Accounting for sustainability
An HP Labs collaboration improves environmental accounting and suggests a new model for customer engagement
By Simon Firth, freelance technology journalist
A pair of projects teaming young HP corporate finance professionals with researchers from HP Labs’ Sustainable Ecosystems Research Group has produced a set of tools that could help HP and its customers operate in a more environmentally sustainable way.
The tools promise to let corporate stakeholders view either past performance or future investments through the lens of sustainability and are already being trialed by finance and sustainability units within HP. They include:
- A New Model for Environmental Profit and Loss – generating performance statements that more accurately quantify the external environmental impacts (such as water used, CO₂ emitted, etc.) of company operations
- A Next-generation Sustainability Scorecard – offering a framework for prioritizing projects based on their financial feasibility and their potential environmental impact
- A Product Prioritization Scorecard – a simulator, initially aimed at data center investments, that helps prioritize investment decisions by accounting for both financial costs and projected reductions in energy consumption
But how they came to be built is important too, Patel believes. “What we did here was innovate in response to a customer need – and we did that by building a virtual team of experts from across a range of disciplines, in this case mostly finance and industrial research. It’s an example, I think, of how large companies will increasingly need to act in the future if they are to innovate successfully.”
Finance team members show passion for sustainability
The effort began three years ago when Patel met Nitesh Sharan, then HP’s Director of Corporate Treasury.
“I already knew about Chandrakant’s work in sustainability,” recalls Sharan, now a Director in HP Investor Relations, “and then I met him in a class we were both involved in and we started talking about how we could learn from one another. One thing that interested both of us was how you could apply more financial rigor to ideas around sustainability.”
Sharan realized that an existing mentoring program run by HP’s corporate finance group offered a way to do just that. The program placed high-potential Finance employees into small teams to collaborate on a project with an HP business partner for a period of six months.
Many Finance mentees jumped at the chance to work with HP Labs, resulting in consecutive sustainability-focused projects in 2011 and 2012. These also drew in staff from HP’s Global Communications Sustainability and Social Innovation team and HP’s Enterprise Services business, who took final possession of two of the tools that the projects created.
Cross team value
“One of the things that quickly became clear was that we were cross-pollinating not just knowledge but our working styles and how we were thinking differently about problems; which was incredibly useful,” notes Amip Shah, the lead HP Labs researcher working with the finance employees.
Shah also appreciated being able to populate his models with real dollar figures. The number-centric folks, meanwhile, appreciated tackling a challenge where the route to the right answer—or even the question being posed—wasn’t necessarily clear.
“When you have an accounting background, you have your credits and debits that you want to fit in a box,” explains Sharan, “and this was something that made our people push how they thought about things.”
That experience will prove valuable as his former mentees go onto more senior jobs in the company, Sharan believes. “Once you get to a certain point in any job, you just don't have answers laid out for you,” he says. “So you've got to be able to find solutions when they're not obvious.”
A new model for innovation
Equally important, says HP Labs’ Patel, is that twenty up-and-coming HP finance professionals are now experts in the fiscal underpinnings of sustainability and thus ready to help address customers’ ongoing sustainability interests.
Indeed, both he and Sharan see in this exchange of expertise and learning a model for how large companies will increasingly need to operate.
“Historically, innovation has typically been anchored on technology, but I think in the future it will also reside very much in the processes by which we come to solutions,” Patel argues.
“To address the problems that our customers will bring to us, we’ll want to stretch across our organization and build virtual teams to dynamically service those needs,” he suggests. “The teams we build won’t always be formed in the same way, of course, but this is a good example of flexibility in allocating human capital – and the kind of thing that we need to be facilitating across the board.”