The study suggests that there is a strong correlation between organizational structure and successful sustainability programs. Kathee Rebernak, Framework: CR President and CEO, said that correlation exists, in part, because stewardship of those programs now rests in close proximity to executive suites or boardrooms.

According to the study, programs that are either managed and executed by senior executives or report to the board of directors tend to be more successful at garnering high-profile awards for sustainability performance, including the Carbon Disclosure Project’s Leadership Index and Fortune magazine’s list of 100 Best Companies to Work For. Rebernak suggests that recognition from respected sources can be regarded as a reliable benchmark of an organization’s commitment to sustainability.

Indicators that are closely aligned with successful sustainability programs are:

• The title of the position that is responsible for sustainability,
• The department charged with managing sustainability efforts,
• Organizational proximity to the CEO; and
• If, and how frequently, the department reports to the board of directors.

“The general trend indicates that companies receive more external recognition if the person in charge of sustainability sits higher within the organization structure,” according to the report. “For example, companies in which sustainability is managed by a senior vice president perform better than those that delegate that function to vice presidents, directors or managers.

“It’s not enough to have ‘CEO support.’ For the sustainability effort to drive business value, the CEO must be in the driver’s seat.”

As leading organizations continue to earn public acclaim and business advantages from outstanding sustainability performance, it won’t take long before top decision makers see the connection and become more closely engaged in their programs.

¹ Visitors must register to obtain the Framework: CR study.

However, behind the scenes, some Chinese companies are quietly taking significant steps to manage GHG emissions.

For instance, companies like PetroChina, and its parent CNPC, launched major emission management programs several years ago, including implementation of enterprise-wide technology platforms that serve as the foundation for those initiatives. Although there has been little fanfare surrounding the company’s actions, it’s important to note that PetroChina’s program was a significant step that was taken without external prompting from government regulators. As a major player in oil and gas acquisition and distribution markets, company officials recognized the need to exercise responsible environmental stewardship in order to maintain its standing with its Western competitors.

In Hong Kong, officials earlier this year adopted a regulatory system that provides financial incentives for electric utilities to reduce emissions to regulatory limits. The long-term agreement between Hong Kong and electric generating companies CLP and Hong Kong Electric would allow the companies to adjust rates to generate a rate significant increase, plus a bonus if they reduce emissions below permitted levels.

Of course, ESS is providing technology solutions that support several of these groundbreaking initiatives. That’s why we’ve found it interesting to note that while government negotiators are debating climate change amid broad trade policies, Chinese companies are doing business with U.S. technology companies like ESS to support responsible corporate emissions management. We’re looking forward to many more opportunities to promote effective sustainability programs in China and elsewhere along the Asia-Pacific rim.

That’s why I thought it would be helpful to share some insights from a recent analyst report by Groom Energy Solutions, Enterprise Carbon Accounting: An Analysis of Organization-Level Greenhouse Gas (GHG) Reporting and a Review of Emerging GHG Software Products. This report provides useful advice to help corporate decision makers choose the right software to support their carbon emissions management program. Enterprise carbon accounting (ECA) describes the process of calculating, managing, reporting, reducing and trading carbon emissions in compliance with cap-and-trade requirements.

Paul Baier, a Groom Energy Solutions vice president and co-author of the report, said it was designed to help CIOs, CFOs, EHS directors and other executives understand the drivers for GHG/carbon emissions tracking, calculation and reporting and to identify well qualified software vendors.

Key points from the report include:

• Just as organizations purchased financial accounting software to automate financial data management, companies will similarly invest in ECA software to automate the process of carbon data management.
• Companies will need to produce reporting that is based on accurate and verifiable carbon emission data. In that regard, carbon emissions will need to be as rigorously managed as revenue and expenses.

Not surprisingly, the report identifies ESS as an “emerging leader” based on criteria including strength of product/technology offerings, number of customer deployments, financial strength and corporate vision. We are pleased that Groom Energy has affirmed ESS market leadership at a time when a large number of organizations are looking to adopt technology solutions for carbon management. Our company has been at the forefront of the EHS software space for nearly two decades, and we look forward to helping organizations that are ready to navigate through a new generation of regulatory challenges.

“The fact that the volume of the market has grown even in the most stressed times indicates that people are looking at the sustainability of their business,” said Caroline Angoorly, head of Environmental Markets for North America at JP Morgan, a report contributor.

