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Five learnings and five challenges from five years of carbon reporting research

Burgess COMMENTARY

Peter Burgess

Five learnings and five challenges from five years of carbon reporting research

For the past five years Carbon Clear have carried out research into how well the FTSE 100 reports on their carbon management performance.

Carbon

In those five years we have seen many changes – to the composition of the FTSE 100, to the depth and breadth of companies’ reporting and to our own scoring criteria.

Our research this year found that there are few game changers when it comes to carbon reporting. The top 20 places have been held by 36 different companies over the 5-year period. Marks & Spencer Group, BT Group, Sky, Aviva, Kingfisher, Sainsbury’s and Reed Elsevier have held places in the top 20 every year. Marks & Spencer Group, Sky and Aviva have consistently been ranked in the top 10, leading the FTSE 100 in carbon reporting performance since 2011.

Our research this year found that there are few game changers when it comes to carbon reporting. BT Group ranked first this year, just gaining ground on Marks and Spencer Group. Both of these companies really pave the way in terms of climate change best practice with holistic and extensive approaches to their carbon strategies.

We hope that other companies can learn from the best practice examples and see the value to both their bottom line and to the planet of implementing a robust carbon management strategy and reporting it to their stakeholders.

And all businesses, not just the FTSE 100, must play a role in meeting carbon reduction targets and managing their impacts. With international climate negotiations taking place in Paris at the end of this year and demands being made to address the potential risks of climate change from the media, general public, and companies themselves, the time has never been better for companies to think about their approach.

Comply or die

Our five-year comparison of the carbon performance of the FTSE 100 shows the average scores of companies ranked in the bottom 10 is the same in 2015 as it was in 2011. At first glance, this looks like a lack of progress, but when taking into account the tougher scoring criteria, it looks like the lowest scoring companies are making some improvement.

Legislation may play a role in this. In 2013 the government introduced legislation which makes it mandatory for FTSE listed companies to report on carbon emissions in their annual report and accounts. And we found that companies, with the exception of one or two, have complied. This is the beginning of the carbon management journey.

It’s likely that we will see increasingly punitive legislation for carbon emissions management. The challenge for some companies will be making sure they are prepared, whilst others who are already prepared must make sure they maximise the opportunities presented by regulation.

Strategy + targets = robust reductions

Carbon targets are now being set by 73 companies in the FTSE 100, an improvement from 64 companies in 2012. In 2015 70% of companies that had a strategy with specific and measurable reduction targets actually achieved carbon emissions reductions. It is hoped that we will continue to see an increased trend in companies that are planning for short and long-term emissions reduction.

The challenge for carbon strategy and target setting will be adopting a methodology that bases targets in the context of agreed climate change science. Currently BT Group is the only FTSE 100 company to disclose that it has set science-based targets.

Risky business

For 2015 55 companies have assessed the risks of future climate change to their business, a 20% increase since 2012. Assessing the future risks of climate change to businesses is as important as carrying any other risk assessment. It allows identification of material impacts on the company and how these can be mitigated – critical for long term planning. Again, at Carbon Clear we would hope that the number of businesses looking to increase their understanding of climate science becomes widespread.

The challenge here will be to identify opportunities from the risks posed by climate change. 24 companies found opportunities for their business in this manner, there is certainly scope for others to make a change here.

Scoping out emissions

Scope 3 emissions often account for the majority of a company’s carbon footprint, and so it makes sense for robust measurement. In our 2015 research we found that 56 companies report Scope 3 emission data, a 30% increase since 2011. Of these 56 companies, 40 are providing Scope 3 data beyond business travel, compared to only 27 in 2012.

The Greenhouse Gas Protocol provides an extensive and robust approach for measuring and reporting Scope 3 data. In 2015 only nine companies are providing more than five GHG Protocol categories. Companies that undertake a full Scope 3 measurement will improve their reporting and gain a holistic and robust picture of the impacts their business is having. This picture will allow a wider range of risk and opportunities to be considered and enable better business decisions to be made. Carbon as an integral part of corporate strategy At Carbon Clear, we work with companies across many different sectors to manage their full environmental impacts from carbon to water to biodiversity. Our core expertise lies in helping businesses to identify the risks and impacts of climate change on their business and to maximise any opportunities. We are increasingly seeing the need for companies to position carbon management in a wider sustainability and corporate context. Taking a longer term view, putting in place robust and challenging carbon reduction targets and developing a clearly defined strategy are essential ways to improve the security of your business. The Carbon Reporting Performance of the FTSE 100 is available here If you’d like to discuss any of the points in this blog or an assessment of your company’s current carbon management situation, get in touch on 0203 589 9444 or enquiries@carbon-clear.com SUBJECTS Carbon footprinting Carbon management Carbon reporting Add a comment