By Ed King
Radical Transparency is required at all levels of the global economy if climate change and overconsumption are to be effectively addressed.
That’s the view of Deloitte Sustainability expert Guy Battle, who believes business and attempts to secure a global climate deal in 2015 will benefit from more thorough environmental reporting practices.
Recognised as one of the leading figures in the carbon management world, Battle has worked with Marks and Spencer, Sainsbury’s and Masdar’s Zero Carbon City on their sustainability strategies.
In an interview with RTCC, he acknowledged the concept of radical transparency, where a business scrutinises every part of its operations and ensures the board is presented with the results, ‘scared’ many in commerce and politics, but said it is proven to deliver quantifiable returns within 2-3 years.
Arguing that it’s increasingly difficult to hide ‘performance failings’ such as high energy and water consumption, Battle also said that focusing on business and government reporting capacities could be more effective at cutting global greenhouse gas (GHG) emissions than a legally binding deal at the UN.
And he reasoned that a more open flow of information would see investors flock to businesses who take resource efficiency seriously.
“It’s a hard sell and goes against the instincts of many boards and advisors, but there is nothing to be scared about transparency,” he said. “It’s about reducing risk, understanding risk and it’s about being honest. Ultimately our world is moving to a place where nothing can be hidden, because everyone has a mobile phone.”
Battle worked with UK-based retailer Marks & Spencer on its sustainability strategy, and cites it as as a case-study in transparency.
Achievements include a 30% reduction in waste in 2009, the establishment of 10 ethical supplier factories in 2010 and a 26% reduction in non-glass packaging per item in 2011. Critically it is estimated to have delivered a net benefit of £105m.
He says that as soon as businesses become aware of the savings they can make by reviewing their operations, they swiftly act. If they don’t – they suffer. For instance, electricity prices in the UK have risen by approximately 50% in the past few years – heavily penalising companies that have not adopted efficiency measures.
“What’s interesting about reporting is that once you have it on paper you realise that either you are using a resource inefficiently or you are using more than a competitor,” he said, “and as soon as you establish benchmarks or protocols you can then have comparability.
“There’s nothing much better than competition to drive change. We need some form of carbon system – but I think there’s something in leveraging the ability of the market to deliver. The market is driven by people who want to get the best share price, and that is intrinsically linked to environmental reporting across industries.”
So could this approach gain traction where attempts to develop a legally binding emissions deal have failed?
On the plus side the scale and competency of environmental reporting is growing on an annual basis. The UK and Europe are leading in this field, and Battle says business in the USA has embraced the practice. Brazil, South Africa and Denmark are all pushing ahead with plans to make reporting compulsory.
Multinational companies like Walmart, Unilever and Dell all say reporting has made their business more efficient, saving consumers money and handing investors better returns.
As former UNFCCC chief Yvo de Boer pointed out recently, the Rio+20 Earth Summit demonstrated the level to which business is now taking a lead without waiting for government policy. Increasing interest in energy efficiency measures among big business can be seen as another example (if limited to certain regions) of this taking place.
A focus on reporting could also get around the politically toxic issue of binding emission targets, which many developed and developing states actively (if stealthily) protest against. Merely looking at the scales is enough to make some people try and lose weight – and a similar approach to emissions could have a similar effect.
And there is pressure from certain governments – some of whom are mentioned above – for reporting capacities to be improved.
Point 47 in the final Rio+20 text called for reporting to be expanded, calling on “industry, interested governments as well as relevant stakeholders with the support of the UN system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting”.
Yet this fell well short of mandatory reporting, which companies such as Aviva Investors had called for before the conference. Steve Waygood from Aviva subsequently claimed a coalition from Canada, New Zealand, Australia, Kazakhstan and the US Chamber of Commerce had blocked moves, believing it could undermine their national interests.
The argument against is familiar – and revolves around complaints from certain companies of red tape and regulation. (Battle dismisses these concerns, reasoning that any business that is not conducting a thorough analysis of its energy and water use is effectively driving blind.)
A more pressing concern is that such a regime would only be effective if the standards were of a high quality and applied in a consistent manner.
Last year the Guardian highlighted some shocking reports – with VW and E.ON winning the outright award for mistake/omission of the year: “The German carmaker and power company both decided not to include a massive coal plant in Germany in their emissions records: VW because it was owned by E.ON, E.ON because it was run by VW,” it reported.
Laughable as that example may sound, consistency over reporting or simply the accounting of GHG emissions is a deadly serious issue at the UN climate talks, and one that has rumbled on since its inclusion in the 2007 Bali Action Plan.
UNFCCC chief Christiana Figueres summed up her frustration with this aspect of the talks recently, saying: “We need to know that a tonne in Brussels is worth the same as a tonne in Australia, and a tonne in Costa Rica”.
Most recently negotiators at the recent Bangkok summit found themselves bogged down in unproductive discussions on this issue.
As Chris Wright from Adopt A Negotiator revealed, in one meeting an EU proposal with the words ‘common accounting rules’ was met with frantic interventions from China, India, South Africa and Brazil. “According to China there is a key difference between common accounting rules and accounting rules that ensure accountability”, he wrote.
Under the UN talks the principle of Common But Differentiated Responsibility currently applies to all policy proposals. Many Parties use this as an excuse for claiming that ‘Common Rules for Accounting’ cannot be applied to everyone.
In its pre-COP18 report the UK’s Energy and Climate Change Committee Committee warned that without consensus over measuring, reporting and verification, an effective emissions deal in 2015 will be impossible.
Discussions over developing a transparent system of accounting will continue at the next round of major UN climate negotiations in Doha.