Glossary

11.5 Carbon accounting and reporting

12 min read•august 19, 2024

is becoming crucial for companies as stakeholders demand transparency on climate change. It involves measuring, reporting, and managing greenhouse gas emissions to support mitigation efforts. Companies must quantify their and use this data to develop strategies for reducing emissions.

Carbon reporting frameworks provide guidelines for measuring and verifying emissions. The is the most widely used standard, defining three scopes of emissions. Other frameworks like , , and TCFD help companies disclose climate-related information and set reduction targets.

Carbon accounting fundamentals

  • Carbon accounting is the process of measuring, reporting, and managing greenhouse gas emissions to support climate change mitigation efforts
  • It involves quantifying an organization's or product's carbon footprint and using this information to develop strategies for reducing emissions and managing climate-related risks
  • Carbon accounting is becoming increasingly important for companies as investors, regulators, and consumers demand greater transparency and action on climate change

Greenhouse gas emissions

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  • Greenhouse gases (GHGs) are gases that trap heat in the Earth's atmosphere, contributing to global warming and climate change
  • The main GHGs include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gases (HFCs, PFCs, SF6)
  • GHG emissions are typically measured in metric tons of carbon dioxide equivalent (tCO2e), which accounts for the different global warming potentials of each gas

Scope 1, 2, and 3 emissions

  • GHG emissions are categorized into three scopes based on their source and level of control
  • are direct emissions from sources owned or controlled by the organization (fuel combustion, company vehicles)
  • are indirect emissions from purchased electricity, heat, or steam
  • are all other indirect emissions in an organization's value chain (supplier emissions, employee commuting, product use and disposal)

Carbon footprint calculation

  • A carbon footprint is the total amount of GHG emissions associated with an organization, product, or individual over a given period
  • Calculating a carbon footprint involves identifying emission sources, collecting activity data (fuel consumption, electricity use), and applying emission factors
  • Emission factors convert activity data into GHG emissions based on the carbon intensity of the source (kgCO2e/kWh for electricity)

Organizational vs product-level accounting

  • Organizational carbon accounting measures the GHG emissions of an entire company or institution, including all operations and facilities
  • Product-level carbon accounting, also known as life cycle assessment (LCA), measures the emissions associated with a specific product or service throughout its life cycle
  • Organizational accounting is useful for setting company-wide emission reduction targets and reporting to stakeholders
  • Product-level accounting helps identify emission hotspots and inform product design and supply chain management decisions

Carbon reporting frameworks

  • Carbon reporting frameworks provide guidelines and standards for measuring, reporting, and verifying GHG emissions
  • These frameworks aim to ensure consistency, comparability, and credibility of carbon disclosures across companies and industries
  • Adopting a recognized reporting framework can help companies meet stakeholder expectations and comply with regulations

Greenhouse Gas Protocol

  • The Greenhouse Gas Protocol (GHG Protocol) is the most widely used international standard for carbon accounting
  • It provides a comprehensive framework for measuring and reporting GHG emissions at the organizational and project level
  • The GHG Protocol defines the three scopes of emissions and offers guidance on setting boundaries, collecting data, and calculating emissions

CDP reporting

  • CDP (formerly the Carbon Disclosure Project) is a global disclosure system that enables companies to report their environmental impacts, including GHG emissions
  • Companies respond to CDP's annual questionnaire, which covers climate change, water security, and deforestation
  • CDP scores companies based on the completeness and quality of their disclosure, as well as their performance on climate-related issues

Science Based Targets initiative

  • The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact, World Resources Institute, and the World Wide Fund for Nature
  • It provides a framework for companies to set emission reduction targets in line with the Paris Agreement goal of limiting global warming to well below 2°C
  • Companies that commit to the SBTi must develop targets based on the latest climate science and have them validated by the initiative
  • The is an industry-led initiative that provides recommendations for voluntary, consistent climate-related financial disclosures
  • The TCFD framework covers four main areas: governance, strategy, risk management, and metrics and targets
  • By aligning with the TCFD recommendations, companies can provide investors and other stakeholders with decision-useful information on their climate-related risks and opportunities

Carbon accounting standards

  • Carbon accounting standards provide detailed guidance on how to measure, report, and verify GHG emissions
  • These standards ensure that carbon accounting practices are consistent, transparent, and scientifically rigorous
  • Adhering to recognized standards can enhance the credibility and comparability of carbon disclosures

