How SaaS and human intelligence can support your carbon accounting - Carbon Responsible
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How SaaS and human intelligence can support your carbon accounting

We're shared our insights around SaaS platforms and their role in supporting companies with their emissions reporting.

Sophie Rathmell, Carbon Responsible

Sophie Rathmell

Client Account Lead

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Hugo Kimber, CEO of Carbon Responsible on the Green Stage at Innovation Zero 2024 discussing the pro's and cons of SaaS platforms in carbon accounting

Our Chief Executive, Hugo Kimber, took to the Green Stage at Innovation Zero 2024 to discuss SaaS solutions and how they all too often miss the mark when it comes to accurate carbon emissions reporting. 

 Mandate and policy pressure is increasing the number of clients looking to become more transparent with their emissions reporting. Hugo is joined by Dan Baxter, Sustainability Consultant for LifeArc who shares their experience working with our human-intelligence powered platform.  

Below you’ll find a mini transcribe of key discussion points: 

Q1: What are the reasons why people might choose a SaaS solution when looking into setting up their admissions reporting? 

 

Hugo: I think that the two key reasons why you would go down this route will be price and convenience. The idea that you can put in minimal effort but get disclosures out is attractive, and it has its place. But what is the quality of the output you’re going to receive? If you put that through something like limited assurance, would it pass? 

Limited assurance obviously important for things like the carbon disclosure project but a whole raft of other stakeholders as well. 

Q2: What did you look for when deciding what carbon accounting platform to implement? 

Dan (LifeArc): Some sales platforms are attractive; it seems a one-click sort of solution which is seemingly great in today’s world with not a lot of time. I realised the potential there for business risk; to rely on something where you can’t see the inner workings, you are just given a few numbers which without more to say behind it, is a little meaningless. 

So, I had a look at a couple of such platforms, but I really wanted to talk to some peers in my network to understand what their considerations and requirements were, so I could plan to build my own scoping plan and went out to speak to several vendors.   

I opted for a human intelligent approach, spoke to Carbon Responsible and from our first discussions, it became clear this is a team of people who really understand this fast changing landscape. 

Few of the Carbon Responsible team at Innovation Zero 2024

Learn how we supported LifeArc with their corporate sustainability reporting <here> 

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Q: What are the key differences between a SaaS solution and a human-powered solution? 

Hugo: When it comes to data input – within SaaS, you can enter any data and that data will give you an output. The verification and quality of that data can be very variable. We’ve seen this ourselves even when we collect data from clients. Sometimes it could be as simple as somebody inputting the wrong data for something like gas; they could put in cubic metres not kilowatt hours. There’s a huge difference.  

Absent some degree of human intelligence within the process, it’s very difficult to uncover a lot of these errors on the input side. So that becomes more of a problem.  

When you start to move into things like estimation, if you don’t have complete datasets – that becomes difficult, especially when you’re in Scope 3 and you’re in some of the bigger categories of scopes free around investments or purchase goods and services. The ability to understand what the data is telling you, is a critically important first stage in the process. Without it, you will end up with numbers but you will not have that human intelligence in it. Artificial Intelligence will take us some distance in that over a period of time, but it is not a silver bullet effective enough to make that process 100% as we sit here today. 

 Without human intelligence, you might end up with numbers that don’t reflect an accurate picture of what’s really going on in the company and emissions that are being produced.  

 

Q: For those companies that don’t have a sense of their carbon footprint, or a benchmark, and use a tool so at least they’ve got something to disclose – what are the risks associated with having inaccurate data or reporting? 

Hugo:  Firstly, there’s a reputational risk if you’re putting out numbers and then you find that they’ve changed radically a year later because you’ve suddenly done a slightly better job. That’s difficult to explain to stakeholders. 

If you’re setting a new target of core data, it will compromise your target setting and your entire decarbonisation pathway right at the outset.  

The other risk is that the increased scrutiny, in terms of greenwashing, that sits around numbers coming variously from the Competition and Markets Authority (CMA), the Advertising Standards Authority (ASA), and the Financial Conduct Authority (FCA). 

They’re looking at claims made by people and reviewing whether they’re properly backed by numbers and are those numbers proportionate? And are those numbers any good? So you are opening the door to a degree of risk. It’s probably easier to do this and do it right the first time than it is to keep making mistakes on an incremental basis until you get to a point of conflict. 

Dan: I come from LifeArc which is a biotech with lots of scientists who are used to seeing methodology clearly laid out to get from data/numbers through their primary analysis, through to conclusions. If you don’t have that transparency, you don’t have a rigorous methodology based on robust data.  Why should it be any different for carbon which comes with huge business implications?  So it absolutely makes sense to have, as Hugo pointed out, quality numbers at the start but with an understanding of how much estimation there is with margins of error, and then go through to get to a number that you’re confident you can back up. Transparency means you can confidently say where it’s come from, and everyone can see that. 

Q: There are a number of pressures and changes in the reporting landscape that mean regulatory obligations on reporting has changed over the last few years. How has that changed and how do you see it changing in the near future?  

