Introduction
The intersection of business and climate change has garnered heightened attention as industries play a pivotal role in shaping our planet's future. Today, we explore the key tools driving business transparency in environmental impact: standards, protocols, and frameworks.
Understanding Key Terms
Before diving in, let's decipher the primary terms surrounding climate-related disclosures.
- Standard: Your guide to consistent, transparent climate-related reporting.
- Protocol: The nitty-gritty on data collection and reporting.
- Framework: A holistic structure to base specific measures on.
- Regulation: The law you don't want to break.
These pillars aim for harmonized reporting practices, with each offering unique guidance on effective and precise climate-related information disclosure.
Protocols - Detailed Methodologies for Global Challenges
Protocols offer systematic methods that guide specific environmental actions. International in nature, each address significant global challenges and different environmental issues: GHG emissions (Kyoto), Ozone depletion (Montreal), Genetic resource utilization (Nagoya), Biosafety concerns (Cartagena), and Air pollution (Gothenburg). The Kyoto Protocol introduced market-based mechanisms, while others like the Nagoya Protocol emphasize equitable benefit-sharing. Companies in signatory countries are required to comply with these protocols, leading to changes in operations, reporting, and transparency.
Kyoto Protocol: Reducing GHG emissions with market-based strategies. Kyoto Protocol provides detailed instructions and ensures consistency in the approach to addressing environmental challenges or concerns.
Montreal Protocol: The global stand against ozone-depleting substances. An international treaty designed to phase out the production and consumption of ozone-depleting substances. This protocol has been Universally ratified and has been successful in phasing out numerous substances responsible for ozone depletion, such as CFCs and halon.
Nagoya Protocol: Equitable sharing of genetic resource benefits: A 2010 international agreement aimed at the fair and equitable sharing of benefits arising from the utilization of genetic resources. Helps ensure benefits are shared between providers and users of genetic resources and associated traditional knowledge; promotes the sustainable use of biodiversity.
Cartagena Protocol: Biosafety Concerns. An international agreement which aims to ensure the safe handling, transport, and use of living modified organisms (LMOs) resulting from modern biotechnology that might have adverse effects on biodiversity, also considering risks to human health.
Gothenburg Protocol: Addressing transboundary air pollution. Addresses long-range transboundary air pollution, aiming to reduce and limit emissions of specific air pollutants. Focuses on reducing acidification, eutrophication, and ground-level ozone by setting emission reduction commitments for specific pollutants, including sulfur, NOx, VOCs, and ammonia.
Greenhouse Gas Protocol (GHG Protocol): Accounting and reporting standards for greenhouse gas emissions. The World Resources Institute (WRI), in partnership with the World Business Council for Sustainable Development (WBCSD), developed the Greenhouse Gas Protocol (GHG Protocol). The GHG Protocol categorizes emissions into three "scopes":
Scope 1: Direct emissions from owned or controlled sources.
Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company.
Scope 3: All other indirect emissions that occur in a company's value chain.
Scope 3 emissions, also known as "value chain emissions," can often be the largest source of greenhouse gas emissions and, in some cases, can account for up to 90% of the total carbon impact. These emissions can result from activities both upstream and downstream of the company's operations.
Standards - Leading the Way in Climate Reporting
Several standards help businesses disclose their climate-related footprints.
- ISO 14064: Comprehensive greenhouse gas accounting and management. ISO (International Organization for Standardization) has developed a series of standards related to greenhouse gases (GHGs) to support the understanding, measurement, and reduction of greenhouse gas emissions. These standards fall within the ISO 14064 series and are designed to provide governments, businesses, regions, and other organizations with a set of tools to develop GHG inventories, verify GHG emissions, and engage in GHG projects.
Frameworks - Holistic Approaches to Environmental Management
Frameworks provide a general structure for managing and disclosing environmental impacts.
1. TCFD (Task Force on Climate-related Financial Disclosures): Established by the Financial Stability Board, the TCFD provides a framework for companies to disclose their financial exposure to climate-related risks. Focuses on governance, strategy, risk management, and metrics & targets. Aims to ensure consistent climate-related financial risk disclosures.
2. SASB (Sustainability Accounting Standards Board): Established in 2011, this Standard focused on helping businesses around the world identify, manage, and report on sustainability topics that SASB identifies as materially important for sector performance. Provides industry-specific standards across a wide range of environmental, social, and governance issues.
3. The Global Reporting Initiative (GRI): An international independent organization that has pioneered sustainability reporting since the late 1990s. Provides a comprehensive sustainability reporting framework used worldwide; encompasses economic, environmental, and social impacts.
4. CDP (formerly the Carbon Disclosure Project): A global disclosure system that enables companies, cities, states, and regions to measure and manage their environmental impacts. Emphasizes comprehensive climate change, water security, and deforestation data disclosure. Encourages environmental transparency.
5. Science Based Targets Initiative (SBTi): A collaboration between CDP, the United Nations Global Compact, WRI, and WWF aiming to advance corporate climate action. Assists companies in setting and committing to science-based emissions reduction targets to meet the goals of the Paris Agreement.
Conclusion
The rise of climate-related disclosure tools underscores the pivotal role businesses play in our global environmental trajectory. Whether through standards, protocols, or frameworks, the emphasis remains on transparency, accountability, and fostering sustainable practices.
Stay tuned for our next dive into the reporting frameworks, a critical piece in the environmental disclosure puzzle. Subscribe now for our upcoming piece!
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