Consultation on draft guidance on how to measure and report your greenhouse gas emissions

Comments from ACCA to the Department for Environment, Food and Rural Affairs (Defra), August 2009. ACCA is pleased to comment on the launch of the Defra 'greenhouse gas emissions reporting' guidance, which has been considered by the ACCA Social and Environmental Committee.


Does the guidance provide enough detail?

Are there any issues that require further guidance?

ACCA feels that the guidance document is a good start towards providing organisations of different sizes and geographical scope a methodology for calculating their carbon footprint. There are a few areas that require additional clarification and coverage though, which are covered in the questions below and as follows:

Data collection and target setting

ACCA would like further guidance to be provided on what constitutes a 'reasonably challenging' target, perhaps including the results of benchmarks or technologically based percentage savings. This is needed in instances such as the 'Smith Family' case study on page 34 – it states they have set a target of 25% reduction in emissions, but there is no guidance as to how they might have come to that decision and target level.

More discussion is needed around targets based on intensity, rather than absolute – in certain circumstances (macro level reporting), absolute targets are essential for complete reporting.

There is little use of the concept of materiality (i.e. how does a reporter determine what should be included in its emissions calculations). It is touched upon for Scope 3 on page 55, but there is no additional commentary on how the principles provided can actually be used in practice (should more weight be given to stakeholder opinions? Or cost effectiveness/effectiveness of influence on data gathering?).

Reference is made throughout to the use of estimates if accurate data is not available. More guidance is needed as to what constitutes an acceptable error margin when using estimates.

There are currently variations in calculation methods, for example, on page 6 it allows units of miles or km and several different options for measuring fuel use. These should be kept to a minimum to increase comparability of resulting emissions reporting.

The guidance in its current format is very UK focussed, especially in relation to electricity use (for example, Annex G) and it's not clear how the methodology would be extended to non UK emissions. Further clarification is needed on international emissions factors.

Following on from this point, there is likely to be confusion arising over reporting for the CRC league table and reporting use this Defra guidance, as the numbers reported under the two schemes will be different. This could lead to problems in terms of communicating the two different reporting methods. Many stakeholders may prefer the reporting guidance to be better aligned to the CRC's forthcoming requirements.

Reporting styles and format

ACCA would like to see more working examples of how the GHG reporting guidance would work in practice for large, complex organisations

The guidance explains that reporting should include two aspects: a summary table of GHG emissions data/reduction activities and supporting narrative information. There should be more detailed information on GHG emissions and commentary provided elsewhere (e.g. Corporate Social Responsibility report or website). The guidance does not deal with how the report is to be published other than by giving as an example, publication 'on their B&B website and in a framed display in their doorway'.

Guidance should be provided for those organisations looking to include GHG information in the annual report and accounts in terms of format and integration into financial statements. ACCA advocates the work of the Prince of Wales Accounting for Sustainability project, which seeks to provide a framework for the integration of sustainability performance information with financial reporting. Included in this guidance should be a clear 'roadmap', laying out the different processes involved and the advantages to doing so as early as possible.

Following on from the point above, reporting in the annual report and accounts would provide an opportunity to companies to place the information on the public record in a manner consistent with the objective of increasing transparency. Smaller companies in particular would benefit from this as they do not normally use a website to publish their annual financial statements. It would also facilitate research to inform the Secretary of State in relation to obligations to make regulations or report to Parliament by April 2012. As an increasing number of financial statements are filed electronically, it will be important to work with Companies House to ensure that it is able to accept the voluntary filing of GHG reports in a suitable form (XBRL).

ACCA encourages the introduction by Government of mandatory reporting of carbon emissions by 2010. These disclosures will help investors predict environmental costs and liabilities likely to be incurred (as a result of carbon constraining regulation) by organisations whose strategies support carbon intensive activities.


Do you agree with all the recommendations? 

As outlined in ACCA's response to the recent consultation document on the term 'Carbon Neutral', we would like to avoid direct encouragement of organisations using carbon offsetting, as we feel it may lead to them opting for this rather than implementing their own programmes for emissions reductions (which is the preferable course of action).

Recommendations 2 and 5: As outlined under question 1, ACCA is concerned about the lack of clarity and guidance on calculating global emissions. There are differences between Defra conversion factors and the GHG/IEA factors, which could cause confusion among reporters as well as potential inconsistent disclosures between countries. ACCA would like Defra to be supporting and working towards an international carbon reporting standard that can be used by any organisation, wherever they are based, to ensure comparable disclosures.

Recommendation 3: ACCA would like to see more encouragement of reporting on Scope 3 emissions, as it has primarily been Scope 1 and 2 that has been focussed on in the past. As outlined in the Defra guidance, for many organisations, Scope 3 emissions make up the majority of the total (which is the case for ACCA) so shouldn't necessarily be categorised as 'best practice'. Including Scope 3 in 'standard practice' would encourage more organisations to start accounting for them (even if only partially, to begin with).

Recommendation 9: ACCA would like it to be recognised that setting absolute targets is not always the most appropriate method for fast changing industries.