ISO 14064 series

  • The series are international standards for GHG accounting and verification
  • ISO 14064-1 specifies principles and requirements for designing, developing, managing, and reporting organization-level GHG inventories
  • ISO 14064-2 focuses on project-level GHG quantification, monitoring, and reporting
  • ISO 14064-3 provides guidance on the validation and verification of GHG statements

PAS 2050 for product lifecycle

  • is a publicly available specification for assessing the life cycle GHG emissions of goods and services
  • It provides a consistent method for quantifying the carbon footprint of products across their entire life cycle, from raw material extraction to end-of-life disposal
  • PAS 2050 is based on existing life cycle assessment methods and is compatible with the GHG Protocol Product Standard

GHG Protocol Corporate Standard

  • The provides guidance for companies to prepare a GHG emissions inventory at the organizational level
  • It covers the accounting and reporting of the six main GHGs covered by the Kyoto Protocol
  • The standard outlines the principles of relevance, completeness, consistency, transparency, and accuracy that underpin GHG accounting and reporting

Verification and assurance

  • are processes that provide confidence in the accuracy and reliability of GHG emissions data
  • Verification involves an independent assessment of the GHG inventory to ensure that it is complete, accurate, and compliant with relevant standards
  • Assurance is a more comprehensive evaluation of the GHG inventory and the systems and processes used to prepare it
  • Third-party verification and assurance can enhance the credibility of carbon disclosures and meet the requirements of certain reporting frameworks (CDP, SBTi)

Carbon disclosure and reporting

  • Carbon disclosure and reporting involve communicating an organization's GHG emissions, climate-related risks and opportunities, and emission reduction strategies to stakeholders
  • Effective carbon reporting can demonstrate a company's commitment to sustainability, enhance its reputation, and attract environmentally conscious investors and customers
  • There are various channels and formats for carbon disclosure, ranging from standalone sustainability reports to integrated financial filings

Annual sustainability reports

  • Many companies publish that provide a comprehensive overview of their environmental, social, and governance (ESG) performance
  • These reports typically include information on GHG emissions, emission reduction targets, and climate change mitigation and adaptation strategies
  • Sustainability reports may follow recognized reporting frameworks such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB)

Integrated reporting

  • is an approach that combines financial and non-financial information, including sustainability performance, into a single report
  • The International Integrated Reporting Framework provides guidance on preparing an integrated report that communicates how an organization creates value over time
  • Integrated reporting can help companies demonstrate the links between their sustainability performance and financial outcomes, and provide a more holistic view of their business

Mandatory vs voluntary disclosure

  • Carbon disclosure can be mandatory or voluntary, depending on the jurisdiction and the reporting framework
  • Some countries and regions have introduced mandatory carbon reporting requirements for certain companies (UK, EU, California)
  • Voluntary disclosure initiatives, such as CDP and the SBTi, encourage companies to report their emissions and climate-related information on a voluntary basis
  • Even in the absence of mandatory requirements, companies may choose to disclose their carbon performance to meet stakeholder expectations and demonstrate leadership in sustainability

Benchmarking and best practices

  • Benchmarking involves comparing a company's carbon performance against industry peers or best-in-class organizations
  • It can help companies identify areas for improvement and set ambitious yet achievable emission reduction targets
  • Best practices in carbon disclosure include using recognized reporting frameworks, obtaining third-party verification, and providing transparent and decision-useful information
  • Companies can also engage with stakeholders to understand their information needs and expectations, and tailor their carbon disclosures accordingly

Carbon management strategies

  • are the actions that companies take to measure, reduce, and offset their GHG emissions
  • These strategies can help companies mitigate their climate-related risks, comply with regulations, and capitalize on opportunities in the low-carbon economy
  • Effective carbon management requires a holistic approach that encompasses operational improvements, strategic investments, and stakeholder engagement

Emissions reduction targets

  • Setting emission reduction targets is a key element of carbon management, as it provides a clear goal and direction for a company's decarbonization efforts
  • Targets can be absolute (reducing total emissions by a certain amount) or intensity-based (reducing emissions per unit of output or revenue)
  • Science-based targets, which are aligned with the goals of the Paris Agreement, are increasingly seen as best practice for corporate emission reduction targets
  • Companies should develop a roadmap for achieving their targets, with interim milestones and specific initiatives across their operations and value chain

