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As a testament to the maturity of forest and water disclosures through the CDP information request, the Climate Disclosure Standards Board is expanding its Reporting Framework to include water and forest risk commodities. The expanded framework will provide guidance for companies in integrating this information into their mainstream corporate reports and start on the journey towards integrated reporting.
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@CDSBGlobal www.cdsb.net 1
Integra(ng 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 repor(ng drivers
+ Not another Framework?
+ Consulta(on
+ Summary
@CDSBGlobal www.cdsb.net 3
About the Climate Disclosure Standards Board
+ CDSB is a consor(um of business and environmental organiza(ons formed at the 2007 World Economic Forum’s annual Davos mee(ng
+ CDP has provided secretariat support since incep(on and coordinates day-‐to-‐day ac(vi(es
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 representa(ves, the major accoun(ng firms, professional bodies, academics and other specialist collaborators
@CDSBGlobal www.cdsb.net 5
About the Climate Disclosure Standards Board
+ CommiUed to the integra(on of climate change related informa(on into mainstream corporate repor<ng
+ 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 repor<ng drivers
+ Danish Financial Statements Act
+ EU Accoun(ng Direc(ves (proposed)
+ French Grenelle II
+ South African King Code
+ UK Companies Act
+ Find out more at cdsb.net/standards
Mandatory repor9ng
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External repor<ng drivers
Proposed amendments to EU accoun9ng direc9ves
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External repor<ng drivers
+ Background + Amendment to the Accoun(ng Direc(ve 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
+ Loca(on of non financial statement + Within 6 months of balance sheet date
Proposed amendments to EU accoun9ng direc9ves
@CDSBGlobal www.cdsb.net 11
+ Content: + Policies, results, risks, due diligence + Environmental (plus social, employee, human rights, an(-‐corrup(on, bribery)
+ The use of renewable and non-‐renewable energy, greenhouse gas emissions, water use and air pollu(on
+ Compliance tools & frameworks + Na(onal / EU / interna(onal frameworks
+ EC guidance to support land use, water, GHG emissions and use of materials
+ Audit / verifica(on + 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 repor<ng drivers
Proposed amendments to EU accoun9ng direc9ves
@CDSBGlobal www.cdsb.net 12
External repor<ng drivers
GHG emissions repor9ng 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 repor<ng drivers
GHG emissions repor9ng by UK quoted companies
@CDSBGlobal www.cdsb.net 14
External repor<ng drivers
GHG emissions repor9ng by UK quoted companies
@CDSBGlobal www.cdsb.net 15
External repor<ng drivers
GHG emissions repor9ng by UK quoted companies
@CDSBGlobal www.cdsb.net 16
External repor<ng drivers
Preliminary findings:
+ Materiality not clearly defined by companies
+ No clear correla(on between materiality assessment and discussion of risk in reports
+ Environmental performance disclosed in isola(on without narra(ve
+ Lack of clarity on boundaries and intensity metrics
+ Addi(onal guidance for prac((oners, auditors, solu(ons providers, etc. could be useful
GHG emissions repor9ng by UK quoted companies
@CDSBGlobal www.cdsb.net 17
External repor<ng drivers
Many organisa(ons may prepare and publish informa(on requested by:
This may expand to:
Voluntary repor9ng
@CDSBGlobal www.cdsb.net 18
Not another Framework?
+ Prepare & present environmental performance & risk informa(on in mainstream financial reports
+ Designed to allow investors to assess the rela(onship between environmental performance & risks and the organisa(on’s strategy & prospects
+ Cross referencing other repor(ng requirements (CDP CC4)
CDSB Framework focuses on iden9fying environmental risk in mainstream reports
@CDSBGlobal www.cdsb.net 19
Not another Framework?
+ Harmonise repor(ng of environmental risk by having it included in, or linked to, an organisa(on’s mainstream financial report
+ Environmental performance & risk subject to the same Interna(onal Financial Repor(ng Standards & assurance requirements as financial informa(on
+ Centrally deposited with competent na(onal authority promptly and publically available
+ Working with regulators, CDP and the Fujitsu Research Ins(tute to develop an eXtensible Business Repor(ng Language (XBRL) taxonomy
Advantages of mainstream reports
Climate change informa(on 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 & opportuni(es affec(ng an organisa(on’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 repor9ng
@CDSBGlobal www.cdsb.net 21
Consulta9on open 19th February – 12th May 2014
+ 90 day consulta(on period open
+ Online consulta(on planorm
+ Public comments promote dialogue among reviewers
+ Consulta(on planorm will manage consulta(on process
+ Available at cdsb.net/consulta(on
Not another Framework?
@CDSBGlobal www.cdsb.net 22
Summary
Concluding remarks
+ CDSB working with others on sustainability repor(ng
+ Disclosures by UK quoted companies suggest mixed success in compliance with new UK Companies Act requirements
+ Amendments to EU Accoun(ng Direc(ves at cri(cal point
+ CDSB Framework expanded scope and aiming for natural capital
+ Consulta(on now open, comments welcome
@CDSBGlobal www.cdsb.net 23 @CDSBGlobal
@CDSBGlobal
Climate Disclosure Standards Board
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Thank you