Corporate responsibility with Tom Rotherham

Time to disclose carbon emissions?

ACCA recently sponsored a workshop on improving climate change reporting. The unsurprising main story was that actual carbon disclosure has not kept pace with the presumed incentives to disclose. Companies have a long way to go when it comes to full disclosure of their carbon holdings. Four policy instruments currently cover the business sector’s climate liabilities: the EU-ETS, Climate Change Levy, Climate Change Agreement, and the Building Regulations and Energy Performance of Buildings Directive.

A fifth proposed measure, the Energy Performance Commitment (EPC) would cap carbon emissions from many non-EU ETS industries. Add to that increasing stakeholder pressure from consumers, shareholders and analysts, and one begins to think that the problem is not desire, but rather capability.

To that end, ACCA has undertaken research into carbon disclosure best practice.  Their top tips are:

• Practice Good Governance:  explain who is responsible for climate change policy at your company.

• Provide Policy Context: Communicate your climate policy and carbon strategy clearly. If climate change isn’t a material issue for your company, state why. Provide the context for scientific discussions.

• Clear Communication: Especially for companies for whom climate change is their most material CR issue, the information regarding climate change disclosure should be easy to find and easy to understand.   

• Data, Targets and Assurance: Disclose targets, the process for setting them and their context. Use a recognized protocol for calculating emissions. Where climate change is a material issue, emissions data should carry the appropriate level of assurance.

• Don’t Forget Product Impact: If you produce a product with a significant climate impact, be sure to report on products. You risk losing credibility if you don’t.

Better reporting on climate change is the result of both better carbon management and a recognition of the opportunities presented by the low-carbon economy. The risks of not reporting clearly on carbon are rising.  In particular, when the enhanced Business Review provisions of the Companies Act come into effect in October 2007, talking about material risks and opportunities from climate change may be mandatory.  Time to start practicing...

FairTrade or Foodmiles ?

For the past week a debate has been unfurling on popular CR list-serve CSR-Chicks (the application criteria are flexible).  At issue: is it better for rich-world consumers to support farmers in developing countries by buying FairTrade, or to protect farmers in developing countries by buying locally to reduce foodmiles and limit the catastrophic risks posed by climate change.

My question: How long will it be before Tesco helps us poor confused, conflicted, concerned consumers by investing in emissions reductions programmes so that their credits can be used to subsidise the foodmiles associated with FairTrade products - or any other product from poor Kenya, Bolivia or Viet Nam?

The FairTrade vs Local debate is a classic case of how complexity can stun concerned people into inaction.  It also suggests a few things:

First, there are no easy answers.  Balancing environmental, social and economic objectives involves tough decisions.  People are not, and cannot be expected to be, consistent in how they deal with this complexity.  I might choose FairTrade one day and local the next; I might choose the lowest cost (to me) one day and the premium green brand the next.  This is not inconsistent: it reflects reality.  Reality is complex; ethical preferences are not homogenous.

Second, it points to the need for some guidance and a degree of "benign dictatorship". If I know what the right thing to do is, I'll try to do it (no promises).  If I am not sure what the right thing to do is, and I am busy, had a rough day, stubbed my toe on the way into the shop ... screw it: if it was that important they'd make it easier on me to do the right thing.

Third (self interest) - it highlights the importance of good communication, designed by people who actually understand the issues. 

In the absence of the right information down traditional channels, we turn to trusted arbitors.  NGOs, Consumer Groups, celebrities ... rightly or wrongly, for good or bad, all of these groups influence purchasing decisions.  But only government has the mandate to consider all the pros and cons (and short and long term issues) in a coordinated way.  Some market failures need government input.  Perfect information is a dream; perfect markets are too.

Governments have showed us that they are happy to leave this issue to companies, civil society and market mechanisms.  We should not expect much from DEFRA and DfiD to help us figure out the right thing to do.

So what happens next?  Back to my original question:

Tesco has decided to label each of its 70,000 products with a carbon footprint label.  At some point, consumers will point out that this information is pushing them to reduce the environmental impact of their purchases at the expense of their support for economic development.

So, how long will it be before Tesco helps us poor confused, conflicted, concerned consumers by investing in emissions reductions programmes so that their credits can be used to subsidise the foodmiles associated with FairTrade products? Or is doing the right thing too complex?