Carbon offsets and credits

  • are measurable reductions in GHG emissions or enhancements of carbon sinks that are used to compensate for emissions elsewhere
  • Companies can purchase carbon offsets to meet their emission reduction targets or achieve carbon neutrality
  • Common types of offsets include renewable energy projects, energy efficiency improvements, and reforestation and conservation initiatives
  • are tradable units that represent a certain amount of GHG emissions reduced or removed from the atmosphere
  • Companies can earn carbon credits by undertaking emission reduction projects or purchase them on voluntary or compliance carbon markets

Internal carbon pricing

  • is a tool that companies use to assign a monetary value to their GHG emissions and factor this into their decision-making processes
  • It can take the form of an internal carbon fee, where business units are charged for their emissions, or a shadow price, where a hypothetical price is used to evaluate investments and strategies
  • Internal carbon pricing can help companies identify emission reduction opportunities, mitigate climate-related risks, and prepare for future carbon regulations
  • The price level should be high enough to drive meaningful emission reductions and align with the company's overall carbon management strategy

Low-carbon technology investment

  • Investing in low-carbon technologies is a key strategy for companies to reduce their emissions and position themselves for success in the transition to a low-carbon economy
  • This can include investments in renewable energy, energy efficiency, electrification, hydrogen, and carbon capture and storage
  • Companies can also invest in research and development to drive innovation in low-carbon solutions and gain a competitive advantage
  • Low-carbon technology investments can offer financial benefits, such as reduced energy costs and new revenue streams, as well as reputational benefits and improved resilience to climate-related risks

Financial implications of carbon

  • The transition to a low-carbon economy has significant financial implications for companies, investors, and the broader economy
  • Companies that fail to manage their carbon emissions and adapt to changing regulations and market conditions may face financial risks, such as stranded assets and reduced competitiveness
  • On the other hand, companies that proactively address climate change and position themselves for the low-carbon transition may benefit from new opportunities and improved financial performance

Carbon taxes and cap-and-trade schemes

  • and are policy instruments that aim to put a price on carbon emissions and incentivize emission reductions
  • A carbon tax imposes a fixed price on each unit of GHG emissions, while a cap-and-trade system sets a limit on total emissions and allows companies to trade emission allowances
  • These policies can increase the cost of high-carbon activities and products, and create financial incentives for companies to invest in low-carbon alternatives
  • Companies need to assess the potential impact of carbon pricing on their operations and develop strategies to mitigate the financial risks and capitalize on opportunities

Stranded asset risk

  • Stranded assets are assets that become obsolete or non-performing due to changes in technology, market conditions, or regulations
  • In the context of climate change, fossil fuel reserves and high-carbon infrastructure are at risk of becoming stranded as the world transitions to a low-carbon economy
  • Companies with significant exposure to high-carbon assets may face financial losses and reduced asset values as demand for fossil fuels declines and carbon prices increase
  • To mitigate , companies can diversify their portfolios, invest in low-carbon assets, and engage with policymakers and stakeholders to support a just and orderly transition
  • Climate change poses a range of financial risks to companies, including physical risks (damage to assets and supply chain disruptions from extreme weather events) and transition risks (policy and market changes related to the low-carbon transition)
  • These risks can impact a company's revenues, costs, assets, and liabilities, and ultimately affect its financial performance and valuation
  • Companies need to assess and disclose their exposure to , and develop strategies to mitigate and adapt to these risks
  • Investors and financial regulators are increasingly demanding better disclosure and management of climate-related financial risks, as evidenced by the growth of the TCFD and other initiatives

Green finance and sustainable investing

  • refers to financial instruments and investments that support environmentally sustainable economic activities and projects
  • This includes green bonds, which are fixed-income securities that raise capital for projects with environmental benefits, such as renewable energy and low-carbon transport
  • , also known as ESG investing, involves integrating environmental, social, and governance factors into investment decisions to manage risks and generate long-term value
  • The growth of green finance and sustainable investing presents opportunities for companies to access new sources of capital and benefit from the increasing demand for sustainable products and services
  • Companies can attract green and ESG investors by demonstrating strong carbon management practices, setting ambitious emission reduction targets, and aligning their strategies with the low-carbon transition

Future of carbon accounting

  • As the world continues to grapple with the challenges of climate change, carbon accounting is likely to become an increasingly important and integral part of corporate sustainability and financial reporting
  • The future of carbon accounting will be shaped by evolving regulations and policies, efforts to standardize and harmonize reporting frameworks, technological advancements, and the integration of carbon performance into mainstream financial analysis and decision-making

