New approach for identifying energy use
Progressive digitization consumes a lot of electrical energy. Studies estimate that the energy demand of digital devices and data centers world-wide generates around two percent of global CO2 emissions, with the trend increasing. This roughly corresponds to the CO2 emissions generated by global air mobility. So the question of identifying, in a complete, continuous and verifiable way, the amount of energy actually consumed in a company with as little effort as possible, in the light of further digitization, the ongoing debate about CO2-neutral production as well as climate-efficient corporate sales, is gaining in importance. As long as real energy consumption does not appear in the “control cockpit” of a company, actual CO2 emissions remain unclear.
In our private households, we read our electricity bills in much the same way as filling our cars at the gas pump: The invoice amount and quantity received are easily identifiable. Companies in the pre-digital era generally owned a stable number of firmly located office buildings and operating locations, which were equipped with a manageable number of electricity meters that could be easily read. Those who ask around will probably find that many businesses do not actually have very precise perceptions of the total amount of energy actually used throughout the group. In addition, digitization and internationalization in many cases strengthen the deficit of representativeness of disclosures made in Sustainability Reports on energy and CO2.
For as precise an overview as possible of sustainability perspectives, a most accurate awareness of the volume of energy used throughout the entire company is necessary, together with its resulting calculable climate-effecting CO2 footprint. In the course of the progressive digitization of the Group, Axel Springer SE is consolidating its now more than 180 larger and smaller Internet-based companies located on several continents (the list of holdings as at 31 December 2015 can be found in the Annual Report 2015).
This “family of companies” is being continually expanded to include new digital “grown-ups” and “start-ups”. They physically comprise offices with coffee machines, lighting and telephone systems, PCs, laptops, scanners with numerous data centers stationed at various locations and even a fleet of vehicles. The identification of the energy consumption figures to date for three newspaper printing plants and a large publishing location was carried out easily using conventional processes. However, because the number and global location of the “start-ups” and “grown-ups” which make up Axel Springer as a digital publisher is undergoing continuous dynamic change, the “reading of electricity meters” as in times past is no longer practicable.
The representativeness of the amounts declared for the Group will steadily decline. So how could world-wide energy use be identified for all the consolidated business units at a manageable cost? Seeking for new approaches, the Group Accounting Unit and the Corporate Sustainability Office of Axel Springer SE have jointly developed and implemented a group-wide energy use identification procedure.
The New Approach
One of the few “reporting lines”, established immediately after the respective incorporation into the Axel Springer family, is the reporting of relevant financial figures to Group Accounting – including various revenue and cost elements, among these the energy costs. The input and reporting of this financial data is the responsibility of the employees of the respective Chief Financial Officers (CFO) of the subsidiaries. The idea was that this established reporting procedure for all companies could therefore also be useful for the collection of non-financial performance indicators, such as the amount of energy consumed. For this purpose, the data collection tool “IAS Notes” which was already in use and interface-linked throughout the company world-wide, was expanded to include a “Reporting Energy” input mask.
A good future development
Understanding and motivation are positive in the subsidiaries. Existing and established reporting procedures and reporting tools can be used to improve efficiency through adaptive measures and routine. And of great importance: In future, around 90 percent of the energy purchased by the consolidated business units at Axel Springer in a given year can be quantitatively documented. On this basis, with the help of the country-specific CO2 emission factors, at least approximate CO2 emissions can be verifiably identified for the entire company.
This is progress, because the representativeness of the amounts of energy consumed and CO2-emissions declared by the company in the Axel Springer SE Sustainability Report has tended to lean worryingly towards the 50 percent mark in the course of internationalization and digitization. Thus, the approach described here can also offer a pragmatic solution to other companies for the increased deficit in the representativeness of disclosures on CO2 emissions in the course of internationalization and digitization.
Notes on the energy use recorded for the entire company
Digitization and the internationalization of the company have made the collection of data more difficult in recent years due to the growing number of consolidated subsidiaries. This has reduced the completeness of the energy data documented in the Sustainability Report.
To counter this problem, the company has adopted a new approach: Among other things, the numbers for cost categories – such as energy – are merged in Group Accounting for the entire company. Existing ‘reporting lines’ to the many subsidiaries are now also used to determine the amount of energy used. For this purpose, the world-wide interface-linked data collection tool “IAS Notes” has been expanded to include a “Reporting Energy” input mask. This allows for an initial, for the most part complete record of the energy (natural gas, district heating and electricity) used by the company as well as the 180 (status 31 January 2015) fully consolidated subsidiaries world-wide for the years 2014 and 2015. This new method of data collection will be further developed and optimized.
The recording of the quantity of natural gas, district heating and electricity used by the company, including the fully consolidated subsidiaries, resulted for the year 2015 in a total of 137,433 MWh (2014 = 143,989 MWh).
Due to the learning curve accompanying the use of this method for the first time to record global amounts of energy used (electricity, district heating and natural gas), the data obtained using the data collection tool “IAS Notes” is subject to a number of inaccuracies.
Causes of data inaccuracies:
Office moves, which occur in a growing company, lead to “mixed” energy quantity accounts and thus contribute to data inaccuracies. A number of the consolidated subsidiaries reported the amount of energy (electricity, district heating, natural gas) either only incompletely, clearly implausibly or not at all. Taking the energy costs reported by these companies into account however, it is clear that the orders of magnitude are negligible for the overall view. Where data reports of energy amounts were missing, an estimate of energy costs has been made.
Rental accounting transparency: A number of real estate agencies both within and outside the EU, who rent office space to subsidiaries, report the settlement of energy-related costs with a considerable time lag. With a number of rental contracts, especially those for smaller offices, energy costs for heating are included in the rental payments. In these cases, the amount of energy used was determined by using average costs. In cases of incomplete data reporting, average costs were estimated. In some subsidiaries, international parts of the company were allocated the same average costs for different countries. Where no energy costs were available, energy amounts were not projected in order to ensure consistency in cost recording.
External plausibility check
The recording of the quantity of natural gas, district heating and electricity used by the company, including the fully consolidated subsidiaries, resulted for the year 2015 in a total of 137,433 MWh (2014 = 143,989 MWh). Of this, a total of 105,204 MWh was determined for the year 2014, in the framework of the external energy audits of the use of natural gas, district heating and electricity carried out at selected locations in Germany in 2015 and validated by ECG. This corresponds to 69 percent of the use of natural gas, district heating and electricity specified in this report for the overall company in 2014.
The remaining 31 percent specified in this report for the year 2014, are the quantities of natural gas, district heating and electricity obtained solely through the data collection tool “IAS notes” used by Group Accounting, which is interface-linked to all parts of the company and subsidiaries world-wide. As the energy audit was not carried out again for 2015, the share of the externally validated amounts of energy (electricity, district heating, natural gas) for 2015 is 39 percent and the share of data obtained solely through the data collection tool “IAS notes” used by Group Accounting is 61 percent.
The external validation carried out by ECG is based both on a review of raw data from the load profile as well as a review of manually recorded energy bills including invoices for additional costs.
Objectives: To determine 75 percent of the global use of energy by Axel Springer SE in the form of electricity, district heating and natural gas, in validated quality for the years 2016 and 2017.