Caution on data ‘hot air’June 2009
The current emphasis on reporting and product labelling in the management of greenhouse gas (GHG) emissions may be diverting companies’ attention from actually doing things to tackle climate change.
That’s the conclusion of a new report by the CSR consultancy Acona and asset managers Insight Investment. The study argues that because of the pressure to be seen to be taking action on climate change, the collection and presentation of emissions data is concentrating management attention on the wrong areas.
In a challenge to the oft-quoted maxim that ‘what gets measured gets managed’, the report says the data published by many companies may simply be ‘a lot of hot air’. And it notes that, although many companies measure direct emissions as a starting point for emissions management, ‘attempting to quantify total GHG emissions through the value chain is far more problematic’.
It adds: ‘Putting aside questions of cost, both in time and money, there is a distinct possibility that this quest for perfect data becomes a Sisyphean task – one that is never capable of resolution – and can divert attention from effectively managing the risks associated with GHG emissions.’
Consequently, the report says, the measures are flawed in terms of both business interests and fighting climate change.
It states: ‘First, the issues around data quality mean that many of the numbers may be highly qualified or of limited value. Second, many aspects of value chain GHG emissions performance cannot be reduced to hard numbers, and the impact of many of the actions or decisions taken – for example, initiatives focused on customer education and labelling – may be difficult to demonstrate.
‘Third, in an attempt to avoid criticism of incomplete reporting, companies may shift their attention to those aspects where numbers – even if extremely uncertain – can be gathered and performance tracked, rather than focusing on those areas where they have the greatest influence on emissions.’
Acona and Insight say there is nothing inherently wrong with emissions disclosure through labelling and other marketing, but they argue that there are ‘fine lines between labelling, green branding and greenwash’.
Furthermore, they question the usefulness to consumers of quantifying the carbon footprint of goods such as bank accounts and clothing.
The report recommends that companies should concentrate on measuring, and reducing, the environmental impact of emissions from their whole value chains, not just quantifying and marketing the more measurable but less useful direct emissions from their operations.
Paul Burke, senior partner at Acona and author of the report, said: ‘By focusing attention on the most significant areas, in financial and environmental terms, the cost of data capture and reporting will be greatly reduced. Moreover, there is a far higher probability that real progress will be achieved.’
However, the Carbon Disclosure Project, an investor-led body that encourages companies around the world to disclose as much carbon information as possible, said there was ‘clear evidence... that the process of collecting data for reporting is a vital first step in driving emissions reductions’.
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