GHG Reporting - Why Companies Need Internal Alignment Now

The role of publicly available greenhouse gas (GHG) emissions data and climate-related reporting from companies has shifted over the years. What started as an exercise only the most climate-conscious businesses undertook has gradually become the standard for organizations across industries. With an increased emphasis on decarbonization and transparency, relevant regulatory agencies require more robust reporting.

Transparency around sustainability reporting for public, private and government interests is compelling every organization to evolve its existing data management efforts to meet the needs of today. As we move into the next phase of emissions and climate-related reporting, it’s time to align.

The SEC, for instance, proposed a new rule that would require public companies to disclose certain climate-related information. Among other things, this rule would establish standardized reporting, which would be available to investors, allowing them to uniformly assess and compare climate change risks across corporations.

With these established expectations from customers, employees and shareholders, and additional emphasis on an organization’s sustainability positioning coming from current and potential investors, it’s time for every company to align internal stakeholders to effectively collect, consolidate and measure Scope 1, 2 and 3 emissions. By creating a unified view of their GHG inventory, companies can streamline the calculation and modeling of emissions data – informing the development of a clear decarbonization strategy.

What Does Good Data Collection and Disclosure Look Like Today?

Having access to timely, accurate, complete and auditable investment-grade data is critical. Before being able to support reporting and disclosure requirements, underlying data goes on an extensive journey. Scope 2 emissions calculations, for example, rely heavily on utility data. Having this utility data available to calculate emissions is dependent on the data collection and management processes that an organization has in place.

The Path to Disclosure Starts With Data

It can be challenging to meet reporting requirements if the underlying data is not collected and validated with the end in mind. Having clarity around how the data will be used can help inform the processes needed to collect and analyze the data properly. This SEC climate disclosure standardization helps with that—providing a framework for the final reporting so an organization can know what information they need to gather.

A best-in-class sustainability data management program must include:

Centralization

With a diversity of facilities—not only by type, but by geography—creating a unified report becomes unwieldy for organizations without one centralized repository to manage all relevant data from all the relevant sources.

Standardization

Utility invoice data comes in various formats, with critical consumption data presented in different units of measure. For global portfolios, invoices may span multiple languages, making translation necessary for developing a centralized report. Having a consistent method for inputting data that allows for standardized outputs is key to ensuring data is accurate and verifiable. 

Modeling

Being able to forecast what could happen, what might change, and the potential cost reduction of various circumstances is essential. Instead of only looking backward at past GHG emissions and historical economics, modeling allows organizations to preview the potential impact of adjustments.

Insights

In a sea of data, it can be difficult to identify trends or anomalies—insights at the core of proactive decision-making. Having relevant insights surface from among the data provides not only additional context to the reporting, but potential changes to implement. Furthermore, when data is timely, organizations are agile, enabling them to respond quickly to make any necessary adjustments and proactively budget for future improvement.

Reporting

While there will continue to be more reporting requirements moving forward, it doesn’t mean an organization will be limited to those reports. Customers, investors and employees may still want to see detailed reports beyond the regulatory requirements, so a structure that still allows for customized reporting based on a corporation’s unique perspectives and goals is essential.

Adaptability

More reporting regulations are coming. We have a good idea now of what some of them are, but there are others that aren’t yet even on the horizon. Establish a strong data foundation with built-in adaptability and an understanding that disclosures will continue to evolve in the future.

Ideally, these best practices are developed and integrated to be compatible with each other to ensure seamless transitions throughout the process.

Adopt Data-Driven Sustainability Reporting to Meet Requirements

Every organization will be impacted by upcoming shifts in required reporting and disclosures. Those with existing programs and reporting structures in place will face standardization requirements—meaning they may need to not only adjust how the data is reported, but potentially how the data is gathered, managed and formatted as well.

Organizations currently without robust programs may feel like they’re already behind on how best to disclose their emissions and climate-related data. While it does take time to align internal resources and stakeholders to organize the sources behind Scope 1, 2 and 3 emissions, putting in the effort and preparation today will ensure that the organization is prepared as new reporting and disclosure rules are rolled out. This next phase of emissions and climate-related reporting offers an opportunity to build internal data and reporting infrastructure in a way that accounts for not only current needs but also for future trends.

Regardless, an organization that identifies their data needs—based on required government reporting, investor expectations, or customer demands—will have a solid foundation for their decarbonization efforts and be able to advance in parallel with whatever may come.