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Mandatory Corporate Carbon Reporting? The Role of Utility Invoice Lifecycle Automation in Understanding Scope-2 GHG Emissions

As mandatory climate reporting becomes more of a reality for America’s top corporations, ESG professionals are recognizing the importance of reporting on the positive impacts their Sustainability and Facilities Management counterparts are implementing across the enterprise to reduce carbon footprints and minimizing their impacts on the environment. One crucial aspect of this effort is understanding and managing Scope-2 greenhouse gas (GHG) emissions, particularly those originating from utility provider invoices. In this article, we’ll explore the significance of Invoice Lifecycle Automation in accurately tracking and managing Scope-2 emissions, especially in jurisdictions that require reporting in Energy Star Portfolio Manager.

Understanding Scope-2 GHG Emissions

Before delving into the role of invoice lifecycle automation, let’s first understand what Scope-2 GHG emissions are. In the realm of sustainability reporting, Scope-2 emissions are a key component, as defined by the Greenhouse Gas Protocol. These emissions represent the indirect GHG emissions associated with the generation of purchased electricity, heat, and steam.

In essence, Scope-2 emissions are the result of energy consumption and often account for a significant portion of a company’s overall carbon footprint. Accurately measuring and managing these emissions is crucial for organizations aiming to reduce their environmental impact.

Figure 1: Scope 1, 2, 3 emissions. Source: GHG Protocol.

The Invoice Lifecycle and Its Challenges

One of the primary challenges in tracking and managing Scope-2 emissions lies in the invoice lifecycle, or how invoices are processed and paid. This lifecycle involves the receipt, validation, approval, and payment of utility provider invoices. While seemingly straightforward, this process is purely a financial operation and does not take into account the labor needed for accurate sustainability reporting:

Utility Providers Don’t & Won’t Submit eInvoices to Their Customers: While many B2B vendors have embraced submitting eInvoices directly into customers’ AP, ERP, or Business Spend platforms (like Coupa or Workday), utility providers still provide their invoices in the old-fashioned way, such as making it available on an online portal (typical with the larger, regional energy providers) or via snail mail and postcards (typical with smaller providers or municipalities), requiring a completely manual process to input the invoice into the payment platform.
When Invoices Are Received, They Need to Be Paid Quickly: Some utility providers only offer 15-day payment windows, so invoices need to be processed and approved for payment ASAP to avoid costly late fees and shutoff notices.
AP Processes Only Capture the Top Line: Due to the manual requirement of inputting the invoice details and the urgency of getting the invoices processed for payment, AP departments typically only capture the top line of the invoice, or the summary financial totals, when entering into an ERP system.
Most AP Processes Only Capture the First Page of the Invoice: As part of this “top line” capture process, usually, only the first page of the invoice is scanned, leaving all the usage detail on subsequent pages lost, which is the detail needed for sustainability reporting.
Sustainability Departments Need a Duplicate, Redundant Process to Capture the Usage Details They Need to Report on Scope 2 Emissions: In order to capture the usage detail required, Sustainability Departments must also obtain a copy of the invoice and manually capture the usage details, which is quite time-consuming and prone to error.

Before AMI creates an automated parser for an electricity provider’s invoice format, it takes our team an average of 47 minutes to manually capture all the usage detail at the meter and sub-meter level.

These challenges not only impact the efficiency of invoice processing but can also lead to inaccuracies in Scope-2 emissions data, potentially skewing a company’s sustainability reporting.

