Through benchmarking and other initiatives, this research has improved the international practice of carbon accounting and driven positive action by influential investors on climate change.
The social cost of climate change is exceptionally high – potentially as much as US$220 per tonne of greenhouse gas emissions. However, until 2008, there was little consistency in the international practice of carbon accounting - the ways in which different businesses measure and report on their emissions.
Different communities of practitioners framed carbon accounting in different ways, and there were no shared methods for benchmarking corporate performance in this area. In the absence of reliable benchmarks or indices, there was little that investors could do to drive much needed improvements in large multinational corporations’ carbon management.
Ascui, Mackenzie and colleagues at the Centre for business and climate change set out to define carbon accounting and explore how corporate carbon performance could be measured and compared. In doing so, they wanted to develop drivers for improving carbon management across business at all scales, including at the highest, multinational level.
The research has involved a range of methods, from reviewing literature and analysing emissions and performance data, to interviewing experts and bringing together different types of businesses and stakeholders in workshops. This has helped the researchers identify five key ‘frames’ of carbon accounting which, in turn, have enabled closer collaboration between communities of practitioners.
Funding has come from various organisations, including the Economic and Social Research Council (ESRC), the Natural Environment Research Council (NERC) and the UK Energy Research Centre (UKERC). ENDS Carbon, a spin-out company established in 2009 to carry out carbon benchmarking, was made possible, in part, through paid participation in benchmarking by 26 multinational companies, including major supermarkets and mobile telecommunications providers.
The five key ‘frames’ concept has been used by the Climate Disclosure Standards Board (CDSB) in its move from climate risk reporting to carbon financial accounting, including in discussions with the All-Party Parliamentary Group on Climate Change on ‘Consistency for Better Decision Making’.
The Centre has contributed to the revision of ISO standards on project-level and organisational carbon accounting, and Ascui has been appointed to CDSB’s Technical Working Group and to the Boards of two other carbon accounting standard-setting bodies, the Plan Vivo Foundation and the Woodland Carbon Code.
Backed by £330k of investment from Haymarket plc, ENDS Carbon has now benchmarked over 1,000 companies for multiple corporate clients, the market-leading trade publication, Brand Republic, and the international index provider, FTSE Group.
The benchmarking aspect of the research has also significantly influenced the Carbon Disclosure Project, which to date has encouraged over 304 global institutional investors, with US$22 trillion of assets, to participate in its ‘Carbon Action’ initiative to reduce carbon emissions.
A further network of 1,200 institutional investors, the UN-supported Principles for Responsible Investment (PRI) initiative, credits the work as a key inspiration for its corporate engagement focus, which it has tested with 2,200 companies; PRI has appointed Mackenzie to a committee designing its own benchmark.
The lead researchers have written an executive briefing paper for UN Global Compact, resulting in the take-up of key concepts by the Climate Bonds Initiative. The research as a whole has been used in training and education, including for senior decision makers from over 20 countries.