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NEW YORK (TheStreet) — Tougher environmental and greenhouse gas regulation is on the horizon for the U.S., spurring an evolution in corporate accounting that publicly-traded companies will need to embrace in order to survive.
Executives of global corporations such as Coca-Cola(KO_), Lockheed Martin(LMT_), News Corp(NWSA_), Pfizer(PFE_) and Royal Dutch Shell(RDS.A_) have seen the writing on the wall in the form of tougher environmental regulations in Europe and are already using environmental performance data to make multi-billion dollar operational and investment decisions.
Corporate environmental initiatives certainly aren’t new, but the way that businesses capture, track and manage their sustainability performance is — thanks to a crop of new software products offering carbon accounting and sustainability management programs. Taking their cues from traditional accounting software programs, greenhouse gas software products monitor a company’s energy usage and carbon consumption as seriously as conventional accounting programs track input costs and sales metrics.
“Just because carbon cap and trade legislation didn’t make it through the Senate, it doesn’t mean this stuff is dead,” said Paul Baier, vice president of sustainability consulting at Groom Energy. “There’s still a lot being done about carbon emissions especially at the Fortune 500 company level.”
Baier authors an annual report on enterprise carbon accounting, or ECA, a term that has grown to encompass the tracking of other environmentally sensitive materials such as water and waste. In his third and most recent report, released in January 2010, Baier forecasts that global unit sales of ECA software will grow exponentially to 250 units this year and 1,500 units in 2011 from roughly 50 units in 2009.
Companies within the burgeoning segment range from startups like Hara to stalwarts like IBM(IBM_). Baier identifies a list of emerging leaders within the sector to help companies differentiate between the 60-some software vendors — each of which cater to the needs of different types of customers and their diverse goals. In the 2010 report, Baier named Enablon, Enviance, Hara, IHS(IHS_), Johnson Controls(JCI_), PE International, ProcessMAP and SAP(SAP_) as this year’s emerging leaders based on financial standing, product/technology strength, vision and the number of customer deployments.
Carbon Accounting: 7 Leading Companies
Environmental data tracking has caught on in the U.S. even though greenhouse gas regulations are lax compared to countries that adhere to the Kyoto Protocol or the European Union Emissions Trading System due to the global nature of modern business. Since companies like Bunge(BG_), Ingersoll-Rand(IR_), ArcelorMittal(MT_) and BP(BP_) already have to complete detailed reports and comply with carbon restrictions in certain regions where they operate, many also participate in voluntary reporting programs in the U.S. such as the Carbon Disclosure Project. Companies that may have been stalling until tougher restrictions are enacted, no longer have the luxury of waiting since businesses are increasingly pressuring their partners to clean up their acts.