The published SECR Guidance – What is new?

The latest  Environmental Reporting Guidelines from the Department of Business Energy and Industrial Strategy (BEIS) were published on 31 January 2019. They include Government guidance on the new Streamlined Energy and Carbon Reporting framework (SECR) which comes into force from 1 April 2019¹ and replaces CRC.

The updated guidance addresses SECR in Chapter 2, but it does not amend other areas covered in the Environmental Reporting Guidance. The rest of the document sets out best practice and opportunities to go beyond what is legally required. This guidance is aimed at organisations seeking to optimise their environmental reporting.

The government recognises that it is no longer necessary to mandate reporting of energy and carbon reporting in the same prescriptive way as in 2010, when the CRC scheme was introduced². The majority of organisations now have a much better understanding of their energy consumption. In addition, environmental disclosures are increasingly requested by investors, shareholders, customers and other stakeholders in annual reports and accounts.

To minimise the reporting burden on companies, the government has sought to simplify its requirements and find synergies between mandatory reporting and voluntary reporting initiatives, such as the Taskforce on Climate-related Disclosures (TCFDs).

BEIS engaged with key stakeholders (including Carbon Credentials) to ensure that participants find the SECR guidance relevant and user friendly, whether they are quoted companies or large unquoted companies and LLPs.

What has been amended in the SECR guidance from the stakeholder engagement?

SECR guidance can be found in Chapter 2 of the Environmental Reporting Guidance. Please see our previous blogs for a summary of the main SECR qualification and reporting requirements.

Following the feedback received from key stakeholders, the SECR guidance has been amended in the key areas:

Encouragement of greater voluntary disclosures: BEIS has set out more the ways in which businesses could go beyond the SECR requirements to demonstrate best practice, including the requirements dealing with the energy efficiency action narrative, intensity ratios, previous year’s data and increasing the range of recommended voluntary disclosures in the reporting templates.

Reference to the Taskforce on Climate-related Disclosures (TCFDs): The guidance recommends and encourages disclosure aligned with the TCFD principles.

Guidance on the “de minimis” provision for emissions and energy use reporting: BEIS has extended the section that deals with ‘materiality’, which now applies to both quoted companies and unquoted businesses and includes some best practice guidance.

Greater clarification of different landlord/tenant scenarios: The guidance clarifies how energy use should be disclosed or estimated, including where tenants may not be responsible for its purchase.

Greater encouragement of the use of dual reporting of emissions: This includes location (grid-average) emission factors for purchased electricity, following the approach taken in Government’s existing guidance and the revised ISO 14064. This is now reflected in section 9 and revised reporting templates.

Clarification on non-disclosure on ‘seriously prejudicial’ and ‘not practical to obtain’ grounds– the guidance clarifies that the ‘seriously prejudicial’ option should only be applied in very exceptional circumstances. Expanded sections on materiality will help businesses in application of exclusions on ‘not practical to obtain’ grounds.

Group reporting, eligibility of companies and LLPs in public sector bodies: Additional information and clarification is included on the types of organisations in scope for SECR reporting.

Assurance/verification: There is no requirement in the legislation for independent verification of assurance. However voluntary, independent assurance on the accuracy, completeness and consistency of energy use, GHG emissions data and energy efficiency action is recommended as beneficial to both internal decision-making and for external stakeholders.

What can companies and LLPs do now to prepare for SECR reporting?

The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 come into force on 1 April 2019. Qualifying organisations will need to include the required information in company accounts for financial years commencing on or after this date. BEIS estimates that around 11,900 companies³ will be obliged to report under SECR. Many of these organisations already collect energy data for CRC and ESOS compliance or for voluntary reporting frameworks, but some will be reporting for the first time.