The U.S. remains the largest provider of voluntary offsets (28 percent) and, collectively, U.S.-based companies are the largest buyers (39 percent) according to the report. Asia contributed 45 percent of all carbon credits bought on the over-the-counter (OTC) market in 2008, and the Middle East emerged as a key source of credits, supplying 15 percent of OTC transaction volume in 2008.

Experts suggest that compliance with existing (European Union, Australia) or proposed (U.S.) climate change regulations will drive increased carbon market activity this year. As more EHS professionals discover the benefits of sustainable operations, it is likely that efficiency and cost savings will be the primary driver for sustainability initiatives, which will be good for the enterprise, good for the environment and good for the long term viability of carbon markets.

Authors Bruno Berthon and Eric Lowitt, provide ample evidence of sustainability benefits in “Don’t Give up Sustainability Now or You’ll Pay Later,” an article recently published in Forbes Magazine.

Berthon and Lowitt flatly assert, that “sustainability is closely aligned with critical moves companies need to make in a downturn–moves like doing more with less, returning to basics and investing prudently.”

Sustainability supports solid goals that are good for businesses in any economic environment. For instance, corporate managers are always looking for ways to reduce waste and inefficiency to enhance their profit margins. A growing number of companies have discovered that sustainability can generate associated cost reductions and operating efficiencies.

Building Sustainability in Hard Times, a recently published ESS white paper, provides solid evidence about the correlation between sustainability and profitability.

Berthon and Lowitt also suggest that sustainability offers other business benefits, including opportunities for:

• Business growth in the expanding market for consumer products and services that improve energy efficiency; and
• Partnerships that influence future government regulations. Numerous ESS clients have joined the U.S. Climate Action Partnership, a nonprofit that has worked closely with federal regulators to craft climate change legislation under consideration in Washington.

In times like these when companies are looking for strategies that deliver reliable benefits, experts like Berthon and Lowitt show that investments in sustainability – including EHS information management – clearly deliver bottom-line results that can help companies survive the current market instability and provide a foundation to help your business thrive for many years to come.

Scheme of control is an intriguing approach because of its carrot-and-stick approach to environmental oversight. It’s an especially interesting development because we’ve recently applied our solution to address the rapidly changing regulatory scheme in Hong Kong.

This may be a precursor of things to come for other utility companies.

According to an article from The New York Times, the agreement “authorizes the companies to charge electricity rates that will give them a 9.99 percent return on assets. If either company exceeds regulatory limits for any pollutant, however, it would be required to charge customers less, reducing its allowed rate of return by 0.2 to 0.4 percentage points.

“If the companies manage to cut their pollution rates more than required, then they are allowed to raise prices to the point where they effectively earn bonuses of 0.05 to 0.1 percentage point on their rate of return.”

With a strong incentive to reduce emissions, it won’t be surprising if Hong Kong Electric and CLP take steps to strengthen their pollution control programs so they meet their emissions reduction targets.

This is yet another example of rapidly changing worldwide regulatory requirements that are driving organizations to implement enterprise-wide platforms for EHS management and voluntary sustainability reporting. Under the Hong Kong scenario, EHS technology not only helps organizations save time and reduce operational costs; it also becomes a powerful driver for business opportunities that can provide significant long-term payoffs. With regulatory activity accelerating across the globe, a growing number of organizations are leveraging the power of EHS technology to generate those benefits and more.

We’ll continue to follow developments with Hong Kong’s implementation of this regulatory scheme to determine how it impacts the territories’ utility companies.

Once news of the pandemic spread, I learned that some of our clients — both private and public organizations — are leveraging ESS’ robust crisis management solution, Essential Emergency™, to track how the virus is spreading across affected jurisdictions and coordinate emergency procedures with local health care providers for a timely and effective response.

Organizations worldwide started mobilizing after Dr Margaret Chan, WHO’s Director-General, raised the current level of influenza alert to Phase 5 and advised national emergency management officials to activate their pandemic preparedness plans.

Incident commanders are leveraging our scalable platform to track locations where the illness has spread, organize resources and establish lines of communication for timely crisis response. They are also taking advantage of functionality that permits access to sensitive incident information only to designated decision makers to prevent rumors and mass panic.

Corporate users are using the technology to provide travel warnings and updated threat assessments so executives can avoid travel to locations where A/H1N1 infections have been reported.

ESS has been helping organizations streamline emergency response for nearly two decades, including hurricanes Ike, Rita and Katrina, and the Oklahoma City terrorist bombing. I’m always pleased to know that our software products are playing an important role in ensuring the health and safety of our clients and their stakeholders.

