Environmental measuring and reporting beyond the carbon tax

By Rob Stummer, Managing Director, IFS Australia and New Zealand

Rob_Stummer_Web_PortraitAustralia's carbon tax, set to come into effect on July 1, is probably the most serious action yet requiring organisations to measure and report environmental impacts. It is not the first
such measure, however, and it certainly won't be the last.

Many companies have had to report on carbon emissions since 1 July 2008 under the National Greenhouse and Energy Reporting Act, with the reporting threshold progressively lowered to include more companies up until 1 July 2010.

Other organisations choose voluntarily to measure and report on various environmental impacts - such as packaging waste destined for landfill. That way they can both improve their environmental performance and communicate this with stakeholders, other businesses in the supply chain and the community.

IFS is supplying an ERP software solution to one innovative and environmentally conscious Australian company, Closed Loop, that specialises in environmental packaging and recycling solutions which help businesses manage their waste more effectively. Its programs use recyclable food or beverage packaging, which are captured, recycled and turned into new products.

Despite its inevitability, many organisations are poorly prepared and must overcome a number of challenges before they can go down the path of environmental measurement and reporting. In fact, a recent Gartner / Supply Chain and Logistics Association of Australia (SCLAA) survey reportedly found that only 7% of Australian companies are currently ready to monitor and report their carbon emissions1.

One of the biggest challenges is ensuring that the measuring and reporting process does not impose an unsustainable overhead on the business. A related challenge is finding ways to reap productivity benefits from efforts to improve environmental sustainability.

When it comes to meeting these challenges, many organisations find they lack the technology to efficiently measure their current environmental footprint or make business decisions based on environmental impact. In most organisations, much of the relevant data does exist but it tends to sit in disparate and unmanageable silos or, at best, is collated in spreadsheets, with both approaches leading to inconsistent data.

Adequately tracking environmental footprint data is virtually impossible while using ad hoc systems like spreadsheets. True environmental footprint management can involve a complex and huge body of data and the natural place for that data - and where much of it is already to be found - is within the enterprise software or ERP system.

That is why IFS developed its Eco-footprint Management technology - a tool tightly integrated with its ERP enabling you to analyse the environmental impact of your operations. This powerful environmental footprint management functionality uses an approach that is similar to standard costing. As products are created, environmental impacts are assigned to each unit, and rolled up into reports that detail the impacts of product lines, business units or the entire enterprise.

Unfortunately, pitfalls abound for organisations implementing environmental measurement and reporting systems. Many are tempted to take a one-off approach to each new piece of environmental legislation or requirement and rely almost exclusively on either standalone software solutions or on one-off integrations between ERP tools and either packaged or custom software.

Whether or not we like it, there will be new reporting demands made upon organisations, so an environmental management solution that can only measure one impact, like carbon emissions, is of little value. Similarly, environmental management solutions that rely on extensive integrations that are limited in capability or expensive to change and expand may, ironically, be even less sustainable than the environmental impacts they are supposed to reduce.

1 Rust Report, 27 Feb 2012, http://rustreport.com.au/wp-content/pdf/february-27-2012.pdf

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