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Start saving the climate by using e-Invoicing !

While analysts and investors have always focused on the financial position of companies, today environmental aspects are becoming of greater interest and importance. Financial investors are increasingly assessing the contribution that environmental issues have on intangible corporate value, such as brand value, customer loyalty and retention, and corporate reputation.

With the growing attention for the principles of sustainability many companies started publishing their annual Corporate Social Responsibility (CSR) achievements and/or include relevant environmental key performance indicators in their annual reports. Stakeholders want companies to disclose information about how they have performed in their value creation process, how they have maximized the value of their intangible assets and how they have / will contribute to the environmental theme of climate change.

Studies of several Research Organizations and Institutions in the past years show the environmental impact of switching from paper-based invoicing to electronic invoicing is high. One way for companies to present their commitment to the preservation of the natural environment is by implementing electronic means of doing business such as electronic invoicing and procurement.

A recent study (April 2010) of TNO - the Netherlands Organization for Applied Scientific Research - reveals that paper invoicing has an energy consumption that is almost twice as much and a CO2 emission approximately 1.5 times higher as for digital invoicing. TNO investigated the direct and indirect effects of dematerialization on the usage of energy and the emission of CO2.

To most of us the concept of dematerialization is ‘Less clear than it seems’ and that is precisely the title of a thematic exploration study executed for the Dutch Ministry of VROM (Ministry of Housing, Spatial Planning and the Environment) in September 2000 (published in January 2001). The authors of the document sided with the view that ‘the aim of dematerialization is the reduction of environmental impact of material flows’ and provided a number of definitions, visions and policy suggestions. Their dematerialization policy is aimed towards influencing the development of economic systems in such a way that the environmental impact of the material flow caused by those systems is significantly, and in absolute terms, reduced.

TNO calculated that ten million electronic invoices sent by businesses to governments (B2G) amount to energy savings of 3TJ (terajoule) and almost 200 tonne (tonne) CO2. In their report ‘Energie- en CO2-besparing door elektronisch factureren’ they concluded that switching to digital invoicing for all invoicing types (B2G, B2B and B2C) would result into energy savings of approximately 1PJ (petajoule) and a CO2 emission savings of almost 70 Kt (kilotonne).

In a similar study from 2008 by the Department of Environmental Strategies Research at the Royal Institute of Technology in Sweden, the whole paper invoice life cycle was assessed from the forestry up to and including the recycling of the paper after the legal archive period. In the report ‘Effects of the total change from paper invoicing to electronic invoicing in Sweden’ the authors present their Life Cycle Assessment approach and the results of their analysis.

The study examined the consequences of changing 1,4 billion invoices from distribution on paper to electronic distribution and concluded that this change would be beneficial. If all invoices in Sweden were to be changed from paper to electronic, a total energy saving of around 1.400 TJ-equivalents/year and reductions of greenhouse gas emissions corresponding to 39.000 to 41.000 tonne CO2-equivalents/year would be made.

A study of Methis Environmental in Belgium shows that a saving of 15.000 tonne paper and a reduction of CO2 emission between 24.500 - 33.000 tonne can be achieved by using e-Invoicing instead of printed invoices. Their calculation takes as average 900 millions of invoices printed by year and a use of 50 % recycled paper.

Before the environmental benefits will become visible to everyone a serious uptake of electronic invoicing in Europe is needed. In 2009 the number of businesses using electronic invoicing was 1,4 million and the total volume of processed e-invoices in the B2B segment was 860 million (Source: DB Research & Billintis) . With over 490 million businesses in Europe and a total of 32 billion invoices the percentage of e-invoice users is only 0,2% and the percentage of e-invoices is just 2,7%.

With such low diffusion and penetration of electronic invoicing in Europe Social and Environmental Responsibility requirements can become a perfect instrument for motivating and stimulating decision-makers to start using electronic invoicing.

Tags: e-Invoicing

Last update: 27-11-2011