Published on March 20, 2014
@CDSBGlobal www.cdsb.net 1 Integrating environmental performance & risk in mainstream financial reports Dr Jarlath Molloy CPhys Technical Manager, CDSB CDP spring workshop
@CDSBGlobal www.cdsb.net 2 Outline + About the Climate Disclosure Standards Board + External reporting drivers + Not another Framework? + Consultation + Summary
@CDSBGlobal www.cdsb.net 3 About the Climate Disclosure Standards Board + CDSB is a consortium of business and environmental organizations formed at the 2007 World Economic Forum’s annual Davos meeting + CDP has provided secretariat support since inception and coordinates day-to-day activities Who we are
@CDSBGlobal www.cdsb.net 4 About the Climate Disclosure Standards Board Who we are + Supported by leading industrial & financial services companies, NGO representatives, the major accounting firms, professional bodies, academics and other specialist collaborators
@CDSBGlobal www.cdsb.net 5 About the Climate Disclosure Standards Board + Committed to the integration of climate change related information into mainstream corporate reporting + Working with others What we do
@CDSBGlobal www.cdsb.net 6 Guidance issued by CDSB About the Climate Disclosure Standards Board
@CDSBGlobal www.cdsb.net 7 Guidance issued with others About the Climate Disclosure Standards Board
@CDSBGlobal www.cdsb.net 8 External reporting drivers + Danish Financial Statements Act + EU Accounting Directives (proposed) + French Grenelle II + South African King Code + UK Companies Act + Find out more at cdsb.net/standards Mandatory reporting
@CDSBGlobal www.cdsb.net 9 External reporting drivers Proposed amendments to EU accounting directives
@CDSBGlobal www.cdsb.net 10 External reporting drivers + Background + Amendment to the Accounting Directive in 2003 (enacted in 2005) + Required companies to report environmental KPI in their annual report + 2,500 of 42,000 large companies in the EU reported + Scope (number of companies) + 250 – 500 employees minimum + Turnover € metric + Location of non financial statement + Within 6 months of balance sheet date Proposed amendments to EU accounting directives
@CDSBGlobal www.cdsb.net 11 + Content: + Policies, results, risks, due diligence + Environmental (plus social, employee, human rights, anti-corruption, bribery) + The use of renewable and non-renewable energy, greenhouse gas emissions, water use and air pollution + Compliance tools & frameworks + National / EU / international frameworks + EC guidance to support land use, water, GHG emissions and use of materials + Audit / verification + Auditors should check non-financial statement or separate report is provided + Member states to determine if independent assurance is required of non- financial statement prepared outside the report + Timeline External reporting drivers Proposed amendments to EU accounting directives
@CDSBGlobal www.cdsb.net 12 External reporting drivers GHG emissions reporting by UK quoted companies + Approx 1,100 – 1,600 fall under scope of new requirements + 61 reported from FTSE 600 (30th Sept 2013 – 24th Feb 2014) + UK quoted companies are UK registered companies with equity shares (companies trading equity or equity & debts) on LSE main market, EEA regulated market, NYSE or NASDAQ
@CDSBGlobal www.cdsb.net 13 External reporting drivers GHG emissions reporting by UK quoted companies
@CDSBGlobal www.cdsb.net 14 External reporting drivers GHG emissions reporting by UK quoted companies
@CDSBGlobal www.cdsb.net 15 External reporting drivers GHG emissions reporting by UK quoted companies
@CDSBGlobal www.cdsb.net 16 External reporting drivers Preliminary findings: + Materiality not clearly defined by companies + No clear correlation between materiality assessment and discussion of risk in reports + Environmental performance disclosed in isolation without narrative + Lack of clarity on boundaries and intensity metrics + Additional guidance for practitioners, auditors, solutions providers, etc. could be useful GHG emissions reporting by UK quoted companies
@CDSBGlobal www.cdsb.net 17 External reporting drivers Many organisations may prepare and publish information requested by: This may expand to: Voluntary reporting
@CDSBGlobal www.cdsb.net 18 Not another Framework? + Prepare & present environmental performance & risk information in mainstream financial reports + Designed to allow investors to assess the relationship between environmental performance & risks and the organisation’s strategy & prospects + Cross referencing other reporting requirements (CDP CC4) CDSB Framework focuses on identifying environmental risk in mainstream reports
@CDSBGlobal www.cdsb.net 19 Not another Framework? + Harmonise reporting of environmental risk by having it included in, or linked to, an organisation’s mainstream financial report + Environmental performance & risk subject to the same International Financial Reporting Standards & assurance requirements as financial information + Centrally deposited with competent national authority promptly and publically available + Working with regulators, CDP and the Fujitsu Research Institute to develop an eXtensible Business Reporting Language (XBRL) taxonomy Advantages of mainstream reports Climate change information in CDP and other disclosures CDSB Framework Annual Report
@CDSBGlobal www.cdsb.net 20 Not another Framework? + Focus of previous CDSB Framework on climate change risks & opportunities affecting an organisation’s strategy and financial performance + Scope has now expanded into forest commodity risks and water + The expansion of the CDSB Framework will now cover 79% of natural capital Aiming for natural capital reporting
@CDSBGlobal www.cdsb.net 21 Consultation open 19th February – 12th May 2014 + 90 day consultation period open + Online consultation platform + Public comments promote dialogue among reviewers + Consultation platform will manage consultation process + Available at cdsb.net/consultation Not another Framework?
@CDSBGlobal www.cdsb.net 22 Summary Concluding remarks + CDSB working with others on sustainability reporting + Disclosures by UK quoted companies suggest mixed success in compliance with new UK Companies Act requirements + Amendments to EU Accounting Directives at critical point + CDSB Framework expanded scope and aiming for natural capital + Consultation now open, comments welcome
@CDSBGlobal www.cdsb.net 23@CDSBGlobal @CDSBGlobal Climate Disclosure Standards Board facebook.com/CDSBGlobal Subscribe to our newsletter at cdsb.net/newsletter Thank you email@example.com
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