Ethical Corporation Report Summary - Ghg Reporting
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Corporate Greenhouse Gas Emissions Reporting How the FT500 report on their GHG Emissions Executive Summary The full report is available at www.ethicalcorp.com/greenhousegas
Ethical Corporation 2008
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Contents
Foreword ..............................................................................................................................................................5 Executive Summary .............................................................................................................................................6 Introduction and Methodology ...........................................................................................................................8 Chapter 1: Measuring and Verifying Absolute Emissions ..................................................................................12 1a – Introduction to GHG Emissions-Reporting Protocols..................................................................................12 1b – Summary of Commonly-Used Emissions-Reporting Guidelines and Protocols...........................................13 1c – Companies’ Views of GHG Emissions Reporting and Verification ..............................................................20 1d – Use of Protocols and Guidelines as Quoted in CDP5 Responses..............................................................25 1e – Overview of Select Industrial Organisations’ GHG Emissions-Reporting Methodologies...........................30 • The Banking and Finance Sector ..............................................................................................................31 • The Retail Sector.......................................................................................................................................31 1f – Verifying GHG Emissions .............................................................................................................................33 Chapter 2: Using Emissions-Intensity Metrics .................................................................................................39 2a – Introduction to Emissions Intensity...........................................................................................................39 2b – Use of Emissions-Intensity Metrics as Quoted in CDP5 Responses..........................................................40 2c – Carbon-Intensity Reporting Among Survey of Respondents......................................................................45 Chapter 3: Stakeholders’ Views on Corporate GHG Emissions Reporting.........................................................46 3a – The NGO View of Corporate GHG Emissions Reporting ............................................................................46 3b – Investors’ Views on Corporate GHG Emissions Reporting ........................................................................48 Chapter 4: Use of Absolute Emissions and Emissions-Intensity Targets Among the FT500 .............................53 4a – Introduction to Absolute Emissions and Emissions-Intensity Targets .......................................................53 4b – How the FT500 Use Absolute Emissions and Emissions-Intensity Targets................................................55 4c – Survey Respondents’ Views on Emissions-Reduction and Emissions-Intensity Targets ............................58 Chapter 5: National Government Policies and Guidelines.................................................................................59 Australia .............................................................................................................................................................59 Canada...............................................................................................................................................................60 China ..................................................................................................................................................................61 India...................................................................................................................................................................62 Japan..................................................................................................................................................................62 South Africa .......................................................................................................................................................63 USA ....................................................................................................................................................................63 European Union .................................................................................................................................................64 France.................................................................................................................................................................65 Germany.............................................................................................................................................................66 Norway ...............................................................................................................................................................67 Sweden ..............................................................................................................................................................67 UK......................................................................................................................................................................68 Conclusion ........................................................................................................................................................70 Appendices ........................................................................................................................................................72 References ........................................................................................................................................................88
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Tables and Figures Contents
Introduction and Methodology Table 1: CDP response status of FT500 companies ............................................................................................8 Figure 1: CDP response status of FT500 companies ..........................................................................................8 Table 2: FT500 companies reporting their GHG emissions to CDP5 by region ..................................................8 Table 3: ECI sectors ............................................................................................................................................9 Table 4: Summary reporting practice of total sample ........................................................................................9 Figure 2: Summary reporting practice of total sample........................................................................................9 Figure 3: Summary reporting practice in the USA and Canada..........................................................................10 Figure 4: Summary reporting practice in Europe ..............................................................................................10 Figure 5: Summary reporting practice in Australia and New Zealand ................................................................10 Figure 6: Summary reporting practice in Emerging markets ..............................................................................10 Figure 7: Summary reporting practice in Rest of the world ..............................................................................10 Figure 8: Number of companies per sector relative to number reporting absolute emissions ........................11 Chapter 1 Table 5: Summary – key characteristics of main GHG emissions-reporting protocols ......................................19 