Climate Change: The Case For Businesses To Take Action Hots Up

Author:Ms Marion Palmer
Profession:Hogan Lovells

In a world increasingly focused on the effects of climate change and its contributory factors it is likely that corporations will be closely scrutinised in relation to their climate-related policies and statements. Failure to substantiate claims or claims about actions with little practical effect are likely to be noticed and publicised leading to reputational loss.

Highly motivated groups such as Extinction Rebellion have demonstrated their willingness to target companies involved in 'green-washing'.1

In some cases, companies may face actions from regulators such as those brought in the past in relation to claimed product performance.2

Claims that products are 'energy efficient' or have been produced in a more 'environmentally sustainable way' are likely to undergo greater scrutiny. Increasingly, companies are making claims about offsetting emissions associated with services, flights for example, or manufacturing of products. In such cases it will be important to provide evidence of realistic offsetting, for example, capture of carbon dioxide in a meaningful time frame, such as a few years, rather than the carbon which will be captured by trees growing over the next 50 years.3

Most companies which assess and publicise reductions in their carbon emissions use a formalised carbon auditing framework. The most widely used voluntary standard is that provided by the 'GHG protocol'4 which measures emissions under 3 different scopes:

Scope 1 audits the emissions derived directly from actions of the company, for example burning of fossil fuels by back-up generators. Scope 2 captures indirect emissions associated with purchased or acquired electricity, steam, heat and/or cooling. Scope 3 relates to the "Corporate Value Chain" and allows companies to assess their entire value chain emissions impact (upstream and downstream), and identify where to focus their reduction activities. Scope 3 is intended to capture other indirect emissions (falling outside of Scopes 1 and 2 discussed above), such as those associated with the use of sold products and transportation of products and people. Previously reporting of Scope 3 has been optional under the GHG protocol and not all companies try to assess emissions associated with Scope 3. Recently, however, there has been renewed interest in Scope 3 reporting in order to help companies make more sustainable decisions about their activities and the products they manufacture, purchase and sell.

In addition to the...

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