Reporting your greenhouse gas (GHG) emissions is one thing - pragmatically planning to lower them another. And you can’t lower those numbers unless you understand the drivers behind them.

After you’ve benchmarked current emissions, you need to identify where to focus and deliver the greatest emissions reduction. We can classify any sustainability metric, like CO2e emission per vehicle or energy usage per building, on two scales - implementation cost and impact.

• Implementation cost means how easy it is to change. For example, can you implement policies to drive behaviour and incrementally lower emissions, or you can make large capital investments.

• Impact relates to how much the change can reduce emissions. If a unit change in one metric has a far higher effect on your emissions than another, it has a higher impact.

Top-left is a great place to start when you define your sustainability initiatives  - easy to change with a big emissions impact. But what about the lower-left, or the top-right? How do you decide whether to prioritise something expensive to change but with a large effect, or something with less impact but comparatively easy.

For starters, alignment between your CFO and CSO is absolutely essential. You can’t create a common unit of measure of cost per change in emissions without your CFO having a solid understanding of emissions reductions, or your CSO understanding the cost to the business.

What does it take?

From a practical perspective, to make this happen, you’ll need a cross functional team and data. You also need to convert your metrics to GHG emissions with tools like Life-Cycle or Input-Output analyses. You need to forecast scenarios and understand the timeframe over which your planned changes will progress. And you will need to re-forecast as things change. Without these, accurately and actively managing your emissions trajectory will be tough.

Carbon accounting is growing rapidly. Plan to hire or train carbon accountants - they’ll have a huge role to play in your organisation’s success. There are standalone reporting platforms with familiar capability to FP&A (Financial Planning & Analysis) teams. They are predominantly focused on acquiring and visualising and reporting data into external disclosure formats. Some combine BI (Business Intelligence) and EPM (Enterprise Performance Management) capability with emissions datasets. The underlying calculations are trivial (Activity x Emissions factor) but getting the data, understanding materiality, and increasing accuracy is not. In parallel, ERP vendors may record carbon as a system of record.

Beyond planning, you need alignment across the organisation. You must be able to communicate your strategy effectively to allow teams to innovate from the bottom up. At the “subledger” level, there lies significant opportunity.

• Imagine if your product designers could predict the carbon footprint of a new product (allocating emissions to your BOM (Bill of Materials)).
• Or your procurement team could target emission reductions when comparing suppliers (standardising and sharing data along your supply chain - something the WBCSD is putting major focus on (World Business Council for Sustainable Development).
• Or your sales and marketing team were incentivised to increase market share of your higher cost, but lower emissions offerings and can use this as a point of differentiation.

This is where data becomes an essential feedback loop. Consistent measurement across your departments and with value-chain partners helps teams see how they are tracking and learn how they can make an outsized impact.

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