Organisations should undertake the following actions to prepare for their first reporting year:

  • Understand the corporate organisational structure
  • Understand if you meet the qualification criteria, see previous blog for clarification.
  • Review current approach to energy and emissions reporting (Do you have appropriate data and systems in place)?
  • Plan, undertake and record energy efficiency actions to be included in the Directors’ Report
  • Decide on appropriate intensity ratio(s)

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If you want to learn more about SECR and what it could mean for your business then get in touch and allow our team leverage their expertise to guide you through the process.

 

¹ The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

²The price signal provided by CRC allowances will be replaced by increases in the Climate Change Levy (CCL) in April 2019

³ Streamlined Energy &Carbon Reporting Government Response to the Consultation July 2018

How prepared is your business for greater climate-related disclosure in 2019?

Over recent months several of our clients have been experiencing increasing investor and shareholder pressure around sustainability issues. In part prompted by the TCFD recommendations but also from a drive towards greater transparency around ‘ESG’ issues.

With this in mind, we held a roundtable event on the 23rd January with senior stakeholders from the investor and business community to discuss:

  • What are investors looking for in climate-related disclosures?
  • How can businesses prepare?

The consensus around the table was that we are not on track to meet the objectives of the Paris agreement, which is to limit the increase in global average temperature to well below 2°C above pre-industrial levels. To reverse this trend in the next decade a global economic correction needs to occur, which is likely to result in significant value disruption.

Investors need to know where they should be allocating capital to support the transition to a low-carbon economy and a 1.5°C world. To do this, companies need to show how they’re actively managing the impacts of climate change and capitalising on the opportunities.

During the discussion, three clear themes emerged:

1) Doing something is better than doing nothing

Investors around the table were clear – i) they do consider ESG performance in their investment decisions and ii) in their view, no ESG disclose equals poor performance.  It’s widely recognised that the ESG disclosure landscape is congested, but not disclosing at all is not really an option. We recommend taking a strategic approach and choosing the disclosure frameworks that add most value to your business. Disclosure doesn’t need to be a tick-box exercise, the benchmarking results can be a powerful lever to drive action internally.

2) Embrace transparency

Companies should be embracing the spirit of the TCFD recommendations, which calls for great transparency and certainty over the financial impact of climate change. Companies need to recognise climate-related challenges externally and show stakeholders how they’re managing the risks.  Investors don’t expect companies to have all the answers, but they do want to see that you are:

  • Focused on the material risks and opportunities
  • Open and honest about your environmental impact
  • Aligned to a robust climate strategy and setting credible reduction targets
  • Incorporating sustainability into your business products or services

3) Manage your indirect impact

To help avoid the worst impacts of climate change, companies must reduce their greenhouse gas (GHG) emissions as much and as quickly as possible. This includes emissions from across the value chain (i.e. scope 3) emissions. Scope 3 emissions often represent the largest portion of companies’ GHG inventories and investors want to know that companies have a handle on it. By addressing Scope 3 emissions companies can unlock new innovations, identify efficiencies and address climate-related risk within their supply chains.

Call to action

Investors are looking out for signals that companies are taking strong climate action.  Ambitious commitments, for example setting science-based emission reduction targets or committing to purchasing 100% renewable electricity (RE100), send a clear message to stakeholders that your company is taking sustainability seriously. Without positive action at scale we will not meet the Paris Agreement objectives. Investors at the roundtable emphasized that businesses have a critical key role to play in delivering the transition to a low-carbon economy, they want to see that your company is playing its part.

If you’d like more information on how to maximise your climate-related disclosures in 2019 and prepare for alignment with the TCFD recommendations, sign-up to our webinar on the 14th Feb.

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If you have any queries about anything we’ve shared here please do not hesitate to get in touch with our team at info@carboncredentials.com

Only 10% of companies have set a carbon reduction target

We recently conducted research to investigate the commitment gap between employees wanting to engage more in their companies’sustainability goals and the action being taken by companies to tackle climate change.

Our research found that only 10% of companies have set carbon-reduction targets. Shockingly none of the companies we surveyed have set science-based targets. 

