Climate change is a hot topic now, and it is about to get even hotter! After the Paris Conference on Climate Change in 2015, there is a growing consensus among businesses, international standards organizations, and financial institutions on how to tackle climate change through the adoption of sustainability in company operations. The focus on addressing climate change is rapidly shifting from being a voluntary activity to a mandatory ESG reporting undertaking. visit here
Climate change reporting is the disclosure of a company’s climate-related info, such as the emission levels, reduction targets, strategies adopted for reducing carbon footprint, and results so far. To provide a holistic account of a company’s account on sustainability, most companies combine climate change reporting with environmental, social, and governance (ESG) reporting. So, which is the best climate change reporting framework for your company? Here are the top suggestions that you should consider:
Importance of Climate Change Reporting
- Crucial in building a positive brand on the market.
- The process starts with a comprehensive review of a company, allowing it to identify and address bottlenecks in its operations.
- Correct climate change reporting allows companies to comply with government and international rules and policies.
- For listed companies in markets like HKEX and NYSE, climate change and sustainability reporting are crucial requirements for listing.
- Climate change reporting helps to bring stakeholders and companies together for better engagement.
- Helps to build a motivated and committed workforce.
- Helps to cut down cost of operations, increase efficiency and profitability of a company.
What is the Best Climate Change Reporting Framework?
Although there are dozens of ESG sustainability reporting frameworks that you can use, here are the best options for your company:
Carbon Disclosure Project (CDP)
This is a framework developed to help companies provide environmental information to their stakeholders (customers, employees, investors and international standards organizations). This climate change reporting framework provides questionnaires that cover climate change, forests, and water, and each is scored. The rating/scoring is done by CDP accredited partners.
The Task-Force on Climate-Related Financial Disclosures (TCFD)
TCFD is used to help organizations demonstrate that ESG performance is expected to materially affect future financial performance. It was developed in 2015 following the G20 Finance Ministers’ request that the Financial Stability Board (FSB) analyze the connection between financial and climate-related issues.
TCFD is one of the most preferred climate change reporting frameworks because it is pretty straightforward to use. Here are the four main pillars of TCFD:
- Metrics and Targets: These are the measurements used in assessing climate-related risks and opportunities in your company. You have to be as comprehensive as possible and cover all areas of company operations, including Scope 1, Scope 2, and Scope 3 GHG emissions.
- Risk Management: In this pillar, your company is required to demonstrate how it defines, assesses, and manages climate-related risks.
- Strategy: This pillar requires you to determine the tangible material impacts of climate-related risks and opportunities on the entire business, including financial planning and strategy.
- Governance: This pillar focuses on the structures installed to address climate-related risks and opportunities. For example, do you have a specific department that deals with climate or environmental matters, or is the task delegated to different team leaders?
Global Reporting Initiative (GRI)
GRI is among the oldest ESG reporting frameworks and is preferred for its flexible applications. GRI standards are created to help companies set and prepare sustainability reports on material topics. The three core material topics include social, economic, and environment, which capture climate-related risks and opportunities.
One fact about every climate change reporting framework that we have listed above is that it is data-driven. The data and information presented in the final reports should be accurate, easy to read, and verifiable. The entire process can be pretty challenging, and it is important to work with appropriate sustainability management software. Reach out to Diginex.com for top-rated apps for sustainability management.