The Climate Disclosure Standards Board (CDSB) has announced proposals designed to assist directors in the inclusion of climate change-related information in companies' annual reports.
The pioneering proposals, unveiled at the World Business Summit on Climate Change in Copenhagen, take the form of a global framework that clarifies precisely which climate change data should be reported by corporations and provides management with a set of guidelines designed to streamline disclosure procedures.
The inclusion of climate change data in companies' annual reports will enhance corporate transparency for the benefit of shareholders and prospective investors alike. Speaking in Copenhagen, Paul Dickinson, Chief Executive of the Carbon Disclosure Project, one of the principal members of the CDSB, commented: "The proposed framework, announced 17 months after the formation of the CDSB, represents a vital step towards encouraging corporate boardrooms to disclose climate change related data in their annual reports by way of standard procedure. As the current economic crisis illustrates, the failure to acknowledge risks in the short term can lead to substantial legacies in the long term. There is no scarcity of warnings of the risk of irreversible climatic damage to the environment. Against this background, it is imperative that companies supply their shareholders with appropriate climate change data."
CDSB was founded in January 2007 at the Annual Meeting of the World Economic Forum in Davos, Switzerland. The Carbon Disclosure Project (CDP), which holds the largest corporate climate change database in the world, is at the forefront of developments in climate change disclosure and, in addition to being a board member, acts as secretariat to the CDSB. The GHG Protocol's 'Corporate Accounting and Reporting Standard' is being used as the basic emissions reporting standard and underlies the CDSB framework.
Lois Guthrie, CDP's Technical Director and Secretary to CDSB, declared: "The CDSB is about better reporting, not more reporting. The framework draws upon relevant financial and business reporting principles as well as best practice with regard to corporate climate change-related disclosure in order to provide organisations with greater clarity as to what to include in their annual reports. This is an important step towards better reporting and we now welcome responses to our proposals."
By aligning itself to financial reporting principles and using the expertise of its board members including the Carbon Disclosure Project, CERES, the Climate Group, the Climate Registry, the International Emissions Trading Association, the World Economic Forum and the World Resources Institute, CDSB seeks to make corporate climate change-related reporting as mainstream and credible as financial reporting. This cannot happen fast enough if the world is to move towards a low-carbon economy.
Dr. Wolfgang Groίe Entrup, Head of Environment & Sustainability, Bayer AG said: "CDSB's draft framework launched today plays an important role in substantiating climate change reporting. It will be instrumental in enhancing the calibre and comparability of disclosures within corporations' reporting."
The release of CDSB's draft framework at the World Business Summit on Climate Change supports the Copenhagen Climate Council's* mission "to articulate a strong, coherent and ambitious mandate…on behalf of the global business community". Following public consultation CDSB will update the framework ahead of COP15 negotiations in Copenhagen in December 2009.
Michael Izza, Chief Executive of the Institute of Chartered Accountants in England and Wales and representative of the accountancy profession at the summit said: "Today, the imperative is for a market system that promotes sustainability and, essential to the success of that, are reliable flows of relevant and accurate information. This is the domain of the accounting profession. The CDSB's reporting framework, of which we and other accountancy bodies as well as chartered accountants from business and the firms have played a vital role, is a great example of how the profession has and can continue to play its part."
CDSB's proposed framework is available for download at http://www.cdsb-global.org.
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