Environmental reporting is not just hot air [Part 1] |

In 2015, 6.2 gigatonnes of carbon (tCO2e) were traded globally valued at $52.8Bn, and the figures are accelerating. The Greenhouse Gas (GHG) market is big business and a win-win for savvy business leaders and eco-warriors alike. (Figures by Climate Observer)

This two-part blog series introduces environmental reporting as a means of compliance, adding value, efficiency and competitive advantage. Part one of this blog series introduces the market and explains how and why we should all be reporting our carbon footprint. Part two will explain the five simple steps to join the 86% of Fortune 500 Companies who use the ISO14064 based GHG reporting protocol.

Mandatory Compliance

Since 2013, quoted companies (as defined in the Companies Act 2006) have reported their GHG footprint within their annual report (complying with the Climate Change Act 2008). Other countries have since adopted or are planning to adopt a similar approach for their main markets.

Companies trading in certain industries within the EU are provided with CO2 quotas that are tradable on the EU-ETS market; the largest carbon trading market in the world. Companies can also buy and sell carbon credits voluntarily to enhance their corporate social responsibility (CSR) performance.

Investor expectations

Environmental Reporting The size of the global sustainable investment market is growing rapidly, and according to a GSIA report, the market was valued at $21 trillion in 2014. Investors are clearly advocating a move towards social responsibility as a pre-requisite to becoming shareholders. This, in turn, raises the demand and hence, the value of the share price.

Installing a successful GHG protocol is also a clear message of intent and competency, as the investor will know the company’s capacity to tackle large issues successfully which impacts positively on future performance perception.

Business efficiency catalyst

Many of the terms and techniques used to define and drive understanding and analysis of GHG reporting are derived from accounting standards and practices. The technique of defining cause and effect chains for companies’ emissions is the same for controlling cost; therefore, companies that adopt a lean approach for the purposes of reducing GHG are also likely to reduce cost. A recent study commissioned by DEFRA estimate these savings for businesses at £23Bn for the UK alone and increasing to £55Bn for longer payback periods.

Implementation of the ISO14000 series can provide a company with an auditable globally recognized standard upon which to build their environmental understanding, management and reporting.

Corporate and Social Responsibility (CSR)

CSR is a philosophy of ensuring a company takes positive steps towards becoming environmentally, ethically and socially responsible and accountable, and seeks to give back to communities and societies as a whole.

Being environmentally aware and actively monitoring and reducing GHG emissions is a part of a company’s overall CSR, which is also reported annually, and part of an investor’s decision-making process. Added to this (according to a Harvard law school forum) is the possibility of attaining competitive advantage from targeting your CSR activities

Companies seeking to enhance their overall CSR tend to nurture cultures around efficient working and reduce cost in return. Additionally, they provide education to the employees and their families, which in turn will reduce the personal consumption of this group.

Environmental reporting is not just hot air [Part 1]

Mandatory Compliance

Investor expectations

Business efficiency catalyst

Corporate and Social Responsibility (CSR)

CONTINUE ON TO READ PART 2:

5 steps to create value by managing your eco-footprint [Part 2]

Further reading

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Steve Treagust

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