In 2015 there is going to be a lot of talk about climate change; the election will see to that.
Add the global climate change summit in Paris and a recovering economy that is allowing consumers and investors to think past the short term, and you’re going to be hearing the word ‘carbon’ a lot this year.
Reporting carbon is changing and below I’ve highlighted what it means to your business. But before we dive into what you need to do about it, it’s important that we are all…
Speaking the same language
You see climate change has a language, and that language is carbon; more specifically an activity’s global warming impact expressed in terms of the equivalent amount of Carbon Dioxide it represents.
In a business context, this focus on carbon quickly leads us to carbon accounting; the process of measuring where your emissions are occurring so that your customers, investors and NGOs, can see them and you can identify priority initiatives to manage them. As with financial accounting, the key is that a consistent approach is used by everyone.
To give you some context of Scope 2
A core version of this document was published in 1998 and since then authors have been expanding the Corporate Standard to provide specific clarity in particularly technical areas.
The most recent of these publications (4 years in the making) is the guidance on what is known as Scope 2 emissions, that is indirect emissions from sources such as purchased electricity.
So what does the Scope 2 report say?
Well the first thing it says is that people do care what kind of power organisations buy. I was certainly struck by the number of countries – most notably the US, where this is the first piece of information they look for in this area.
It is also true to say that people are also interested in the emissions associated with where you are based – your locational figure – the approach we in the UK think of as business as usual. The second thing to say is that people care about the quality of the contract you have signed.
There is so much uncertainty about what certificates should be used to show where the power comes from, that stakeholders have started to demand confirmation that organisations are checking they are buying the right thing.
To help, the World Resources Institute (WRI) have clarified what type of instrument can be used to support a claim; an extremely welcome addition to the debate I must say.
The final thing is that the WRI want to make sure that the reporting entity doesn’t get itself in trouble as they report on their electricity.
You see, after considering the different perspectives that people have when reading a carbon inventory, they understood that it would be really easy to miss something controversial, leaving the reporter open to criticism.
Key takeaways from the report
The result is that the guidance lays out three reporting requirements for the world to follow:
1. Dual reporting: From now on, to remain compliant with the Corporate Standard, organisations will be asked to publish two numbers, the emissions associated with their contract – what the WRI term the Market Based figure, and the emissions (electricity use) associated with their location – the National average in the UK.
2. Disclosure about the quality of contract used: The WRI have outlined 8 criteria for a contract that can be relied upon to support a claim and organisations are now being asked to confirm that the contract they have signed has actually met them.
3. Recommended disclosure: Helpfully the WRI have summarised all of the questions that people will ask when reading the carbon inventory, so that organisations can be sure that they have covered everything.
The WRI is realistic about how long it will take for organisations to respond to these changes; but they have said that they expect this to be BAU from next year’s reporting cycle.
Be among the first to adopt best practice
We think that this is a big deal and a chance for UK organisations to continue to show leadership in the area of carbon management.
To help our customers adopt this new best practice we have been working to ensure that all of our contracts; renewable backed, nuclear backed (termed Blue) and our standard fuel mix are already compliant with these newly clarified reporting requirements.
Find out more about Blue here
Even so, this is quite a change for the UK, so it is important to get our businesses ready.
That means all of us getting used to consistently asking three questions when we choose a contract.
Importantly, these are questions most of us in the UK don’t ask today:
1. What are the carbon emissions associated with the electricity contract I am signing?
2. Are we sure that the electricity contract is robust enough to support my carbon reporting requirements?
3. Is there anything else I need to tell my stakeholders about where this power came from?