Oceans are becoming warmer and the sea levels are rising. From turtles on the coast of Africa to polar bears in the Arctic, the planet is faced with serious risks associated with climate. The challenge is now negatively impacting businesses and people's livelihoods, and we cannot sit back and wait for the worst. The time to act by adopting sustainability is now. All about Climate Change Reporting Framework 2022.
To address the problem of climate change, we have to cut down carbon, and other greenhouse gas emissions-related pollution. The 2015 Paris Agreement on Climate Change, the Special Report of the Intergovernmental Panel on Climate Change, and the United Nations Sustainable Development Goals, all call for accelerated actions to cut down greenhouse gas emissions (GHG) by everyone, including companies and cities, to create a low-carbon economy.
Past efforts have not yielded much in cutting down risks, but the renewed efforts might have provided us the ultimate solution: corporate sustainability reporting.
Unlike other strategies, corporate sustainability reporting targets businesses, companies, organizations, and government departments, requiring them to adopt efforts for emission reduction and responsible operations. More importantly, these organizations are required to report their efforts following the Climate Change Reporting Framework (CCRF) by the Climate Disclosure Standards Board. So, how exactly does the framework work?
CCRF was developed by the Climate Disclosure Standards Board (CDSB), which is committed to helping international corporate reporting with the aim of equating natural capital to financial capital. This is why they created CCRF, which is aimed at bringing elevated rigor in environmental reporting. Well, just like you put a lot of effort into financial reporting and disclosures, sustainability will need equal or more focus in line with clearly set recommendations/ standards.
The Climate Change Reporting Framework (CCRF) was created as a response from stakeholders demanding that businesses take greater responsibilities because they have a bigger impact on the environment.
CCRF was first released in 2009 during the World Business Summit on Climate Change but was later updated to reflect the emerging realities of modern reporting needs and policy changes. In 2013, the framework was expanded to ensure the reporting process goes beyond greenhouse gas emissions to include environmental and natural capital.
CCRF is a comprehensive framework that helps a company correctly disclose its impacts on the environment, including climate change. The aim is to guide companies to make conscious initiatives targeting to cut down carbon emissions and reduce the impacts on the environment.
Ultimately, the reporting or disclosure is aimed at helping stakeholders make the big decision on whether to work with the respective business after comparing the report with those of others.
Which company presents fewer ESG risks, has a more comprehensive strategy for risk mitigation, and is accurate in ESG reporting? Investors want to be sure beyond reasonable doubt that the right standards were followed. This is the best way to promote financial; social, and environmental sustainability.
As we have pointed out, the disclosures under CCRF are aimed at showing stakeholders the impacts that climate change is having on the company. It also tells them what the top leadership of the organization considers climate-related issues and the efforts adopted to address them. Therefore, the ESG framework outlines key requirements or guidance for organizations to follow when making their disclosures:
CDSB indicates that for climate-related information to be useful, it depends on its qualitative nature. This implies that the presented information or disclosure should be able to help investors make the decision about the company. The report emphasizes on the predictive value of the presented data so that investors can work only with the company inclined towards making the planet a better place.
A good example is information about an organization’s expectations on its ability to adapt or benefit from the new activities / risks on climate change, such as selling carbon credit. When the disclosure is presented qualitatively, it becomes easy for interested investors to see the company’s future.
The management should be as specific as possible, especially when presenting data on the impact of climate change to its organization. How will it impact the business, investors and planet?
Recently, concerns about greenwashing have emerged, with some investors indicating they are unable to make key decisions based on climate change and other ESG information presented in the reports. To address this challenge, the Climate Change Reporting Framework (CCRF), just like the Task Force on Climate-related Financial Disclosures (TCFD) requires companies to be faithful in the presentation of the information to stakeholders. Faithful presentation means that the details, whether financial or environmental, captured in must be complete, free from error, neutral and presented both qualitatively and quantitatively.
The term neutral does not mean that the reporting should not be purposeful. Rather, it calls for the correct presentation of information without bias and in line with the selected frameworks. So, you should not just focus on the positive edge, highlighting how the efforts on emission reduction are yielding impressive results. The primary requirement is that you also capture all the related negative impacts.
Climate Change Reporting Framework (CCRF) also appreciates that climate change-related info can at times be anchored on estimates drawn under conditions of uncertainty. Therefore, it calls for utmost faithfulness. If there are omissions or deviations from such estimations, they should be communicated in the sustainability report.
This is perhaps the most important requirement when using the Climate Change Reporting Framework (CCRF). The idea is to only identify and present only the information that is worth reporting. So, how exactly do you determine that the information is material?
CCRF provides workable filters that help you to narrow down to areas that are of interest to stakeholders. Materiality helps to eliminate clutter and derivatives that are not helpful to clients.
Cutting down emissions is material because it impacts almost all areas of company operations and the globe too. So, do not fail to include related efforts in your ESG report.
Other recommendations on possible material topics include water use and the risk of shifting to new raw materials. Changing to a new source of energy would also be an awesome reporting area. Because organizations are different, the management is required to look at its operations, strategic design, the long term goals and government policies, to determine what is material. Looking for an ESG Consultant?
The requirements we have highlighted above can get you started in the climate change reporting journey. However, the list is not conclusive. It is important to appreciate that a whole range of factors, parties, and parameters come into play. Your local policies also play a huge role when working on sustainability. To get it right with your company’s climate change disclosures, here are some useful tips.
The process of climate change reporting is complex and involves a lot of parameters. For the process to be comprehensive and information accurate, you need to have the right sustainability reporting software. Leading apps can help you to easily gather the required data, analyze, and present it in line with the CCRF.
You can even automate some parts of data gathering and follow specific key performance indicators.
For many companies that are getting started with the process of sustainability reporting, using CCRF can be pretty challenging. Even some well-established brands still find it challenging, and the best way to go about the process correctly is working with experts. These professionals have all the experience needed to steer the process correctly from start to end. They can also train your employees on sustainability matters, but only if you select and work with the best consultants.
One of the reasons why climate change reporting is challenging is that some entrepreneurs consider it an end as opposed to a process. When viewed as an end, it implies that the post-reporting phase could easily see the company slide back into high carbon emissions. Therefore, you should look at the efforts and guidance adopted for sustainability from the long-term perspective.
Your company should join others in helping to make the world a better place. This way, even the sustainability reporting process for your business will become a lot simpler.
As you can see, the Climate Change Reporting Framework (CCRF) is one of the revered tools helping companies to adopt focused efforts on sustainability. It allows them to disclose their efforts to investors so that they can avoid those accelerating the damage to the environment.
To use this framework, you should have the right framework and experts on your side for better results. At Diginex.com we are waiting to assist. Visit us for all that you need about climate charge or ESG sustainability reporting.
The primary benefit of ESG accounting is that it helps to identify the risks and opportunities facing your company.
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