Source: Oliver Wyman Forum
Topics Covered in this Article
The current state of mandatory corporate climate disclosure.
How sustainability decision makers are preparing for compliance.
Market drivers for increased demand for enterprise carbon management software platforms.
The importance of clean Scope 2 data sets.
Challenges with traditional accounts payable processes and scope 2 data capture.
AMI’s take on AI-assisted invoice parsing tools and their effectiveness at capturing granular details.
How partnering with AMI accelerates Scope 2 usage capture through our Utility Invoice Processing automation technologies.
Corporate Climate Disclosure Legislation on the Horizon
Source: Columbia Law School
With the Probability of Disclosure Requirements, Corporations are Concerned About Compliance
In the their report, Executive Benchmark on Integrated Reporting 2024 which surveyed 900 executives at companies with over $250M is revenues, Workiva identified that:
- 74% of executives reported that complying with regulatory reporting requirements will become significantly more challenging in the coming year
- 66% expressed their concern about their companies’ ability to comply with the new regulatory reporting requirements
- 65% are concerned that the business reporting technology currently in use by their companies is insufficient for meeting new regulatory reporting requirements
The Rise of Enterprise Carbon Management Software Platforms
These uncertainties have analysts predicting substantial growth in the carbon management software market over the next few years, driven in part by these emerging new regulatory requirements that demand full carbon accounting.
In their 2023 Green Quadrant for Enterprise Carbon Management Software, Verdantix concludes that:
One out of every six sustainability decision makers indicate they will raise their spending on software for carbon-accounting-related functionality by more than 50% in the next two years
One in four say they will increase their spend for this functionality by 10% to 50%
The core jobs that buyers are looking to carry out with carbon management software are:
- Aggregating and normalizing emissions data from across the enterprise
- Calculating an enterprise carbon footprint
- Disclosing carbon performance to stakeholders
Scope 3: The Elephant in the Room Driving Climate Disclosure Platform Adoption
According to Gartner, Scope 3 emissions are the most challenging to measure, yet in some companies they can account for over 95% of total emissions. They expect carbon footprint measurement technologies to see significant adoption as organizations broaden their focus to all three emission types and increase reporting transparency.
“Ultimately, every organization will have to invest in carbon accounting tools” says Annette Zimmerman, research vice president at Gartner. “Software solutions which provide transparent carbon measurement and actionable advice are seeing rapid adoption, and Gartner expects continued growth as integration capabilities progress.”
Carbon Footprint Measurement Scopes
Scope 1: Direct emissions from owned or controlled sources
Scope 2: Indirect emissions from the generation of purchased energy
Scope 3: All indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions
Source: Oliver Wyman Forum
Scope 2 Usage Data: Low Hanging Fruit? Not Quite
Faced with the ambiguity and reliance on supply chain partners to assist in gathering Scope 3 emissions data, sustainability teams see collection of Scope 2 usage data (or energy purchased directly from utility providers) as a less challenging project that they can initiate today.
After all, a corporation that consumes utility services and pays utility invoices must have some sort of historical and ongoing access to the data contained in those invoices, right?
On the surface, the data source looks easy enough to identify and gather, but for organizations that support a large amount of corporate locations, collecting this data in a reliable and accurate way is highly manual, time consuming, and error prone especially when we consider how these invoices have been traditionally handled.
Utility Invoices: The Source of Scope 2 Usage Data
Scope 2 data, encompassing indirect emissions from purchased electricity, steam, heating, and cooling, needs to be extracted from utility invoices. These invoices provide the necessary usage data for accurate Scope 2 emissions reporting.
However, the process in which these invoices are handled by accounting teams has never contemplated the importance of or how to capture granular Scope 2 data effectively.
Traditional Accounts Payable Processes Have Not Been Engineered to Collect Utility Invoice Scope 2 Usage
Accounts Payable (AP) teams handle utility invoice processing in a highly manual and time-sensitive environment, often constrained by narrow payment windows, sometimes within 15 days.
This just-in-time (and often late) environment is compounded by the fact that vast majority utility providers have not embraced submitting eInvoices directly into customers’ AP, ERP, or Business Spend platforms,like Coupa or Workday.
In fact, most 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
Due to these constraints, AP teams typically capture only the invoice header details and scan the first page for digital record-keeping, making historical usage research challenging.
For example, while it takes about 10 minutes to process an invoice for AP purposes, it can take an average of 47 minutes per invoice to manually capture detailed usage information at the meter and sub-meter level.
Manually Capturing Usage Data from Electricity Invoices
Before AMI creates an automated PDF Translator 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.
Carbon Management Platforms: Increased Demand for Clean Data Sets
The Scope 2 White Whale: Clean Data
As demand for carbon platforms, such as Workiva and Watershed, increases across the enterprise market, so has the demand for the clean and organized data required for them to function correctly. Manual data collection is inefficient and error-prone, underscoring the need for automated utility invoice processing solutions.
The Importance of Clean Data for Efficient Sustainability Reporting
For large, multi-location corporates, AP teams are not accustomed to collecting usage data, or even utility invoices in their entirety, for historical sustainability analysis.
Because of this, a tremendous amount of extra effort is required, including working with numerous utility providers to obtain historical invoices or reporting data.
The EPA’s guidance on quantitative uncertainty and the Uncertainty Calculation Tool aim to address this issue by hedging the complexity of Scope 2 data collection, which is a clear indicator on the EPA’s opinion that manual data collection is labor-intensive and often results in assumptions that lead to poor data integrity – justifying the complex pedigree matrix outlined below:
AI-Assisted AP Automation vs. Clean Granular Data Extraction
With the rise of AI, many AP automation tools have launched in the market and can be very effective at speeding up the time to capture payment details of an invoice for payment processing.
These tools, however, while effective at capturing invoice text and numbers, struggle to maintain the hierarchy and context of these data points in large, complex invoices, especially when those related data points appear in different physical parts of the invoice.
Tempering Expectations on AI for Large, Complex Invoices
AMI advises the market to temper expectations on leveraging AI tools to capture reliable data from large, complex invoices.
Though our own investments we have found AI/ML tools to be helpful as part of an overall orchestration process, but still require a higher amount of human-in-the-loop interaction than our proprietary PDF-translation technologies when it comes to data quality validation and overall data integrity.
The Last Mile: How Partnering with AMI Strategies Accelerates Utility Invoice Processing at Granular Levels to Produce Scope 2 Usage Data
For over 30 years, AMI has provided expense management services for Telecom, Technology, and Utility providers on behalf of large enterprise clients. With a deep background in rationalizing complex IT inventories, AMI understands the importance of capturing clean invoice data at extremely granular levels in complex and consumption-based pricing environments.
By leveraging this expertise, AMI extends these principles to utility invoice automation through the following process:
AMI’s Scope 2 Usage Capture Process via Utility Invoice Processing
Automated Invoice Retrieval: AMI sets up Robotic Process Automation (RPA) bots to automatically retrieve native PDF invoices every month from utility provider portals.
Proprietary PDF Translators: AMI’s translators capture all invoice data at the most granular levels, maintaining the original context and hierarchy.
Data Quality Verification: A series of programmed validations verify the accuracy of captured data.
Uniform Data Presentation: The data is presented uniformly within the AMI platform, accessible via dashboards and reporting, and can be shared with other platforms.
Reliable Data for GHG Measurements: Collecting data directly from the source (utility provider invoices) ensures rock-solid data sets devoid of statistical uncertainty, backed by copies of the original data sources, that withstand audits.
Source: AMI Utility Management Dashboard
Beyond Invoiced Data: Comprehensive Utility Inventories
AMI’s expertise in managing IT inventories and expense management allows for the enrichment of invoice data with additional context, such as:
- Location Data
- EGrid Power Profiler Data
- Emissions Factors
- GHG Emissions Calculator Data (Source ID, Source Description, Source Area, eGrid Subregion, Purchased Gas Types, Waste Material, Disposal Method & Weight)
This approach creates a comprehensive system of record updated monthly with actual usage data from invoices, enhancing the utility invoice processing workflow.
Making AP Departments Life Easier by Lightening their Workload
AMI can access data from provider portals in parallel to the existing AP invoice intake process or eliminate the need for AP teams to process these invoices entirely by automating invoice allocation and adding them to the AP platform for approval or payment.
For providers without portal access, AMI can reroute paper invoices to our facility for processing, completely alleviating the AP burden. This partnership between sustainability teams and AP can help secure budget for automation, benefiting both teams.
Final Thoughts
As sustainability decision makers prepare for a new era in corporate climate disclosure compliance, the demand for collecting clean data to interact with next-generation ESG and emissions reporting software is greater than it has ever been.
When it comes to Scope 2 usage data, the source of the data is clear, but the task of collecting clean data sets from that source is daunting and lacks the trust required to withstand audit requirements.
By partnering with AMI, sustainability and accounts payable teams can partner on a mutually beneficial solution that dramatically decreases the workload for both parties to achieve their core business objectives.
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.
