Carbon Reporting Performance of the FTSE 100

AUGUST 2011 EXECUTIVE SUMMARY This report presents the results of research conducted in June 2011 into the extent and quality of carbon management reporting amongst FTSE 100 companies. The research focused on four main competency areas: carbon footprint; carbon reduction targets; carbon reduction activities; and engagement. The results demonstrate a near-universal engagement with carbon reporting at a basic level, but significant variance in the breadth of carbon management activities undertaken and reported. The top performing companies are presented, alongside a comparison of performance between industry sectors. The authors hope this report encourages companies to benchmark their carbon reporting and develop a best-practice approach to transparent and comprehensive carbon management reporting. Key Findings • The average FTSE 100 company scores 56% of total points available for carbon reporting • Supermarket and Publishing sectors are best performers; the Manufacturing sector performs the worst • Companies scored highest in the carbon footprint competency area; and lowest for carbon reduction activities • 93 companies had issued a 2010 carbon report by June 2011 • 52 companies have their carbon data audited • 43 companies are reporting some Scope 3 emissions “Building and maintaining trust remains essential to our business; we recognise that many people – our shareholders, customers, employees, suppliers and communities – have high expectations of us. We welcome those expectations, and intend to live up to them. By being clear about our strategy, setting objectives and targets, we build and sustain that trust.”
Robin Freestone, Chief financial Officer of Pearson (Our impact on society 2010 Report)

• 16 companies can neither demonstrate emission reductions or plans for achieving reduction • 44 companies publish historical carbon data covering 5 or more years • 87 companies report investment in energy efficiency measures • 70 companies report undertaking behavioural change initiatives

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2 | www. all of which are key to a successful carbon reporting strategy. what future objectives the company has committed to and their plans to meet these objectives. companies have been been scored against a set of criteria relating to how they report on the different aspects of carbon management. For the first time. some stakeholders will be unaware of the existence of these external programmes or have insufficient technical knowledge to access the data. and where most work needs to be done. provides a fresh angle to the important debate around Corporate Social Responsibility.carbon-clear. Publishing a breakdown of scores by competency area allows an analysis of which aspects of carbon management reporting companies are performing well in. Investors are looking for signals that companies are managing their long term risk. While it is recognised that many companies participate in external reporting programmes such as the Carbon Disclosure Project. Consumers make it clear with their opinions and buying preferences that they want business to be sustainable. or make meaningful conclusions from it. Methodology The research was conducted by Carbon Clear in June 2011. company size and activity.Introduction The need for companies to manage and report on their carbon emissions is now almost universally accepted. which will naturally vary with industry type. and the corporate website is a key source of information for stakeholders. This report looks at how companies in the FTSE 100 are responding to this demand by reporting on their carbon-related activities. Carbon management is much more than measuring a carbon footprint and putting the data up on a webpage or annual report. there are key elements to transparent and comprehensive carbon reporting which all companies should be working to embrace. The data used to score each company against their criteria had to be publically available from their company | © Carbon Clear . Focusing solely on reporting as opposed to carbon impact or intensity. Companies were scored on criteria in four broad competency areas. For detailed information about the criteria in each competency area see the Results sections. The results of this research are intended to help organisations benchmark their performance within the FTSE 100 as a whole. Companies want their supply chains to support their sustainability objectives. Regardless of the characteristics of a company. Fundamental to good reporting is that material is made as accessible as possible. The government has introduced legislation to incentivise low-carbon innovation. It is about engaging stakeholders: informing them of what activities have been undertaken and what has been achieved to date. or within their own industry sector.

consumers. and whether engagement extends beyond information provision to influencing behaviour change and engaging the supply chain to improve their own carbon management activities. government and the wider community. and engagement • Companies ranked by overall performance score and in each competency area • Analysis of cross-sector performance 3 | www. from investment in efficient technology.CARBON FOOTPRINT This section relates to collection and reporting of the organisation’s carbon footprint data. Stakeholders include staff. carbon neutrality. Companies also gain points for evidence of measurement of Scope 3 emissions. whether objectives for achieving carbon reductions are set. or commitment to. SUMMARY OF METHODOLOGY • Companies in FTSE 100 as of June 2011 • Scored against 33 carbon reporting criteria and given a performance score as a percentage of total points available • Criteria broken down into four competency areas: carbon footprint. and whether data has been verified or audited by a third party. CARBON REDUCTION ACTIVITIES Carbon reduction activities drive emission reductions and allow organisations to achieve their reduction objectives. CARBON REDUCTION TARGETS This section relates to whether the company can demonstrate carbon reductions (either absolute or relative reductions). improving logistics or encouraging behavioural changes in the organisation. This section scores companies on their activities to connect with each of these stakeholder groups. This section also scores the company’s commitment to tackle unavoidable emissions through carbon offsetting and the achievement | © Carbon Clear .carbon-clear. such as the Carbon Trust Standard or the London Green500. the supply chain. such as the GHG Protocol or ISO 14064 standard. carbon reduction activities. ENGAGEMENT Engagement with stakeholders is key to both achieving carbon reduction objectives and to realising commercial benefits from a low-carbon approach. carbon reduction targets. for example the use of conferencing technology in place of business travel. Companies are scored on the provision of footprint data and whether a recognised carbon footprint methodology has been followed. This section also scores companies on whether external recognition has been gained through the achievement of certification or awards. and if a carbon reduction plan is presented. This section looks at what each company reports it is doing to reduce emissions. Organisations are also scored on whether they present 5 or more years of carbon data to show historical trends in carbon emissions. investors.

