As sustainability interests grow, more sustainability leaders — from business and IT — are exploring which carbon accounting software can help.
Carbon accounting software and platforms can be an important tool for sustainability-minded organizations. This type of technology helps to manage carbon emissions by measuring, tracking and reporting emissions data, and can serve as an important tool in an organization’s decarbonization efforts.
An effective request for proposal is key to choosing the right carbon accounting software, especially since a variety of carbon accounting tools have emerged and the choices can feel overwhelming. Offerings include specialized tools developed specifically for the expanding sustainability software market as well as new capabilities built into existing cloud and enterprise IT platforms. Understanding how to evaluate which tools are right for a particular organization requires the following steps:
- Survey organizational requirements.
- Assess the impact on internal stakeholders.
- Identify integration points.
- Conduct market research.
- Write a request for information (RFI).
- Develop a request for proposal (RFP).
- Create a shortlist.
As the impact of climate change reaches new urgency, business and IT leaders are exploring better ways to reduce their carbon emissions. Increasingly, carbon accounting software can help automate the process of measuring, auditing and reporting data across internal operations and supply chains.
Many factors contribute to shortlisting and choosing the right carbon accounting software. Environmental, social and governance (ESG) program managers need to understand their reporting requirements, processes and infrastructure to better understand how they can simplify deployment and build internal buy-in. This can help guide efforts to create an RFI to understand vendor capabilities. RFI responses can then help teams build a more substantive RFP to guide further analysis and decision-making in choosing the best software.
Here are seven important steps for creating and working with an effective RFP for carbon accounting software.
Survey requirements
The first step lies in understanding the organization’s mandatory and voluntary reporting needs. This survey must consider existing, pending and proposed requirements taking effect across the firm’s global footprint. Understanding how these align with the needs of partners, investors and other stakeholders is also important.
Regulations and client demands can change, so don’t assume your disclosures are fixed, said Tom Andresen Gosselin, practice director of ESG and sustainability at Schellman, a sustainability consultancy. It’s important to be a proactive partner, stay one step ahead of needs and communicate that to partners and customers.
The survey should consider regulatory compliance requirements in the industry or region. Considering the larger implications of carbon reporting requirements on other compliance needs is equally important.
Important evaluation criteria to identify and prioritize key requirements for the carbon accounting software include reporting capabilities, data accuracy, scalability and integration with existing systems, said Akram Hidmi, a director at AArete, a global management and technology consulting firm. Addressing concerns related to data security, privacy and compliance with relevant data protection laws is also important.
Carbon accounting initiatives might not be focused solely on reporting, but instead extend to broader efforts to manage and reduce an organization’s emissions. The buying team should understand the extent of these efforts, and the software features needed to manage them.
For example, software can help in decarbonizing efforts by gathering emissions data at the source, identifying emissions reduction opportunities, centralizing and sharing insight, and more.
Assess impact on internal stakeholders
Carbon accounting is a complex process and a cross-organizational effort and IT, in particular, has an important role.
Once the buying team understands the organization’s requirements, the team should work with relevant internal stakeholders, including environmental, finance and IT teams, to gather diverse perspectives on requirements for the software, Hidmi said. This will help ensure that the selected software aligns with the organization’s sustainability goals and objectives.
Specificity is key.
It is also important to clarify exactly what your sustainability objectives are, said Josh Prigge, founder and CEO of Sustridge, a sustainability consultancy.
“You first want to have a clear vision of what your company wants to achieve in its sustainability efforts,” he said.
This clarity is critical to ensure you ask the right questions to find the perfect match for the company’s sustainability needs.
It is also important to cultivate a comprehensive understanding across various departments, Prigge said. Engaging a cross-functional team to gather diverse insights ensures all stakeholders are included.
Identify integration points
Understanding the current IT landscape, what data is contained in enterprise systems, the existing data management practices and how all this might integrate into carbon accounting platforms is essential.
The success of carbon accounting software hinges on seamless integration with existing systems for optimal performance, Hidmi said. IT must articulate the integration points with various software systems, including ERP, energy management and the human resources information system.
“This detailed approach is vital to ensuring data integrity,” Hidmi said.
Conduct market research
There are many tools to help streamline various aspects of an organization’s carbon accounting practice. For example, some software could be better for automating Scope 1 reporting about inherent carbon emissions, Scope 2 about facilities or Scope 3 about emissions across complex supply chains in a particular industry. Some tools might be easier to integrate with the organization’s existing accounting workflows, while others might work better across the supply chain.
The landscape of sustainability and ESG tools is constantly growing and evolving, particularly the carbon accounting software market, which means many technology buyers are in the learning phase.
The rapidly evolving market is a challenge, Prigge said. ESG teams should connect with other sustainability practitioners and experts through conferences, webinars and newsletters to keep informed on what is on the market and what might be a good fit for the organization’s needs.
Write an RFI
Once technology buyers have a sense of potential software, it’s time to reach out to vendors to understand how they might align with the organization’s needs. The RFI will help establish a broad picture of vendor capabilities and highlight gaps in understanding that will inform the RFP.
A good RFI can help ESG managers assess support, characterize service levels and understand internal disclosure controls, Gosselin said.
For example, an RFI can help explain what support each software provider can provide in-house, what partners the provider relies on and whether a given provider can offer comparative support. An RFI can also help ensure that the service level commitment from the provider matches expectations, particularly concerning technical qualifications and experience. In addition, an RFI can help to explain the organization’s responsibility in ensuring that climate financial disclosures are subject to the same controls as other financial disclosures.
Develop an RFP
The answers to an RFI can provide valuable feedback for a more detailed RFP required to create a shortlist of the software that best fits your needs. The RFP needs to look beyond raw capabilities to more detailed considerations of costs, implementation support and impact on internal stakeholders involved in a carbon accounting project.
It’s important to specify detailed technical needs that span data integration, security, auditability and user experience, Prigge said. The software should be able to collect data and turn it into actionable insights. Also, see if it makes it easy to enter data in various ways, including direct manual input, bulk upload via spreadsheets and API connections to automate data transfers from existing systems.
In addition, it is also important to consider vendor experience and reputation.
Prigge recommends taking a deep dive into past vendor projects and directly conversing with other clients. This will not only help technology buyers select a better vendor, but other clients can also provide feedback on challenges and best practices they learned along the way.
Create a shortlist
After sending out the RFP, vendors will respond with a detailed plan describing how they will support the organization’s carbon accounting program, the implementation process, costs and potential benefits.
At this stage, the organization’s ESG, IT and other teams can begin to develop a shortlist of the best products. The various proposals can also highlight multiple tradeoffs across offerings. For example, one might be cheaper to start but more expensive to maintain.
Vendor roadmaps for future capabilities — for example, enhanced reporting or analytics capabilities — can make certain proposals more attractive. It may be worth considering negotiating milestone clauses into the contract tied to the success of the implementation or the release of new functionality.
George Lawton is a journalist based in London. Over the last 30 years, he has written more than 3,000 stories about computers, communications, knowledge management, business, health and other areas that interest him.
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