Table 6: Protocols and guidelines used by surveyed companies ....................................................................20 Table 7: Approximate GHG emissions measurement and verification costs ......................................................21 Table 8: Overall frequency of protocols and guidelines as quoted in CDP5 responses, by region ..................25 Figure 9: Frequency of guidelines by region (excluding the GHG Protocol)......................................................26 Figure 10: Frequency of the GHG Protocol, by region ......................................................................................26 Table 9: Frequency of standard protocols and guidelines used – Aerospace and Defence ..............................27 Table 10: Frequency of standard protocols and guidelines used – Automobiles and Parts..............................27 Table 11: Frequency of standard protocols and guidelines used – Banking and Finance ................................27 Table 12: Frequency of standard protocols and guidelines used – Chemicals ..................................................27 Table 13: Frequency of standard protocols and guidelines used – Food and Beverages..................................27 Table 14: Frequency of standard protocols and guidelines used – Health and Pharmaceuticals......................27 Table 15: Frequency of standard protocols and guidelines used – Industrials ................................................28 Table 16: Frequency of standard protocols and guidelines used – Insurance ..................................................28 Table 17: Frequency of standard protocols and guidelines used – Leisure and Media ....................................28 Table 18: Frequency of standard protocols and guidelines used – Mining and Metals ..................................28 Table 19: Frequency of standard protocols and guidelines used – Oil and Gas ..............................................28 Table 20: Frequency of standard protocols and guidelines used – Personal and Household Goods ..............28 Table 21: Frequency of standard protocols and guidelines used – Real Estate................................................28 Table 22: Frequency of standard protocols and guidelines used – Retail ........................................................29 Table 23: Frequency of standard protocols and guidelines used – Support Services ......................................29 Table 24: Frequency of standard protocols and guidelines used – Technology................................................29 Table 25: Frequency of standard protocols and guidelines used – Telecommunications ................................29 Table 26: Frequency of standard protocols and guidelines used – Tobacco ....................................................29 Table 27: Frequency of standard protocols and guidelines used – Transport and Logistics ............................29 Table 28: Frequency of standard protocols and guidelines used – Utilities ....................................................29 Table 29: Summary of verification practice, by region ......................................................................................33 Figure 11: Overall summary of verification practice ..........................................................................................33 Figure 12: Verification practice in USA and Canada ..........................................................................................34 Figure 13: Verification practice in Europe ..........................................................................................................34 Figure 14: Verification practice in Australia and New Zealand ..........................................................................34 Figure 15: Verification practice in Emerging markets ........................................................................................34 Figure 16: Verification practice in the Rest of the world ..................................................................................34 Figure 17: Verification practice – Frequency of external verifiers used, by region ............................................35
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Figure 18: Number of companies employing the GHG protocol that use an external verifier ..........................35 Table 30: Relative importance of factors in determining the cost of emissions audits, according to auditors ........37 Table 31: Approximate range of time in weeks required to verify a client’s annual GHG emissions figures, according to auditors ............................................................................................................................37 Chapter 2 Table 32: Companies reporting emissions intensity relative to those reporting absolute emissions, by region....40 Figure 19: Total number of companies reporting emissions intensity relative to those reporting absolute emissions ............................................................................................................................................41 Table 33: Percentage of companies reporting emissions intensity, by sector ..................................................42 Table 34: Frequency of emissions-intensity indicators used, by sector ............................................................43 Figure 20: Overall frequency of emissions-intensity indicators ........................................................................44 Chapter 3 Table 35: Ranking investment criteria for non-carbon-intensive companies ....................................................49 Table 36: Ranking investment criteria for carbon-intensive companies............................................................49 Chapter 4 Figure 21: Total frequency of absolute emissions and emissions-intensity targets ..........................................55 Figure 22: Summary of target use ....................................................................................................................55 Figure 23: Summary of target use, by region ....................................................................................................55 Figure 24: Timeframes for absolute-emissions-reduction targets......................................................................56 Figure 25: Timeframes for emissions-intensity-reduction targets ......................................................................57 Appendices Emissions-reporting guidelines and protocols quoted and abbreviation used in this report ..........................74 Verification agencies mentioned in FT500 companies’ responses to the CDP5 questionnaire ........................75 Emissions intensity indicators used, by sector, including additional detail noted in CDP5 responses............76 Absolute emissions and emissions-intensity targets set across industry ........................................................80
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Executive Summary
lthough there are a number of governmental and non-governmental bodies striving to advance the current state of corporate greenhouse gas (GHG) emissions reporting, there is still a great deal of inconsistency and therefore a lack of comparability between corporations' reports on their GHG emissions and emissions-reduction targets. There are a number of highly-developed protocols and guidelines for reporting emissions available to corporations (we note a total of 34 in the responses of FT500 companies to the 5th Carbon Disclosure Project request (CDP5), of which the most widely used is the WBCSD/WRI GHG Protocol. But it seems that some such voluntary standards can put a ‘certification stamp’ on companies’ emissions-reporting processes, even though some companies may not follow the guidelines/protocols to the same extent as others. Most of the guidelines quoted by companies in their CDP responses are voluntary, and although seven of the nine protocols assessed in detail in this report include verification standards, external verification is required only for three of them (one being the EU ETS Monitoring, Reporting and Verification guidelines).