Gain insight into some of the other key barriers to action , as well as receive insight into how an engaged workforce can be mobilised to achieve ambitious carbon reduction targets

Download the full report here

 

Could environmental action be a catalyst for increased health and wellbeing?

We all know that physical activity is good for us but this doesn’t always result in action. So what if more environmentally friendly behaviours could increase your physical activity? 1 in 4 adults aren’t physically active

Physical activity is proven to help prevent heart disease, diabetes, cancer and much more, but worldwide 1 in 4 adults do not meet the global recommendations for physical activity set by the World Health Organisation (WHO). Global progress to increase this has been slow, largely due to lack of awareness and investment.

Could going green mean being more active?

We’ve recently seen a huge spike in the level of awareness around environmental issues, and the commitments that both organisations and individuals are making. So could this level of ambition be translated into actions that not only benefit the environment but also health and well-being?

Carbon Credentials has supported an exciting research project funded by Cancer Research UK and led by Professor Danae Manika, to assess whether promoting positive environmental behaviours amongst workplace employees could spill over into increased physical activity and reduce sedentary time (e.g. taking the stairs instead of the lift).

The project used a Bait and Tease marketing campaign. Positive environmental behaviours were promoted, but health and well-being were not referenced in communications. We see the connection between health, well-being and sustainability as an opportunity to inspire colleagues to take action to help the environment whilst creating a healthier, happier and more productive workforce.

 

For full details of the project, please visit the project webpage here.

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If you’d like to get in touch with a member of our team please email info@carboncredentials.com

Our 6 Top Sustainability Trends for 2019

2018 felt to us to mark the year that environmental sustainability went truly mainstream. We saw the positive impact that engaged and passionate people can have on the agenda of corporates on a wide range of issues.  Plastic pollutionveganismfast fashionscience-based targets all became headline news and we are continuing to see this growth with the likes of Veganuary uptake and M&S releasing a complete vegan line.

However, the release of the IPCC’s report and the outcomes of COP24 last month indicate that our efforts are not sufficient and we are heading towards climate disaster. –Current pledges to cut CO2 emissions are on track to push global warming to at least 3 degrees by 2100, a full 1.5C higher than the IPCC recommended 1.5C pathway. We can’t emphasise the scale of the implications enough and the impetus on us all to do more. So, what do we expect to see in 2019 to drive this change?

Improved alignment across sustainability frameworks and integration into mainstream reporting

2019 will see the continued move towards a higher level of integration of key environmental, social and governance (ESG) factors into mainstream reporting and investment decision-making. The TCFD recommendations will continue to play a key part in advancing this agenda over 2019 and, as a growing number commit to implementing these, this will drive companies to consider not just the impact their business has on the climate, but also the impact that climate change will have on their business.

The Corporate Reporting Dialogue launched its two year ‘Better Alignment Project’ in December 2018 which will see the main ESG standard setters and framework providers including CDP, GRI & IIRC come together to map their respective sustainability frameworks and standards, to determine how they can achieve greater alignment, as well as support integration of material non-financial information into mainstream reporting.

Push for increased transparency and widening the net of ESG issues

It’s no secret that investors increasingly understand ESG risks and opportunities and are pushing for participation in benchmarking and rating mandates – and we expect this to truly become standard practice this year. But what are we seeing across some of these key frameworks?

GRESB is increasingly placing an emphasis on ‘totality’ – an understanding of the full impact of an operation that is clear, transparent, impartially-audited and supported by robust data that extends to a broader range of ESG issues.

As CDP has indicated there will be no significant changes to the questionnaire in 2019, we predict companies will use this time as an opportunity to consolidate their disclosures for Climate Change, Water and Forests and utilise CDP to respond to investor requests for information. With this in mind, we expect more emphasis to be placed on transparency – in particular, addressing Scope 3 emissions and setting Science Based Targets in order to demonstrate alignment with the Paris Agreement.

