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

Taking the next
step in reporting
Over the last few years, we have seen sustainability and
climate change move more towards the mainstream of
business thinking and reporting. This has been driven
by a number of factors: companies seeing the potential
business benefits (for example GE generated US$21bn in
revenues in 2011 from a US$2.3 billion R&D investment in
their eco-imagination division); the realisation that growth
cannot be sustained with declining natural capital; and a
need for companies to meet changing customer needs.
What is clear is that businesses are seeing sustainability
and climate change as a new way in which to change their
business model, strategy and generate and sustain multiple
competitive advantages into the future.
However, capitalising on this opportunity is not
straightforward. This is where reporting has a part to
play. Reporting is all about telling it how it is: in a way that
is balanced, unbiased, clear about the relevance to the
business and some external context. However, it also needs
to be concise, to the point, and memorable. And when it
comes to corporate reporting, comparability should be
added to this list of attributes.
With all of these attributes it is challenging but necessary
to demonstrate how a business is seizing the opportunities
and addressing the risks from climate change. The UK’s
recent announcement of mandatory greenhouse gas
emissions reporting for companies listed on the London
Stock Exchange provides the necessity for many companies
to report. The challenge will be telling a compelling picture
to go along side the basic information that needs to be
disclosed.
Alan McGill,
Partner,
PwC
The underlying principles of integrated reporting are a good
place to start when looking at the next steps in reporting:
• Discuss the external market drivers: capture economic,
competitive, regulatory, geopolitical, environmental, social
and technological drivers and be future orientated about
how these are shaping the market in which you operate.
• Be transparent around your strategy: show how this
responds to the market drivers, is aligned to remuneration
policies and the identified risks, and inform the reader
about the extent of this across the value chain in which
you operate.
• Explain how the business model enables you to
differentiate: include the relative importance of resources
(financial, human and natural capital) and relationships
(customers, suppliers, employees, etc.).
• Disclose your performance: give a balanced assessment
of performance on progress against strategy, including
Key Performance Indicators and targets, to provide
insight into how the business is dealing with the market
drivers.
• Think of the future: the future orientation of the business
and how it is going to continue into the future will be
important to the reader.
Giving a balanced picture is not as easy as it sounds.
Climate change is a complex issue fraught with uncertainty.
Admitting that you do not have all the answers and don’t
have certainty about how it will impact the business is
never easy. But biased reporting has less credibility and
risks being branded as ‘greenwash’. Those who have the
courage to deal with uncertainty are those who will capitalise
on the opportunities.
19