Evolving regulations and policies

  • Governments around the world are introducing new regulations and policies to drive the transition to a low-carbon economy and meet the goals of the Paris Agreement
  • These include carbon pricing mechanisms, such as taxes and emissions trading systems, as well as mandatory disclosure requirements for climate-related risks and opportunities
  • As these regulations evolve and become more stringent, companies will need to enhance their carbon accounting and reporting practices to ensure compliance and manage the financial implications
  • The future of carbon accounting will also be influenced by international climate negotiations and agreements, such as the ongoing development of Article 6 of the Paris Agreement, which aims to establish a global carbon market mechanism

Standardization and harmonization efforts

  • The current landscape of carbon accounting and reporting is characterized by a proliferation of different standards, frameworks, and initiatives, which can create confusion and inconsistency
  • Efforts are underway to standardize and harmonize these approaches to improve the comparability, reliability, and decision-usefulness of carbon disclosures
  • For example, the IFRS Foundation is working to establish a new Sustainability Standards Board that will develop global standards for sustainability reporting, including climate-related disclosures
  • The consolidation and alignment of carbon accounting standards and frameworks will help to streamline reporting processes, reduce the reporting burden on companies, and enable better benchmarking and analysis of carbon performance

Role of technology and data analytics

  • Advances in technology and data analytics are transforming the way companies measure, manage, and report their carbon emissions
  • Digital solutions, such as IoT sensors, blockchain, and artificial intelligence, can enable more accurate and real-time tracking of emissions data across complex supply chains and operations
  • Big data and analytics tools can help companies to identify emission hotspots, optimize resource efficiency, and forecast the impact of different emission reduction strategies
  • The integration of these technologies into carbon accounting processes can improve the quality and granularity of emissions data, enable more sophisticated scenario analysis and risk assessment, and support better decision-making and target-setting

Integration with financial reporting

  • As the financial implications of climate change become more apparent, there is a growing recognition of the need to integrate carbon performance and climate-related risks into mainstream financial reporting and analysis
  • This integration can take various forms, such as incorporating carbon metrics and targets into financial statements, discussing climate-related risks and opportunities in management commentary, and aligning carbon disclosures with financial reporting standards and frameworks
  • The TCFD recommendations provide a framework for integrating climate-related information into financial filings, and many companies and investors are already using them to enhance their reporting and decision-making processes
  • The future of carbon accounting is likely to see a closer convergence between financial and sustainability reporting, as investors and other stakeholders demand a more holistic and integrated view of corporate performance and value creation

Key Terms to Review (30)

