By ClimateBiz Staff
Published March 30, 2010
LONDON, United Kingdom — Most climate and sustainability data reported by some of the world’s largest companies suffer from a credibility gap, a new report found, largely because companies fail to have the information verified.
A U.K.-based consulting firm surveyed FTSE 350 companies on their disclosure practices, discovering just 75 companies on the index publish some kind of assurance to show the information had been verified. Of these, 62 were based on a recognized assurance standard and performed by a third party, the study found.
Investors clamored for a way to compare the credibility of the vast array of non-financial reports published by companies in their portfolios, particularly for greenhouse gas emissions, prompting the U.K.’s Department for Environment, Food and Rural Affairs (DEFRA), and a group of corporations including Barclays, BP, BAT, CII, SAP and BPR Group, to sponsor the research. Most companies don’t have their greenhouse gas emissions inventories verified: Just 38 did, while seven discussed carbon-reporting criteria and two statements clearly followed a standard.
A widespread problem facing the industry is the lack of standardization of assurance models, creating confusion for investors as to which hold more credibility: stakeholder panels, internal audit statements, celebrity endorsements or independent third-parties.
“As Britain moves toward its goal of reducing carbon emissions by 80 percent by 2050, we need credible sustainability and carbon data,” Ben Murray, managing director of Carbon Smart, the parent company of Smart Sustainability, the initiative that conducted the study, said in a statment. “Currently we don’t have that.”
The findings echo similar results published in GreenBiz.com’s State of Green Business 2010, which examined the disclosure practices of Standard and Poor’s 500 index. Just 7.6 percent of S&P 500 reporters sought third-party verification of their environmental data, compared to the global average of 23 percent and European rate of 30 percent.
The Carbon Disclosure Project will launch a framework with the recommended components of a robust assurance and verification process, in addition to a partnership program with verification professionals to help accelerate the practice, according to Nigel Topping, its chief development officer.
“Confidence in emissions and other climate change data is increasingly important as the issues around climate change become more and more relevant to businesses and investors,” Topping said in a statement last week.