with the Carbon Neutral Company, Enviance with CH2M Hill, SAS with AMEE, eQuilibrium solutions (now bought by EnerNOC) with Clear Carbon Consulting and SAP with Hitachi, Wipro, Accenture and EDS.
Many products began life as tools for reporting and compliance with legislation, but vendors say users are increasingly interested in functions to help reduce their impacts, such as forecasting, identifying emission hot-spots, setting targets, carrying out scenario analysis, benchmarking performance against competitors, costing alternative actions and managing impact-reduction projects.
Where trading and offsetting schemes operate, there will be demand for specialist software that is linked to carbon prices and offsetting projects, but this is vulnerable to political developments. For example, the EU emissions trading scheme (EU ETS) is well established but Australian firms developing trading software have been affected by the shelving of the country’s planned trading scheme, and US firms are still awaiting the legislative passage of a cap-and-trade bill.
Offsetting schemes have also been subject to criticism which may affect future needs. Greenstone, for example, put development of an offsetting function on hold in response to waning enthusiasm for the practice.
Software will continue to evolve in line with user needs. One of the biggest trends is for a narrow focus on carbon to lead on to a broader push towards overall sustainability. Already many tools that were originally carbon-only are expanding to incorporate water consumption and waste management, which are significant costs for many businesses.
But it does not stop there. Vendors are now producing sustainability suites which include a carbon management tool within a wider corporate social responsibility (CSR) reporting package, often with the flexibility of user-defined indicators. Carbonetworks, for example, has recently rebranded itself as ENXSuite to emphasise its move from a carbon focus to covering a wider suite of impacts such as water, waste and energy management.
This move reflects the fact that specialist carbon tools are competing against comprehensive sustainability and environmental health and safety suites from competitors such as Enablon. Independent analyst firm Verdantix is forecasting that existing carbon tools will increasingly merge with CSR suites and energy management packages to offer integrated sustainability platforms.
Demands for greater transparency are escalating, driven by pressure from investors, legislation and growing expectations of corporate social responsibility. In part, this trend is a response to the ‘greenwash’ phenomenon – a tide of dubious environmental claims, often made in contexts where there was no clear legal or other agreed framework.
As scrutiny intensifies and legislation becomes tighter, there will be more demand for software that can deliver an audit trail, with automated error checking, time stamping, version control and links to supporting documentation. It is also likely that formal reporting and accounting standards will be introduced.
The Climate Disclosure Standards Board is working on a globally accepted framework for corporate reporting of climate change information, which will most likely build on the de facto standards of the Greenhouse Gas Protocol and the Carbon Disclosure Project (CDP). The forthcoming Greenhouse Gas (GHG) Protocol scope 3 standards will also prove useful as boundaries are currently vague. For example, it is not clear whether emissions from waste disposal and water supply should be included.
For sustainability reporting, the Global Reporting Initiative (GRI) could form the template. Software accreditation by bodies such as the CDP and GRI may also grow in importance.
As carbon acquires a higher price under tighter and more extensive trading schemes, demand for software to be integrated with company financial accounts or enterprise resource planning systems will increase. The GRI has recently proposed that environmental, social and governance reporting and financial reporting should converge over the coming decade, and advocates that a standard for integrated reporting should be defined, tested and adopted by 2020.
More vendors are now including the facility to collect data automatically from utility meters, and some are looking ahead to the planned roll-out of smart meters in some regions. CarbonOps, for example, is working on a pilot project involving a mass roll-out of smart meters in Kent. Firms are also driven by the incentive to increase their Carbon Reduction Commitment (CRC) Energy Efficiency Scheme league table score by investing in automatic meter reading technologies.
Beyond the company
Organisations that are already closely managing their direct impacts will find scope for further improvements with their supply chain and with design of greener products. Tesco and Walmart, for example, are trialling product carbon labelling.
Already some vendors offer tools to help with supply chain and product life-cycle analysis and with ecodesign, though many are still waiting for demand in this area to take off.
As uptake of environmental business software increases, there will be further opportunities for meaningful networking between users of the same portal, allowing benchmarking against similar organisations, sharing of best practice and ideas for improvements, and further engagement of stakeholders.
Greenstone says that with a critical mass of clients they could build more predictive tools, allowing functions such as identifying anomalies with respect to benchmarks, or building intelligence into software that could direct users to particular solutions based on accumulated user experience.