Credible Carbon Reporting: Key Lessons

Australian companies are becoming increasingly aware of climate change impacts and emerging policies on their businesses. Progressive companies are beginning to put their own carbon footprint under the microscope. Motivation for companies, large and small, to disclose their carbon footprint is quite clear – greater visibility into energy use and the opportunity to reduce energy wastage, improve efficiency, reduce carbon emissions, negotiate more favourable energy contracts and save money.

Having reviewed and audited companies’ greenhouse emissions and energy over the past couple of years, we’ve found the level and rigour of disclosure of carbon footprints is highly variable.

For many resource‐stretched businesses, the challenge of preparing a greenhouse and energy inventory may initially appear daunting, where does one start? Companies operating numerous and geographically dispersed energy‐consuming facilities and assets face particular data quality management challenges relating to data acquisition, handling, processing and reporting.

Carbon and energy accounting requires a systematic methodical approach to acquiring relevant energy data from diverse sources across various business operations, processing and manipulating data, quantifying greenhouse emissions, aggregating emissions into relevant categories and reporting emissions at various business levels.

There are internationally accepted standards for preparing greenhouse inventories including ISO 14064, the GHG Protocol for corporate reporting. Any carbon footprint accounting and disclosure must fulfil five key principles of high integrity, credible reporting:

1. Relevance: The greenhouse gas inventory must appropriately reflect the greenhouse gas emissions of the company and properly reflect emission form areas over which a company has control and hold responsibility.

2. Completeness: Greenhouse gas emission sources and activities within the chosen inventory boundary must be accounted for and any exclusion must be disclosed.

3. Consistency: Consistent methodologies must be used to allow meaningful comparisons of emissions over time and any changes to the data, inventory boundary, methods, or emissions factors must be disclosed.

4. Transparency: All relevant decisions, issues, and data must be addressed in a factual and coherent manner to provide a clear audit trail for independent verification and any assumptions must be disclosed

5. Accuracy: There must be sufficient accuracy to enable users to make decisions about the integrity of the reported information with reasonable assurance. Quantification of greenhouse gas emissions must not be systematically over or under the actual emissions.

As greenhouse auditors who certify greenhouse reports to the international standard ISO 14064, we often come across common issues facing reporting organisations. Here are some key things to be aware of:

Greenhouse and energy accounting needs to be institutionalised within the organisation. Be sure to establish an appropriate cross‐functional team as often data will need to be gathered from various business areas such as accounts, facilities management, engineering and maintenance, fleet department, procurement, etc.

An effective, concisely documented greenhouse inventory quality management plan is imperative. It need not be voluminous ‐ aim for a 6 to 12 page concise roadmap showing responsibilities and authorities of key personnel; organisational boundaries and facilities being reported; relevant emission sources; data sourcing, gathering and handling processes; quantification methods and tools to be applied; internal quality checking processes; reporting activities and templates; and carbon offsetting and trading activities.

Use technology that’s fit‐for‐purpose and that you can easily monitor and control. You may not necessarily need an expensive proprietary software or outsourced “cloud‐based database bureau service” if all you require is a well‐managed and controlled spreadsheet application. Remember, GIGO (garbage in, garbage out). If data is not validated and checked before its uploaded into software or a database, the reports you get may contain numerous errors that will cost you time and more money to rectify. If outsourcing, ensure your bureau service provider assumes liability for accurate data capture, validation and accuracy.

Make sure you can get reports from your bureau service provider in spreadsheet format so you can conduct your own independent checks on automated reports.

Implement your own independent data checking, validation and review.

Consider having your report independently verified and assured by a credible independent auditor especially if you’re reporting to government or a voluntary registry.

Information is knowledge, so implement a robust greenhouse and energy inventory system and use it to identify and energy wastage and realise opportunities to improve energy efficiency, reduce energy costs and reduce greenhouse gas emissions.

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