‘Smart’ buildings take on a new meaning

Smart buildings will take on a new meaning, as not only will they become more efficient, but more renewable and user-focused.

Buildings will get much Smarter, enabling higher cost and carbon savings from optimisation as IoT sensors and gateways become more cost effective and widely available.

A combination of ESOS and 20%+ increases in energy costs will engage boards more on energy efficiency. The ESOS compliance deadline is 5th December 2019, which requires Board level sign-off. This coupled with an average of 20% or higher energy cost inflation will re-focus boards on energy efficiency opportunities that will now have better ROIs.

PPAs will be embraced more as organisations look to lock in renewable energy contracts to save carbon and reduce price risk. 2019 will be the year that Renewable Power Purchase Agreements (PPAs) come into their own. Rising grid energy costs, reducing renewable PPA prices and volatile markets following Brexit will mean companies look to ‘lock in’ agreed electricity unit rates for 5-10 years. This creates a double-whammy of reduced carbon and less risk.

More organisations will be exploring and embracing electric car charging infrastructure and how this will affect their electricity usage. While these changes will increase energy costs and carbon emissions, if done well there could be new revenue opportunities as well.

Wellbeing becomes mainstream and workplace enhancement becomes a key focus

By the end of 2019, how wellbeing is supported by buildings and site management will be better defined with more pragmatic solutions, which will ultimately lead to better buildings and more productive occupants.

The major changes will be twofold:

Adoption of less expensive and more programme specific standards. Having successfully been certified to the first RESET Air Shell and Core in Europe at the end of 2018, we are anticipating two more projects to be certified in the next month or so, with additional projects to come. At the same time, we see a growth in Fitwel Ambassadors and an increasing number of Fitwel pilot projects.

There will be a growth in wellbeing projects which are less about certification but more to do with employee or tenant engagement and workplace improvement. Carbon Credentials has conducted half a dozen of such pilot projects to date, and these are seeing a lot of interest because they can be directed towards the specific aims of the client and the building.

Honest and vulnerable communication builds trust

How can you harness the voice of your employees and customers in 2019 and what are the trends that you should be taking advantage of?

Leverage social. It can be difficult to make the most of social media platforms, but they’re a vital tool. More corporates will be looking to user-generated content to give their engagement initiatives authenticity and to build momentum. There is plenty of research exploring the power of social norms to change behaviour, so make sure you’re working with influential colleagues to produce engaging content that sets expectations for behaviours you’re trying to encourage or deter.

Progress over perfection. Over the last few years we’ve seen a trend towards transparency and this will continue as corporates seek to build trust with their employees and consumers. We often talk about ‘progress, not perfection’ when it comes to engagement, and why it’s more important to make a start than wait for the perfect plan or ideal moment. You don’t need to pretend you have all the answers, by being honest and transparent you will discover solutions and achieve results quicker.

Use technology to communicate impact. The availability of data and the ease of storing and analysing large data sets continues to improve. Make sure that you’re taking advantage of this to communicate results quickly and in a way that resonates with individuals. By making feedback personal and timely you will build confidence and inspire further action.

On the horizon

Circularity – the idea of a Circular Economy has been brewing for quite a few years now, but we expect for it to really gain traction over the next few years by being integrated into frameworks, and particularly thinking around circular buildings (e.g. Green Building Certificates).

Zero Impact – companies heading towards a zero-carbon future will not be so few and far between anymore. In particular, we predict the UK-GBC’s Advancing Net Zero programme to lead to more Net Zero portfolios.

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If you’d like to understand more about any of these topics or find out how Carbon Credentials might be able to support you, please contact Franki at Francesca.wiley@carboncredentials.com, Fiona at fionaquinlan@carboncredentials.com or Sam at sam.carson@carboncredentials.com.

