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

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. 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. 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. 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. 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. 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. 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.

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