The top capabilities of Carbon Management solutions
This Spend Matters series takes a look at the state of the procurement technologies in the market today and whether they meet user demands. Spend Matters is featuring the top digital capabilities of different procurement technologies and what functionality you can expect from average and top performing solutions, leveraging its SolutionMap dataset.
In this article, our analyst Bertrand Maltaverne looks at carbon management solutions.
What does a carbon management solution do?
Carbon Management solutions and services support the estimation, continuous measurement and reduction of an organization’s GHG emissions (Scope 3 with a focus on purchased goods and services) by enabling calculation of CO2 footprint, identification of reduction opportunities and management of decarbonization plans with suppliers.
Why buy carbon management solutions
The majority of a company’s GHG emissions is produced in its supply chain, so investment in (Scopes 1, 2 and 3) carbon management technology can help companies determine where and how emissions are produced in their value chains, what the influenceable drivers are for reduction/absorption and measuring (financial) improvement results regarding carbon impact.
Top 4 carbon management technology capabilities
What’s the state of different procurement technologies in the market today and do they meet user demands? Spend Matters is featuring the top 4 digital capabilities of different procurement technologies and what functionality you can expect from average and top performing solutions, leveraging its SolutionMap dataset.
Exploring the actual market state of the top 4 capabilities
1. Calculation methodology
The ability to calculate emissions.
There are multiple ways to calculate emissions, each with its pros and cons, from an accuracy and effort point of view. The most basic calculators use secondary data to estimate a company’s footprint by multiplying spend by an emission factor. It has the advantage of being low effort, but it has limited accuracy because of how spend is influenced by multiple factors that do not correlate with GHG emissions, e.g., price. An alternative offered by certain solution providers is to use a quantity-based approach as a better indication of emissions.
More advanced solutions rely on primary data, such as quantitative data collected from suppliers, to provide more details with greater accuracy. This allows the calculations to be based on supplier-specific information.
Top performing vendors offer a hybrid approach, combining primary and secondary data. Secondary data (spend or quantity-based) is used for the initial baselining to identify areas that need further investigations (collection of primary data from suppliers) but also as a fallback when organizations are not able to collect primary data.
2. GHG granularity
The capability of the solution to manage (data collection, analysis and reporting) GHG at a very granular (i.e., material) level.
Calculations and allocations of GHG emissions can be carried out at different levels — spend category, supplier, material, etc. — meaning that users have actionable details. Whether the calculations are based on primary or secondary data, granularity depends on:
- Spend details and emission factors: highest or lowest level of the taxonomies (categories and geographies).
- Supplier-specific data: at the level of the group (several entities), location (site), machine, material, etc.
- Allocations: based on spend mix, BoMs (Bill of Materials), etc.
Top performing vendors have granular data models that allow customers to calculate emissions as accurately as possible. Some vendors also enable users to manage the allocation of emissions to final products based on data at the material level and BoMs.
3. Analysis and reporting
The ability to analyze, understand and report the carbon footprint in detail.
Average performing vendors are expected to provide a set of starting templated views for basic reporting of GHG emissions with the ability to filter and drill down by category, region, supplier, etc.
Top performing vendors not only have a very extensive set of templates that cover emissions and drivers across categories, contracts, suppliers, etc. but also extensive analytics capabilities. For example, certain solutions allow customers to build new KPIs and scorecards that include GHG and other metrics to measure progress against targets and integrate GHG in other reports and analyses.
4. Opportunities and recommendations
The ability of the solution to help users identify opportunities for improvements to reduce emissions.
The purpose of carbon management (and managing GHGs in general) is to reduce emissions. Therefore, solution providers often (but not always) offer capabilities to identify and manage opportunities via in-app features and/or services.
The average provider’s solution includes templates or plans from an out-of-the-box library of typical levers and improvement actions and can identify opportunities based on industry or category emission averages.
Top performers provide customers with guidance more tailored to their actual footprint, granular community benchmarks and curated best practices. Among the providers demoed some offer guidance in the application in the form of benchmarks and recommendations for actions. Others also have a whole service offering focusing on decarbonization.
The vendors considered
How ‘Market State’ is derived from the SolutionMap dataset
These ‘Top 4’ (of 13) critical digital capabilities stem from the Spend Matters TechMatch workbench — derived from 44 requirements scored in the Carbon Management Spring 2023 SolutionMap solution benchmark.
The Top 4 capabilities are the highest-weighted critical capabilities that are central to the displayed solution market benchmark. They have been developed by Spend Matters team of analysts and refined by procurement users in tech-selection projects using our market-proven SolutionMap benchmarking dataset and associated TechMatch decision-making tool.
Spend Matters® SolutionMap Procurement Technology Intelligence
Spend Matters built a better way to help companies, and their consultants, advance procurement practices via technology. SolutionMap compares technologies on two main factors: technical capability (gathered via a rigorous RFI process) and validated customer ratings. Data is refreshed every six months. Participation for vendors is completely non-commercial.
Spend Matters® SolutionMap Intelligence Process Overview
Featured vendors undergo a rigorous, RFI-based assessment process including functionality counter-scoring, supporting materials review, tech demos and submission of independent customer references. Expert analysts deeply vet solution capabilities prior to ranking inclusion. Only relevant industry players that meet the criteria determined by Spend Matters are invited in order to create a complete view and optimal intelligence for its members.
- To learn more about the Spend Matters methodology, click here.
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- To compare product strengths and weaknesses, try Spend Matters TechMatch to directly assess the capabilities of digital procurement solutions.
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AP/I2P CLM EPRO P2P S2C S2P SOURCING ANALYTICS SRM10/04/2018
AP/I2P CLM EPRO P2P S2C S2P SOURCING ANALYTICS SRM10/04/2018