Global Carbon Disclosure Reporting Standards

Peter ShepherdWorld Bank MOOC, Turn Down the Heat

Final ProjectMay 20, 2015

Challenges, Responses + Opportunities

• Challenge: Turn Down the Heat: Why A Four Degree C Warmer World Must Be Avoided

• Responses: Changing Behaviour at Individual, Institutional, Corporate and Country Level

• Opportunities: Motivators for Behaviour Change

2

Our Challenge

3

4

Response: Behaviour Change

• Changing Behaviour [Source: http://www.carbontrust.com/our-clients/u/university-of-sheffield-low-carbon-behaviour-change 5

Ingredients/ Elements/ Factors for Behaviour Change

• Access to Information (about scope of the problem) and Awareness of Options for Change

• Advocacy and Persuasion• Incentives: Social Pressure, Market

Mechanisms and Policy Instruments• Leadership + Commitment

6

Varied Mechanisms

• Voluntary Initiatives on part of institutions and corporations: prompted by pressure from investors and ethically oriented consumers

• Legislative Mandatory Reporting Requirements (examples: Denmark, United Kingdom)

7

Interaction

• Mandatory + Voluntary

8

Corporate Reporting

• Avenues of Reporting

9

Carbon Disclosure + Reporting: Rationales

• Use of market-based environmental policy tools and instruments to:

• Focus on economic incentives as crucial means to reduce carbon emissions

• Encourage informed decision making taking energy usage and greenhouse gas emissions in account in business planning

• Manage risks and communicate with stakeholders + wider public

10

CD + R: Opportunities

• Opportunities for:• Setting and pursuing targets for capping

and reducing carbon emissions• Giving priority to energy efficiency in the

design and development of new projects• Identifying new opportunities for low

carbon business

11

Carbon Disclosure Project

• Carbon Disclosure Project (CDP): charity based in UK working with corporations and shareholders (institutional investors) to facilitate voluntary disclosure of greenhouse gas emissions of major corporations

12

How: Rankings

• CDP: Rankings, Carbon Performance Leadership Index

13

14

How: Carbon Disclosure + Reporting Standards

• Voluntary Initiatives:• Global Compact (GC)• Organization for Economic Cooperation

and Development (OECD) Guidelines for Multinational Enterprises (GME)

• Global Reporting Initiative (GRI)

• Global Initiative for Sustainability Ratings (GISR)

Source: http://www.unglobalcompact.org 15

The Global Compact

Background and purpose • World's largest aspirational corporate

citizenship and sustainability initiative Development and governance • Initiative of United Nations (UN), led by

Secretary General’s Office, and supported by seven UN agencies

Global Compact Principles

• Environment• Principle 7: Businesses should support a

precautionary approach to environmental challenges;

• Principle 8: undertake initiatives to promote greater environmental responsibility; and

• Principle 9: encourage the development and diffusion of environmentally friendly technologies. 

• Other Principles focus on Human Rights, Labour and Anti-Corruption  

16

17

OECD: October 2013; Carbon Phaseout by 2050, Achieve by pricing in order to stay below 2° C target

“Unlike the financial crisis, we do not have a 'climate bailout option' up our sleeves,” Angel Gurria, Sec Gen OECD

18

Background and purpose of Guidelines for Multinational Enterprises (GME) • OECD is international membership organization of states (34), mainly of developed nations •Purpose is to promote economic development• Standing stakeholder committees: trade union advisory committee and business and industry advisory committee

Development and Governance

• GME started in 1976, with latest revision in 2011.•Intended for guidance only, though supported by monitoring mechanism • Governments that adhere to the guidelines required to establish National Contact Point (NCP) agency

19

OECD GME standard

• disclosure • human rights • employment and industrial relations • the environment • combating bribery • protecting consumer interests • science and technology • competition • taxation

Source: http://www.oecd.org/environment/climate-carbon.htm

20

21

Global Reporting Initiative (GRI)

• Background & Purpose:– aim to be comprehensive & consistent.

• Development & Governance:– Designed with broad multi-stakeholder group – First iteration in year 2000, GRI 4 in 2013

22

Deliverable: • Annual corporate “Communications on

Progress” (COP) report. GRI is recommended over the Global Compact for greater assurance, though GC useful to get initial buy-in, especially in developing countries.

Source: *http://www.wri.org/sites/default/files/pdf/ghgp_launch_factsheet_2011.pdf 23

CERES conclusion, GRI & similar standards

• Ceres compared GRI and other standards’ effectiveness at implementing human rights, including to a carbon budget as described by IPPC, IEA, World Bank, OECD & IMF.

• One large shortfall of existing broad standards is failure to understand & recognize physical limits of carbon cycle & equity issues involved.

• GRI & Carbon Disclosure Project (CDP) hide systemic effect of emissions under “Scope 3: Product Life Cycle” section that are not deemed sufficiently material or mandatory to report downstream effects.

• GRI doesn’t sufficiently recognize Principle 7 of 1992 Rio Declaration, “Common But Differentiated Responsibilities”.

• CERES, GRI’s parent NGO takes corrective action, and founds the Global Initiative for Sustainability Ratings, (GISR).

http://ratesustainability.org/the-gsir-ratings-standard-an-overview/

24

25

GISR Principles Issued

Source: http://ratesustainability.org/standards/principles/#form 26

The 12 Principles: Five Process, Seven Content

• Transparency• Impartiality • Continuous Improvement• Inclusiveness• Assurability• Materiality• Comprehensiveness• Sustainability Context - science-based thresholds, ecological limits• Long-Term Horizon• Value Chain – wherever firm has significant influence • Balance• Comparability

http://ratesustainability.org/wp-content/uploads/2013/10/GISR-Principles-Map.pdf 27

Sustainability Principles Comparative Rating: Snapshot of GISR among Precursor Standards

Continuing Challenges• Addressing + Remedying Carbon Chasm

28 http://www.sustainablebrands.com/news_and_views/new-metrics/CDP-leadership-indexes-role-scientific-targets