CDP-FTSE-350-Climate-Change-Report-2012

in consumer behaviour, or both. There are good reasons
for why companies will consider reputational impacts
an increasingly important reporting issue. Diageo, for
instance, highlights that 2011 was a record year for
shareholder resolutions related to environmental issues
including greenhouse gas reporting. Spectrics notes that
a number of the products it developed in 2011 have been
influenced by climate change and reflect the drive from its
customers to reduce energy consumption and emissions.
Reporting can translate into a boost to brand value and
reputation. British Sky Broadcasting notes that emission
reporting guidelines (it uses Defra’s Voluntary Reporting
Guidelines and the Greenhouse Gas Protocol) have
enabled companies that are investing and reducing
their carbon emissions to benefit by being seen to be a
leader on climate change. This, in turn, can bring with it
reputational benefits, the ability to attract and retain talent
and the opportunity to build new partnerships with likeminded
organisations and suppliers. Electrocomponents
supports this assertion by noting that reporting
obligations can make its customers more aware of energy
conservation opportunities which may increase the
demand for its products and services.
A leading reputation can stem from reporting
commitments but also from bold internal policies. For
example, Lloyds Banking introduced in 2011 a ‘No
Travel Week’ once a month to reduce its business travel
emissions by 20% by 2020. Imperial Tobacco grants
environmental projects exemptions from their normal
requirements that pay backs should occur within three
years. Communicating and reporting this will improve a
company’s reputation.
Consistency and reliability of emissions data
The UK’s mandatory reporting regulation will require
companies to report their Scope 1 and 2 emissions in
their annual reports. While responding companies are
increasingly confident in measuring and reporting their
Scope 1 and Scope 2 emissions, there is still some way
to go with the reporting of Scope 3 emissions. The quality
of Scope 3 data disclosed to CDP was mixed due to the
complexity involved in assessing some types of Scope
3 emissions. For example, a majority of responding
companies (69%) measured business travel emissions
as part of their Scope 3 emissions but few reported their
upstream (19%) and downstream goods (25%) emissions.
The updated Scope 3 protocol released in November 2011
will help consistency of reporting, but until there is a real
driver to report on this area, the harder to measure Scope
3 items are unlikely to be reported in full.
Financial auditors hold a responsibility to read all financial
and non-financial information in the annual report
to identify material inconsistencies with the audited
financial statements. This includes the data that will be
reported by companies next year as part of the UK’s
mandatory reporting regulations. Any apparent material
misstatements or inconsistencies may impact the financial
audit opinion. Over time, this may be seen as a risk that
“Longer term, we have integrated
our Carbon Critical Design
philosophy into all of our business
decisions. The campaign aimed to
raise our employees’ awareness
of the criticality of carbon in every
project that we deliver so that they
in turn could engage our clients
on carbon.”
Atkins
leads companies to request that their emissions data is
assured.
Reporting comparable and reliable data is important to
ensure the data can be relied upon to drive key decisions.
Stakeholders are looking for independent third party
verification or assurance to help them to assess the
materiality and accuracy of the companies’ reported data.
There was an increase in companies reporting some form
of verification or assurance of their emissions in 2012
from 25% in 2011 to 35% in 2012. CDP has provided
considerable input to drive this rise in verification, including
the Carbon Performance Leadership Index (CPLI) (see page
26) entry requirement for verification or assurance over
Scope 1 & 2. Verification and assurance adds credibility to
companies’ efforts in tackling and reporting their actions on
climate change: it adds an independent, external opinion
on the data and is strong proof for investors of companies’
willingness to clearly disclose their performance and
their progress. This increase in verification of emissions
will prepare these companies for future, more stringent,
reporting regulation, and reduce the risk of incorrect
emissions reporting.
Gaining a business and strategic advantage
from reporting
Companies are increasingly aware of the benefit of
reporting on carbon issues. As Tesco notes, growing
consumer awareness of climate change means that
there are strong reputational benefits to taking a lead
in the transition to a low carbon economy: companies’
actions can have a significant bearing on the ability to
win business and/or investors. 89% of CDLI companies
already recognise these reputational opportunities (non-
CDLI: 55%).
BT Group highlights that, in 2012, its sustainability
credentials were requested in £2.7billion of customer
bids. The potential revenue streams are huge: RBS views
the climate change-related market to be £200-400bn in
size while HSBC’s Climate Change Centre of Excellence
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