A
Costs of adhering to the various standards Estimated costs of collecting data and calculating GHG Protocol Scope 1 GHG emissions varied between €75,000, for a chemical company, and €800,000, for an anonymous food and beverages company. How much of their reported emissions figures companies veri and the cost of their doing so both vary significantly. The lowest and highest verification costs – €50,000 and €500,000, respectively – both fall within the pharmaceuticals sector. However, it is dicult to determine how much overlap exists between payments to external agencies for collecting data and payments for their services in veriing data. Of the companies that responded to our survey questions concerning GHG emissions-reporting costs, 61.5% found them "high but acceptable", while 15% found them "too high".
Standards used and frequency of verification As anticipated, the GHG Protocol is by far the guideline most commonly-used by companies in measuring their emissions, followed by the US-EPA as the second-most common, and by the guidelines recommended by the UK government department Dea as the third-most common. Just over half of the companies using standards
veri them, and less than half of the companies using the GHG Protocol have their emissions data externally verified. However, companies headquartered in Europe are more likely to veri their emissions than companies headquartered in the US. The region in which a company is headquartered is the strongest influence on selection of the guidelines used to measure GHG emissions, with many companies using national, government-advocated standards. There is no correlation between the use of general, cross-industry reporting guidelines (e.g. the GHG Protocol and the IPCC guidelines) and industry sectors, but some industries – notably banking and finance, and oil and gas – have developed one or more of their own GHG emissions-reporting standards, and these are widely adopted.
Reporting emissions intensity The majority of the companies in our sample report both emissions intensity and absolute emissions. Higher-emitting companies are more likely to report GHG emissions-intensity data, but it is dicult to ascertain whether this is because higher-emitters are under a greater obligation to report to the CDP, or because there is no consistent place for lighteremitting companies to report such information in their CDP response. It is interesting to note that, of the four aerospace and defence companies in the sample, only two report their GHG emissions. Three even specifically note that they do not report their emissions intensity (although it should also be noted that United Technologies Corporation uses an energy-eciency indicator). In this case, all four companies are based in the US, but since aviation is considered a significant contributor to climate change and will soon be integrated into the EU ETS, it could be expected that there would be greater pressure on aerospace and defence companies to report their emissions intensity. There is a great deal of variation in the nature of emissions-intensity indicators used by companies. While in some sectors (e.g. utilities) there is a strong tendency for companies to use the same emissionsintensity indicators, there are industry sectors (e.g. telecommunications) in which there is definitely scope for harmonising the indicators used.
Stakeholder views on GHG emissions reporting We were disappointed by the diculty of finding NGOs willing to share their views on corporate GHG emissions reporting. Only two of the 16 NGOs approached proved willing to give feedback. WWF
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
noted that the current state of corporate GHG emissions reporting is inadequate, and suggested the need for increased standardisation among industry sectors. The investor representatives who answered our survey ranked the ISO 14064 standard below the GHG Protocol as an effective reporting protocol, although all investors surveyed suggested that the current standards available to companies are inadequate. Suggestions given as to what would improve corporate emissions-reporting standards included increased consistency in reporting and a greater link between carbon-performance reporting and financials.
