Alan Buckle

Customers are aware of green issues and are increasingly demanding environmentally friendly products and services.

With soaring energy costs squeezing margins, ethical investors putting pressure on businesses to cut back on the environmental damage they do and harder-hitting legislation on the cards, big businesses are ensuring that reducing carbon emissions forms a central part of their corporate strategy.

Any successful carbon strategy must be measurable and based on accurate data. Without effective measurement it is impossible to understand the financial implications of any initiatives.

Shareholders are demanding companies outline their carbon footprint as part of their annual report. Therefore the same rigour that is applied to reporting on financial performance will be expected when accounting for carbon.

Unfortunately, measuring carbon emissions isn't like checking the gas meter. Companies often look internally to cut back on carbon emissions, for example, using greener fuels and energy efficient measures. But to really get their aspirations on reducing carbon emissions to grow exponentially, businesses must use their influence as customers to encourage suppliers to reduce their carbon emissions too.

Forthcoming legislation will see many more organisations compelled to reduce carbon. For example, from April 2008 all large public buildings such as libraries or council offices will have to display energy performance certificates which will rate the buildings energy efficiency level and display energy certificates that show the actual energy usage.

We are already seeing a demand for accurate management information on which to develop reduction strategies including investment decisions, tax considerations and offsetting.

The pressure from consumers that has fuelled carbon reduction and climate change initiatives is already impacting a number of sectors and the government has made it clear that some form of regulation isn't far behind. Whether it is getting to grips with your own carbon number, understanding what financial savings are achievable and how best to account for carbon, carbon accountability requires a strategic approach that should influence every corner of an organisation.

Alan Buckle is chief executive of KPMG Advisory Europe