2019: the Breakthrough Year for Smart Buildings

Insights from our Smarter Energy Performance Event 2018

We hosted a live event last year at the historic One Great George Street to discuss the benefits of Smart Buildings for your whole portfolio and the people who work there. We had 3 great speakers including Tim Hutchen, Director – Property & Asset Management at JLL, Miles Dunnett, Director, Portfolio Management at Grosvenor Europe, Alistair Johnson, General Manager at Clifford Chance’s Canary Wharf Office and our own Cian Duggan, Chief Innovation Officer for Carbon Credentials.

“The future is here today,” declared Miles Dunnett, our first speaker for the day and Fund Manager for retail destination Liverpool One. Liverpool One is one of the almost 100 buildings that Carbon Credentials has analysed with our Collaborative Asset Performance Programme (CAPP). However the future Miles was speaking about is more broad than energy performance, and more about the range of opportunities for smarter buildings to improve performance.

Smart technology is here today

The technology which drives smarter buildings is ready to be deployed. In 2018 Carbon Credentials was able to quickly retrofit smart building technology to dozens of buildings, providing additional analysis that can improve energy performance or occupant comfort. Carbon Credentials’ “Smart Building Gateway” is now driving insight out of a number of different buildings, making them more energy efficient, reducing the cost of maintenance and improving occupant comfort.

Smarts is about insight, not data

“A key issue is not lack of data but how to use that data,” Alistair Johnson. At Carbon Credentials, we’ve seen a lot of examples of smart meters, sensors or other data programmes being installed without a clear understanding of how that will result in insight or improved performance.

This has led to an understandable and healthy scepticism about how data can drive performance. We need to make sure the smarts deliver results, and that is rarely a data issue, but more about helping people make decisions which lead to more actions to make improvements.

Tim Hutchen, a Director in JLL’s Property and Asset Management team, spoke about how Carbon Credentials’ Collaborative Asset Performance Programme (CAPP) was able to improve energy efficiency at a number of sites which JLL operate. Tim’s experience was similar to Alistair’s as they each were clear about how data and insight can be leveraged to drive human behaviour. Without that specific outcome, the data doesn’t have value, the smarts are dumb.

Measuring Success

An often overlooked aspect of the smart building opportunity is the ability to track and measure success, making it easier to report more specific improvements. The more detail and granular insight, the more that success can be specifically attributed to specific actions or projects.

“I was probably the sceptic in the room at the beginning,” admits Alistair. However, evidence of savings and the benefits of projects helped him understand that the data and insight that smart buildings provide is worth investing in.

2019 the year to make buildings smarter

If the audience and round tables at our event are anything to go by, then we can confidently say that there is an interest and appetite to develop smarter buildings. However, as the speakers confirmed, smartness is about improving the quality of insight to deliver more specific action, and measure the success of the outcome. Pragmatic smart building programmes will result in specific actions and outcomes designed into the process from the outset, with a clear understanding of how smarts result in success.

In 2019, we expect to see a lot more interest in smart buildings. Now that the technology is well established and works well, and the services deliver real and viable outcomes, 2019 looks to be the year smart buildings go mainstream.

Watch our Smart Buildings Video to gain deeper insight into the benefits of smart buildings.

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If you have any queries about anything we’ve shared here please do not hesitate to get in touch with our team at info@carboncredentials.com

12 Blogs of Christmas – Looking back at 2018

2018 was an critical year in the world of sustainability and as reported by the IPCC report it is clear that time is running out for our planet to mitigate the impact of climate change. However as the 2018 WWF points out, climate change is our greatest challenge but also our greatest opportunity.

We looked back over the year of Carbon Credentials content to give you the 12 Blogs of Christmas, which we’ve complied here for your enjoyment and to give insight into the many ways that your company can help enable a low carbon economy. 

Click on the titles below to be taken to the blog post.

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If you have any queries about anything we’ve shared here please do not hesitate to get in touch with our team at info@carboncredentials.com

Seven ways to reduce emissions in your supply chain – demystifying Scope 3 greenhouse gas emissions

In most cases, over 60% of a company’s emissions lies outside its own operation, in the supply chain. New guidance released by the Science-Based Targets initiative aims to help demystify Scope 3 greenhouse gas emissions, supporting companies to make material emission reductions.

