Government, investors, and customers are increasingly pressuring businesses to publicly disclose their carbon emissions figures and climate-related financial risk. This article talks about the key frameworks used for doing this, the reasons for complying, and what it means for Willmott Dixon.
Climate change is already having significant effects; temperatures are soaring, rainfall patterns are becoming more dynamic and sea levels are rising. The IPCC has warned that unless carbon emissions are cut to levels that limit global warming to 1.5oC, we will all experience dramatic changes to our lives.
The requirement for companies to disclose environmental-related financial information in line with global frameworks ensures they consider risks and opportunities they face as a result of climate change. This year, sustainable investments globally amount to $4tn, with the figure growing exponentially.
Willmott Dixon’s industry-leading ambition is to be a zero-carbon company by 2030 without any offsetting. As well as eliminating carbon completely, this ambition commits us to adopt robust and transparent external reporting.
This article talks about the key frameworks for disclosure, why transparency is so important as a business, and Willmott Dixon’s approach.
Key carbon disclosure methodology
Although there are numerous ways to disclose carbon emissions and targets, there are three which are most recognised across the world. These are:
Carbon Disclosure Project (CDP):
CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, and regions to manage their environmental impacts. CDP requires companies to disclose information under three key sections: climate change, forests and water security. Questions cover areas of the business such as strategy, performance, emissions methodology and engagement.
Taskforce for Climate-Related Financial Disclosure (TCFD):
The TCFD is an industry-led group helping investors understand their financial exposure to climate risk. The TCFD encourages businesses to undertake scenario analysis and provides a uniform way of reporting risk. From April 2022 all large businesses in the UK are required by law to include climate risks in their annual reporting using the TCFD framework.
Environmental, Social and Governance (ESG):
ESG reporting is the disclosure of environmental, social and corporate governance data. Investors are increasingly applying these non-financial factors as part of their analysis process to identify risks and growth opportunities. Common ESG metrics include water consumption, greenhouse gas emissions and waste generation.
So why is it so important to be transparent?
- Quality data – unified methodology for reporting climate-related risk and performance means data is robust and can be benchmarked our performance against industry peers.
- Reputation – publicly disclosing against a verified framework builds trust amongst customers, communities and prospective workforce.
- Risks and opportunities – frameworks help identify environmental risks and opportunities that could be overlooked, including commercial and performance.
- Investors and competitiveness – finance for our projects is increasingly linked to long-term sustainability and profitability of a business. The money that funds our projects is becoming more dependent on ESG performance, meaning our business operations and buildings need to perform sustainably.
- Get ahead – mandatory disclosure is growing in momentum and doing it sooner rather than later helps us be prepared for future regulation. As the scope for mandatory disclosure expands, it is likely more of our supply chain will also be affected.
What is Willmott Dixon doing?
Willmott Dixon is committed to developing transparent external emissions reporting supported by clear internal actions and performance reporting. We have been benchmarking and reporting for a number of years already:
- Willmott Dixon has been carbon neutral since 2012, and one of only a handful of companies in the construction sector to be certified to the Carbon Trust Standard
- Our publicly available Carbon Reduction Plan details our carbon reduction figures, targets and plans to achieve them.
- Our Sustainable Development Review reports annual performance against our targets, externally audited and verified by Bureau Veritas.
- We have been sharing our knowledge and supporting our supply chain partners to develop carbon baselines and reduction plans.
Going forward businesses can expect more and more requirements for carbon emissions and climate-related risk disclosure. As our understanding of metrics matures, we can expect the scope of reporting to expand beyond carbon to encompass more wide-reaching sustainability issues such as biodiversity, diversity, and social value.