At its annual customer conference in May, SAP’s CEO announced: “We are going to add a green ledger in our ERP so you can account for carbon as you account for financials today.” This is one of the most clear statements of the new reality: Emissions data is now reportable data. And it must go through the same rigorous, locked-down processes finance teams use for public financial disclosures.
But finance teams lag far behind: Only 25% use software, and 55% still use spreadsheets and manual data entry to compile emissions data. Every bit of this makes CFOs nervous, given their personal exposure under Sarbanes-Oxley.
With every finance team looking for a better way, here are three key areas to focus on and how to solve the challenge each one presents.
1. Actual Emissions Data
It’s pretty easy to grab some industry average emissions data and apply it to the scope of emissions calculations. This work can be done on spreadsheets and there is a logic to it. But investors are demanding actual data—not back-of-the-envelope estimates—and are quick to point out flaws. Not convinced? Here’s a recent headline: “Vanguard sets ‘laughable’ net-zero pledge.”
Actual emissions data starts with primary data sources. For Scope 1 and 2 emissions (at sites), the data are in energy invoices and utility bills. Each document is essentially a miniature data silo, and the data must be unlocked. Often, manual data entry is used, but this introduces errors. It is also expensive, so just a bit of data is captured—not enough to plan emissions reductions. An automated solution that delivers a complete set of actual data from primary sources can help.