Environmental Reporting Guidelines and SECR

Environmental Reporting GuidelinesCarbon TRACC helps our clients achieve compliance with Environmental Reporting Guidelines and SECR.

1. Carbon TRACC advise clients on how to robustly report their GHG performance. Furthermore, we help with carbon risk mitigation. We review the lease arrangements of assets to proactively reduce clients’ carbon exposure by re-classifying GHG emissions from Scope 1 to Scope 3. This applies to buildings, vehicles, and all tangible asset classes.
2. (a) We build your GHG inventory. (b) we educate your in-house people to robustly do this and thus save you from annual payouts to consultancies

Environmental Reporting Guidelines and SECR – Background

The Government have introduced regulations on mandatory reporting of greenhouse gas (GHG) emissions by LSE-quoted companies. This reporting of GHG emissions provides transparent GHG reporting. Furthermore, that listed companies are seen to be managing their carbon liabilities. The regulation is given legal force. This is done under Section 85 of the Climate Change Act 2008. As well as under section 416(4) of the Companies Act 2006 requiring the Directors’ report of a company to contain information regarding emissions of GHG for which a company is responsible.

Why is this initiative important?

(1) Government requirement soon to be enacted. Therefore, we must measure and reduce emissions.
(2) GHG reporting is now a board room issue. Many investors are concerned about carbon risks associated with large corporations, with pension trustees having a duty to consider all financially material risks. As well as, exposures of their long-term funds performance. According to a 2010 report “Carbon Risks in UK Equity Funds” (produced by WWF, Mercer and Trucost) significant improvements can be made in portfolio exposures. This is done by expedient of moving investment from poor Carbon Performers to less polluting industry. All whilst maintaining their asset allocation to a specific sector.

What can you do about these GHG risks.

The only practical solution to prepare our businesses and sectors from these real risks is to robustly quantify existing portfolio and industry emissions. This is best done and achieves global acceptance by using the internationally recognised Greenhouse Gas Protocol. As well as its allied international Standard ISO 14064 and conformance to the Mandatory requirements. Which owe much of their construction to GHGP/ISO.

In order to manage and reduce carbon exposures investment managers need to be aware and understand to allow them apply the ISO 14064-1 GHG Standard. While also applying the WBCSD/WRI GHG Protocol for Corporate Accounting to their portfolios. Allowing managers to develop an understanding of the importance of the design and development of verifiable GHG inventories systems and procedures. Therefore, allowing managers to delegate to their staffs. Whilst, also allowing GHG practitioners to be able to apply tools, methods and other good practice guidance in the WBCSD/WRI GHG Protocol for Corporate Accounting and  the requirements of the ISO 14064-1 GHG Standard for the development of inventory requirements.

Responsibility for GHG emissions may also be uncertain and both the WBCSD/WRI GHG Protocol for Corporate Accounting and the ISO 14064-1 GHG Standard allow for reporting to be allocated appropriately. This is done using the Control Share approach or the Equity share consolidation methods.

What is the approach?

The Control Share Consolidation approach allows the organization to account for all quantified GHG emissions from facilities over which it has financial or operational control.
An alternative approach uses Equity share. This is where the organization accounts for all quantified GHG emissions from respective facilities in which it has equity.

Emission types

1. Direct GHG Emissions. This is where the emissions within company’s organizational boundary from sources that company owns or controls such as business travel in company cars.
2. Energy Indirect GHG Emissions. Emissions from the generation of imported electricity heat or steam.
3. Other Indirect GHG Emissions. Indirect GHG Emissions other than from the generation of imported electricity heat or steam.

Examples include:

  1. employee commuting
  2. outsourced activities
  3. contract manufacturing and franchises
  4. waste generated by the organization but managed by another organization
  5. emissions from the use and end-of-life phases of the organization’s products and services
  6. GHG emissions from the production of purchased raw or primary materials

ISO 14064 GHG Standard is flexible so it can be used for different types and sizes of organizations. As well as for different voluntary and mandatory objectives. The ISO 14064 GHG Standard can be used stand alone. However, it is intended to be used in accordance with established procedures from good practice guidance. For example, API, CAPP, INGAA, IPIECA, WBCSD/WRI GHG Protocol, EU-ETS, VCS, and Government Reporting requirements.
An organization reporting against ISO 14064-1 should be informed by the WBCSD/WRI GHG Protocol. In the majority of cases, an organization GHG report that meets ISO needs would also meet GHGP needs, and vice versa.

Inventory adjustment procedures are important because organizations are dynamic, operations may vary over time. To ensure a fair comparison of current GHG emissions over time it is often necessary to recalculate the base year depending on variations in the organizations, mergers, outsourcing and other structural changes. This will impact the organization’s organization and operational boundaries. By implementing a standard procedure for recalculation organizations will create consistency and transparency in their GHG inventories.

View our full list of consultancy services, or view our partners, the Canadian Standards Association, website today.


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