How Do Companies Measure Their Environmental Impact?

There is a gap between the customers who say that they want to buy from companies that offer sustainable products with minimal impact on the environment and the customers who will actually pay for this – people don’t always do what they say. In this case, the Harvard Business Review found that around 65% want to buy from purpose-driven companies, but only 26% follow through and practice this.

However, it is important to note that it is becoming more common for customers to actually practice this demand. This can be backed up by McKinsey research. They found that companies offering products that make claims about their sustainability generally see growth of about 28% compared to 20% growth for similar products with no environmental claims.

But it is not just customers. When companies need cash, they often turn to investors. It is becoming a common requirement for investors to understand the Environmental, Social and corporate Governance (ESG) strategy of a business before releasing new investment capital.

Job seekers are also actively looking for companies with a strong ethical profile — they want to feel that they are working for a company that cares about the environment.

So any company that wants to attract capital, attract the best employees, and increase sales by attracting more customers needs to take ESG seriously. Can IT systems help them to manage their environmental impact?

It is possible. After all, what are we trying to achieve? We need to collect data on company activities, monitor anything that may create an environmental impact, and report on it in a way that allows managers to react and make changes when needed. It is an information project and therefore the problem is well suited to IT systems.

There are a number of areas where managers can consider an IT implementation to manage this, including:

1. Data Collection and Integration

Internet of Things (IoT) sensors can be deployed across facilities to collect real-time data on energy usage, water consumption, waste generation, and emissions. These sensors can be installed on machinery, HVAC systems, and other equipment to monitor performance and environmental impact.

Enterprise Resource Planning (ERP) systems, such as SAP, can integrate various data sources across an organization, including procurement, logistics, production, and HR, to provide a comprehensive view of environmental impact.

Other data sources can also be useful, such as pollution or weather data.

2. Carbon Accounting

Specialized software solutions like SAP’s Green Ledger, Microsoft’s Sustainability Calculator, or Salesforce Sustainability Cloud can track and calculate greenhouse gas (GHG) emissions across Scope 1, 2, and 3.

3. Energy Management Systems (EMS)

EMS platforms enable real-time monitoring and control of energy consumption across facilities. They provide insights into energy usage patterns and identify opportunities for efficiency improvements. Employees can be actively involved in monitoring and trying to adjust energy use.

4. Supply Chain Management

IT systems can track the sustainability performance of suppliers, ensuring that materials and products are sourced from environmentally responsible partners. Every company sits in a web of suppliers, clients, and partners. Ensure that your connections to other companies are measured – are you insisting on ESG audits for all your own suppliers?

5. Reporting and Compliance

Modern IT systems can automate the collection and reporting of environmental data, ensuring accuracy and reducing the administrative burden. These reports can be used for regulatory compliance, investor relations, and sustainability certifications.

6. Employee Engagement and Collaboration

Interactive dashboards can keep employees informed about the company’s sustainability performance and goals. This transparency can foster a culture of sustainability within the organization – it helps to involve everyone on the team in the efforts to improve the business.

7. Artificial Intelligence and Machine Learning

AI and ML algorithms can analyze historical data to predict future environmental impacts and identify trends. This can help companies anticipate and mitigate potential issues before they become significant problems. Predictions may not always be accurate, but they can often be helpful.

By leveraging modern IT systems, including tools like the SAP Green Ledger, companies can gain detailed insights into their environmental impact, identify areas for improvement, and implement effective strategies to reduce their footprint.

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