Climate Reporting: Your Target Audiences
Tomorrow the Carbon Disclosure Project – the initiative backed by the world’s largest financial institutions, which asks companies questions about their carbon emissions and strategies for reduction – releases its latest report on emissions in supply chains (I’ll be speaking at the launch in New York). So it seemed like a good time to revisit transparency and reporting, in particular talking about your carbon footprint. We asked reporting expert Kathee Rebernak to lay out how companies are communicating with some key stakeholders about this critical issue.
~Andrew Winston, Founder, Winston Eco-Strategies, Co-author, Green to Gold (Read his "Eco-Advantage" blog here.)
We are at a convergence point: An increasingly hostile economic environment is forcing companies to find new ways to gain competitive advantage - and fast. At the same time, the pressure is on for companies to manage and disclose their greenhouse gas (GHG) emissions.
That pressure is coming from all quarters - it seems that every stakeholder group has been twisting the screws lately. Large companies are asking their suppliers whether and how they're managing GHG emissions, often because their own customers are asking the same questions. Investors increasingly see companies that manage environmental and social impacts outperforming their less-conscious peers. Some state governments are seeking disclosure on climate risk, and the U.S. federal government will soon require companies to answer for the climate impact of their activities. And even in this sluggish economy, many job seekers want to know that they are working for a responsible company.
Companies are responding to these calls for greater transparency in a variety of ways. According to the Carbon Disclosure Project (CDP), of the 383 members of the FT Global 500 that responded to the organization's most recent questionnaire, 171 reported indirect (or Scope 3) emissions, whose sources include suppliers and employee travel, and 55 included supply-chain emissions in their responses.
Whether a company is seeking to reduce its own operational impacts or help stakeholders reduce their impacts, reporting is a vital aspect of the process. When done well, GHG reporting can help companies reduce costs, spur innovation, generate goodwill, and access capital - all key to maintaining competitive advantage during tough economic times.
Here are the key stakeholder groups that your climate reporting should address, and how some companies are effectively communicating their carbon-management efforts.
~Kathee Rebernak is the founder and CEO of Framework:CR.
Your Investors: Getting Louder and More Insistent
Investors are seeking more information on the climate risk of their portfolio companies; last year investors filed a record number of global warming resolutions. CDP signatories in 2008 comprised 385 investors with assets of $57 trillion. Recently, a group of 60 investors wrote to President Obama asking that the new administration restore the right of investors to require, through the resolution process, disclosure on specific risks, including climate risk. And one group is taking matters into its own hands: The Interfaith Center for Corporate Responsibility has posted on its website climate risk profiles, developed by Trucost, of those companies subject to shareholder resolutions.
Companies should be well prepared to respond to investor requests for information on environmental performance. Dow, for one, has taken a proactive approach; the company prepares a quarterly report (PDF) on its sustainability performance and posts the report on its website when it publishes its quarterly financial report.
Your Corporate Customers: Asking for Numbers
If they're not already, B-to-B suppliers will soon be receiving inquiries from their customers as to how they're managing climate risk. What's more, they'll be expected to report how their own suppliers are managing GHG emissions and other environmental and social impacts (there's a reason it's called a supply "chain"). For example, I've heard that one large consumer-products company asks suppliers whether they're reporting their GHG emissions to the CDP and seeks their views on including carbon footprint information on products.
In turn, more companies are reporting the impacts of their supply chains to stakeholders. HP is naming names, and Dell, which has been reporting to the CDP since 2004 and reports supply-chain emissions, has developed standards, based on the CDP questionnaire, for its suppliers to report their GHG emissions.
Employees: Looking to Contribute
A recent report by the Boston College Center for Corporate Citizenship notes that while employees are the most influential stakeholder group, they are also the least informed. Workers want to know not only that their employers are managing GHG emissions but also how, specifically, they can help. Some companies are answering this call by communicating how each worker is contributing to the larger effort. Yahoo headquarters, for example, has set up a "green screen" in its cafeteria that shows the campus's energy use in real time. Google is creating a computer application that would personalize the message even further, displaying company energy use data on individual workers' desktops.
It pays to make the extra effort. Sun Microsystems, for example, conducted an internal study on its Open Work teleworking program, calculating exactly how much time and money employees were saving by working from home part of the week. No doubt the results are serving as a much-needed morale booster during these days of economic uncertainty.
Consumers: Shopping Smarter
Makers of consumer goods face a tricky task: apprising consumers of the climate impact of their products without confusing them or turning them off altogether. I once heard a marketing executive for a consumer products company remark that "the average consumer has the attention span of a gnat." Fortunately, not all subscribe to that sentiment. Tesco has announced plans to expand its carbon labeling system for products. Timberland's Nutrition Label and Green Index seek to inform customers, in a straightforward but engaging manner, of the environmental impacts of their products. And Patagonia launched a microsite that shows customers the carbon footprint of selected products throughout their lifecyle. After supply-chain emissions, lifecycle analysis is the Next Big Thing in GHG reporting.
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