Some listed companies will be reporting their Greenhouse Gas emissions for the first time under the new mandatory GHG Reporting regulations (The Companies Act). Other will have been reporting for a while — but will need to ensure they are reporting in-line with the new requirements.
Although the regulations only apply ‘to the extent that it is practical for the company to obtain the information in question’; organisations will want to make sure that there data is as comprehensive and accurate as possible. It is likely that there will be a host of league tables published by the sustainability press — it could be embarrassing to back-track on published data in future years.
So my top 10 bear traps to avoid when compiling GHG data for your financial report are:
1. Omitting part of your organisation – In the context of implementing other environmental regulations such as ‘packaging waste’, I have come across organisations that have subsidiaries they are not aware of — sometimes in very different sectors. The organisational boundary should be the same as the financial report and include overseas emissions.
2. Omitting part of a site – Many sites have more than one electricity or gas meter. The site may have expanded over the years and taken over other units or buildings. On occasion I have found that the previous owner is still paying the bill! Nevertheless, ensure you have data from all the meters.
3. Omitting certain business travel data – If you choose to voluntarily report Scope 3 business travel emissions (and many will), ensure that you capture journeys by staff who pay for train or air fares on their personal credit card — and then claim it back on expenses; and fuel used in hire cars. Check vehicles on lease agreements to determine if they are listed as assets on your balance sheet — emissions will either by Scope 1 or 3.
4. Omitting unmetered fuel usage – Gathering data from metered usage is relatively easy, compared to unmetered usage from on-site generators, process emissions, and fugitive (non point-source) emissions. If you have equipment containing F-Gases that leak, you will need to capture top-up data. Do your F-Gas contractors provide reliable data? How do they accurately measure the volume added? Are scales / gauges calibrated?
5. Using the wrong conversion factors – DEFRA have completely changed the look and feel of their emission factors spreadsheet in the last few weeks — it is now called ‘CarbonSmart’. You need to select the correct emission factor for each type of emission and appropriate units, eg: gas oil used in tonnes, national rail travel in passenger km, SF6 emissions in kg. DEFRA also provide overseas emission factors for electricity, but not for transport. Use local transport emission factors where they exist, and are reliable, or GHG Protocol emission factors.
6. Reading meters /bills incorrectly — Gas meters / bills are one of the main offender here: units may be meters cubed, feet cubed, or hundreds of feet cubed. Are subsidiaries submitting data in imperial or metric units? Double-check all unit conversions.
7. Leaving it until the last minute – If you are unlucky, and your financial year to ends on 30th September 2013, you only have a few months remaining to establish data collection systems and gather your data. Even so, you could obtain the first 3 quarters of data now, rather than leaving it until October. Surprisingly the regulations will not come into force until the following day — 1st October 2013.
8. Picking the wrong emission intensity ratio – The regulations require the Directors to state at least one emissions ratio — ‘a quantifiable factor associated with the companies activities’. If you pick ‘number of full time staff equivalent’ for example, and have to make staff redundant next year, your benchmark indicator may rise. Generally it is easier to improve benchmarked emission factors when organisations are growing, because assets are better utilised. On the other hand there is often a time-lag between redundancies, and reducing capacity. You may of course use more than one emission intensity ratio.
9. Errors in spreadsheets! – Check and double-check you spreadsheets. As an auditor I have seen many types of spreadsheet error from selection of the wrong cells, to use of incorrect formula. In April 2013 BBC news reported that two eminent Harvard professors made basic errors in a paper often cited when making the case for austerity cuts. This was discovered by student ‘Thomas Herndon’. Their spreadsheet accidentally only included data from 15 out of 20 countries under analysis. Never assume!
10. Don’t let your GHG data drift – As with any new business initiative if GHG data collection it is delegated to the most junior member of staff, who has least influence, it is unlikely to be successful. Get a grasp of the data and data gathering processes by properly embedding them within your business process. This is probably not a job for an unpaid intern!
And a final thought — if you are missing any data, or have made assumptions of any kind, simply make a note of them, and include in your GHG report. The legislation does not require perfect reporting, just honest reporting — “state what information is not included and why”.
Marek Bidwell (Director of Bidwell Management Systems) has established GHG reporting systems, and verified GHG data for UK organisations. He also provides an environmental Internal Audit Service, and lectures at Newcastle University.