Proposed additions to the Companies Act 2006 now require UK quoted companies to report GHG emissions in their Directors’ Reports.
Once UK companies have their data, they must set a target. There are a number of good business reasons to do this such as improving cost and resource efficiency. It is important to obtain senior management commitment to the target as this will establish internal accountability for such targets; create an incentive system, and provide resources to meet your target.
There are two types of target:
• an absolute reduction target which compares absolute figures in the target year to the base year;
• an intensity target based on an appropriate normalising factor (e.g. water consumption per tonne of product, CO2e emissions per Full Time Equivalent staff member).
An absolute target is designed to achieve actual reductions in environmental impact. Organisational growth has to be decoupled from the environmental impact in order to achieve an absolute target. In contrast, an intensity target can drive resource efficiency and relative environmental impact, but the total resource use/impact may actually increase even if an intensity target has been reached due to increases in organisational activity e.g. production.
Use of Offsets?
Reporting organisation may choose to reduce their emissions through projects that reduce GHG emissions outside your operations. This may be because GHG reductions can be achieved more practically or cost effectively from these external sources.
Companies should list separately external GHG reduction activities, which should not be accounted for in reported gross CO2e tonne figure, and provide a net CO2e tonne figure.
Companies may do this where these external reduction activities meet Defra’s good quality criteria set out below.
(Download the entire guide here)
‘Good Quality’ Criteria
Additionality – Projects must demonstrate that they have produced a saving in carbon that would not have happened otherwise i.e. the project could not take place without the carbon finance from selling credits. The project must not be required by legislation or to demonstrate compliance against legally binding targets. This should be demonstrated via a project methodology developed by a recognised body. (check out our ISO 14064 and VCS projects that qualify).
Avoiding leakage – The project must demonstrate that it has not caused an increase in carbon emissions elsewhere. Leakage is when the carbon saving made at a project/location/time increases emissions elsewhere. An assessment must be made of any effects from the project whether up stream or downstream. This must be taken into account in determining the total emissions that can be sold from that project.
Permanence - If the project could be impermanent, (e.g. forestry projects are at risk of disease or fire) then this must be addressed by the project developer or offset provider. To achieve this, projects with a risk of carbon loss should undertake a risk assessment and identify actions to minimise and compensate for loss.
Validation and verification - The project must receive independent verification. The verifier must be an accredited and recognised independent third party. Purchasers of credits should also ensure that robust, independent validation and verification procedures were in place to check projects were implemented according to the methodology (validation) and subsequently monitored to ensure that emission reductions were properly measured (verification).
Timing – Carbon credits should be ex-post, that is, they must only have been issued from the project after the emissions reduction has taken place.
Avoiding double counting – A registry must be used to register, track and permanently cancel credits to avoid double counting or double selling. Project must not be double counted against another policy or mandatory targets.
Transparency - Credits should be supported by publically-available information on a registry to set out the underlying projects (when they were considered approved and implemented), the quantification methodology applied, independent validation and verification procedures, project documentation, proof of credit ownership and date of retirement of credits.
Where an organisation is carbon offsetting, they should provide the following information as a minimum:
• The reduction in tonnes of CO2e per year
• Type of carbon credit (Non-Kyoto compliant credit)
If carbon credits are non-Kyoto compliant, organisations should provide the name of the supplier, a hyperlink to the project documentation, details of who developed the quantification methodology, how the project was validated and verified, the date you retired the units from the registry and a hyperlink to the proof of retirement and how other ‘good quality’ criteria were met....More info