(77a) Environmental & Carbon Reporting & Disclosure: Not Business As Usual

By

John. P. Fillo, Ph.D. CPEA

ABSTRACT

Climate change and carbon risk management are complex environmental and societal issues, as well as being fundamental to business sustainability.  Increased regulation and reporting of environmental and carbon exposures, liabilities and risks are driven by national, regional, state/provincial and local requirements in the U.S. and abroad.  These obligations have evolved from participation in voluntary initiatives to legislative and regulatory-driven mandatory actions. While reporting of greenhouse gas (GHG) emissions is only one component of these requirements, statutory financial disclosure requirements for publicly held companies and even country-specific requirements for environmental/ sustainability reporting extend these obligations to address strategy, operations, business risk and opportunity management, legal compliance and supply chain issues, as well as disclosures in financial statements and reports. 

This presentation will provide an overview of and insight into the complexity of these requirements and their relevance to the chemical engineering profession.  While it will provide a brief overview of the mandatory ‘environmental’ reporting programs and requirements as a baseline, the focus will be on statutory, industry and voluntary environmental, carbon and sustainability reporting and disclosure in the U.S. and internationally. For example:

• U.S. Federal sustainability and carbon planning and reporting requirements under Executive Order 13514, which requires setting and achieving goals for improvement of energy use, GHG emissions and broad-based sustainability performance;
• Environmental, social and carbon reporting and disclosure as mandated by the U.S. Securities and Exchange Commission and international securities commissions;
• Global carbon disclosure and attestation standards, including those from the Climate Disclosure Standards Board;
• Standards that mandate the basis for development and verification of GHG inventories and project reductions, and recent efforts by the International Federation of Accountants (IFAC) to establish standards specific to assurance of GHG assertions;
• Country-specific requirements that mandate environmental and sustainability reporting by industry;
• Voluntary carbon reporting and disclosure, including  the Carbon Disclosure Project, The Climate Registry, and others;
• Industry-specific carbon risk reporting and management, including the National Association of Insurance Commissioners, The Carbon Principles, and others; and
• Corporate reporting and disclosure that is being driven by stakeholders, including shareholder resolutions.

These requirements and voluntary venues represent complex carbon reporting and disclosure requirements, and extend beyond just simply reporting a GHG inventory. Such disclosures often require that corporate strategy, risk and opportunity management, and programs and initiatives be disclosed as a basis for assessing the adequacy of such disclosures.

For each of the reporting and venues, real-world examples of how selected entities approach conformance with these requirements will be discussed.  As the statutory requirements around GHG reporting, reductions, and overall carbon management expand and mature, so will the complexity of public reporting and disclosure.

And are these relevant to the chemical engineering profession? They most certainly are. For a chemical engineer whose career has evolved down a path of EHS/sustainability management or into the legal profession, they will be directly involved in the reporting and disclosure process. For the chemical engineer who is focused to product/process R&D or design and engineering, understanding these issues is essential to assure they are addressed progressively through the process and product development lifecycle. Engineering efficiencies and pollution prevention into processes and products, and assuring continuous improvement, is essential so as to improve a corporation’s top and bottom line, and to ensure that the necessary information is available to support these required disclosures.