December 8, 2009
It is crucial that a disappointing outcome from Copenhagen should not detract us from the following facts of life. On the contrary, the combination of energy dependency, climate change, and the real possibility that oil production is nearing its peak drives us towards a new and pluralistic future where energy needs will be met by a mix of renewable technologies, including carbon capture and clean coal, combined with a reduction in demand from individuals, households, corporations and the public sector, and an extensive retrofit of the existing built environment.ACCA (the Association of Chartered Certified Accountants) has therefore produced a discussion paper in which Dr Steve Priddy, ACCA’s Director of Technical Policy and Research considers what a low-carbon landscape might look like, together with some aspects of the emerging regulatory framework for the accounting of greenhouse gas (GHG) emissions.
He namely indicates that there are tough strategic and operational issues around, for example, project appraisal, procurement of infrastructure, and commercial viability. In the transition to a low-carbon economy we will need a multidisciplinary approach working with engineers and scientists, technologists and lawyers, asset managers, facilities managers and accountants.
Currently, accounting for carbon emissions is primarily a voluntary activity conducted by a handful of corporations according to a range of accounting guidelines, since there is no international mandatory requirement to account for GHG emissions at a corporate level, but a range of voluntary codes developed around the world such as the Global Reporting Initiative (GRI). These are being driven primarily by accountants working in conjunction with environmental scientists, engineers and technologists. There are also accreditation agencies such as Lloyds Register QA (LRQA), which is registered under the EU-ETS framework and licensed to audit GHG emissions from affected installations. This is under the auspices of the International Standards Organisation (ISO) standards. There are also an increasing range of proprietary software applications that claim to be able to measure emissions. The marketplace hence presents itself as highly fragmented with many small competing constituents, which according to the findings of the Carbon Disclosure Project (CDP) leads to the following problems:
- Comparability between data sets is difficult
- The majority of the largest quoted companies and multinationals now disclose some meaningful carbon information (such as policies, quantitative emissions trend data, alignment with the World Resources Institute GHG Protocol), but this is a minority of the world’s economic activity, ignoring as it does public sector institutions and the mass of small and medium-sized non-listed enterprises that constitute the majority
- Specific areas of carbon disclosure are clearly lagging, with only a handful leading the way and reporting on a broader spectrum of carbon issues, such as adaptation strategies, product impacts, transformational initiatives, assurance of disclosures, and carbon governance.