Article written by Paul Fraley and Frank Smietana of Dimensional Insight.
For a business to be sustainable, it must effectively deal with resource consumption, changing economic and environmental conditions, and the emerging regulatory framework governing the reduction of carbon footprints. Corporations are therefore increasingly turning to business intelligence (BI) applications to provide their Office of Sustainability staff with effective and timely decision-support capabilities. Using a hypothetical Australian manufacturing company, we’ll illustrate some of the ways that a robust BI platform:
- Provides visibility into current emissions, as well as progress toward corporate goals or government quotas.
- Identifies both problematic and exceptional departments, product lines, and customers that require either corrective action or further study to understand their successful policies and apply them effectively.
- Facilitates “what-if” analysis to help companies choose the most cost-effective path toward compliance.
- Enables effective administration of carbon management programs and captures due diligence data to meet regulatory needs.
- Automates the generation of regulatory compliance reports.
Visualizing the Carbon Footprint and Identifying Anomalies
Our hypothetical manufacturer operates three facilities in Australia. Users of the Carbon Pollution Reduction Management (CPRM) dashboard select the corporate manufacturing facility of interest to obtain the current status of various key performance indicators (KPIs).
Because the principle area of interest is progress toward reducing the corporate carbon footprint, the gauge displaying this KPI is located in the most visible spot on the dashboard, the top left. For context, both year-to-date (YTD) vs. last year-to-date (LYTD) and the longer-term 12-month view are provided. This demonstrates the divergent trends in the underlying data: While YTD vs. LYTD is up by nearly 3%, the rolling 12-month view is more optimistic.
Next, the top right of the dashboard displays carbon dioxide (CO2) emissions by department. Note the green vertical lines that represent departmental emission quotas. Some immediate questions jump out that should drive further inquiries: Why do the Sales and Finance departments contribute the lion’s share of corporate emissions? What are the Operations and Support departments doing to drive down their emissions that could be applied to other departments?
The indicators at the bottom right of the dashboard encapsulate information about fuel usage. Again, although the YTD usage is up, the rolling 12-month graphic provides a different perspective. Finally, the map-based electricity usage indicator at the bottom left of the dashboard is a useful tool for visualizing geographic relationships. Several huge jumps (-255%, +124%) that stand out in this display would likely trigger investigation into underlying factors. For example, the carbon emission coefficients for power supplies vary from state to state, which can significantly affect both carbon emission levels and costs.
Spider graphs prove to be the perfect vehicle to consolidate the view of all sustainability KPIs, and their proximity to corporate goals and regulatory thresholds. The spider graph presents key areas of business governance in terms of the metrics and values of interest for each KPI. The four problem areas that may require action are shaded in red to quickly draw the user’s attention, and the chart as a whole succinctly communicates the immediate status of our hypothetical manufacturer’s program to attain sustainability: Only one KPI is at or above goal.
The power of BI reaches outside the corporation to encompass the entire supply chain, providing insight that both suppliers and distributors can act on to lower their individual and collective carbon footprint. Graphing tons of carbon dioxide (CO2) emitted per $1MM of customer sales highlights areas of potential action and possible savings if a carbon tax were in place. For example, why is the Farm Fresh grocery chain reducing emissions far more effectively than other customers? Understanding and disseminating Farm Fresh’s corporate emission reduction practices could help other customers reduce emissions and corporate carbon taxes.
Modeling Scenarios and Tradeoffs
BI platforms have the ability to model multiple scenarios, showing the tradeoffs between competing options—for example, full compliance with its increased production costs vs. noncompliance and potential hidden costs in penalties and increased carbon taxes. Interactive dashboards, a common BI tool, can juxtapose options for reducing our hypothetical company’s carbon footprint, such as telecommuting, with carbon tax rates to find the most cost-effective pathway toward compliance. Interactive scenario modeling provides insights based on future business and operational growth, and its impact on electricity, carbon usage, and taxes.
Reasonable assumptions about telecommuting adoption rates can be extrapolated to calculate future CO2 emissions.
The Greenhouse Gas (GHG) Protocol Initiative defines a rather complex set of accounting rules that lay the groundwork for carbon taxes, credits, incentives, and penalties for noncompliance. Participating corporations file periodic compliance statements that essentially quantify their carbon footprint. The GHG framework can be encoded as business rules in the BI platform, thereby automating the accounting and reporting of GHG emissions and other metrics. This saves enormous amounts of manual labor and reduces potentially expensive errors when filing compliance documents, while the data extraction and validation process provides a due diligence path to avoid possible heavy fines and legal action.
Proactive corporations and organizations are well on their way to quantifying their carbon footprint across the supply chain, putting systems in place to monitor and reduce emissions, and attaining compliance with emerging regulatory standards. With their powerful data integration, analysis, and visualization capabilities, dashboard-based BI applications will play an increasingly important role in supporting sustainability initiatives by providing role-appropriate information to key sustainability staffers and decision makers.
About the Authors
Paul Fraley is the General Manager of Dimensional Insight Asia and the designer of the CPRM application. Frank Smietana is a Corporate Business Intelligence Strategist at Dimensional Insight, headquartered in Burlington, MA.
For more information please visit Dimensional Insight