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How carbon reporting can become more credible (Summary)

Esther Rodriguez, Associate Director of Carbon Smart, a consultancy on sustainability and carbon, discusses in an Ethical Corporation article about the growing number of large companies that report on their environmental performance, and particularly their carbon emissions. However, she also highlights the lack of independent verifications conducted on companies’ carbon data and insists on the importance of having an independent third party to “assure readers that reported information is reliable”.

Everyone will agree that, in recent years, sustainability has become a key factor in business operations and risk management. Nowadays, sustainable initiatives are closely evaluated when measuring overall business health and performance. One of the most important elements evaluated in a sustainable report is the total carbon emissions, which illustrates the organization’s engagement in fighting climate change and building future sustainable growth.

Actually, according to the {{LNK| Carbon Disclosure Project (CDP)|}}, the rate of large multinational companies reporting their carbon emissions has sharply increased in the past few years and reached 82% in 2009.

However, Esther Rodriguez explains that, “an increase of carbon reporting does not necessarily lead to an increase in the quality of the data reported”. In fact, “ the world’s largest companies are presenting investors with performance data that is not independent or transparent,” {{LNK|reveals Ethical Corporation|,%20India%20engaging%20in%20CSR%20and%20challenges%20facing%20ethics%20and%20compliance%20executives&utm_content=458057}}.

A lack of independent verification of carbon data jeopardizes the credibility of the report because readers have no guarantee whether the data is reliable, complete and comparable with other organizations. They might believe that the carbon report is just a “greenwashing” tool and that no real sustainable strategy has been put into place within the company. To increase credibility, organizations must allow their data to be scrutinized by an independent 3rd party and therefore guarantee the quality of the data reported.

A “mandatory framework of international assurance standards” called ISAE 3410 is being developed by accounting professionals but future success “will depend on Government regulations and investor demand”.

In conclusion, one could ask why sustainability performance data gathering methods are much less rigorous opposed to those used for measuring financial performance. When will sustainable performance be as prominent as financial performance? When will it become the reference when talking about a company’s performance?

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