emissions reporting or employ an external agency to carry out this responsibility. Despite not having a national emissions cap, Japan has had guidelines in place for reporting GHG emissions since 2000. Although these are not enforced, the level of reporting among Japanese companies suggests that they are reasonably effective. China, India, and South Aica do not currently have central schemes encouraging companies to report on their emissions, but the State Environmental Protection Administration of China (SEPA) last year launched a "green securities" scheme asking listed companies, regardless of industry sector, to expand their environmental reporting. The conclusions of this report include that:
Reporting targets Excluding the companies setting a target of carbon neutrality, twice as many companies report having set an absolute emissions reduction target as report setting an emissions intensity reduction target. Only 27 (10%) out of the pool of 266 companies reporting on their GHG emissions report targets for both emissions intensity and absolute emissions reductions. There is considerable inconsistency in the way in which companies report their targets. In general, timeames for absolute emissions reductions are set for 5-20 years. Only five companies set reduction timeames over 20 years. The most notable of these is National Grid, which reported a target to reduce GHG emissions by 60% below 2000 levels by 2050 (and this target was subsequently revised to an 80% reduction by 2050).
Country analysis Australia, Canada, and the UK are the only countries in which it is or will soon be mandatory for companies with emissions levels over a certain threshold (or meeting other specific criteria) to report on their emissions. However, many of the countries surveyed either offer their own guidelines for voluntary
• National governments appear to have an influence on how companies report on their GHG emissions, even when reporting is not mandatory. There is thus greater scope for collaboration between national governments and government agencies to standardise reporting internationally; • There is a need for increased scrutiny and standardisation of the extent to which companies comply with specific protocols and guidelines. Currently a company may adopt only certain elements of a given reporting protocol and need not speci exactly which these elements are; • There is a lack of benchmarks for assessing individual corporations’ targets and their performance in meeting them. Industry associations and investors could play an active role in harmonising the ways in which companies within given sectors report on their emissions intensity and set their emissions-reduction targets. Emissions-intensity benchmarks for specific industrial sectors will inevitably require constant revision to take account of technology advances, but as this report shows, the statistical basis for such benchmarks is not yet established.
Ethical Corporation report centre Recent publications cover topics such as anti-corruption, voluntary initiatives in CSR, emerging market issues, and managing carbon emissions. You can also visit Ethical Corporation’s website and download some free research papers: www.ethicalcorp.com/reports Anti-corruption, ethics and compliance in Russia Practical information to develop local compliance strategies and overcome corruption challenges. For more information, current prices or online ordering, visit: www.ethicalcorp.com/russia Anti-corruption, ethics and compliance in China and Counter corruption in your supply chain in China Learn more about the issues critical to your operational security, ethical management and success in China. For more information, current prices or online ordering, visit: www.ethicalcorp.com/china Best practices for designing effective ethics programmes Find out which ethics and compliance training is most effective and productive. For more information, current prices or online ordering, visit: www.ethicalcorp.com/ectraining How to manage carbon reduction, and make it pay A hands-on management briefing on real-life ways big UK companies cut carbon, and their costs. Order online or obtain more information at: www.ethicalcorp.com/crc Corporate greenhouse gas emissions reporting Learn how your competitors are calculating and verifying their GHG emissions – and discover which metrics and verification standards will work for you. For more information, current prices or online ordering, visit: www.ethicalcorp.com/greenhousegas Guide to industry initiatives in CSR Get the inside track from some of the world’s key industry-based initiatives. For more information, current prices or online ordering, visit: www.ethicalcorp.com/initiatives Job-specific guides for embedding CSR throughout your company Winning methods for integrating sustainability into operational departments including communications, finance and facilities. For more information, current prices or online ordering, visit: www.ethicalcorp.com/csr Essential strategies for effective emissions trading and offsetting With practical information from the leading companies, this report is everything you need to develop your company’s emissions trading and offsetting strategy. Including case studies from 15 companies across industry. For more information, current prices or online ordering, visit: www.ethicalcorp.com/emissionstrading The must-have guide to water ethics, footprinting, programmes and supply security Learn how water risks factor into your operations, and what you should do to ethically manage water use. For more information, current prices or online ordering, visit: www.ethicalcorp.com/water
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Ethical Corporation 2008
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Contents
Foreword ..............................................................................................................................................................5 Executive Summary .............................................................................................................................................6 Introduction and Methodology ...........................................................................................................................8 Chapter 1: Measuring and Verifying Absolute Emissions ..................................................................................12 1a – Introduction to GHG Emissions-Reporting Protocols..................................................................................12 1b – Summary of Commonly-Used Emissions-Reporting Guidelines and Protocols...........................................13 1c – Companies’ Views of GHG Emissions Reporting and Verification ..............................................................20 1d – Use of Protocols and Guidelines as Quoted in CDP5 Responses..............................................................25 1e – Overview of Select Industrial Organisations’ GHG Emissions-Reporting Methodologies...........................30 • The Banking and Finance Sector ..............................................................................................................31 • The Retail Sector.......................................................................................................................................31 