What are Scope 3 emissions and why are they important?

To help avoid the worst impacts of climate change, companies must reduce their greenhouse gas (GHG) emissions as much and as quickly as possible. This includes emissions from across the value chain (i.e. scope 3) emissions.

Scope 3 emissions often represent the largest portion of companies’ GHG inventories but due to challenges around data quality and degree of control, it can be difficult to know how to make meaningful Scope 3 emission reductions.

Despite the challenges, addressing Scope 3 emissions can lead to substantial business benefits. For example, companies can mitigate climate-related risks within their value chains, unlock new innovations and collaborations, and respond to mounting pressure from investors, customers and society.

How do you calculate Scope 3 emissions?

Calculating Scope 3 emissions can be complicated. The first step is to conduct a Scope 3 gap analysis or screening, to understand what is relevant and determine the materiality of each emission source. The GHG Protocol Scope 3 Standard outlines the components of a company’s value chain (upstream in the supply chain and downstream) that make up a Scope 3 footprint.

Did you know?

The Science-Based Target Initiative (SBTi) requires companies submitting targets to undertake a Scope 3 screening. If Scope 3 emissions make up over 40% of total Scope 1, 2, and 3 emissions then at least 66% of Scope 3 emissions must be included in the target.  Read a blog by our technical lead on science-based targets to understand more.

7 ways to reduce Scope 3 emissions

Once you’ve conducted a screening and have a good understanding of emission hotspots in your value chain the next step is to build a strategy to reduce Scope 3 emissions. This can be difficult due to the global scale and complexity of corporate supply chains. Recent guidance by the SBTi highlights some key levers companies can use to tackle Scope 3 emissions.

 

Scope 3 management is not easy, but new technologies such as data analytics, smart sensors, and blockchain will help by offering powerful insight into complex, global value chains. These technologies will play a key role in business innovation and offer exciting opportunities to improve a company’s environmental footprint, but also its bottom line.

Demonstrating the impact of Scope 3 management?

Complexities around data availability can make it difficult to show the positive impact of Scope 3 reduction strategies. A new standard is under development which aims to help companies account for emissions ‘interventions’ (i.e.  programmes and decisions that reduce emissions in key areas of their supply chain) and include them in reporting in a credible way.  The approach is to be used in conjunction with the accounting methodology provided in the GHG Protocol Scope 3 Standard.

We will keep you updated on the guidance as it develops.

What next?

Whether you’re are the start of your Scope 3 journey or looking to build a strategy to monitor and reduce key Scope 3 emission sources – we can help. Please get in touch at: info@carboncredentials.com

UPCOMING BLOG: Scope 3 biogenic carbon and ‘Net Emissions Change’ – requirements for science-based targets

CDP timelines for 2018 and 2019 released!

 CDP has released details of the 2018 scores and a 2019 timeline. 2018 scores will be available on the 22nd January, public responses are now available on the CDP website.

The CDP key dates for 2018/19 are below

2019 will be a consolidation year

Looking forward CDP has indicated there will be no significant changes to the questionnaire in 2019 and most questions will remain the same. This provides an excellent opportunity for companies to consolidate their disclosures for Climate Change, Water and Forests and utilise CDP to respond to investor requests for information.

As a Silver Climate Change Consultancy Partner, and the first UK Science-based targets partner, Carbon Credentials is well-versed in supporting companies with their responses. In 2017 we supported 1 in 6 companies who achieved a Leadership score in the UK.

Conducting an initial gap analysis of your 20  18 disclosure against the 2019 questionnaire is an easy way to understand where to focus efforts.

Carbon Credentials can provide expert support to your organisation on how to improve CDP performance and investor confidence.

Contact the team to learn more about improving your CDP score.