Energy and greenhouse reporting: a year in review

18 Dec 2010Archived News Climate Change Matters

This article provides an overview of a range of carbon and energy reporting programs: NGER, EEO, CDP and GRI, and discusses the convergence of programs towards international standards such as ISO 14 064/ ISO 14 065. The article also discusses the status of carbon labelling in Australia.

National Greenhouse and Energy Reporting (NGER)

The 2010/11 financial year represented the second year for companies to report their energy and greenhouse information to the NGER program. Our experience with companies was that reporting was easier this year. Reporting of inventory uncertainty was voluntary, and the companies that attempted to deliver this aspect of the report found it a more complex and lengthy task than they had anticipated. Energetics' Harriet Kater gained significant experience in this aspect of NGER reporting and worked with the Department on some more detailed aspects of uncertainty reporting. As companies become more accustomed to, and better at, gathering these information sets, the cost in time and money of reporting will reduce.

The government appointed the first people to its NGER verifiers' panel, we congratulate Jody Asquith on representing Energetics on this panel. We have assisted a number of companies with preparation for audit as well as through the audit process. One learning we have taken from these experiences is that you need to be absolutely clear with the auditor about expected scope for the audit as, for many line items, it is not possible to follow information back to its formative source as auditors are accustomed to doing with financial information.

We also found that companies are not necessarily using their NGER information to best effect. Your inventory can help you establish risks and opportunities, as well as potential areas where efficiency gains would add value.

The Department of Climate Change and Energy Efficiency released new guidelines and launched a review of the NGER Determination this year. Responding to these was not always trivial. Companies need to develop processes to ensure that they are up to date with any new requirements as some of the information was not released using typical routes.

OSCAR on-line reporting has not taken as much time as some companies were predicting in the first reporting year, however, it is certainly not an easy exercise. The Department's training and assistance is much appreciated in this area.

Energy Efficiency Opportunities(EEO)

The program is reaching the end of its first five year cycle (although we expect that EEO will continue beyond this time). Public reports for EEO have been published annually since the launch of the program. These reports are relatively easy to construct and not time consuming. However, final reports to government about how companies have responded to the requirements of the program during this first five year cycle are due by the end of December 2011. These reports will not be trivial to construct as they will need to include all project information, as well as baseline information, trends in key performance indicators and other detail not typically gathered and reported. While they can be built using NGER inventories, this will not necessarily be an easy exercise. Companies need to review their NGER and EEO reporting requirements and deadlines and ensure that they have planned for two very large reports to be delivered within 60 days of each other (NGER is due end of October and EEO is due end of December).

Carbon Disclosure Project (CDP) and the Global Reporting Initiative (GRI)

The CDP celebrated its tenth year in 2010 with more than 2,400 companies reporting for 2009. They have launched a program to enable cities to start to report to the CDP (the CDP Cities program). This program allows cities to transparently report their inventories, climate risks and opportunities as well as their adaptation plans.

The CDP is also reviewing the potential to extend the program to include water, and particularly the effect of water constraints on large corporations. In 2010 water questionnaires were sent to 302 companies listed on the FTSE, we expect Australian listed companies to be included in 2011.

Completing the CDP questionnaire was not an onerous task this year as companies are becoming accustomed to gathering this information, and NGER has placed significant emphasis on energy and greenhouse gas emission information which resulted in the inventory information being readily accessible. The supply chain questionnaire is placing increasing focus on suppliers and we are seeing some of this emphasis in the work that we do for companies who are at the beginning of supply chains, many of which are located in other regions. This is the first evidence that we are seeing of the development of internationally uniform datasets – as the large multinationals begin to request information from their suppliers globally. One part of the CDP web-site is a portal for Walmart suppliers to report their carbon performance through. Walmart uses this information to rank suppliers in their carbon performance.

Our main observations on how companies are reporting under Global Reporting Initiative (GRI) are that a) information on scope 1 and scope 2 emission sources is becoming much more robust as a result of the requirements of NGER reporting; and b) there is increasing integration of GRI information into a single corporate report. The GRI is obviously experiencing this too as they launched a number of integration activities in 2010, notable among these are:

  • The International Integrated Reporting Committee (IIRC): this committee has been formed by the Princess' Accounting for Sustainability Project and the GRI and aims to create a globally accepted framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format. The intention is to help with the development of more comprehensive and comprehensible information about an organisation's total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model.
  • A CDP linkage document between the GRI's G3 reporting guidelines and the CDP's 2010 questionnaire which outlines how reporters can efficiently use or adapt the same data in both reporting processes.

While there is a lot of information in GRI which is not required for CDP, and CDP requires economic and financial information which is not included in GRI there is a considerable overlap between GRI's indicators and CDP’s questions related to energy consumption and greenhouse gas emissions. The information in the linkage document compares the relevant indicators (GRI) and questions (CDP) and details the similarities as well as the disparities.

  • Input to ISO 26000 (Guidance on Social Responsibility) which was launched in November 2010. ISO 26000 states that "an organisation should at appropriate intervals report about its performance on social responsibility to the stakeholders affected." The GRI G3 Guidelines are ideally suited to provide the voluntary framework to enable organizations to report this performance. The GRI has developed linkage guidance that highlights synergies between the GRI disclosures and the ISO subject areas.

Bringing this all closer to home, in 2010 the St James Ethics Centre launched "The Hub" which is the GRI focal point for Australia. The Hub is part of the National Responsible Business Practice Project which is funded by the Federal Government, through Treasury to enable St James Ethics Centre to engage Australian businesses in identifying and adopting more responsible business practices. It supports reporting to the Corporate Responsibility Initiative (CRI), the GRI and the UN Global Compact. It has specific resources for large corporations as well as SMEs. It is refreshing to have a local presence for GRI at last.

Program Convergence: using international greenhouse reporting standards

We are also seeing a convergence of GRI, CDP and other programs such as NGER to using ISO 14 064 and ISO 14 065 which are international greenhouse gas reporting standards. ISO 14 064 has three parts:

  • Part one details the principles and requirements for designing, developing, managing and reporting organization or company-level GHG inventories.
  • Part two focuses on projects specifically designed to reduce GHG emissions or increase GHG removals such as wind power or carbon sequestration and storage projects.
  • Part three describes the actual validation or verification process, it specifies requirements for components such as verification planning, assessment procedures and the evaluation of GHG assertions and, can be used by organizations or independent third parties to validate or verify GHG reports and claims.

ISO 14 065 has been developed to deliver assurance in the verification and validation process itself and defines requirements for companies performing greenhouse gas validation and verification. These companies may be performing verification of data managed in compliance with the ISO 14064 standard or to other specific criteria such as those in emissions trading scheme or corporate standards.

Reporting scope 3 emissions

This year has also seen increased interest in reporting of scope 3 emissions, both for corporations and as part of product labelling and carbon neutral claims. The Greenhouse Gas Protocol was initially developed by a partnership of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). These parties have joined together to support the development of scope 3 emissions accounting and reporting guidelines. Two sets of guidelines have been developed – corporate value chain (scope 3) accounting and reporting; and product accounting and reporting. These guidelines provide methods to account for emissions associated with individual products across their life-cycles and of corporations across their value chains. In the main the assessment methodology embedded in these guidelines is life cycle assessment.

These guidelines have been extensively tested by 62 companies over a six month period. The last open comment period for these guidelines closed at the beginning of December 2010. The final guidelines are due for publication in the Northern Hemisphere spring. Rob Rouwette and Mary Stewart from Energetics were two of only four Australians involved in the development of these guidelines, providing input to the product reporting standard.

Carbon labelling

Within Australia we have seen some interest in carbon labelling of products, but definitely not as much as is happening internationally. At the moment some of these initiatives are being driven by specific retail companies for example Tescos and Sainsbury who are using PAS 2050 on some product groups. In Switzerland: Migros labels products that are more than 20% better than average, this label is based on ISO14040. Korea and Japan both have carbon labelling, programs and are making substantive input to the carbon footprinting standard. Globally, the dominant standards embedded in these programs are PAS 2050 (the British carbon labelling standard) and ISO 14 040 (the international LCA standard).

PAS 2050 was launched in 2008 by the British Standards Institution (BSI). PAS 2050 marked the first attempt to establish a unique standard for consistent measurement of greenhouse gas emissions related to the full life cycle of goods and services (Product Carbon Footprint). It was built on the existing ISO Standards 14 040 and directly addresses to the role of consumption contributing to GHG emissions at the product level. Since publication of the standard, several products have been measured and labelled according to the specifications. The most prominent example is the Carbon Reduction Label awarded by the Carbon Trust (UK). This label is used by Tescos, Walkers, Dyson and Kingsmill. Rob Rouwette provided feedback to the standard during its development and is well-placed to apply it to Australian products.

The Carbon Reduction Label is managed in Australia by Planet Ark. It has been awarded to ALDI, Dyson and The New Zealand Wine Company. Energetics supports this activity in Australia and is able to assist any company wishing to qualify for this label.

In 2010 ISO announced that it is working on a new standard for "Carbon Footprints of Products" for the quantification and communication of GHG emissions associated with goods and services. The standard builds largely on the existing ISO standards for life cycle assessments (ISO 14040/44) and environmental labels and declarations (ISO 14025) and is planned to be published by March 2011. A precise measure of a carbon footprint "is a powerful tool for de-carbonizing the product supply chain," says Klaus Radunsky, chairman of the ISO working group developing the standard.

In comparison to the existing LCA standards it contains further provisions for the uniform quantification of GHG emissions as well as information on how claims can be made in public. An important part of ISO 14 067 addresses the topic of "communication" of a company's carbon footprint measure to other businesses and consumers. It includes guidance on labelling products. "Quantifications will address topics such as the electricity supply system, land-use changes, soil carbon change, carbon storage, carbon capture and carbon sequestration," according to Radunsky. "However, the details of these requirements still need to be further developed."

Companies that have a low carbon footprint will be able to advertise their efforts to combat global warming. "The aim is for ISO 14 067 to become a user-friendly tool, which should help users not only to make strategic decisions on product design, but also day-to-day operational decisions to reduce greenhouse gas emissions along the supply chain," says Radunsky, a Nobel Peace Laureate and head of the Federal Environmental Agency in Vienna, Austria.

Energy management standards

Energy management standards are being developed for industrial and commercial facilities "to manage all aspects of energy, including procurement and use," says Pinery. "The urgent need for a management tool to tackle the critical issue of energy, combined with an urgency to harmonize the proliferation of similar national standards, has resulted in a very fast-moving and smooth international standards development process."

Energetics has been operating in this space for 25 years – we have always said that our value add is based on the fact that we work across the entire value chain of energy and carbon, from procurement to reporting. It is interesting that the international community is coming to the same conclusion.

Written by Mary Stewart. 

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