Why is this initiative important?

(1) Government requirement soon to be enacted – thus we must measure and reduce emissions.
(2) GHG reporting is now a board room issue as many investors are concerned about carbon risks associated with large corporations, with pension trustees having a duty to consider all financially material risks and exposures of their long-term funds performance. According to a 2010 report “Carbon Risks in UK Equity Funds” (produced by WWF, Mercer and Trucost) significant improvements can be made in portfolio exposures by the relatively straightforward expedient of moving investment from poor Carbon Performers to less polluting industry, whilst for example maintaining their asset allocation to a specific sector.

What can you do about these GHG risks.

The only practical solution to prepare our businesses and sectors from these real risks is to robustly quantify existing portfolio and industry emissions. This is best done and achieves global acceptance by using the internationally recognised Greenhouse Gas Protocol and its allied international Standard ISO 14064 and conformance to the Mandatory requirements – which owe much of their construction to GHGP/ISO.

In order to manage and reduce carbon exposures Investment managers need to be aware and understand to allow them apply the ISO 14064-1 GHG Standard and the WBCSD/WRI GHG Protocol for Corporate Accounting to their portfolios. This will allow managers to develop an understanding of the importance of the design and development of verifiable GHG inventories systems and procedures. This knowledge allows managers to delegate to their staffs and allow GHG practitioners to be able to apply tools, methods and other good practice guidance in the WBCSD/WRI GHG Protocol for Corporate Accounting and the requirements of the ISO 14064-1 GHG Standard for the development of inventory requirements.

Responsibility for GHG emissions may also be uncertain and both the WBCSD/WRI GHG Protocol for Corporate Accounting and the ISO 14064-1 GHG Standard allow for reporting to be allocated appropriately either using the Control Share approach or the Equity share consolidation methods.

Using the Control Share Consolidation approach, the organization accounts for all quantified GHG emissions from facilities over which it has financial or operational control.
The alternative approach uses Equity share, where the organization accounts for all quantified GHG emissions from respective facilities in which it has equity.

Emission types

1. Direct GHG Emissions: Emissions within company’s organizational boundary from sources that company owns or controls such as business travel in company cars.
2. Energy Indirect GHG Emissions: Emissions from the generation of imported electricity heat or steam.
3. Other Indirect GHG Emissions: Indirect GHG Emissions other than from the generation of imported electricity heat or steam.

Examples include:

• employee commuting
• outsourced activities
• contract manufacturing and franchises
• waste generated by the organization but managed by another organization
• emissions from the use and end-of-life phases of the organization’s products and services
• GHG emissions from the production of purchased raw or primary materials

The ISO 14064 GHG Standard is flexible so it can be used for different types and sizes of organizations and for different voluntary and mandatory objectives. The ISO 14064 GHG Standard can be used stand alone, but is intended to be used in accordance with established procedures from good practice guidance (e.g., API, CAPP, INGAA, IPIECA, WBCSD/WRI GHG Protocol, EU-ETS, VCS, and Government Reporting requirements).
An organization reporting against ISO 14064-1 should be informed by the WBCSD/WRI GHG Protocol. In the majority of cases, an organization GHG report that meets ISO needs would also meet GHGP needs, and vice versa.

Inventory adjustment procedures are important because organizations are dynamic, operations may vary over time. To ensure a fair comparison of current GHG emissions over time it is often necessary to recalculate the base year depending on variations in the organizations, mergers, outsourcing and other structural changes which will impact the organization’s organization and operational boundaries. By implementing a standard procedure for recalculation, (i.e. what triggers a recalculation and the process to follow) organizations will create consistency and transparency in their GHG inventories.

Carbon Action are Strategic alliance Partners of the Canadian Standards Association who have developed a complete suite of training courses and seminars to equip both business leaders and GHG practitioners with the skills and tools to make sense of and fully understand the issues of GHG reporting in a verifiable and transparent way.