Hugo: Yes, it’s a good question. If we go back, three, four years, the space that we’re in now was very voluntary, and only a few small number of companies were in it. With the requirements to be able to report on and that’s a regulatory requirement, which is simply growing and has been growing as we see that move forward that’s placing a lot of pressure on people to get the numbers right.  

But what probably was happening three years ago, maybe even two years ago, was that having any numbers was good. And people would get reasonably rewarded for producing some numbers. The question now, driven by a lot of regulation, driven by greater accounting standards scrutiny from a whole range of bodies, is that now the question is, are your numbers any good? And that is the narrative which is fed to us increasingly by people we talk to, who will quite often use the sentence which I’m going to paraphrase, which is: 

“we’ve been reporting for a couple of years now, but we’re not really sure about the quality of what we’re doing. We want to get under the bonnet. We want to make sure this is right.”  

And today, one of the larger fund managers in the world were investors in the world came out about how they were not confident in the £331 billion worth of assets that they were actually reporting their emissions on, as the Carbon Responsible team can testify to having gone through a lot of emissions analysis…it is very complicated, and it is very easy for some of that data to be poor. And it can often use, for example, modelling which will have very high estimation in it.  You could end up with an entirely estimated end result. And those who kind of were paying attention to the small line items in the budget, give another partial answer to your question, which is that the UK Government are consulting or regulating the data provision sector because there has been a lot of unease around the quality of ratings and the quality of the data that sits within those ratings.  

So we’re seeing regulatory bodies, but we’re also seeing Government starting to say ‘we must have better’ and one of the things that they’re asking for in their consultation paper, is they want more transparency. They want transparency on the input numbers. They want transparency on methodology, just saying that you’ll put everything into a cross matching database, which is only potentially got 40% available match, but its best result is not really giving you that degree of certainty, But worse than that, it’s quite often scored as all being the same. So whether you have a P Caf score, for example of as high or low, it aggregates all of that together – you’re not even getting the transparency on where it’s poor and where you might remediate that in the future. 

 

Q: What does long term reporting mean? And how quickly can you actually get set up? If you’re using human intelligence, are you trying to gather more data to get some kind of understanding of your admissions profile? 

Hugo: The key thing here is that it’s not just about human intelligence in the reporting part of it, it’s how you set clients up for success in the first place. So being able to support them to understand what it is they’re going to need is really important. And this is something that is a critical or non-negotiable part of the process for us.   

What we’re also seeing beyond just that education piece, is that to compare then: 

  • putting your information in SaaS; 
  • or giving it to somebody like Carbon Responsible 

The difference in time lapse is not all that great. The difference and the determinant of how long it takes to report as a company depends on what data you’ve got in the first place, and how long it takes to provide that data either into the SaaS platform or to somebody like ourselves. So it doesn’t massively elongate that process.  

I would suggest that if you’ve got to have full data delivery supported data delivery probably might take two weeks longer than doing something where you input all that information and you press a button. 

 

Q: Why would you go down a SaaS route and what’s that setting you up for?  

I think there’s something that Dan just mentioned, which is really when you look at something like TCFD and Climate Related Financial Disclosures (CRFD) in general, that’s producing a number of requirements on businesses not just to be able to produce metrics and targets – and obviously the targets need to have good data if they’re going to be robust.  

But increasingly, from an investment perspective, large companies are being asked to provide some financial modelling around this. That was the original basis of TCFD. Investors are asking the question, you’ve got a very nice target here… 

  • What’s that going to cost us?
  • What’s the investment going to be?
  • How is that going to work? 

There are quite a number of things that happen adjacent to a reporting programme, which can be target setting, it could be climate related financial disclosures. There are a whole range of things –  the numbers are just the bedrock of everything else that is going to happen subsequently. 

 

Q: What other challenges are you seeing clients tackle over the last years? And what advice do you have when it comes to reporting and the wider strategy around net zero? 

Hugo: We’re seeing a lot of challenges in companies’ ability to provide the data they need to get to the reporting they want.  

One prospective client told us that he had been advised not to try and do everything in one year, which was fair enough. It’s a progressive challenge.To Dan’s point about getting, for example, the huge number of suppliers that they have in LifeArc or the huge investment portfolio that helps to fund their research – these are things that need work overtime.   

I think the challenge is going to be not just then in that communication of good numbers, but how those get used, what the narratives are and what the targets are.  We’ve seen a lot of people being effectively ejected from SBTI (Science Based Targets Initiative) for targets that they just couldn’t sustain.  

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If you need help with your carbon reporting, please get in touch with our team today.  

Also, quite a lot of people are withdrawing them or withdrawing their commitment because they did not feel they were in a strong enough position to be able to proceed – and so with the challenge of increased regulation and higher numbers. It’s just a continuum that we are seeing.  

 

For example, in the EU, you are required if you’re a large company, not just to report (as LifeArc does) for streamlined energy and carbon reporting. You actually need limited assurance for that report as well. So you can’t just throw any numbers into the pot and hope for the best. It will be an ongoing challenge. 

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