1f – Verifying GHG Emissions .............................................................................................................................33 Chapter 2: Using Emissions-Intensity Metrics .................................................................................................39 2a – Introduction to Emissions Intensity...........................................................................................................39 2b – Use of Emissions-Intensity Metrics as Quoted in CDP5 Responses..........................................................40 2c – Carbon-Intensity Reporting Among Survey of Respondents......................................................................45 Chapter 3: Stakeholders’ Views on Corporate GHG Emissions Reporting.........................................................46 3a – The NGO View of Corporate GHG Emissions Reporting ............................................................................46 3b – Investors’ Views on Corporate GHG Emissions Reporting ........................................................................48 Chapter 4: Use of Absolute Emissions and Emissions-Intensity Targets Among the FT500 .............................53 4a – Introduction to Absolute Emissions and Emissions-Intensity Targets .......................................................53 4b – How the FT500 Use Absolute Emissions and Emissions-Intensity Targets................................................55 4c – Survey Respondents’ Views on Emissions-Reduction and Emissions-Intensity Targets ............................58 Chapter 5: National Government Policies and Guidelines.................................................................................59 Australia .............................................................................................................................................................59 Canada...............................................................................................................................................................60 China ..................................................................................................................................................................61 India...................................................................................................................................................................62 Japan..................................................................................................................................................................62 South Africa .......................................................................................................................................................63 USA ....................................................................................................................................................................63 European Union .................................................................................................................................................64 France.................................................................................................................................................................65 Germany.............................................................................................................................................................66 Norway ...............................................................................................................................................................67 Sweden ..............................................................................................................................................................67 UK......................................................................................................................................................................68 Conclusion ........................................................................................................................................................70 Appendices ........................................................................................................................................................72 References ........................................................................................................................................................88
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Tables and Figures Contents
Introduction and Methodology Table 1: CDP response status of FT500 companies ............................................................................................8 Figure 1: CDP response status of FT500 companies ..........................................................................................8 Table 2: FT500 companies reporting their GHG emissions to CDP5 by region ..................................................8 Table 3: ECI sectors ............................................................................................................................................9 Table 4: Summary reporting practice of total sample ........................................................................................9 Figure 2: Summary reporting practice of total sample........................................................................................9 Figure 3: Summary reporting practice in the USA and Canada..........................................................................10 Figure 4: Summary reporting practice in Europe ..............................................................................................10 Figure 5: Summary reporting practice in Australia and New Zealand ................................................................10 Figure 6: Summary reporting practice in Emerging markets ..............................................................................10 Figure 7: Summary reporting practice in Rest of the world ..............................................................................10 Figure 8: Number of companies per sector relative to number reporting absolute emissions ........................11 Chapter 1 Table 5: Summary – key characteristics of main GHG emissions-reporting protocols ......................................19 Table 6: Protocols and guidelines used by surveyed companies ....................................................................20 Table 7: Approximate GHG emissions measurement and verification costs ......................................................21 Table 8: Overall frequency of protocols and guidelines as quoted in CDP5 responses, by region ..................25 Figure 9: Frequency of guidelines by region (excluding the GHG Protocol)......................................................26 Figure 10: Frequency of the GHG Protocol, by region ......................................................................................26 Table 9: Frequency of standard protocols and guidelines used – Aerospace and Defence ..............................27 Table 10: Frequency of standard protocols and guidelines used – Automobiles and Parts..............................27 Table 11: Frequency of standard protocols and