The Role of Automation in Invoice Processing

Enter invoice lifecycle automation. Automation solutions have revolutionized the way businesses handle invoices. By leveraging technology, companies can streamline the entire invoice lifecycle and sustainability reporting process, addressing the challenges mentioned earlier:

Automated Invoice Retrieval: For utility providers that have online portals, Robotic Process Automation (RPA) solutions can be used to log in to those portals and retrieve the invoice on a schedule, just as a human would do, saving AP departments an average of 5 minutes per invoice.
Rerouting of Paper Invoices: For utility providers who still only send invoices by snail mail, those mailings can be directly sent to AMI where our team will scan, parse, allocate, and push those invoices directly into the approval processes in a fraction of the time it takes for our clients to perform manually.
Automated Data Extraction: Automation tools, such as AMI’s proprietary PDF translators, can extract data from invoices at the most granular level accurately and efficiently with built-in data validation processes to eliminate the risk of errors.
Validation and Approval Workflows: Automated workflows ensure that invoices go through validation and approval processes efficiently, eliminating late fees and shutoffs.
All Scope 2 Usage Data Is Collected in This Process, Eliminating the Need for a Duplicate Sustainability Process: As part of the invoice lifecycle process, AMI captures all the necessary Scope 2 usage data and makes it available within our platform, eliminating the need for a duplicate process to be handled by another team.

Impact on Scope-2 Emissions Reporting

The benefits of invoice automation extend beyond efficient invoice processing. They have a profound impact on Scope-2 emissions reporting as well:

Accurate Data: Automation ensures that data related to utility invoices is consistently accurate, leading to precise Scope-2 emissions calculations.
Timely Reporting: With automation, companies can generate emissions reports more quickly, enabling prompt decision-making.
Reduced Emissions: Armed with accurate data, organizations can identify opportunities to reduce emissions more effectively.

Reporting in Energy Star Portfolio Manager

In jurisdictions that require reporting in Energy Star Portfolio Manager, accurate data on energy consumption and GHG emissions is essential. This tool, developed by the U.S. Environmental Protection Agency (EPA), helps organizations track and report on energy use and GHG emissions for their buildings and facilities. Many cities and states across the United States have adopted Energy Star Portfolio Manager as a mandatory reporting platform.

Automated invoice processing aligns seamlessly with Energy Star Portfolio Manager reporting requirements. By automating the data collection and validation process for utility invoices, businesses can easily feed accurate information into the Portfolio Manager, ensuring compliance with local regulations and sustainability goals.

At AMI, we have integrated our platform with Energy Star via API, allowing this often mandatory reporting process to be completely touchless for our clients.

Integrating Automation with Sustainability Goals

To truly harness the power of invoice automation, businesses must integrate it with their broader sustainability goals. Technology not only simplifies invoice processing but also empowers companies to make informed environmental decisions. Here are some best practices for companies looking to implement invoice lifecycle automation as part of their sustainability journey:

Assess Current Processes: Conduct a thorough assessment of existing invoice processing methods to identify areas where automation can make the most significant impact.
Invest in the Right Tools: Choose automation solutions that align with your specific needs and can seamlessly integrate with your sustainability reporting systems.
Employee Training: Ensure that your team is well-versed in using automation tools to maximize efficiency. Alternatively, you can hire a company like AMI to orchestrate this entire process for you, so your team can focus on making decisions rather than running the process.
Continuous Improvement: Regularly evaluate the effectiveness of automation and seek ways to optimize processes further.

Conclusion

In conclusion, understanding and managing Scope-2 GHG emissions is paramount for any organization committed to sustainability. Invoice lifecycle automation plays a pivotal role in achieving this goal by providing accurate, timely, and transparent data related to utility provider invoices. By automating the invoice process and integrating it with broader sustainability strategies, businesses can enhance their environmental accountability and make more informed decisions to reduce their carbon footprint.

As companies continue to prioritize sustainability, invoice lifecycle automation emerges as a powerful tool in the pursuit of environmental responsibility. By adopting automation solutions, businesses not only improve their operational efficiency but also contribute to a greener and more sustainable future.

David Sonenstein - Vice President of Product Strategy

AMI Strategies

With over 20 years in the industry, David helps orchestrate AMI’s vision for vendor hyperautomation. While contributing to AMI’s adoption of automation technologies, system integrations and technology frameworks, his research focuses on enterprise market and technology trends and where automation solutions can help organizations achieve their desired business outcomes. He currently serves on the executive board of the Enterprise Technology Management Association (ETMA) and is an associate of the Technology Business Management (TBM) Council.