Reporting environmental performance is quickly becoming a requirement for any corporation with a “green” initiative worth writing a press release about. According to consulting firm KPMG’s latest International Survey of Corporate Responsibility Reporting, of the top 250 companies in the 2007 Fortune 500 issued sustainability reports.
The majority of companies use the indicators crafted by the Global Reporting Initiative (GRI) to come up with a snapshot of their environmental performance, but back in 2004, the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) decided it was necessary to develop a standard specific to greenhouse gas emissions.
The two teamed up to develop a standard called the Greenhouse Gas Protocol. According to WRI, about two-thirds of the S&P 500 now use the protocol to include greenhouse gas emissions in their corporate social responsibility reports. The protocol doesn’t eliminate the need for GRI’s indicators; rather, it augments those indicators, providing another level of detail to reports of environmental performance, focused narrowly on greenhouse gas emissions.
WRI and WBCSD just announced the of their Greenhouse Gas Protocol: standards that cover a company’s products and global supply chain.
The standards help companies figure out first a “functional unit” to measure, such as a loaf of bread for a baker or 1,000 liters of Coke for Coca-Cola, then trace that unit from virgin materials through to consumption. Sticking with the Coca-Cola example, that would mean accounting for the emissions associated with the creation of the company’s various bottles as well as the production of its drinks, the shipping of the bottles to various distributors and then to retailers.
While there is some crossover between a product’s emissions and a company’s supply chain emissions, the protocol will contain both in order to cover the emissions generated by supplier companies as well as the primary company.
The product lifecycle and supply chain standards were released in draft form a year ago and have since been reviewed and revised by stakeholders, including representatives from corporations, consumers, non-governmental associations and governments. Now that public comments have been incorporated into the standards, 60 companies — including Levi Strauss, Coca-Cola and General Electric — have volunteered to road test them.
“If this method becomes widely accepted, it will enable us to better calculate and share the climate change impact of our products,” said Michael Kobori, Levi Strauss & Co.’s vice president of Social and Environmental Sustainability. “Being able to credibly measure and communicate that product impact to consumers can unleash the power of the market to address climate change on a global scale.”
While the 60 companies road testing the standards are some of the largest in the world, according to David Rich, a WRI Associate working on the Greenhouse Gas Protocol Product and Supply Chain Initiative, not everyone was jumping up and down to be part of the road test.
“Some companies want to track emissions, but they are a bit gun-shy about publicly reporting and are waiting for standards to be in place so that they can say ‘These are the internationally accepted standards we’re reporting against,’” he explains.
To that end, the final standards are expected to be published by December 2010. It’s a good step, and one that companies will have to take especially if and when carbon accounting becomes a real thing in this country. Still, Rich himself is quick to own up to the limitations. First, there are numerous industry-specific issues that the Greenhouse Gas Protocol does not take into account.
“We are providing a general framework that works for all industries — the details will have to be hammered out by industry-specific groups,” Rich says.
“The details” in this case means the emissions and supply-chain issues specific to each industry.