guidelines used – Banking and Finance ................................27 Table 12: Frequency of standard protocols and guidelines used – Chemicals ..................................................27 Table 13: Frequency of standard protocols and guidelines used – Food and Beverages..................................27 Table 14: Frequency of standard protocols and guidelines used – Health and Pharmaceuticals......................27 Table 15: Frequency of standard protocols and guidelines used – Industrials ................................................28 Table 16: Frequency of standard protocols and guidelines used – Insurance ..................................................28 Table 17: Frequency of standard protocols and guidelines used – Leisure and Media ....................................28 Table 18: Frequency of standard protocols and guidelines used – Mining and Metals ..................................28 Table 19: Frequency of standard protocols and guidelines used – Oil and Gas ..............................................28 Table 20: Frequency of standard protocols and guidelines used – Personal and Household Goods ..............28 Table 21: Frequency of standard protocols and guidelines used – Real Estate................................................28 Table 22: Frequency of standard protocols and guidelines used – Retail ........................................................29 Table 23: Frequency of standard protocols and guidelines used – Support Services ......................................29 Table 24: Frequency of standard protocols and guidelines used – Technology................................................29 Table 25: Frequency of standard protocols and guidelines used – Telecommunications ................................29 Table 26: Frequency of standard protocols and guidelines used – Tobacco ....................................................29 Table 27: Frequency of standard protocols and guidelines used – Transport and Logistics ............................29 Table 28: Frequency of standard protocols and guidelines used – Utilities ....................................................29 Table 29: Summary of verification practice, by region ......................................................................................33 Figure 11: Overall summary of verification practice ..........................................................................................33 Figure 12: Verification practice in USA and Canada ..........................................................................................34 Figure 13: Verification practice in Europe ..........................................................................................................34 Figure 14: Verification practice in Australia and New Zealand ..........................................................................34 Figure 15: Verification practice in Emerging markets ........................................................................................34 Figure 16: Verification practice in the Rest of the world ..................................................................................34 Figure 17: Verification practice – Frequency of external verifiers used, by region ............................................35
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Figure 18: Number of companies employing the GHG protocol that use an external verifier ..........................35 Table 30: Relative importance of factors in determining the cost of emissions audits, according to auditors ........37 Table 31: Approximate range of time in weeks required to verify a client’s annual GHG emissions figures, according to auditors ............................................................................................................................37 Chapter 2 Table 32: Companies reporting emissions intensity relative to those reporting absolute emissions, by region....40 Figure 19: Total number of companies reporting emissions intensity relative to those reporting absolute emissions ............................................................................................................................................41 Table 33: Percentage of companies reporting emissions intensity, by sector ..................................................42 Table 34: Frequency of emissions-intensity indicators used, by sector ............................................................43 Figure 20: Overall frequency of emissions-intensity indicators ........................................................................44 Chapter 3 Table 35: Ranking investment criteria for non-carbon-intensive companies ....................................................49 Table 36: Ranking investment criteria for carbon-intensive companies............................................................49 Chapter 4 Figure 21: Total frequency of absolute emissions and emissions-intensity targets ..........................................55 Figure 22: Summary of target use ....................................................................................................................55 Figure 23: Summary of target use, by region ....................................................................................................55 Figure 24: Timeframes for absolute-emissions-reduction targets......................................................................56 Figure 25: Timeframes for emissions-intensity-reduction targets ......................................................................57 Appendices Emissions-reporting guidelines and protocols quoted and abbreviation used in this report ..........................74 Verification agencies mentioned in FT500 companies’ responses to the CDP5 questionnaire ........................75 Emissions intensity indicators used, by sector, including additional detail noted in CDP5 responses............76 Absolute emissions and emissions-intensity targets set across industry ........................................................80
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Executive Summary
lthough there are a number of governmental and non-governmental bodies striving to advance the current state of corporate greenhouse gas (GHG) emissions reporting, there is still a great deal of inconsistency and therefore a lack of comparability between corporations' reports on their GHG emissions and emissions-reduction targets. There are a number of highly-developed protocols and guidelines for reporting emissions available to corporations (we note a total of 34 in the responses of FT500 companies to the 5th Carbon Disclosure Project request (CDP5), of which the most widely used is the WBCSD/WRI GHG Protocol. But it seems that some such voluntary standards can put a ‘certification stamp’ on companies’ emissions-reporting processes, even though some companies may not follow the guidelines/protocols to the same extent as others. Most of the guidelines quoted by companies in their CDP responses are voluntary, and although seven of the nine protocols assessed in detail in this report include verification standards, external verification is required only for three of them (one being the EU ETS Monitoring, Reporting and Verification guidelines).
