Information Systems for Environmental Sustainability

IT, Resource Productivity, Environmental Preservation, and the Fourth Industrial Revolution

Indirect & Direct Cost of CMS

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I’ve been thinking about the benefits and costs of CMS lately. My sense is that figures vary widely across industries depending on the nature of business operations, which drive scopes. Scarce information is available on direct costs, though a “startup” and “recurring” fee is typical for SaaS models. Green Research has some info. that pertains to CMS indirectly:

UPS spends $1 million per year to measure its carbon footprint. 

 The components of cost vary …, ranging from allocating internal manpower to developing and deploying new information systems or other monitoring infrastructure to fees paid to external consultants.

Starbucks hired CH2M Hill, the $5 billion engineering, consulting and construction firm, to help it calculate the carbon footprint of its retail locations. 

One former consultant, who performed corporate GHG inventories before moving to an environmental NGO, told me that her firm typically charged $25,000 to $150,000 for an inventory, with the costs most dependent on the quality and number of data sources involved.

EPA says it provides free assistance to develop a greenhouse gas inventory plan and to complete a base-year inventory. If you are preparing to do your own corporate inventory, be sure to investigate free sources of assistance.

Experts say that the major cost of greenhouse gas inventory programs is in the use of staff time. Therefore, the benefit of tools like these should be assessed largely but how much staff time is saved once they are up and running, after the first inventory is complete.

According to the EPA analysis, reporting costs will rang from $3,000 per year to $150,000 per year for large-scale emitters like cement manufacturers. [to comply with new regulations].

I would hypothesize that Scope 2 is cheaper to assess, given the relative straightforward nature of determining purchased electricity and emissions factors, while Scope 3 is more expensive, given the difficulty of accounting for upstream activities that generate GHG.


Author: nigelpm

Associate Professor of Information Systems, Stephen M. Ross School of Business, University of Michigan - Helping organizations to navigate digital transformation.

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