Reporting season – whether you have already published or are just about to start, there is no denying it is a busy time of year for sustainability professionals. It is a period of celebrating success in reducing your environmental impact whilst recognising the key areas you need to improve and develop during the coming year. However, with so much of the reporting effort focused on simply meeting mandatory requirements, it can be easy to lose sight of its purpose and link to the wider world.
This has got to change.
Following the Paris Climate Agreement and the progress made during COP23, climate change has been firmly placed on governments and investors agenda. 2018 must be the year that reporting moves beyond the data and focus on these real-world issues.
This blog is a review of the growing significance of climate reporting, current reporting legislations and the value of integrating climate reporting into business strategy.
What is climate reporting?
Climate reporting is a bridge that links your business to the global issue of climate change. It involves reporting on your company’s environmental emissions and discussing the real impact this has on the local, regional and global climate. Internally, it is a framework to understand how climate change will affect your future business and what steps you should be taking to secure your longevity. Environmental performance has been a cornerstone of sustainability reporting for many years now, with the UK Mandatory Greenhouse Gas reporting coming into its 5th year. Many companies, including yours perhaps, have responded to this legislation by simply recording and reporting on the carbon footprint of their business. Climate reporting aims to help you take the next step and start openly discussing the role your business can play in tackling climate change. This new legislative focus on climate reporting alongside heightened interest from investors and consumers will have an impact on your business. Climate reporting presents an opportunity for you to stand out from the crowd, engage with investors and improve long-term efficiency.
Why should your business care?
Every country, except the USA, has now committed to the Paris Climate Agreement. Governments recognise the key role of businesses in helping them meet their global targets and will likely respond by introducing new policies and financial penalties or incentives. By choosing to start integrating elements of climate reporting into your business process now, you have a huge opportunity to get ahead of the curve.
In addition to staying ahead of policy changes, beginning to discuss climate change can have a range of other benefits. For example, you may be able to identify ways to reduce the impacts of your direct operations, resulting in long-term cost savings. Additionally, demonstrating your desire to drive behaviour change within your supply chain or consumer base can remove barriers to investment and make you a more attractive employer or brand.
How can you act?
A mix of legislative and voluntary frameworks are being introduced or amended in 2018, aiming to encourage businesses to recapture the purpose of reporting: as a tool for inspiring change. Here are three key ways you can begin this transition:
- Legislative requirements are being strengthened in 2018 as the EU Non-Financial Reporting (EU NFR) directive comes into force. The increased focus on non-financial KPIs highlights heightened government interest in the role of large public – interest companies must play in a sustainable future. Covering a range of both social and environmental issues, it provides a good framework for you to showcase your commitment to tackling climate change. The reporting is mandatory, the KPI provides the value and purpose. Make sure your target setting is meaningful and relevant to your business.
- The most significant voluntary framework taking effect in 2018 is the results of the Taskforce on Climate-related Financial Disclosures (TCFD). Set up by the Financial Stability Board, the recommendations released in June 2017 inextricably link climate change to future financial performance. Every business will be affected by climate change, either directly or indirectly. You should start integrating climate change into your risk management and strategic planning to help secure your business longevity. Reporting openly on this process will increase investor confidence, and likely spur industry-wide action.
- An increasingly popular way to build a business narrative around climate issues is disclosing through the Climate Disclosure Project (CDP), with 6,300 companies taking part last year (up 8.5% from 2016). This voluntary measure can be a powerful way to indicate to investors that climate change is an important aspect of your business strategy. In 2018 disclosing through the CDP will hold even more weight, as it has incorporated several of the TCFD recommendations. A CDP disclosure provides a cross-industry respected platform to showcase your successes and share industry best-practice. Read our recent post – Reflecting upon the 2017 CDP results and preparing for the 2018 changes to learn more about CDP disclosure in 2018.
Carbon Smart is dedicated to supporting our clients on this journey. From meeting regulatory requirements and developing a narrative for annual reports, to assisting with improving CDP scores, our aim is to help businesses drive the transition to an environmentally responsible and resilient world.
Contact us to learn more about how we can help, we will be delighted to answer any questions that you may have.