A
Costs of adhering to the various standards Estimated costs of collecting data and calculating GHG Protocol Scope 1 GHG emissions varied between €75,000, for a chemical company, and €800,000, for an anonymous food and beverages company. How much of their reported emissions figures companies veri and the cost of their doing so both vary significantly. The lowest and highest verification costs – €50,000 and €500,000, respectively – both fall within the pharmaceuticals sector. However, it is dicult to determine how much overlap exists between payments to external agencies for collecting data and payments for their services in veriing data. Of the companies that responded to our survey questions concerning GHG emissions-reporting costs, 61.5% found them "high but acceptable", while 15% found them "too high".
Standards used and frequency of verification As anticipated, the GHG Protocol is by far the guideline most commonly-used by companies in measuring their emissions, followed by the US-EPA as the second-most common, and by the guidelines recommended by the UK government department Dea as the third-most common. Just over half of the companies using standards
veri them, and less than half of the companies using the GHG Protocol have their emissions data externally verified. However, companies headquartered in Europe are more likely to veri their emissions than companies headquartered in the US. The region in which a company is headquartered is the strongest influence on selection of the guidelines used to measure GHG emissions, with many companies using national, government-advocated standards. There is no correlation between the use of general, cross-industry reporting guidelines (e.g. the GHG Protocol and the IPCC guidelines) and industry sectors, but some industries – notably banking and finance, and oil and gas – have developed one or more of their own GHG emissions-reporting standards, and these are widely adopted.
Reporting emissions intensity The majority of the companies in our sample report both emissions intensity and absolute emissions. Higher-emitting companies are more likely to report GHG emissions-intensity data, but it is dicult to ascertain whether this is because higher-emitters are under a greater obligation to report to the CDP, or because there is no consistent place for lighteremitting companies to report such information in their CDP response. It is interesting to note that, of the four aerospace and defence companies in the sample, only two report their GHG emissions. Three even specifically note that they do not report their emissions intensity (although it should also be noted that United Technologies Corporation uses an energy-eciency indicator). In this case, all four companies are based in the US, but since aviation is considered a significant contributor to climate change and will soon be integrated into the EU ETS, it could be expected that there would be greater pressure on aerospace and defence companies to report their emissions intensity. There is a great deal of variation in the nature of emissions-intensity indicators used by companies. While in some sectors (e.g. utilities) there is a strong tendency for companies to use the same emissionsintensity indicators, there are industry sectors (e.g. telecommunications) in which there is definitely scope for harmonising the indicators used.
Stakeholder views on GHG emissions reporting We were disappointed by the diculty of finding NGOs willing to share their views on corporate GHG emissions reporting. Only two of the 16 NGOs approached proved willing to give feedback. WWF
CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
noted that the current state of corporate GHG emissions reporting is inadequate, and suggested the need for increased standardisation among industry sectors. The investor representatives who answered our survey ranked the ISO 14064 standard below the GHG Protocol as an effective reporting protocol, although all investors surveyed suggested that the current standards available to companies are inadequate. Suggestions given as to what would improve corporate emissions-reporting standards included increased consistency in reporting and a greater link between carbon-performance reporting and financials.
