Developments in carbon reporting
Will you report your company’s carbon footprint in your annual report this year?
The UK’s Climate Change Act 2008 requires the government to determine whether to mandate reporting on carbon emissions from April 2012. The government has committed to announce in early 2011 “how it intends to proceed in promoting more widespread and consistent reporting of greenhouse gas emissions”.
Will you report your carbon footprint in your annual report this year?
- Which framework to use?
- What’s the situation in the UK?
- What are your competitors doing?
- Next steps & frequently asked questions
A number of frameworks for carbon reporting have emerged over the past decade. The international Greenhouse Gas Protocol was first issued in 2001 and revised in 2004, and in November 2010 an updated draft standard for measuring Scope 3 emissions was issued for consultation. Certain jurisdictions around the world have mandatory carbon reporting. In the UK, in September 2009 the Department for Environment, Food and Rural Affairs (Defra) published voluntary guidance for UK entities on how to report greenhouse gas emissions (often described as an entity’s ‘carbon footprint report’) and from April 2010 regulatory reporting under the CRC Energy Efficiency Scheme became mandatory for about 3,000 organisations. Also, the number of organisations voluntarily reporting their emissions to the Carbon Disclosure Project has continued to increase, with more than 3,000 participants in 2010.
The Climate Change Act 2008 (CCA 08) requires the government to determine whether to mandate reporting on carbon emissions from April 2012. In November 2010 Defra published a report outlining the results of its research into whether reporting can assist the UK in meeting its carbon reduction commitments under CCA 08. Defra’s research shows that reporting is one of several drivers and can help companies to manage their emissions and improve transparency for investors.
In the next few months, an announcement is expected from the government on whether carbon reporting will become mandatory, and, if so, from when, and for whom.
Many leading businesses are prepared for mandatory carbon reporting - is yours?
In November 2010, we issued a survey of the current formal carbon reporting practices (i.e. in published annual reports or sustainability reports) of a sample of 100 UK listed companies. This indicated that, although there are clear leaders in the field, many companies would have a long way to go to comply with Defra’s disclosure guidance.
Have you considered reporting your carbon footprint in this year’s annual report? If you have the data, you may wish to consider including a summary. The appendices to our survey provide a reporting checklist and illustrative disclosures. You could make more extensive disclosures in a separate sustainability report or embed carbon reporting in your annual report now.
Some useful questions:
- Do you explain the impact of climate change on your business in your annual report? Do you assess climate change to be a risk or opportunity for your business? Do you report this and clearly explain your actions?
- Can you benchmark yourselves? What are your competitors doing? Are you staying ahead of the game or falling behind in this area? Do you need to benchmark your approach?
- How confident are you in your carbon footprint? Have you considered reporting voluntarily in accordance with the Defra guidance? If carbon footprint disclosures are mandated, are you ready to comply? Where would you disclose this information? What assurance over the quality of the data might you look for?
- Can investors with a socially responsible investment (SRI) mandate access the non-financial or environmental, social and governance (ESG) information they need easily within your annual reporting package?