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Mandatory Reporting in the UK. Does this mean I need software?!

Mandatory Reporting in the UK. Does this mean I need software?!

We're a sustainability software company, which means we're probably not the most objective people to answer the question above - we're biased! However, we've been doing this for over a decade, and we provide sustainability software to over 100 companies around the world with users in 168 countries. (We think the list is pretty impressive; see what you think: www.credit360.com/clients)

This means we understand what carbon reporting means for companies, big and small, from California to Sydney. We've even won awards for what we do: 2012 Best Sustainability Software- Responsible Business Awards and 2011 Best Carbon Markets Management Service - World Finance Awards.

We want to try and offer some objective insights rooted in this experience.

Five key points

If you're not inspired to read this entire article, we suggest these key points to take away:

1 - On the question of 'do you need software now'? The answer is 'maybe, but for many it won't be essential'.

2 - Software for calculating and reporting GHG emissions is not only for 'big' companies, and it doesn't need to cost hundreds of thousands of pounds.

3 - Excel is 'free' and very flexible and can take you a long way. It's also a blank canvas - it's as good as you make it and the people maintaining it. However, there are very specific limitations in Excel that can make carbon reporting a headache.

4 - If you start using software, make sure it can expand with your business and its requirements.

5 - It's always worth taking a look at what's possible with software, you may be surprised and we don't make a habit of hassling people that are just curious.

What does mandatory reporting mean for me?

We won't go into all the details of the new requirements here: there are many well written articles covering what's in the mandate and which companies are exposed. Let's look at the specifics around the data. The GHG Protocol (www.ghgprotocol.org) is the de facto standard for reporting carbon emissions. The protocol groups emissions into Scopes 1, 2 and 3. In very simple terms:

Scope 1 is 'direct' emissions, e.g. fuel oil being burnt on site.

Scope 2 is 'indirect' emissions, e.g. electricity, where the emissions are created by the utility.

Scope 3 is 'other indirect' emissions, e.g. transport and distribution. Formerly the dumping ground for 'everything else', a lot of work has gone into tightening Scope 3 definitions over the past year - but that's the subject of another article.

The good news for UK mandatory reporting is that it only covers Scopes 1 and 2 (whilst disclosure on key Scope 3 sources is 'encouraged'). Here is your first data requirement - do you currently

know how much electricity or gas you consume? How much fuel oil are you burning at your sites?

Once you know how much of each emission source you're using, what do you do next? Let's take electricity as example - you'll have a figure per electricity meter or site in kWh, so what's that in terms of carbon? Again, there is some good news here, the government (and a range of other organisations) have a set of 'carbon conversion factors' for each of your emission sources: for electricity you simply need to take your kWh of consumption and multiply it by the carbon conversion factor expressed as kg of emissions per kWh. (It's actually 0.52462 kg/kWh in the UK, if you were wondering.) There's a bit more to it than that as you have different greenhouse gasses and carbon dioxide equivalents, but that's essentially how it works:

A x B = C, or consumption (usage) of emissions source x carbon conversion factor = emissions.

How does software help?

Data collection - you can have a single web-based system for people all around your business to submit the consumption data you need. You can assign responsibility to users, benefit from automated emails to chase data, and get a single dashboard view of who is submitting data and who is not. Clever features such as unit of measure conversions and validity checks (i.e. flag this value if it increases by more than a given percentage period-to-period) make life easier for your data providers and increases data quality for you.

Some credit360 clients take this a step further with automated data collection from electricity providers, meters, energy bureaus or existing systems within their business. Unfortunately, integration is never as easy as it sounds and will never solve all of your problems; it's about working with your software provider and picking your battles.

Analysis - this is where it gets interesting. credit360 is pre-installed with all of the carbon conversion factors referenced above. We cover a wide range of international factor sets, including those for UK mandated reporting (issued by DECC). These factors are updated periodically, and we make sure the system remains up-to-date.

You don't have to worry about collecting or maintaining these factor sets: we'll do all that hard work for you. For any operations outside the UK (which will need to be included) you'll also have all the international factors you need in one place. The upshot of all this is that you have a system consistently and transparently calculating your emissions for you - all against UK mandated requirements and with a full audit trail. We're Carbon Disclosure Project accredited to a Gold Standard, which means independent testing and verification of our ability to manage these calculations.

Communication - the big trap to avoid when meeting the new UK mandate is reporting for reporting's sake. If you have data and insight, you can share it with internal and external audiences and- significantly - drive performance. credit360 has flexible charting tools, interactive maps, scorecards, summary dashboards and the ability to export information out to MS Word/Excel, PDF and even high quality images for publishing straight to web or to send to your designers.

That's all great, but what about Excel?

Almost everyone has Excel, and most people are pretty with it. Many companies do make carbon reporting work in Excel; it's certainly not impossible. We don't think it's a great idea because:

• Excel isn't a data collection tool. To collect the information you need to send around lots of Excel templates then mash them all together at the end of the process. This is time consuming, error prone and not auditable.

• Excel isn't great on quality checks or unit of measure conversions. You can make it work but it's easily broken, largely because Excel often gives the end user too much control.

• You don't get anything pre-installed in Excel; it's a blank canvass. This means you have to source your own carbon conversion factors and keep them updated.

• Do you trust the outputs of your calculations? Excel is very open to simple errors which can have profound impacts on the data being calculated. As soon as you have calculations working across multiple tabs, diagnosing a problem can be a big job.

• What happens if that clever person from the IT department who made your wonderful Excel carbon tool leaves the business or gets too busy to help you out?

Many of the problems above are manageable if your requirements aren't too extensive. For instance, if you're just collecting data from a couple of sites, sending around an Excel template isn't the end of the world. If you're an Excel whizz perhaps you don't need to worry about being dependant on someone from IT. The big problem you can't really get round is that collectively these Excel drawbacks will eventually stop you scaling. This probably sounds a bit cryptic, so let's be specific - it's almost a certainty that if you start reporting your emissions in 2012/13 you would have started a journey that will require you to manage more data from more sources at a higher frequency. (Don't forget all the Scope 3 emissions not even covered by mandated reporting at this stage.) At the same time your business will grow and change. This is where Excel will let you down -all of the errors will be multiplied, and what was once a small task of chasing a few people will be a full time job for an unlucky person - perhaps even you!

Implementing software to manage your carbon reporting will reduce the time you spend in collecting and analysing data for mandatory reporting. The accuracy of the data collected will be greater for less investment of your time checking it, and the carbon calculations will be systemised and reliable. You'll benefit from a set of flexible reporting tools to interrogate your data and share it with key internal and external audiences.

Okay, but surely sustainability software is just for 'big' companies?

credit360 works with a number of large companies but also SMEs. Voluntary carbon reporting has been driven by large listed companies, so it's not a huge surprise that these companies have pioneered the use of dedicated sustainability software systems. However, you can benefit from all of this learning and share the best bits of the software we've developed with multi-national companies but at a scale that's relevant to your business. We did just that with Produce World, one of our SME clients who have won awards for their sustainability reporting with credit360. (Read the case study here)

About us

credit360 is a specialist provider of sustainability software, serving over 100 global clients. Headquartered in the UK, credit360 has offices in the United States, Australia and China. Founded in 2002 by a group of sustainability professionals and an innovative UK IT company, credit360 has developed software from the ground up to handle the complexities of managing sustainability data. The company's founders work day to day in the business, and every aspect of product development and support is managed with in-house technical teams and sustainability experts and founded on strong client relationships.

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