Carbon on Company Balance Sheets?

Despite the fizzle after the great fanfare of the Copenhagen Summit, many companies remain intensely focused on the strategic implications of climate change. Some believe that a requirement to monitor, report and reduce their carbon emissions is coming and is just a question of time. Indeed, some observers believe that carbon accounting is destined to be embedded in the core of enterprise systems, with carbon emissions tracked continuously and treated like any other balance-sheet item.

I recently had the opportunity to speak with David Abood, Managing Director, Sustainability Services North America and Climate Change Solutions Global Lead at Accenture, the consulting and strategy firm. In his experience, the attention companies are putting on carbon accounting, tracking and reporting varies according to the risk and opportunity they attach to it. Companies that see themselves “in the cross hairs” of future cap and trade programs are, as you might expect, paying close attention. For instance, Accenture is being asked right now by major companies that would be “capped entities” (bound, under proposed cap-and-trade legislation, to limit carbon emissions) to do company-wide system implementations to handle the requirement of detailed tracking of carbon emissions, or to do carbon analytics as a managed service.

But even companies that are not destined to become capped entities are getting increasingly engaged, he says, whether due to pressure from their customers or from organizations like the Carbon Disclosure Project. He expects the CDP to push for increasingly granular emissions tracking over time. This will inevitably drive more detailed reporting by the growing number of reporting companies and eventually their supply chain partners too (as I’ve noted here).

Accenture has made a substantial investment in building a capability to help clients cope with climate change. The firm has some 200-300 people in its Sustainability Services practice and around 2000 people company-wide with a focus in this area alongside their principle functional or industry expertise. The company has done an analysis of the “whole software market” around carbon accounting, Abood says, and are working with SAP, Carbon Networks and IHS, among other potential partners.

So, is the day at hand when most companies will track carbon emissions continously, and integrate emissions reporting into core financial and operational reporting? Not quite. Abood says that vision is “in everyone’s sights” but ackowledges that no one has yet “cracked the code.”

If you have a point of view on where carbon accounting is headed, please consider leaving a comment.