A strong plan is the baseline of action at a corporate level, where businesses feel the growing expectations from their stakeholders to act and demonstrate transparency on climate change. A robust strategy is critical to realizing your sustainability objectives, whatever the level of ambition. In the 1.5-degree context, it is imperative. There is now a growing expectation of board-level governance on climate-related matters, most notably since the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) made governance a focal point. Climate change is no longer a siloed responsibility of the CSR officers and sustainability departments. Therefore, the responsible person or committee must have top-down support to oversee operations across the business (CDP, 2018).

In the research conducted by Choi et al. (2013) under the title “an analysis of Australian company carbon emissions disclosures” in that paper, researchers developed a checklist to assess carbon emission disclosures based on the information request sheets provided by the carbon disclosure project (CDP). The CDP is an independent non-profit organization holding the world’s most significant volume of climate change information from over 3,000 organizations in 60 countries. In categorizing the data, the researcher establishes a “checklist” to determine the extent of voluntary disclosures linked to climate change and carbon emissions incorporated in these publicly available reports. The checklist is constructed based on the factors identified in the Information Request sheets by the CDP. Researchers determine five broad categories relevant to climate change and carbon emissions as follows: climate change risks and opportunities (CC), greenhouse gas emissions accounting (GHG), energy consumption accounting (EC), greenhouse gas reduction (RC), and cost and carbon emission accountability (ACC). The detailed explanation of the indicators is as follows:

  1. Climate change: risks and opportunities
    1. Assessment/description of the risks (regulatory, physical, or general) relating to climate change and actions taken or to be taken to manage the risks.
    2. Assessment/description of current (and future) financial implications, business implications, and opportunities of climate change.
  2. GHG emissions accounting
    1. Description of the methodology used to calculate GHG emissions (e.g., GHG protocol or ISO).
    2. Existence of external verification of quantity of GHG emission– if so, by whom and on what basis.
    3. Total GHG emissions – metric tonnes CO2-e emitted.
    4. Disclosure of Scopes 1 and 2, or Scope 3 direct GHG emissions.
    5. Disclosure of GHG emissions by sources (e.g., coal, electricity, etc.).
    6. Disclosure of GHG emissions by facility or segment level.
    7. Comparison of GHG emissions with previous years.
  3. Energy consumption accounting
    1. Total energy consumed (e.g., tera-joules or petajoules).
    2. Quantification of energy used from renewable sources.
    3. Disclosure by type, facility, or segment.
  4. GHG reduction and cost
    1. Detail of plans or strategies to reduce GHG emissions.
    2. Specification of GHG emissions reduction target level and target year.
    3. Emissions reductions and associated costs or savings achieved to date as a result of the reduction plan.
    4. Cost of future emissions factored into capital expenditure planning.
  5. Carbon emission accountability
    1. Indication of which board committee (or other executive body) has overall responsibility for actions related to climate change.
    2. Description of the mechanism by which the board (or other executive body) reviews the company’s progress regarding climate change.

The World Business Council for Sustainable Development (2004) reveals that direct greenhouse gas emissions are categorized as scope one emissions, and indirect emissions are divided into scope two and scope 3. Scope 1 includes emissions directly generated from company activities and can be controlled, such as emissions from machinery or production equipment used by the company. Scope 2 covers emissions resulting from the company’s electricity consumption. These indirect emissions are a consequence of the company’s activities but cannot be controlled by the company. Scope 3 are emissions generated indirectly from company activities and are not included in scope two, such as waste disposal or fuel purchases.

Sources:

  • Google Image. (2022).
  • Carbon Disclosure Project (CDP). (2018). A checklist for a successful climate strategy. https://www.cdp.net/en/articles/companies/checklist-for-a-successful-climate-strategy
  • Choi B. B., Lee D., and Jim P. (2013). An Analysis of Australian Company Carbon Emission Disclosures. Pacific Accounting Review. 25(1), 58-79.
  • World Business Council for Sustainable Development. (2004). Greenhouse Gas Protocol. https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf.