Assess record for 'Disclosure of Non-Financial Information by Companies'

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1 Page 1 of 5 Assess record for 'Disclosure of Non-Financial Information by Companies' Meta Informations Creation date Last update date User name null Case Number Invitation Ref. Status Background Information For the purpose of analysis of this consultation you want to be identified as -single choice reply- N Other Other, please specify -open reply- Not-for-profit company ltd by guarantee Name(s) (of respondent and of your organisation / company) -open reply- Aldersgate Group Country where your organisation / company is located -single choice reply- UK - United Kingdom Please provide the name and location of parent company Your address 4th Floor, 5 Torrens Street, London, UK EC1V 1NQ Your address: -open reply- andrew.raingold@aldersgategroup.org.uk Short description of the general activity of your organisation / company: The Aldersgate Group is an alliance of leaders from business, politics and society that drives action for a sustainable economy. Our mission is to trigger the change in policy required to address environmental challenges effectively and ensure the maximum economic benefit in terms of sustainable growth, jobs and competitiveness. For full list of our members, please visit our website Is your organisation registered in the Interest Representative Register? If your organisation is not registered, you have the opportunity to register here before you submit your contribution. Responses from organisations not registered will be published separately from the registered organisations. -single choice reply- Please specify the Register ID number in the Interest Representative Register - open reply- Can the Commission contact you if further details on the information you submitted is required? -single choice reply- Publication: Do you object to publication of the personal data on the Alder

2 Page 2 of 5 grounds that such publication would harm your legitimate interests? -multiple Questionnaire 1. How would you consider the current regime of disclosure of nonfinancial information applicable in your country? -single choice reply- Poor In replying to this question, please provide information on what way current reporting provides useful information, and to what extent it is sufficiently tailored to the circumstances of the company. Please also comment on whether you find non-financial information useful for the decision-making of a company. Carbon emissions are now a financially material commodity with an economic and financial value to business, investors and the City. They need to be properly defined, measured, accounted for, audited and reported in the same way as other physical commodities and financial instruments. Too little is understood about the sources of carbon emissions in the economy. Measures introduced to control emissions do not have uniform financial effects on companies even within the same sector. Companies are coming under pressure from investor demands to provide emissions data as part of their investment risk assessment processes. Many companies in Europe and North America now devote considerable resources to respond to those concerns. In many cases, however, where they make detailed quantitative carbon disclosures, those disclosures are often not adequate for investors to make meaningful comparisons. The absence of comparable, standardised measures means that companies who reduce their carbon emissions are unable to demonstrate their success in relation to their competitors. Investors are also vulnerable to green wash, where reporting consists of vague qualitative disclosures about the issue of climate change. The absence of reliable data allows companies that choose not to reduce their dependency on carbon emissions to avoid investor criticism. It also makes it difficult for markets to take account of carbon emissions within asset and liability pricing. If companies report according to a common protocol, they will be able to demonstrate that they have used the appropriate process to assess risks, define boundaries, measure emissions and report on them in a way that is meaningful, consistent and comparable. Current level of carbon disclosure Despite improvements in the number of companies disclosing information on carbon dioxide and climate change, the overall level of disclosures are too low and figures are not comparable because of the use of different calculation methods. The Carbon Disclosure Project (CDP), a not for profit organisation that collects information on carbon disclosure on behalf of 534 institutional investors with assets of over US$64 trillion, finds that 59% of the FTSE 350 disclosed GHG emissions in 2010 (a 4% increase from 2009) This represents significantly less than two thirds of large UK businesses and the incremental improvements demonstrate the limitations of the voluntary approach. It is also not possible for investors and consumers to make sensible comparisons between companies that do disclose their carbon emissions. This lack of transparency not only serves to obscure the true contribution of the corporate UK to national or international carbon emissions; it also undermines the comparative advantage that should accrue to companies with good carbon reporting and control. This slows down what needs to be going faster; our transition to a low carbon economy. There are currently a number of national and international standards for the reporting and disclosure of carbon emissions and these should be streamlined. In the UK, the Government has recently published voluntary guidelines for companies and organisations to measure and report their greenhouse gas (GHG) emissions. It is based on the GHG Protocol, the internationally recognised standard for the corporate accounting and reporting of GHG emissions, and aligns with many widely used national and international voluntary measuring and reporting schemes. Beyond this voluntary guidance, there are a number of regulatory drivers in the UK that ensure organisations report at least part of their GHG emissions. This includes the EU Emissions Trading Scheme (EU ETS), Climate Change Agreements (CCAs) and the CRC Energy Efficiency Scheme. These regulations only cover some of an organisation's GHG emissions, whereas the voluntary carbon reporting guidance covers an organisation's total GHG (and international) emissions. The AG supports the analysis from the Committee on Climate Change which recommends that the Government undertakes a review of the scope for streamlining policies in order to provide appropriate incentives for energy efficiency improvement without unnecessarily burdening companies and organisations. Internationally, the Climate Disclosure Standards Board (CDSB) was formed at the 2007 annual meeting of the World Economic Forum in response to increasing demands for standardised reporting guidelines on the inclusion of climate change information in mainstream reports. CDSB works to develop a globally accepted framework, based on existing standards, for corporate reporting on climate change. As with the UK voluntary guidance, the CDSB framework is based on the GHG Protocol, and aligns as far as possible with relevant aspects of International Financial Reporting Standards. It is being developed with organisations leading work in mainstream reporting and climate change-related disclosure. It is essential that UK guidance is consistent with international reporting standards and the Government continues to support the objectives of the CDSB. A clear, consistent, comparable definition of carbon disclosure is vital for progress towards UK climate change targets. Now that the voluntary GHG reporting guidance has been published, it should be made mandatory for all large UK organisations to ensure greater accountability and transparency. This will help companies identify cost savings through greater resource efficiency and more effectively address material climate risks and opportunities. It would also create a level playing field, allowing investors and consumers to

3 Page 3 of 5 make meaningful comparisons, thus driving further emission reductions. A commitment to mandatory reporting now will also cement UK leadership on the global stage and give greater credibility to government climate targets. There will be further economic benefits, accelerating the development of the low carbon economy and giving the City the backing it needs to become the world leader in carbon accounting and reporting. For example, thanks in part to the UK s creation of its own voluntary emissions trading scheme a year before the mandatory EU scheme was introduced, London was an early mover and is now regarded as the hub of the international carbon market. Though the UK scheme was criticised for its emission reduction achievements vis à vis cost, the benefits of establishing the trading infrastructure (including the development of verifiers and auditors) and the hands on experience of trading, were considered to outweigh the weaknesses. The UK must not lose the initiative and further leadership such as the introduction of mandatory carbon reporting standards would help entrench its position, and spur the development of expertise in carbon accounting and audit practices. The legislation for mandatory carbon reporting is already in place. An amendment to the Climate Change Act commits the Government this year to evaluate the contribution that reporting on GHG emissions is making to the achievement of Government s climate change objectives. It then has to introduce regulations for mandatory carbon reporting by April 2012 or put forward a report to Parliament explaining why this has not happened. A mandatory carbon reporting standard has extensive business support, as demonstrated by the signatories to the AG letter sent to BIS Secretary of State Vince Cable (see Annex 1). A recent survey of 1,674 practitioners by the Institute of Environmental Management and Assessment finds that over 80% support GHG reporting becoming a mandatory requirement. 2. Have you evaluated the effects, No opinion and costs and benefits, of any current corporate disclosure of environmental and social information? -single choice reply- Regulation can be a key driver to ensure companies provide information on material environmental and social risks. Greater transparency can then lead to cost-effective action. A good example of this is the introduction of the Toxic Release Inventory (TRI), which was passed in the United States in This seemingly innocuous provision required that manufacturers disclose their use, storage, transport, and disposal of more than 300 toxic chemicals (all of which were perfectly legal at the time). The data, maintained by the US Environmental Protection agency, became an important new source of information and media interest. Ten years later, toxic emissions in the United States had been reduced by more than sixty percent, even though the US economy boomed during the 1990s. Indeed, many companies actually saved tens of millions of dollars in the process of reducing or eliminating their toxic emissions. By not requiring a lawsuit, court battle, or inspector to make it happen, Stuart Hart, one of the world's top authorities on the implications of sustainable development and environmentalism for business strategy, claims it was one of the most important and effective pieces of social legislation ever passed. 3. If you think that the current regime of disclosure of non-financial information should be improved, how do you suggest that this should be done? Carbon reporting should become mandatory (see response to 1). 4. In your opinion, should companies be required to disclose the following (check all relevant boxes): -multiple Whether or not they have a CSR policy, and if they do, how they implement that policy and what the results have been The principal business risks and opportunities arising from social and environmental issues, and how they are taken into account in company strategy. Key information regarding issues such as employee engagement (e.g.: employee training policy, equality and diversity, etc.); customer satisfaction (e.g.: customer loyalty); public perception of the company (e.g.: stakeholder dialogue); environmental policies (e.g.: energy efficiency, waste reduction); and innovation (e.g.: R&D expenditure). 5. In your opinion, for a EU measure on reporting of non-financial information to achieve materiality and comparability it should be based upon (check all relevant boxes): - multiple 5a) In case you consider that Key Performance Indicators (KPIs) would be useful, would you think that they Key Performance Indicators (KPIs) General for all economic sectors Sector specific

4 Page 4 of 5 should be (check all relevant boxes): - multiple choices reply- 5b) Please indicate which indicators you would consider to be the most relevant for all economic sectors: 6. In your opinion, what should be the process to identify relevant principles and/or indicators (whether general or sector-specific)? In replying to this question, please comment on whether the Commission should endorse or make reference to any existing international frameworks (or a part of them), such as Global Reporting Initiative (GRI), UN Global Compact, the OECD Guidelines, ISO 26000, or other frameworks; or whether companies should be required to select relevant indicators together with their investors and other stakeholders and to disclose information according to such indicators, depending on the use that different stakeholders would make of such information. Carbon reporting should be consistent with the Greenhouse Gas Protocol. 7. In your opinion, should companies No opinion be required to disclose the steps they take to fulfill the corporate responsibility to respect human rights? -single choice reply- 8. In your opinion, should companies be required to disclose the risks they face and the policies they have in the field of corruption and bribery? -single choice reply- No opinion 9. In your opinion, what companies should be required to disclose nonfinancial information (check only one box)? -single choice reply- 10. In your opinion, should institutional investors be subject to specific or additional disclosure requirements, for example to disclose whether and how they take into account environmental and social issues in their investment decisions? -single choice reply- Medium-sized & Large companies (listed and non-listed) In replying to this question, please provide information on which issues seem to be the most relevant and why; and which institutional investors should be subject to such an obligation. 11. In your opinion, should European policy promote the concept of "integrated reporting"? Integrated reporting refers to a report that integrates the company's key financial and non-financial information to show the relationship between financial and non-financial

5 Page 5 of 5 performance (environmental, social, and governance). -single choice reply- In replying to this question, please indicate the advantages and disadvantages of an integrated report, as well as possible specific costs of integrated reporting. 12. In your opinion, should disclosed non-financial information be audited by external auditors? -single choice reply- No opinion In replying to this question please provide any evidence you may have regarding costs of auditing non-financial information, as well as your views on other possible forms of independent reviews besides external auditing. 13. If you have relevant documents you want to share with us, please attach them here. (optional) -multiple Uploaded files: I attach additional documents 07 Carbon Costs.pdf PRINT EXPORT RECORD