Emissions reporting; It’s a legal requirement of the strategic report, but it doesn’t have to be independently audited.
Since 2013, the UK has required listed companies to publicly disclose their greenhouse gas (GHG) emissions. Considering this has been part of the reporting landscape for the last few years, it’s almost become second nature and one of those things that nobody ever really stops to think about any more.
Many corporates, including several of our clients, automatically assume that third party verification is a necessity, when in fact it’s not legally required.
Within the Government’s official guidance there is a section dedicated to the question of assurance and verification. The official position is that “Assurance and verification of reported sustainability and environmental data is a component of a responsible reporting approach […] There is no statutory requirement to have your environmental information audited. ” (Environmental Reporting Guidelines: Including mandatory greenhouse gas emissions reporting guidance, June 2013)
The legislation does go on to say that companies do, however, need to collect their data via widely accepted methodologies, and disclose said methodologies in their annual reports.
Now, it might be easy to read the above and think ‘well that’s that, we can save paying yet another agency to do something we don’t have to do’. But look at that word staring back, responsible. In this position, it carries an incredible amount of weight. After all, if a company misrepresents data, of any kind, they put themselves at great reputational risk and break the unspoken bond of trust with their investors and other stakeholders.
Ultimately, any third-party or independent data or verification that an organisation can provide only helps to enhance and reaffirm the quality of the information they are presenting, and it shows a clear commitment from leadership that they take into context a wider world-view when making strategic decisions.
In October 2017, the Government sent out a green paper for consultation on the potential for streamlining energy and carbon reporting. Among other things, an aim of the consultation is to measure the value of the current GHG reporting approach and its role in helping companies actively monitor, transparently report, and potentially reduce their overall energy usage and GHG outputs. The consultation is due to close in January 2018.
So, there it is. Verification is highly recommended by the Government, greatly valued by all stakeholders, and it provides a significant layer of reassurance, both internally and externally, that what a PLC is saying is appropriate and materially significant to the continued, sustainable future of the business.
Independently audited sustainability and environmental data may not be a statutory requirement. But the better the evidence you can provide, the more responsible your reporting approach.