1. Corporate Greenhouse Gas
Emissions Reporting
How the FT500 report on their GHG Emissions
Executive Summary
The full report is available at www.ethicalcorp.com/greenhousegas
Ethical Corporation
2008

2. CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Contents
Foreword ..............................................................................................................................................................5
Executive Summary .............................................................................................................................................6
Introduction and Methodology ...........................................................................................................................8
Chapter 1: Measuring and Verifying Absolute Emissions ..................................................................................12
1a – Introduction to GHG Emissions-Reporting Protocols..................................................................................12
1b – Summary of Commonly-Used Emissions-Reporting Guidelines and Protocols...........................................13
1c – Companies’ Views of GHG Emissions Reporting and Verification ..............................................................20
1d – Use of Protocols and Guidelines as Quoted in CDP5 Responses..............................................................25
1e – Overview of Select Industrial Organisations’ GHG Emissions-Reporting Methodologies...........................30
• The Banking and Finance Sector ..............................................................................................................31
• The Retail Sector.......................................................................................................................................31
1f – Verifying GHG Emissions .............................................................................................................................33
Chapter 2: Using Emissions-Intensity Metrics .................................................................................................39
2a – Introduction to Emissions Intensity...........................................................................................................39
2b – Use of Emissions-Intensity Metrics as Quoted in CDP5 Responses..........................................................40
2c – Carbon-Intensity Reporting Among Survey of Respondents......................................................................45
Chapter 3: Stakeholders’ Views on Corporate GHG Emissions Reporting.........................................................46
3a – The NGO View of Corporate GHG Emissions Reporting ............................................................................46
3b – Investors’ Views on Corporate GHG Emissions Reporting ........................................................................48
Chapter 4: Use of Absolute Emissions and Emissions-Intensity Targets Among the FT500 .............................53
4a – Introduction to Absolute Emissions and Emissions-Intensity Targets .......................................................53
4b – How the FT500 Use Absolute Emissions and Emissions-Intensity Targets................................................55
4c – Survey Respondents’ Views on Emissions-Reduction and Emissions-Intensity Targets ............................58
Chapter 5: National Government Policies and Guidelines.................................................................................59
Australia .............................................................................................................................................................59
Canada...............................................................................................................................................................60
China ..................................................................................................................................................................61
India...................................................................................................................................................................62
Japan..................................................................................................................................................................62
South Africa .......................................................................................................................................................63
USA ....................................................................................................................................................................63
European Union .................................................................................................................................................64
France.................................................................................................................................................................65
Germany.............................................................................................................................................................66
Norway ...............................................................................................................................................................67
Sweden ..............................................................................................................................................................67
UK......................................................................................................................................................................68
Conclusion ........................................................................................................................................................70
Appendices ........................................................................................................................................................72
References ........................................................................................................................................................88

3. CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Tables and Figures Contents
Introduction and Methodology
Table 1: CDP response status of FT500 companies ............................................................................................8
Figure 1: CDP response status of FT500 companies ..........................................................................................8
Table 2: FT500 companies reporting their GHG emissions to CDP5 by region ..................................................8
Table 3: ECI sectors ............................................................................................................................................9
Table 4: Summary reporting practice of total sample ........................................................................................9
Figure 2: Summary reporting practice of total sample........................................................................................9
Figure 3: Summary reporting practice in the USA and Canada..........................................................................10
Figure 4: Summary reporting practice in Europe ..............................................................................................10
Figure 5: Summary reporting practice in Australia and New Zealand ................................................................10
Figure 6: Summary reporting practice in Emerging markets ..............................................................................10
Figure 7: Summary reporting practice in Rest of the world ..............................................................................10
Figure 8: Number of companies per sector relative to number reporting absolute emissions ........................11
Chapter 1
Table 5: Summary – key characteristics of main GHG emissions-reporting protocols ......................................19
Table 6: Protocols and guidelines used by surveyed companies ....................................................................20
Table 7: Approximate GHG emissions measurement and verification costs ......................................................21
Table 8: Overall frequency of protocols and guidelines as quoted in CDP5 responses, by region ..................25
Figure 9: Frequency of guidelines by region (excluding the GHG Protocol)......................................................26
Figure 10: Frequency of the GHG Protocol, by region ......................................................................................26
Table 9: Frequency of standard protocols and guidelines used – Aerospace and Defence ..............................27
Table 10: Frequency of standard protocols and guidelines used – Automobiles and Parts..............................27
Table 11: Frequency of standard protocols and guidelines used – Banking and Finance ................................27
Table 12: Frequency of standard protocols and guidelines used – Chemicals ..................................................27
Table 13: Frequency of standard protocols and guidelines used – Food and Beverages..................................27
Table 14: Frequency of standard protocols and guidelines used – Health and Pharmaceuticals......................27
Table 15: Frequency of standard protocols and guidelines used – Industrials ................................................28
Table 16: Frequency of standard protocols and guidelines used – Insurance ..................................................28
Table 17: Frequency of standard protocols and guidelines used – Leisure and Media ....................................28
Table 18: Frequency of standard protocols and guidelines used – Mining and Metals ..................................28
Table 19: Frequency of standard protocols and guidelines used – Oil and Gas ..............................................28
Table 20: Frequency of standard protocols and guidelines used – Personal and Household Goods ..............28
Table 21: Frequency of standard protocols and guidelines used – Real Estate................................................28
Table 22: Frequency of standard protocols and guidelines used – Retail ........................................................29
Table 23: Frequency of standard protocols and guidelines used – Support Services ......................................29
Table 24: Frequency of standard protocols and guidelines used – Technology................................................29
Table 25: Frequency of standard protocols and guidelines used – Telecommunications ................................29
Table 26: Frequency of standard protocols and guidelines used – Tobacco ....................................................29
Table 27: Frequency of standard protocols and guidelines used – Transport and Logistics ............................29
Table 28: Frequency of standard protocols and guidelines used – Utilities ....................................................29
Table 29: Summary of verification practice, by region ......................................................................................33
Figure 11: Overall summary of verification practice ..........................................................................................33
Figure 12: Verification practice in USA and Canada ..........................................................................................34
Figure 13: Verification practice in Europe ..........................................................................................................34
Figure 14: Verification practice in Australia and New Zealand ..........................................................................34
Figure 15: Verification practice in Emerging markets ........................................................................................34
Figure 16: Verification practice in the Rest of the world ..................................................................................34
Figure 17: Verification practice – Frequency of external verifiers used, by region ............................................35

4. CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Figure 18: Number of companies employing the GHG protocol that use an external verifier ..........................35
Table 30: Relative importance of factors in determining the cost of emissions audits, according to auditors ........37
Table 31: Approximate range of time in weeks required to verify a client’s annual GHG emissions
figures, according to auditors ............................................................................................................................37
Chapter 2
Table 32: Companies reporting emissions intensity relative to those reporting absolute emissions, by region....40
Figure 19: Total number of companies reporting emissions intensity relative to those reporting
absolute emissions ............................................................................................................................................41
Table 33: Percentage of companies reporting emissions intensity, by sector ..................................................42
Table 34: Frequency of emissions-intensity indicators used, by sector ............................................................43
Figure 20: Overall frequency of emissions-intensity indicators ........................................................................44
Chapter 3
Table 35: Ranking investment criteria for non-carbon-intensive companies ....................................................49
Table 36: Ranking investment criteria for carbon-intensive companies............................................................49
Chapter 4
Figure 21: Total frequency of absolute emissions and emissions-intensity targets ..........................................55
Figure 22: Summary of target use ....................................................................................................................55
Figure 23: Summary of target use, by region ....................................................................................................55
Figure 24: Timeframes for absolute-emissions-reduction targets......................................................................56
Figure 25: Timeframes for emissions-intensity-reduction targets ......................................................................57
Appendices
Emissions-reporting guidelines and protocols quoted and abbreviation used in this report ..........................74
Verification agencies mentioned in FT500 companies’ responses to the CDP5 questionnaire ........................75
Emissions intensity indicators used, by sector, including additional detail noted in CDP5 responses............76
Absolute emissions and emissions-intensity targets set across industry ........................................................80

5. CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
Executive Summary
lthough there are a number of governmental and veri them, and less than half of the companies
A non-governmental bodies striving to advance the
current state of corporate greenhouse gas (GHG)
using the GHG Protocol have their emissions data
externally verified. However, companies headquar-
emissions reporting, there is still a great deal of tered in Europe are more likely to veri their
inconsistency and therefore a lack of comparability emissions than companies headquartered in the US.
between corporations' reports on their GHG The region in which a company is headquartered
emissions and emissions-reduction targets. is the strongest influence on selection of the guide-
There are a number of highly-developed protocols lines used to measure GHG emissions, with many
and guidelines for reporting emissions available to companies using national, government-advocated
corporations (we note a total of 34 in the responses of standards. There is no correlation between the use of
FT500 companies to the 5th Carbon Disclosure general, cross-industry reporting guidelines (e.g. the
Project request (CDP5), of which the most widely GHG Protocol and the IPCC guidelines) and industry
used is the WBCSD/WRI GHG Protocol. But it seems sectors, but some industries – notably banking and
that some such voluntary standards can put a ‘certi- finance, and oil and gas – have developed one or
fication stamp’ on companies’ emissions-reporting more of their own GHG emissions-reporting
processes, even though some companies may not standards, and these are widely adopted.
follow the guidelines/protocols to the same extent as
others. Reporting emissions intensity
Most of the guidelines quoted by companies in The majority of the companies in our sample report
their CDP responses are voluntary, and although both emissions intensity and absolute emissions.
seven of the nine protocols assessed in detail in this Higher-emitting companies are more likely to report
report include verification standards, external verifi- GHG emissions-intensity data, but it is dicult to
cation is required only for three of them (one being ascertain whether this is because higher-emitters are
the EU ETS Monitoring, Reporting and Verification under a greater obligation to report to the CDP, or
guidelines). because there is no consistent place for lighter-
emitting companies to report such information in
Costs of adhering to the various standards their CDP response.
Estimated costs of collecting data and calculating It is interesting to note that, of the four aerospace
GHG Protocol Scope 1 GHG emissions varied between and defence companies in the sample, only two report
€75,000, for a chemical company, and €800,000, for their GHG emissions. Three even specifically note that
an anonymous food and beverages company. they do not report their emissions intensity (although
How much of their reported emissions figures it should also be noted that United Technologies
companies veri and the cost of their doing so both Corporation uses an energy-eciency indicator). In
vary significantly. The lowest and highest verification this case, all four companies are based in the US, but
costs – €50,000 and €500,000, respectively – both since aviation is considered a significant contributor to
fall within the pharmaceuticals sector. However, it is climate change and will soon be integrated into the
dicult to determine how much overlap exists EU ETS, it could be expected that there would be
between payments to external agencies for collecting greater pressure on aerospace and defence companies
data and payments for their services in veriing data. to report their emissions intensity.
Of the companies that responded to our survey There is a great deal of variation in the nature of
questions concerning GHG emissions-reporting costs, emissions-intensity indicators used by companies.
61.5% found them "high but acceptable", while 15% While in some sectors (e.g. utilities) there is a strong
found them "too high". tendency for companies to use the same emissions-
intensity indicators, there are industry sectors (e.g.
Standards used and frequency of verification telecommunications) in which there is definitely
As anticipated, the GHG Protocol is by far the guide- scope for harmonising the indicators used.
line most commonly-used by companies in
measuring their emissions, followed by the US-EPA as Stakeholder views on GHG emissions reporting
the second-most common, and by the guidelines We were disappointed by the diculty of finding
recommended by the UK government department NGOs willing to share their views on corporate GHG
Dea as the third-most common. emissions reporting. Only two of the 16 NGOs
Just over half of the companies using standards approached proved willing to give feedback. WWF

6. CORPORATE GREENHOUSE GAS EMISSIONS REPORTING
noted that the current state of corporate GHG emissions reporting or employ an external agency to
emissions reporting is inadequate, and suggested the carry out this responsibility. Despite not having a
need for increased standardisation among industry national emissions cap, Japan has had guidelines in
sectors. place for reporting GHG emissions since 2000.
The investor representatives who answered our Although these are not enforced, the level of
survey ranked the ISO 14064 standard below the GHG reporting among Japanese companies suggests that
Protocol as an effective reporting protocol, although they are reasonably effective.
all investors surveyed suggested that the current China, India, and South Aica do not currently
standards available to companies are inadequate. have central schemes encouraging companies to
Suggestions given as to what would improve corpo- report on their emissions, but the State Environ-
rate emissions-reporting standards included mental Protection Administration of China (SEPA) last
increased consistency in reporting and a greater link year launched a "green securities" scheme asking
between carbon-performance reporting and finan- listed companies, regardless of industry sector, to
cials. expand their environmental reporting.
The conclusions of this report include that:
Reporting targets
Excluding the companies setting a target of carbon • National governments appear to have an influence
neutrality, twice as many companies report having set on how companies report on their GHG emissions,
an absolute emissions reduction target as report even when reporting is not mandatory. There is
setting an emissions intensity reduction target. Only thus greater scope for collaboration between
27 (10%) out of the pool of 266 companies reporting on national governments and government agencies to
their GHG emissions report targets for both emissions standardise reporting internationally;
intensity and absolute emissions reductions. • There is a need for increased scrutiny and
There is considerable inconsistency in the way in standardisation of the extent to which companies
which companies report their targets. In general, comply with specific protocols and guidelines.
timeames for absolute emissions reductions are set Currently a company may adopt only certain
for 5-20 years. Only five companies set reduction elements of a given reporting protocol and need
timeames over 20 years. The most notable of these not speci exactly which these elements are;
is National Grid, which reported a target to reduce • There is a lack of benchmarks for assessing
GHG emissions by 60% below 2000 levels by 2050 individual corporations’ targets and their perform-
(and this target was subsequently revised to an 80% ance in meeting them. Industry associations and
reduction by 2050). investors could play an active role in harmonising
the ways in which companies within given sectors
Country analysis report on their emissions intensity and set their
Australia, Canada, and the UK are the only countries emissions-reduction targets. Emissions-intensity
in which it is or will soon be mandatory for compa- benchmarks for specific industrial sectors will
nies with emissions levels over a certain threshold inevitably require constant revision to take account
(or meeting other specific criteria) to report on their of technology advances, but as this report shows,
emissions. However, many of the countries surveyed the statistical basis for such benchmarks is not yet
either offer their own guidelines for voluntary established.

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