Walmart Supplier Seeks Carbon Accountant

Let’s say you have a clothing company that supplies Walmart.

They’ve hinted for years that they are about to demand sustainably produced merchandise.  And last week they announced it: Walmart’s new Sustainability Index.

Governments have been unable to change the world. But the planet’s shopkeeper is just so much more powerful.

Oh dear, you say. We can’t lose Walmart. Let’s answer the first question. 1. What is your carbon footprint?

Well, um…gee.

Let’s start with that one handbag we sell to Walmart: We make the handbag parts in 3 factories in 2 continents and an island. We receive the raw materials for the handbag…

1. by camel to that little handbag clasp factory outside Calcutta (5 miles X 120 days per year; camel eats 356,794 pounds of grain shipped by diesel ship 254,998 miles = carbon cost of 2 tons per year for inbound shipping costs),

2. by UPS to a factory in a business park in Seattle (2,900 miles X 340 days per year; using 57% diesel-hybrid trucks =  inbound shipping carbon cost of 34 tons per year )

3. by airfreight to a little factory on Tuvalu (whatever…you get the idea)

and then we ship the finished product 3,900,798 miles by ship powered by… (and so on…)

…to say nothing of figuring out the carbon footprint at each of the factories:

1. factory A in Calcutta gets its power from a 76% coal fired utility; so the 2,800 kwh used annually turning out 395, 567 units there = unit production carbon cost of 467 tons per year

2. while factory B in Seattle can buy greenpower so the 456 kwh we use annually = a carbon footprint of 1 ton per year….

3. factory C is 100% solar powered in Tuvalu and those seven seamstresses walk to work so those 976 kwh used per year = carbon footprint of 0.

Now for each of these factories find total carbon tons divided by annual units produced = the carbon tons per unit.

So per handbag carbon footprint = .004 carbon tons per unit. (in tons or whatever the unit will be. Maybe it will be in kilograms like the way Europeans measure auto emissions. They have been at it longer than us, so they ll get to lead.)

You get the idea. If you love creating math fun in excel, this is just a real software developers dream.

Unlike money accounting which developed over centuries with logical improvements for calculating net worth or cost of goods sold – standardized carbon accounting will have to get up and running fast.

We already have lots of software for money accounting. That’s relatively easy software to create.

Carbon emissions from energy use in creating and shipping products are so very much more complex to track than just mere dollars. Now that companies and governments need carbon emission data, they need to track it like income and expenses.

Just as they bought financial accounting software, now they’ll need carbon accounting software.

Already more than 3,000 firms worldwide are trying to calculate their corporate carbon footprint using custom spreadsheets developed in-house. Only 300 have used carbon accounting software.

As they realize the advantages of using standardized applications for accurate accounting, they’ll need the equivalent of Quickbooks to do their carbon accounting like the rest of the business math.

Among the 50 or so companies attempting to make this software are PE International,  and Clear Standards; which was just bought by SAP.

There’s 20 key software features to consider before selecting which software to buy, according to the Enterprise Carbon Accounting: An Analysis of Organizational-Level Greenhouse Gas (GHG) Reporting and a Review of Emerging GHG Software Products, created as a buyers guide.

I hope that this makes for easier reading than that title!

Via Greentech Media

Image from Flikr user praziquantel