Organisations Unprepared and Ill-equipped for Carbon Reduction Commitment Legislation, says SAP

November 26, 2009 by SAP News 0

Companies fear reputational and financial risk from poor performance in league tables

LondonA survey of 400 businesses in the UK[1] qualifying for the Carbon Reduction Commitment (CRC), has found that organisations are not ready for the fast approaching CRC legislation of April 2010. The research, commissioned by SAP, found that only one third of UK organisations are fully prepared for the CRC, despite it being less than 130 days away. 20% have not even started planning or have no idea what measures they need to take.

While a 77% majority of UK enterprises perceive the CRC to be an opportunity to improve their carbon footprint, under half have employed the necessary IT systems to enable this improvement. Of those that do have a system in place to track their progress and manage their carbon footprint, a third is relying on Excel spreadsheets and a further 12% have an internally developed system with not ideal functionality. A clear lack of ownership was also found, with much discrepancy between businesses as to who is responsible for managing CRC compliance, suggesting that whilst aware of the upcoming legislation, many have a great deal of preparation outstanding.

“The research findings highlight a worryingly low level of preparedness amongst organisations for the CRC,” said Simon Godfrey, Sustainability Champion, SAP United Kingdom & Ireland. “Clear governance and ownership for the CRC will be essential to reducing the administrative burden of what will become an annual requirement. At the same time if organisations want to perform well in the league tables they need a comprehensive carbon management system in place to be able to easily collect, gather and analyse data pertaining to their carbon emissions. There is still time to turn this around, but without such clear ownership and effective IT systems in place companies are limiting their ability to turn the CRC from an obligation to an opportunity.”

The survey found also that companies face reputational and financial risk in CRC league tables if they do not put systems in place to reduce emissions:

  • Organisations’ greatest fear around the CRC is poor performance in the proposed league tables that will show the best and worst CO2 emitters
  • The majority of finance enterprises rate CRC compliance as important in their investment decisions. 44% would definitely decline investment to poor performing organisations
  • About two thirds (65%) fear the CRC will only add to their existing administrative burden with respect to environmental issues

“The CRC Energy Efficiency Scheme is an opportunity and threat for those organisations captured within its net. Those who do not make plans for managing their exposure will find themselves facing stiff penalties. However, those who can plan accordingly and set themselves achievable and sensible targets will find that they can benefit in solid financial ways through the future trading of their CRC credits. With such little time left before the CRC EES becomes mandatory, now is the time to ensure that the business and IT department both work together to ensure an effective plan is in place,” commented Clive Longbottom, Service Director, Business Process Analysis, Quocirca Ltd.

SAP has a long history of developing IT systems to help companies meet sustainability requirements. It recently launched SAP Carbon Impact, an on-demand carbon management solution that helps organisations accurately measure, mitigate, and monetize greenhouse gas emissions, and other environmental impacts across their business. Industry leaders are using SAP Carbon Impact as their resource for reducing the cost of maintaining a carbon emissions inventory, managing regulatory changes, and enhancing brand value by providing transparency into sustainability initiatives.

Other key findings from the research include:

  • Three quarters of businesses cite IT energy consumption as the key area for energy reduction
  • Only half of companies (53%) have started budgeting for carbon allowances so far
  • Over half of companies will find it at least quite difficult assessing the data required for the CRC
  • Only 7% of organisations in the UK are confident enough to say they do not face any challenges with respect to the CRC
  • Overall one third of senior managers perceive the CRC to be additional red tape from the Government
  • Just over one quarter of UK companies (27%) agree that the cost of the carbon allowances is too small to give any real incentive to encourage organisations to reduce their emissions
  • 42% of respondents agreed that they need more far-reaching legislation if they are to decrease emissions to sustainable levels in time
  • Around 4 out of 10 companies agree that the CRC will detract from their original pro-active carbon focused activities

About the Carbon Reduction Commitment (CRC) legislation
The carbon reduction commitment (CRC) is a UK-wide scheme to encourage organisations to reduce their carbon emissions, starting in April 2010. The CRC will mainly affect large private and public sector organisations; these can be made up of many businesses. If half hourly metered electricity use was below 6,000MWh in 2008 ‘information disclosure’ of electricity consumption to the CRC registry is required. Qualifying organisations will eventually have to purchase allowances sold by the government for each tonne of CO2 they emit. At the end of 2011, the Government will also start to publish an annual league table showing the best and worst performers. Additionally, they will also start to cap the number of allowances that companies are able to buy, meaning they will be legally obliged to reduce their emissions.

About SAP
SAP is the world’s leading provider of business software(*), offering applications and services that enable companies of all sizes and in more than 25 industries to become best-run businesses. With more than 86,000 customers in over 120 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol “SAP.” For more information, visit www.sap.com.

(*) SAP defines business software as comprising enterprise resource planning and related applications.

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For more information, press only:
Molly McDonagh, SAP PR Manager, UKI, molly.mcdonagh@sap.com, +44 (0)7966 975 287
SAP press office at Burson Marsteller, sapuk@bm.com, +44 (0)20 7831 6262

[1] Survey conducted independently by Coleman Parkes research, commissioned by SAP, in November 2009. Respondents in the survey were senior business and IT managers from Financial Services, Retail, Utilities, Public Sector, Communications & High Tech and Manufacturing organisations

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