QUESTION 3:  Do you agree with the criteria given to determine which scope 3 emissions are significant?

Yes, they cover the main points. Others that could be considered are:

Further guidance is needed on how an organisation should select which Scope 3 emissions they are going to report on (see materiality comment under question 1). Some emissions, such as those arising from business travel, are relatively easy to calculate so should be encouraged more strongly.

These guidance principles could be expanded into a 'decision making' flow chart, as they are all linked to one another and influence the decision making process.

Competitor/peer coverage. What Scope 3 emissions do the organisation's peers collect and publicly disclose? This may influence the choices made on disclosures.

Engagement with suppliers is generally considered a positive action to take – so rather than giving a list of predetermined criteria (which may eliminate engagement if it doesn't already take place), Defra should take a more encouraging role and outline business benefits of starting a supplier engagement programme on carbon reduction.

QUESTION 4: Do you agree with the emissions data that DEFRA recommends is sought?

ACCA strongly agrees that gross CO2 emissions are disclosed separately from net, to avoid any reader confusion.

As outlined above, ACCA would prefer that Defra strongly encourages emissions reduction programmes in place of offsets. However, where offsetting programmes are invested in, these should be transparently disclosed as outlined in the guidance.

QUESTION 5: What is your view on the supporting explanations? 

ACCA agrees in principle with all the supporting explanations but has the following comments and suggestions for additional ones:

  • The format in which these points are communicated is not very useful to organisations in terms of how they will actually report the information. Defra should provide the same information but in a more narrative format to assist with the final disclosures – it currently looks like something an organisation would submit to government rather than a public disclosure document. If disclosing in an annual report, for example, then space will be limited so this level of detail would probably be too high.
  • Information on how the target was set (procedure and rationale)
  • Performance against the target (in terms of % reductions)
  • Acknowledgement of international and national climate change targets, and an explanation as to whether organisational targets support them
  • Background information on how climate change is managed internally – policy, governance, risk management, senior responsibility

Care should be taken, however, to construct the expectation of disclosures in a way that is proportionate to the size and complexity of the reporting organisation. ACCA advocates a 'think small first' approach as the best way to achieve this.

QUESTION 6: Do you agree with the external emissions reduction activities identified and the 'good quality' criteria?

As above, ACCA would like to move away from encouraging offsets as a replacement to 'in house' emissions reduction programmes, as outlined in the response to the DECC carbon neutral consultation earlier in 2009. Strengthening 'Step 1' commentary could help this, by expanding on the types of emissions reduction activities covered and providing more detail on what disclosures could consist of.

One other area which the guidance could report on is engagement with and influence on suppliers and consumers in terms of emissions reductions programmes upstream and downstream – so influence on Scope 3 emissions levels. Some of this may be narrative, rather than quantitative data, but it would still be useful to readers to gauge an idea of what the organisation is doing in this area.

QUESTION 7: How should organisations account for renewable electricity that they generate? 

ACCA thinks that there should be significant incentives for organisations to invest in on-site renewable energy generation as one way of reducing their carbon emissions. Government regulation such as mandatory carbon reporting aims to reduce participants' carbon emissions and to encourage businesses to maximise their contribution to allocated carbon budgets under the Climate Change Act. The current proposals in the Defra reporting guidance treat all types of zero carbon energy generation as the same – which includes (high quality) offsets, green tariffs and on-site renewable energy generation. ACCA supports the suggestion that these different methods of emissions reductions should be split and reported on separately.

However, ACCA does not feel that offsetting should be given the same 'status' as renewable electricity in terms of its capacity for contributing to a low carbon economy – renewable energy/energy efficiency will always be preferable to offsetting. Treating them as the same could act as a disincentive for organisations to invest in on-site renewables and low carbon technology, as they require more effort and upfront resources than contributing to an offsetting scheme. ACCA also feels that onsite renewable generation should be counted as zero carbon and should not refer to 'grid average' in its emissions reductions, as laid out in the example on page 64.

QUESTION 9: Any additional comments

ACCA has the following, more specific, comments on the guidance document:

  • Page 28 – the comment regarding outsourcing leading to a reduction in carbon intensity requires further discussion. Although the direct carbon intensity of the organisation will have decreased, the emissions still remain in the supply chain, so there has been no net benefit – this should be clearly acknowledged and if possible, accounted for within Scope 3.
  • Page 29 – there appears to be a typo in the bottom right hand side cell. It should read '75,000 million tonnes', not '75,000 tonnes'
  • Page 44 – more information is needed on why the equity share for 'LOS' is 0% and not 1% (i.e. explain about fixed asset investment convention).
  • ACCA would like to see guidance given on the differences between business and economy air travel for organisations calculating their Scope 3 emissions. This is especially important for professional services, whose Scope 3 emissions (in particular business travel) make up a large majority of total emissions.

ACCA looks forward to seeing the final version of this greenhouse gas reporting guidance document and any subsequent dialogue.


Last updated: 11 Apr 2012