Companies face increasing pressure from governments, investors and other organisations to measure and publish annual greenhouse gas (GHG) production. This rising demand is valuable to encourage disclosure, but is hindered by the lack of a standard international method of reporting. Acknowledgement of the value of such reports is increasing, but as no majority standard currently exists, individuals and small groups have developed their own methods. Research by the CDSB has shown there to be 142 different standards and laws regarding carbon disclosure alone, between only 30 countries.

At a recent event sponsored by the All Party Parliamentary Climate Change Group, ‘Consistency in Climate Change Disclosure for Better Decision Making’,  speakers from the Climate Disclosure Standards Board (CDSB) and the Carbon Disclosure Project outlined recent findings on the value of consistency in corporate disclosure regarding such environmental performance.

Presentations from Paul Simpson, CEO of  CDSB and Executive Director Lois Guthrie, physicist Dr Martin Sené, the Head of Energy and Carbon for BT,  Richard Tarboton, and Corporate Responsibility Manager of Aviva Investors, Stephanie Maier explained why the existing multi-system arrangement makes the comparability of performance challenging and potentially unfeasible. As a specific case in point, research showed that the management of sustainability impacts of businesses in China is more evolved than the majority believe, however the perception of the real situation is distorted by restricted disclosure and limited comparable benchmarking.

Encouraging the finance sector to take account of sustainability issues has been particularly challenging, as, until recently, it has not been considered to be a material investment risk.  Indeed some continue to wait for economic incentives to make the necessary jump. Based on this and other research, recommendations are to start with a simple process, so as not to overwhelm the wary and non-believers, then adding greater detail once procedures are accepted into the norm. A strong theme from the speakers, research and audience was that stakeholders need a ‘carrot and stick’ approach: a clear standard to meet, plus firm encouragement to participate, including legislation if needed.  Support from a variety of perspectives, including pricing and rating instruments, would, the presenters suggested, encourage market mechanisms for promoting the right behaviour.

Consistency in financial disclosure has been repeatedly revised for many years. However, research has shown that such an interval is not available to achieve a standard for climate change disclosure (Paul Simpson: CEO of Carbon Disclosure Project): if our proven fossil fuel reserves are burnt, our climate average could increase by +6°C before the end of this century (Mark Campanale: Founder & Director of Carbon Tracker).

If the impact of climate change issues could be clarified, and so become understood as a common business risk, this would help to improve the treatment of carbon disclosures in annual reports and CR publications; a beneficial add-on. Such clarification would increase the importance of considering long-term risks, rather than waiting for the necessary changes to come about and treat it as a short-term issue, by which time it is possible that little can be done to help.

This CDSB project aims to extend this research, including greater analysis of existing levels of disclosure, the problems associated with inconsistency and then to assess the benefits of greater consistency. The outcomes are to be disclosed at the UN Conference on Sustainable Development in June 2012 to be used as a preface to developing disclosure methodology.

Further reading:

Managing Carbon Governance 
(Dr Rory Sullivan, September 24th 2011)

Support by Mutual Funds for Sustainability Proposals Increases, but is it Happening Quickly Enough?
(Robert Kropp, November 16th 2011)