Can Carbon Accounting Survive Government’s Cold Shoulder?

Peter Judge

Government support for carbon accounting has withered, but Peter Judge sees a surprising return in private sector enthusiasm

A couple of years back, it all looked so promising for carbon accounting. Now, I’m not so sure.

Back then, governments were signed up to the Kyoto Protocol – essentially a promise to reduce the world’s carbon emissions in order to stave off global warming. To reduce emissions, governments would be driving reductions in energy use, and emissions trading schemes were coming, which would require organisations to buy carbon credits.

CRC you later, alligator

Britain’s CRC scheme was the epitome of this. A fabulously complex carrot-and-stick scheme, it would reward those who cut back on energy use, at the expense of those who carried on being profligate.

With real money at stake, carbon accounting became a likely beneficiary. The only way to prepare figures for the CRC game would be to invest in software, in either standalone programs or modules for existing accounting packages, which would account for an organisation’s carbon usage.

Panic stories warned firms to invest in carbon accounting software or face extreme penalties from the CRC or similar schemes. Companies were warned not to rely on wonky Excel spreadsheets.

Then the recession happened and government support for green schemes began to wilt. First the government took the carrot from the CRC scheme, and ate it. It became a stealth tax, with all money raised going to the Exchequer.

Then, when businesses cleared their throats gently, George Osborne dropped it like a hot potato. He made it very clear in his budget speech that he has no intention of applying the CRC scheme, calling it “cumbersome” and an “unnecessary” cost on business.

Officially, it’s being reviewed, but after that, no one is in any real doubt that the scheme is doomed. The government is hoping that something, anything, will happen to get us out of recession, and will do anything business asks in the hope of achieving that.

Given all that, we would expect the idea of carbon accounting to fade away, joining the scrapheap where a plethora of former scareware services lie, like those pushed by Year 2000 consultancy, and accounting software which could handle Britain’s entry into the Euro (once confidently predicted).

But to our surprise, green accounting is still out there fighting. Microsoft has said it will be carbon-neutral from July 2013. That might sound like a pretty-standard greenwash anouncement, but we are past the days when most organisations could justify “green” announcements as a PR expense.

Arguably Microsoft is big enough and rich enough to still get away with meaningless greenwash, but on closer examination, the plan seems to be backed by rigorous carbon accounting, and an internal price for carbon credits within the company.

This week, I spoke to Roger Newman of Mahindra Satyam, a company which does a lot of business with large UK organisations and which is just about to start selling those customers on the idea of carbon accounting (and overall monitoring of sustainability), thanks to a deal with FirstCarbon.

The sales campaign starts in the UK, and it will be based around efficiency, rather than adherence to a moribund set of green legislation, Newman told me.

“It’s a quick win for existing customers,” he said. “It ticks the green agenda, and it improves efficiency. A more profitable business is a more sustainable business, that uses resources more wisely. That is the realest definition of sustainability.”

The solution takes FirstCarbon expertise and links it through to back-office modules from all the big software players that Satyam works with, including SAP and Oracle.

Those big players have their own carbon accounting solutions of course, but FirstCarbon is more flexible, and integrates across more vendors’ software, said Charles Hansard of FirstCarbon. “FirstCarbon gives a broader perspective, and can integrate data from many different sources.”

I assume that a company the size of Satyam wouldn’t offer a product unless it believed there is a market for it – and Hansard was not betting on any green initiative from the government to prod firms in his direction.

Both men say they are offering a product with a quick return on investment, simply through exposing an organisation’s energy waste, and showing where it can metaphorically switch the lights off. They won’t promise how quick that ROI will arrive, as it depends a lot on the particular company involved.

Assuming they are right, it looks like far from being killed off by the government, carbon accounting could be revived by the private sector.

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