Annual sustainability reports: Annual sustainability reports are comprehensive documents that organizations produce to communicate their environmental, social, and governance (ESG) performance and practices over a specified period, typically a year. These reports provide stakeholders with insights into a company's commitment to sustainability, showcasing achievements, challenges, and future goals related to sustainable development and carbon accounting.
Benchmarking and best practices: Benchmarking is the process of comparing business processes and performance metrics to industry bests or best practices from other organizations. It helps organizations identify areas for improvement and implement strategies that lead to enhanced efficiency and effectiveness. Best practices are proven, effective techniques or methodologies that yield superior results, serving as a model for others to follow, especially in areas like carbon accounting and reporting.
Cap-and-trade schemes: Cap-and-trade schemes are market-based approaches to controlling pollution by providing economic incentives for reducing emissions. Under this system, a limit (or cap) is set on the total level of greenhouse gas emissions allowed from all participating entities. Companies or organizations that reduce their emissions below their allotted cap can sell their excess allowances to others who exceed their limits, promoting cost-effective reductions in overall emissions.
Carbon accounting: Carbon accounting is the systematic method of measuring and tracking greenhouse gas emissions produced by an organization, industry, or country, aimed at assessing the environmental impact of their activities. This process involves identifying sources of emissions, quantifying them in terms of carbon dioxide equivalents, and reporting the results to stakeholders to inform decision-making and promote transparency in sustainability efforts.
Carbon credits: Carbon credits are permits that allow the holder to emit a specific amount of carbon dioxide or other greenhouse gases. Each credit represents one ton of carbon dioxide emissions, and they are used in carbon trading systems to help reduce overall greenhouse gas emissions by creating a financial incentive for companies to lower their emissions.
Carbon emissions inventory: A carbon emissions inventory is a comprehensive account of greenhouse gas emissions produced by an organization, region, or sector over a specific period. This inventory helps in tracking and managing carbon footprints, aiding organizations in understanding their environmental impact and developing strategies for reduction. It typically includes direct and indirect emissions data, allowing entities to assess their contribution to climate change and implement more sustainable practices.
Carbon footprint: A carbon footprint is the total amount of greenhouse gases, particularly carbon dioxide, that are emitted directly or indirectly by an individual, organization, event, or product, usually measured in equivalent tons of CO2. Understanding carbon footprints is crucial for assessing the environmental impact of various activities and making informed decisions for sustainability. This concept ties closely to initiatives aimed at reducing emissions and promoting transparency in reporting practices related to environmental performance.
Carbon management strategies: Carbon management strategies refer to the systematic approaches organizations use to measure, reduce, and report their greenhouse gas emissions, particularly carbon dioxide. These strategies are essential for mitigating climate change impacts and often involve setting emission reduction targets, adopting renewable energy sources, and improving energy efficiency. Effective carbon management not only helps in compliance with regulations but also enhances corporate sustainability and reputation.
Carbon offsets: Carbon offsets are reductions in greenhouse gas emissions, such as carbon dioxide, that are used to compensate for emissions produced elsewhere. By investing in projects like renewable energy, reforestation, or energy efficiency improvements, individuals and companies can balance out their carbon footprint. This concept plays a significant role in carbon accounting and reporting, as it provides a measurable way to track emissions and the effectiveness of sustainability initiatives.
Carbon taxes: Carbon taxes are financial charges imposed on companies or individuals based on the amount of carbon dioxide emissions they produce. This mechanism is designed to encourage the reduction of greenhouse gas emissions, thereby promoting environmental sustainability and addressing climate change. By making fossil fuel use more expensive, carbon taxes aim to incentivize the adoption of cleaner energy sources and energy-efficient practices.
CDP: CDP, or Carbon Disclosure Project, is a global non-profit organization that helps companies and cities disclose their environmental impact, particularly focusing on greenhouse gas emissions and climate change strategies. By encouraging transparency in environmental reporting, CDP plays a critical role in carbon accounting, allowing organizations to assess their carbon footprint and set targets for reducing emissions, which is essential for climate action and sustainability initiatives.
Climate-related financial risks: Climate-related financial risks refer to the potential financial losses and economic impacts that can arise from climate change and its related effects, including physical risks from extreme weather events and transition risks related to the shift toward a low-carbon economy. These risks can affect businesses, investors, and entire economies, influencing investment decisions and financial reporting practices.
Emissions reduction targets: Emissions reduction targets are specific goals set by governments, organizations, or companies aimed at reducing greenhouse gas emissions over a defined period. These targets are crucial in the fight against climate change as they provide measurable benchmarks for progress, often aligning with international agreements and scientific recommendations to limit global warming.
GHG Protocol Corporate Standard: The GHG Protocol Corporate Standard is a widely recognized framework for companies to measure and manage their greenhouse gas emissions. This standard provides guidelines for calculating emissions from various sources, allowing organizations to identify and reduce their carbon footprint effectively. By adopting this standard, businesses can improve transparency, enhance sustainability efforts, and contribute to global climate goals.
Green finance: Green finance refers to financial investments that support sustainable environmental projects and initiatives, aiming to promote economic growth while addressing climate change and environmental degradation. This concept encompasses a variety of financial products, including green bonds, sustainable investment funds, and loans for renewable energy projects. By integrating environmental considerations into financial decision-making, green finance helps in the transition towards a low-carbon economy and supports carbon accounting and reporting practices.
