Carbon Management Insights


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The importance and business value in being prepared for the new world of public carbon use disclosure and transparency.

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Carbon Management Insights

  1. 1. Informative Document Carbon Management Insights The importance and business value in being prepared for the new world of public carbon use disclosure and transparency. “As executives prepare to manage carbon, they must first determine the best way to approach carbon measurement and management. Indeed, before one can reduce carbon output, one must measure it in order to track progress.” 2010 CFERF Holistic Carbon Management Study
  2. 2. Introduction Ontario and Quebec); and upcoming The strategic impact of carbon use on sustainability reporting requirements by organizations overall business sustainability the Ontario Securities Commission. is well established, including financial, operational , reputational and competitive As regulatory actions develop it is crucial risks and challenges. Furthermore, several organizations start preparing for tracking marketplace events are underway which will and reporting its carbon use. The Chief place the management of carbon use into Financial Officer of organizations will play the broader operational mainstream of a key role in the management and business. compliance of these practices. A key factor driving this development is the This carbon management insight offers statutory and regulatory actions taking insight into the importance and business shape in Canada and the United States, value in being prepared for the new world which have the potential to pose a of public carbon use disclosure and significant impact on the operations of transparency. Canadian organizations. Examples of these actions include: „Cap and Trade‟ mechanisms included in the US American Clean Energy Act (Waxman-Markey) and the Western Climate Initiative (members include British Columbia, Manitoba,
  3. 3. Regulatory compliance levels To begin with some background - regulatory compliance for carbon management can be divided into two different levels, short and long term compliance. Short-term Compliance Long-term Compliance Reporting and Disclosure Active Carbon Management  Wider net – More organizations will be  Imposed restrictions on emissions – directly affected by this type of regulation Heavy emitters and critical industries than physical limits. will have actual limits on emissions or  Reporting guidelines – Each legislation emissions intensity. may/can have its own specific reporting  Financial impacts – There will be direct requirements. Specific reporting costs associated with reducing requirements may exist depending on emissions, penalties for non- geographic location and industry. compliance, and opportunities in  Participation – There will be both carbon market participation. mandatory and optional programs and a  Non-regulated participation – Non- single data set most likely can be used to regulated organizations may be able support multiple reporting regimes. to participate through carbon offset creation.
  4. 4. Uncertainty in the marketplace Today in the marketplace it can be said that there is a general understanding of the current and evolving regulatory environment in North America. However, “When it comes to carbon many organizations are voicing their management, survey results concerns about government leadership suggest that many financial and alignment between regulatory executives could benefit frameworks. In Canada and the United States alone there are multiple regulations from a deeper understanding developing. Table 1 summarizes these of the current and evolving regulations. regulatory environment in Table 1 Canada and the United Canada United States Regional States.” 2010 CFERF Holistic Carbon Management Study • British • Waxman – • Western Columbia Bill Markey Climate • Alberta Cap “American Initiative and Trade Clean Energy • Regional • Ontario and Security Greenhouse Legislation Act of 2009” Gas Initiative • Quebec • Cantwell – Legislation Cap and • OSC Dividend Regulations
  5. 5. A CFO can remove uncertainty Why a CFO is the right person for the CFOs are well positioned within an job: organization to remove this uncertainty  Broad exposure to multiple looming in the environment. corporate functions;  High expertise in risk evaluation A CFO can do this by mobilizing the and management; necessary resources to prepare their  Experience with compliance organizations for carbon management reporting and regulatory activities. management;  Carbon management can have multiple financial implications; “Almost half of heavy carbon  Well positioned to ensure problem is evaluated using strict financial emitters are adopting policies metrics; and for carbon management and  Positioned to provide guidance to reporting and one in four are organization. actively preparing to participate in carbon markets.” 2010 CFERF Holistic Carbon Management Study
  6. 6. Be prepared for carbon regulations operations and environmental Waiting for carbon regulations to arrive departments. before preparing is too late and can create an opportunity cost in harvest of tangible business benefits. Below are some 3. Ensure a robust data collection and suggested steps to take to prepare your organization scheme is in place. The organization for carbon disclosure. importance of accurate and transparent data is crucial to successfully run a carbon management program. 1. Understand the regulatory and market landscape from a functional and directional perspective. Know the difference between 4. Establish clear and consistent key mandatory compliance levels and optional performance indicators (KPIs) upon which reporting practices. Both mandatory and to measure data against. These KPIs optional practices will have specific reporting should align with existing corporate KPIs. requirements and timelines that need to be met. 5. For long-term planning entrench carbon management practices into core 2. Align the appropriate resources and business processes to ensure long-term responsibility for both compliance reporting risk mitigation. and carbon management. The CFO should be assigned key stakeholder or owner with proper logistical support from senior staff,
  7. 7. In summary To end this carbon management insight There is no question regulations we recommend, at a minimum, the surrounding carbon emissions will happen. following three questions be addressed The only question is when. And the only today: way to prepare your company for the 1. Is there ownership for carbon future is to take immediate steps today. management in the organization? 2. Are financial impacts considered in Carbon management is more than just making decisions related to carbon compliance. There are multiple benefits to management? tracking and reporting your company‟s 3. Data? Where is it? Who owns it? carbon emissions, for example it can How can we add value to it? enhance your brand reputation, mitigate risks related to carbon emissions, create opportunities for potential new revenue streams, reduce overall emissions and exhibit your company as environmental leaders.
  8. 8. Burlington, ON Calgary, AB Vancouver, BC 5420 N. Service Road 2335, 162nd Ave. SW 422 Richards St. Suite 501 Suite 1047, #327 Suite 300 Phone: (905) 319 1717 Phone: (403) 802 0951 Phone: (877) 702 3992 Montreal, QC Charlotte, NC 276 Rue Saint-Jacques 15720 John J Delaney Dr. All rights reserved. Bureau 802 Suite 300 © Energy Advantage Inc. Phone: (514) 843 4665 Energy Advantage Inc. provides total energy and environmental management solutions to our customers‟ sustainability challenges, delivering them „best results‟ in managing their risk, reducing their costs, and enhancing their reputation within the markets and communities they serve.