environment magazine

The benefits of GHG measurement and reporting

By Richard Laverick, Director of Corporate Sustainability at environmental consultancy ADAS.

The Defra consultation for measuring and reporting green house gas emissions by UK companies is currently underway.  The options to be considered include business as usual, enhanced voluntary reporting or different mandatory regimes related to business size or energy usage.  There has been a huge response from industry but whatever the outcome of the consultation, it is worth noting the many benefits that accrue to an organisation or business which has a detailed understanding of the green house gas (GHG) emissions associated with its activities and operating practice. 

Most business leaders and managers can accept that Scope 1 and Scope 2 emissions represent hard earned cash and that identification of the carbon ‘hot spots’ can help in the planning and development of more efficient processes and action plans leading to reduced operating costs and an improved bottom-line. However the emission intensive areas also represent future risk, for example exposure to volatile energy supply and cost and climate change impacts on your own operations and those of your suppliers and clients.

It can be argued that the responsibility for a company to understand and monitor its GHG emissions and the likely impacts of climate change is already enshrined in the Companies Act 2006.  This Act dictates that potential risks to a business should be identified and where possible addressed. Recent supply chain surveys by the ‘The Business Continuity Institute’ indicate that 75 per cent of respondents had experienced disruption to their supply chains due to adverse weather or disruption to energy supplies or transport services, events that will become more frequent as global supply chains become increasingly vulnerable to climate change.

Rising energy costs, fluctuating commodity prices and flu epidemics were also cited as reasons for disruption to supplies.  In addition 20 per cent of respondents thought their company reputation and brand had suffered as a consequence of this disruption.  These are issues that will affect all organisations in all sectors.  However poor understanding of company GHG emissions and what they can mean for your business demonstrates a flawed approach to risk assessment and management and any stakeholder or investor would be right to question the company’s overall approach to risk in other areas of business practice.

A detailed understanding of your own company GHG emissions raises awareness of the potential climate change impacts on your business both in your supply chain and in your everyday business operations.  It engages your management team and provides a focus for ownership and action.  It is clear that future legislation will become more demanding, potential disruption to supply chains will increase and energy costs will continue to rise. These certainties mean that a detailed understanding of company emissions is required now to inform business strategy, inform investment decisions and build adaptive capacity to future proof your business.  Today we require effective action plans and a fully integrated strategy for sustainable business development, simply measuring emissions is not enough.  This is sound governance which allocates ownership and responsibility for risk mitigation and climate change adaptation within the company management structure.  

Preparing your business and developing the resilience to cope with different future scenarios based on the degree of climate change includes attracting and retaining the best talent.  Any business slow to understand the impact that it has on the environment and slow to understand the consequences of a changing world will fail to attract or retain the intellectual capital necessary to innovate and adapt.  This is good business sense but many companies have been slow to recognise that the very best candidates now expect their future employers to have robust and fully integrated strategies for sustainable development that engage communities, respond to climate change and build resilient relationships with stakeholders, a combination which through enhanced reputation will build future value. 

Whatever the outcome of the current consultation, no organisation can continue to ignore the many benefits associated with a detailed knowledge of GHG emissions and effective action plans to ensure future business viability and resilience. The benefits associated with identification of unnecessary cost and wastage, compliance with legislation, developing appropriate business models for a low carbon economy, risk identification and management, business reputation and protecting against value erosion must not be forgotten because competitors will take a more proactive stance.

Ask yourself three questions and be honest in your response:

Do I really understand the impact climate change will have on my business, its clients and suppliers?

Do I know the contribution my business is making to climate change through waste generation, resource inefficiencies and GHG emissions?

As a business are we aligned behind an integrated and fully articulated strategy for sustainable development that will meet the challenge of climate change and ensure we attract the very best candidates to build adaptive capacity and create future value?

Unless you can answer yes to all three questions you are failing to consider the extent of the risks your business is facing or the broader benefits that can accrue from developing a robust action based strategy for sustainable development.