30/09/10

By Claire West

With the deadline for registering with the Environment Agency for the CRC Energy Efficiency Scheme (CRC) today (30 September), UK businesses need to rapidly improve their environmental monitoring or face severe financial penalties. That’s according to an independent report launched today by IFS, a global enterprise applications company.

For the estimated 20,000 UK organisations affected by the CRC, which requires regular measurement of and reporting on electricity, gas and static fuel use, poor monitoring systems can mean a breach of regulations, and wasted money, time and energy. Yet, over two thirds (67%) of the 368 IT decision-makers from UK businesses surveyed lack the necessary software systems to readily and accurately monitor and report on their overall environmental impact. A further 8% don’t know whether or not their business uses a monitoring tool. Tellingly, one in ten (11%) respondents don’t even know if their business is required to comply with green legislation.

Alastair Sorbie, CEO of IFS, says that business leaders need to wake up to the fact that they are entering a new era of environmental accountability, or pay a high price. “The focus of the ‘greenest government ever’ on energy efficiency and sustainability, coupled with growing customer and investor demand for green credentials, means that environmental impact monitoring and reporting is fast becoming a necessary business practice. As new legislation such as the CRC comes into force, those organisations without the ability to produce proof of their impact face fines and the loss of customer and investor confidence.”

Most IT decision-makers accept that the compliance burden is growing. Just over half (53%) of respondents said that their organisation was required to comply with environmental legislation, and 62% believe that additional legislation will affect their business over the next five years.

However, although 63% of respondents believe that their organisation’s current environmental impact monitoring is either good or very good, IFS’s report reveals that businesses are badly equipped for the future. According to Sorbie, this finding is supported by recent news reports revealing that thousands of qualifying businesses had not registered for the CRC ahead of the 30 September deadline, despite a potential maximum fine of £45,000 and at an estimated potential combined penalty of £15 million*.

“The unprecedented scale and detail of the monitoring required in this new world of sustainability will be a shock to many business leaders,” says Sorbie. “Even an ad hoc approach to impact measurement using various software applications won’t cut it now: most businesses that are affected by these new rules will need to have a software system that is integrated with the whole business and can provide comprehensive reports regularly.”

Suchitra Padmanabhan, Frost & Sullivan's Programme Manager for the European Waste Management Market, agrees, saying: “Compliance with new regulation has changed the needs of the business community in the UK entirely. Environmental data is increasingly as important and sensitive as financial information and this information needs to be provided in an integrated format alongside the entire operation such that centralised, standardised reports are generated on a regular basis. In the same vein, software to produce this information has gained in importance as effective environmental monitoring and reporting assumes new dimensions of cost and efficiency.”

IFS’s study also shows that most UK businesses view environmental monitoring as a chore rather than an essential practice. The majority (59%) of respondents will only invest in monitoring tools if required to by law, or if it helps to sell their products or services. Only a quarter (24%) say that responsible environmental monitoring is absolutely critical to the success of their business.

UK businesses with Enterprise Resource Planning (ERP) applications may already have the foundations in place to meet the new monitoring and reporting demands. The functionality of some ERP systems, which sit at the heart of a business, can be extended to enable environmental monitoring and reporting. For example, the IFS Eco-Footprint Management module, which integrates with the IFS Applications ERP system, is able to capture all relevant environmental data from across the entire product lifecycle and the whole supply chain in the same way that the financial system captures information. IFS customers use it to produce detailed impact reports and support their overall environmental strategy.