Why your company needs a Carbon Management Office
The majority of global executives regard climate change as being strategically important but fewer act on these opinions according to a survey conducted by McKinsey Consulting. The survey also found that many executives are actually positive about the opportunity for climate change to boost the bottom line.
Standard approach
There are relatively good standards and guidance available on how business should account for their greenhouse gas emissions and so we see a lot of consistency between businesses in this area. Similarly as regulations regarding reporting or pollution cap-and-trade systems, or carbon taxation emerge in different regions then businesses have a clear prescription to follow.
However, there is no authoritative guidance or established best practices guiding business on how they should consider climate change in other aspects of their strategy and operations: corporate reputation, brand and customer engagement; planning for the environmental risks associated with climate change; procurement and supply chain management; development of products and services; employee engagement; and so on.
So it is not surprising that the survey found there were mixed views about where responsibility for ensuring their companies take climate change into consideration actually lie. Roughly equal percentages of respondents apportioned responsibility to C-level executives, corporate-level strategists, and business unit or functional unit managers. It won’t be surprising to you that even in a low carbon-intensity business Greensense believes that climate change should be a C-level executive responsibility.
Carbon Management Office
So what is the right organizational model to act on this responsibility? Greensense recommends that it’s customers establish a Carbon Management Office. There are a two basic models for a Carbon Management Office.
Firstly where the Carbon Management Office is a centre for excellence that acts in a consulting capacity setting standards; selecting tools such as carbon management software; providing support to business area managers with training, guidance and best practices; and, providing strategic advice to the executive. In this case responsibility for carbon emissions, energy production and use, maintenance of a carbon inventory and of meeting regulatory requirements is distributed within individual business areas.
Secondly where the Carbon Management Office also has a centralized governance role with ownership of the corporate carbon inventory; responsibility for reporting on business performance related to climate change; responsibility for compliance and regulatory reporting; and responsibility for enforcing processes and policies related to climate change. For example, the process where by all new corporate initiatives must prepare a Greenhouse Management Plan and the conditions by which this plan must be submitted to an executive committee for review and approval.
While establishing a Carbon Management Office is a clear best practice there isn’t a one-size-fits-all solution. The Carbon Management Office must be aligned to the companies culture, structure and strategy. So, for example, we also see cases where there may be multiple Carbon Management Offices: a centralized corporate office and a separate office attached to a business area with high carbon-intensity operations and specialized monitoring and compliance requirements.
Internal carbon markets
As maturity and understanding of carbon management increases within companies we also see the Carbon Management Office providing an internal carbon registry enabling business areas to exchange carbon credits and pollution permits to meet individual emissions targets. This will enable the business to more efficiently meet its overall external emission targets. This kind of opportunity is a good example of the benefit of having the right organizational model in place.
Making sense of climate change
Please contact us if you’d like to establish a Carbon Management Office in your company.
Tags: carbon management, Climate Change, greenhouse management office
