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

20
The Future of Reporting –
A Company Perspective
A number of multinationals such
as leading telecommunications
group BT have demonstrated a
forward-thinking approach to
preparing their carbon statements
by using the CDSB’s Climate
Change Reporting Framework
for climate change reporting
since 2010.
Reducing our business costs often go hand in hand with
reducing our impacts on the environment. We know this
with certainty since we’ve been measuring and reporting our
environmental performance since 1992. But the goalposts
are shifting, and rightly so. Reporting needs to frame and
illuminate the global challenge of increasing population and
consumption that is bringing break-point pressure on finite
environmental resources.
As a business we are increasingly being asked to
demonstrate how the decisions that we make impact on
the environment and society, in particular through our
supply chain and the products and services we provide our
customers. Some of our customers are making commitments
to accounting for natural capital and exploring aligned
frameworks so that we can all speak the same language
and count the same numbers. Investors too are increasingly
looking to factor environmental considerations into
investment decisions.
For BT, we believe that one of the biggest differences that we
can make is by applying our people, skills and technology to
help reduce the demands on the planet’s natural resources.
For example, it’s been calculated that our sector generates
some 2% of Carbon Dioxide equivalent (CO 2 e) worldwide
and that our products and services could help avoid 15% of
worldwide emissions by 2020.
Neither BT nor its supply chain is a large user of natural
capital, but many of our business customers are, and we
offer a host of services designed to help them be more
efficient. Our primary raw material is energy. Energy powers
the communications solutions that keep people and
businesses connected. In the UK alone BT consumes around
0.7% of the country’s electricity, spending around £250m
per annum and generating over 600,000 tonnes of CO 2 e
emissions.
By leading on emissions reductions activities and CO 2
accounting, as well as driving this through our value chain,
we believe we can make our biggest difference to improving
and preserving natural capital. Reporting plays a key role
here. For a number of years we have been connecting our
fiscal metrics to our nonfinancial KPIs to demonstrate the real
value add of our policies, practice and performance to our
stakeholders.
Transparency in reporting is critical, as it increases trust
and helps to highlight the cost gaps of externalities. Our
stakeholders are calling for the benefits of transparency
and increased visibility in enabling the old adage: what you
value, you protect. We have long believed that including
environmental costs in reporting, reduces risk and will
strengthen society’s ability to deliver a global economic
model which balances efficiency and resiliency.
Environmental impacts from climate change are a thorny
and pressing example. A recent study concluded that CO 2 e
emissions and resulting climate change impacts account for
a large and growing share of environmental costs. Trucost
estimate these external costs as US$ 4.5 trillion in 2008 and
rising to US$ 21 trillion in 2050. These environmental costs
are unavoidable and translate into business costs in the guise
of: insurance premiums, environmental taxes, rising supply
costs and the cost associated with infrastructure repairs after
severe weather events.
For example, the widespread flooding experienced across
many parts of the UK in 2007 caused an additional 31,000
customer complaints and cost BT approximately £9m in
operational insurance claims. More recently the severe
flooding affecting Thailand last year caused severe human
suffering and ecological damage. It also impacted on our
industry by increasing costs and supply lead times for hard
drives. Suppliers of such equipment are often clustered
geographically; Thailand manufactures over 70% of the
world market in hard drives. We know that there’s more to
do to factor this into our climate change adaptation strategy.
This summer in the UK our fault rate in the network increased
by some 30% - this is despite our long term efforts to protect
the network from flooding, wind damage and lightning
strikes.
We all need to do more to ensure that businesses’ products
and services can deliver more good to society than the
natural capital consumed in their making, delivery and end of
life. Transparently accounting and reporting for environmental
costs, connecting non-financial and financial metrics, will
play a central part in enabling this imperative.
Tony Chanmugam
Group Finance Director, BT