Greenhouse Gas Protocol: The Greenhouse Gas Protocol is a widely used international accounting tool that provides standards and guidance for companies and organizations to measure and manage their greenhouse gas emissions. It helps businesses understand their emissions footprint, develop reduction strategies, and report their progress transparently, which is crucial for carbon accounting and reporting.
Integrated Reporting: Integrated reporting is a process that results in a periodic integrated report by an organization that communicates how its strategy, governance, performance, and prospects lead to the creation of value over time. This approach combines financial and non-financial information into a cohesive framework, enhancing transparency and promoting a holistic view of performance that includes environmental, social, and governance factors.
Internal carbon pricing: Internal carbon pricing is a financial strategy employed by organizations to assign a monetary value to their greenhouse gas emissions, effectively integrating environmental costs into their financial decision-making processes. By putting a price on carbon, businesses can drive investments towards sustainable practices and reduce their carbon footprint, aligning their operations with global climate goals.
ISO 14064: ISO 14064 is a set of international standards that provides organizations with guidelines for quantifying and reporting greenhouse gas (GHG) emissions and removals. This standard aims to enhance transparency, consistency, and accuracy in carbon accounting and reporting, allowing organizations to manage their carbon footprint effectively and contribute to climate change mitigation efforts.
Low-carbon technology investment: Low-carbon technology investment refers to the allocation of financial resources towards the development and deployment of technologies that significantly reduce greenhouse gas emissions. This investment is crucial in transitioning towards a sustainable economy, promoting renewable energy sources, and enhancing energy efficiency while supporting carbon accounting and reporting efforts by helping organizations measure and disclose their environmental impact.
Mandatory vs Voluntary Disclosure: Mandatory disclosure refers to the requirement for companies to provide specific financial and non-financial information as mandated by laws, regulations, or accounting standards. In contrast, voluntary disclosure is the information that companies choose to share beyond what is legally required, often to improve transparency or enhance their reputation. Understanding the differences between these two types of disclosure is crucial in contexts like carbon accounting and reporting, where organizations may be compelled to report emissions but can also voluntarily disclose additional sustainability initiatives.
PAS 2050: PAS 2050 is a publicly available specification that provides a method for assessing the life cycle greenhouse gas emissions of goods and services. It aims to help organizations understand their carbon footprints, enabling them to implement better carbon accounting and reporting practices that contribute to sustainability efforts.
Science Based Targets Initiative: The Science Based Targets Initiative (SBTi) is a global body that helps companies set greenhouse gas emissions reduction targets in line with climate science, specifically to limit global warming to well below 2 degrees Celsius above pre-industrial levels. It provides a framework for businesses to establish targets that are not only ambitious but also achievable and transparent, aligning their operations with the latest climate science and ensuring accountability in carbon accounting and reporting practices.
Scope 1 emissions: Scope 1 emissions are direct greenhouse gas emissions that occur from sources owned or controlled by an organization. These emissions typically come from activities such as fuel combustion in company-owned vehicles, manufacturing processes, and facilities. Understanding scope 1 emissions is crucial for organizations to accurately account for their carbon footprint and develop strategies to reduce their environmental impact.
Scope 2 emissions: Scope 2 emissions refer to the indirect greenhouse gas emissions that result from the generation of purchased electricity, heat, or steam consumed by an organization. This concept is crucial in carbon accounting and reporting as it highlights the environmental impact of energy consumption, even if the emissions occur off-site. Understanding Scope 2 emissions helps organizations identify opportunities for reducing their carbon footprint through energy efficiency measures and transitioning to renewable energy sources.
Scope 3 Emissions: Scope 3 emissions refer to the indirect greenhouse gas emissions that occur in a company’s value chain, including both upstream and downstream activities. This encompasses a wide range of activities, such as the extraction and production of purchased materials, transportation, waste disposal, and the use of sold products. Understanding these emissions is crucial for companies aiming to reduce their overall carbon footprint and improve their sustainability practices.
Stranded asset risk: Stranded asset risk refers to the potential loss of investments in assets that may no longer be economically viable due to changes in market conditions, regulations, or technological advancements. This risk is especially relevant in the context of carbon accounting and reporting, where companies may face significant financial impacts if fossil fuel reserves or related infrastructure become obsolete due to a transition to a low-carbon economy.
Sustainable investing: Sustainable investing refers to investment strategies that consider environmental, social, and governance (ESG) factors alongside financial returns. This approach aims to generate long-term competitive financial returns while also promoting positive societal and environmental impacts. It highlights the importance of responsible investment practices that align with the growing awareness of global sustainability challenges, such as climate change and social inequality.
Task Force on Climate-related Financial Disclosures (TCFD): The Task Force on Climate-related Financial Disclosures (TCFD) is an initiative created to develop consistent climate-related financial risk disclosures for companies, helping them provide better information to investors and other stakeholders. By encouraging organizations to disclose information on their climate-related risks and opportunities, the TCFD aims to enhance transparency and enable more informed decision-making regarding sustainable investments and financial planning.
Verification and Assurance: Verification and assurance refer to the processes of evaluating and confirming the accuracy, reliability, and completeness of reported information, particularly in relation to carbon accounting. These processes are essential for ensuring that carbon emissions data is credible, which helps organizations demonstrate compliance with regulations and commitments to sustainability. By providing independent assessments, verification and assurance enhance stakeholder trust in environmental claims and support effective decision-making.
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