Earth Day 2009 arrives at a watershed moment for business and industry. If proposed U.S. regulatory changes are adopted, an organization’s ability to limit greenhouse gas emissions and other pollutants will be a factor in determining winners and losers in the new economy. Fortunately, a growing corporate sustainability movement – supported by many leading corporate CEOs — shows clearly that Earth Day’s goals aren’t just for treehuggers any more.

This year’s event offers an important opportunity to demonstrate how companies across industry sectors have taken a leading role in slowing the growth of greenhouse gas emissions. A growing number of organizations are participating in voluntary reporting programs sponsored by environmental advocates like the Global Reporting Initiative and the World Business Council for Sustainable Development. Investor-driven initiatives have resulted in companies publishing performance data from their sustainability initiatives.

It’s a sea change from the days when Earth Day symbolized inefficient, labor intensive regulatory compliance that increased operational costs without gaining any significant business benefit. Corporate sustainability is now recognized as an integral component of sound operational planning and execution. Soon it will be a key factor that will impact your company’s risk profile, brand viability, and its ability to attract capital.

ESS has supported the goals of Earth Day for nearly two decades. During that time, we have enabled thousands of organizations to improve emissions management performance, reduce compliance risk and achieve cost savings through improved information management. ESS’ integrated software platform provides up-to-date EHS data that supports better daily management decisions and empowers users to develop innovative practices to assure environmental best practices – including management of greenhouse gas emissions – and improve energy efficiency. We have even provided free downloads of our Waste Reporter software to help organizations fulfill requirements for the EPA Biennial Hazardous Waste Reporting.

Information management is the key to ensuring that your business can gain a competitive advantage in this rapidly-changing regulatory climate. We hope that this time next year, you will join us in celebrating your company’s success at transforming your environmental challenges into drivers for bottom-line success.

Do you agree that this Earth Day represents a historic opportunity for companies like yours?

EPA recently announced plans to create a 230-mile enforcement zone around most of the nation’s coastline where regulators would enforce air emissions standards around major port areas. The regulations would primarily target large commercial ships and would apply to both U.S. and internationally-chartered vessels.

Under EPA’s proposal, there would be stricter limits on the sulfur content of fuel used by vessels starting in 2015. A year later, new ships would be required to install advanced emission-control technologies to limit sulfur emissions.

Engines on U.S.-flagged oceangoing vessels are currently subject to emission standards that rely on engine-based technologies to reduce emissions.

According to a study by the International Council on Clean Transportation, commercial ships release more sulfur dioxide particulate than the combined total of all land transportation vehicles. The study also indicated that ships produce an estimated 27 percent of the world’s nitrogen oxide emissions.

The primary driver for this action: EPA Administrator Lisa Jackson estimated that 40 of the 100 largest U.S. ports are located in metropolitan areas that fail to meet federal air quality standards. Once the current business downturn abates, industry and government officials say global trade could double the volume of shipping traffic and further exacerbate persistent air quality concerns.

The agency’s proposal would likely drive port authorities, shipping companies and support businesses to launch initiatives to measure and monitor emissions to establish an emissions inventory for the affected area and comply with federal tougher emissions standards.

The World Shipping Council, a trade organization representing international container ship operators, is not opposed to the proposed standards. International shipping companies participated in discussions regarding the proposed regulations prior to EPA’s announcement.

“It’s a matter of survival for us. So we are among the most vulnerable countries, economically,” said Mohammad Al Sabban, the Saudi lead negotiator.

The Saudis position represents one of many interests that must be considered as the world begins to address the change to a carbon-constrained global economy. Businesses, too, are struggling with similar issues as they begin to asses the potential costs.

With the prospect of a global climate treaty looming and cap-and-trade proposals under consideration in the United States, nearly every kind of organization –large or small, public or private, retail or manufacturing, will be impacted by the proposals to cut greenhouse gas emissions.

The Saudis are hoping that investments in wind and solar technologies can help them maintain their market position in the midst of a changing global economy.

Just as governments are adjusting to the new economic model, businesses need to understand how climate change proposals will impact their operations – and how they manage compliance risks – before those proposals are enacted.

Business success in tomorrow’s carbon-constrained world will depend on an organization’s ability to reduce risks and costs associated with managing carbon emissions and energy consumption. Early adopters are already reaping the benefits of enterprise-wide initiatives to better manage EHS-related costs and risks. Global industry leaders have proven that the key to effective emissions management is adoption of a robust information management platform.

It appears that major regulatory changes are inevitable. Will your organization be ready to maintain its competitive position in a carbon-constrained economy?