emissions reporting or employ an external agency to carry out this responsibility. Despite not having a national emissions cap, Japan has had guidelines in place for reporting GHG emissions since 2000. Although these are not enforced, the level of reporting among Japanese companies suggests that they are reasonably effective. China, India, and South Aica do not currently have central schemes encouraging companies to report on their emissions, but the State Environmental Protection Administration of China (SEPA) last year launched a "green securities" scheme asking listed companies, regardless of industry sector, to expand their environmental reporting. The conclusions of this report include that:
Reporting targets Excluding the companies setting a target of carbon neutrality, twice as many companies report having set an absolute emissions reduction target as report setting an emissions intensity reduction target. Only 27 (10%) out of the pool of 266 companies reporting on their GHG emissions report targets for both emissions intensity and absolute emissions reductions. There is considerable inconsistency in the way in which companies report their targets. In general, timeames for absolute emissions reductions are set for 5-20 years. Only five companies set reduction timeames over 20 years. The most notable of these is National Grid, which reported a target to reduce GHG emissions by 60% below 2000 levels by 2050 (and this target was subsequently revised to an 80% reduction by 2050).
Country analysis Australia, Canada, and the UK are the only countries in which it is or will soon be mandatory for companies with emissions levels over a certain threshold (or meeting other specific criteria) to report on their emissions. However, many of the countries surveyed either offer their own guidelines for voluntary
• National governments appear to have an influence on how companies report on their GHG emissions, even when reporting is not mandatory. There is thus greater scope for collaboration between national governments and government agencies to standardise reporting internationally; • There is a need for increased scrutiny and standardisation of the extent to which companies comply with specific protocols and guidelines. Currently a company may adopt only certain elements of a given reporting protocol and need not speci exactly which these elements are; • There is a lack of benchmarks for assessing individual corporations’ targets and their performance in meeting them. Industry associations and investors could play an active role in harmonising the ways in which companies within given sectors report on their emissions intensity and set their emissions-reduction targets. Emissions-intensity benchmarks for specific industrial sectors will inevitably require constant revision to take account of technology advances, but as this report shows, the statistical basis for such benchmarks is not yet established.
Ethical Corporation report centre Recent publications cover topics such as anti-corruption, voluntary initiatives in CSR, emerging market issues, and managing carbon emissions. You can also visit Ethical Corporation’s website and download some free research papers: www.ethicalcorp.com/reports Anti-corruption, ethics and compliance in Russia Practical information to develop local compliance strategies and overcome corruption challenges. For more information, current prices or online ordering, visit: www.ethicalcorp.com/russia Anti-corruption, ethics and compliance in China and Counter corruption in your supply chain in China Learn more about the issues critical to your operational security, ethical management and success in China. For more information, current prices or online ordering, visit: www.ethicalcorp.com/china Best practices for designing effective ethics programmes Find out which ethics and compliance training is most effective and productive. For more information, current prices or online ordering, visit: www.ethicalcorp.com/ectraining How to manage carbon reduction, and make it pay A hands-on management briefing on real-life ways big UK companies cut carbon, and their costs. Order online or obtain more information at: www.ethicalcorp.com/crc Corporate greenhouse gas emissions reporting Learn how your competitors are calculating and verifying their GHG emissions – and discover which metrics and verification standards will work for you. For more information, current prices or online ordering, visit: www.ethicalcorp.com/greenhousegas Guide to industry initiatives in CSR Get the inside track from some of the world’s key industry-based initiatives. For more information, current prices or online ordering, visit: www.ethicalcorp.com/initiatives Job-specific guides for embedding CSR throughout your company Winning methods for integrating sustainability into operational departments including communications, finance and facilities. For more information, current prices or online ordering, visit: www.ethicalcorp.com/csr Essential strategies for effective emissions trading and offsetting With practical information from the leading companies, this report is everything you need to develop your company’s emissions trading and offsetting strategy. Including case studies from 15 companies across industry. For more information, current prices or online ordering, visit: www.ethicalcorp.com/emissionstrading The must-have guide to water ethics, footprinting, programmes and supply security Learn how water risks factor into your operations, and what you should do to ethically manage water use. For more information, current prices or online ordering, visit: www.ethicalcorp.com/water
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