Mark Chadwick. To those companies not yet providing accurate carbon data and reduction plans.Summary Results Key Findings Average performance score: 56% Highest performance score: 97% Lowest performance score: 12% Performance by Sector Best performing sectors: Supermarkets. poor carbon reporting not only presents a clear commercial risk.carbon-clear. CEO Carbon Clear Pearson (29/33) RSA Insurance Group (29/33) GSK (28/33) Hammerson (28/33) Kingfisher (28/33) Sainsbury (28/33) Tesco (28/33) 4 | www. but offers an opportunity to capture real business benefits through reduced resource consumption and better interaction with stakeholders”.com | © Carbon Clear . Frankly. and others that fell short. I’d urge them reflect on how they can improve their carbon reporting. Publishing Worst performing sector: Manufacturing TOP 10 Performers British Sky Broadcasting (32/33) Marks & Spencer Group (30/33) Aviva (29/33) “Our analysis identified obvious areas of best practice.

Carbon footprint Key Findings • Companies performed best in this competency area with average score of 73% • 100% of companies score at least one performance point in this area • 93 companies issued a 2010 report by June 2011 • 52 companies have their carbon data audited by a third party • 43 companies are reporting some or all of their Scope 3 emissions SCORING CRITERIA • Carbon impact part of company reporting • Carbon footprint undertaken • Carbon footprint data presented • Carbon footprint methodology to a published standard (e.7 points 5 | www.2 points. Good: 3 .5 points. ISO 14064) • Inclusion of scope 3 emissions • External auditing of carbon footprint data • 2010 carbon report published as of 1st June 2011 Performance ranking: Poor: 0 .g. GHG | © Carbon Clear . Excellent: 6 .

e can demonstrate no emission reductions and have no plans or targets for achieving reductions SCORING CRITERIA • Carbon reduction targets / objectives • Carbon reduction plan to meet targets / objectives • Historical year-on-year absolute or relative reductions • > 5 years of comparative data Performance ranking: Poor: 0 . Good: 2 .com | © Carbon Clear .carbon-clear.1 points.Reduction Targets Key Findings • Average company score 60% • 77 companies report carbon reductions in relative or absolute terms • 44 companies publish historical carbon data for 5 years or more • 45 companies have a detailed carbon reduction plans • 27 companies do not have any carbon reduction targets • 16 companies score zero points. i.3 points. Excellent: 4 points 6 | www.

such as switching off equipment • 87 companies have invested in energy efficiency measures • 20 companies offset some emissions and 6 are carbon neutral. SCORING CRITERIA • Implementation of energy efficient technology / buildings • Staff behavioural change initiatives • Logistics or transport efficiencies • Carbon offsetting • Carbon | © Carbon Clear .Reduction Activities Key Findings • Weakest competency area overall with average company score of 42% • 70 companies promote behavioural change initiatives. Excellent: 8 . none to PAS 2060 standard.10 points 7 | www.7 points. • 85% of companies that offset emissions also show internal carbon reductions • 3 companies do not report any reduction activities whatsoever.carbon-clear. PAS 2060 standard. Good: 4 . commitment to future carbon neutrality • Purchase of green energy • Renewable energy self-generation • Development of low-carbon products Performance ranking: Poor: 0 .3 points.

com | © Carbon Clear .8 points.g. CDP Performance ranking: Poor: 0 . Good: 4 . e. supplier engagement beyond procurement • Engagement with wider community • Engagement with government • Investor reporting. influencing sustainable behaviour • Staff engagement activities • Executive level involvement • Supply chain procurement policy.4 points. Excellent: 9 .carbon-clear.12 points 8 | www.Engagement Key Findings • Average company score is 64% • 100% of companies report at least one type engagement activitiy • 7 companies gain 100% scores • 94% of companies report executive level commitment to carbon-related issues SCORING CRITERIA • Carbon-related certification • Consumer engagement activities.

average score for this sector is 58% • Inferences about performance of some sectors with small sample size should be made with caution 9 | | © Carbon Clear . Building Materials • Financial Services Sector is the most populated category with 21 companies.Results by Sector Key Findings • Highest average sector score: 83% • Lowest average sector score: 44% • High scoring sectors: Publishing. Mining & Metals. Waste & Water • Low scoring sectors: Manufacturing.carbon-clear. Chemicals & Pharmaceuticals. Supermarkets.

and how? 10 | www. and how you are going to measure progress and success? • Have you reported operational. and if so do you go beyond information provision to encourage low-carbon behavioural change? • Do you engage your supply chain to ensure that your carbon reduction activities extend beyond your operational boundaries? • Do you encourage your staff to contribute to your carbon management programme. for example by particiaption in carbon or energy-related consultations? • Is your executive team committed to your carbon management agenda. do you document the methodology and/or standards used. or to promote sustainable behaviours? • Do you report to your investors. technical and behavioural change initiatives that are part of your carbon reduction programme. and documented their results? • Do you offset residual carbon emissions? If so. and to identify areas for improvement: • Do you make carbon footprint data publically available in a timely manner. regardless of size and type. such as PAS 2060? • Do you delevelop low-carbon products or services.carbon-clear. for example by participating in the CDP? • Are you involved in shaping policy at local or national government level.The checklist How do you measure up? There are key elements to robust carbon management reporting that all companies. and are reduction measures both relevant and consistent? • Have you set carbon reduction targets for the short and long term that are both ambitious and achievable? • Have you outlined a plan of action to achieve these goals. and if so do you document the basis on which low-carbon claims are made? • Do you engage with your customers on carbonrelated issues. and detail the scope and methodology used? • Do you provide past data to allow comparisons. do you document the type of carbon offset credits and the number of tonnes? • If you claim carbon neutrality. can | © Carbon Clear . Use this checklist to ensure that your carbon reporting is comprehensive and informative to all stakeholders. and keep them informed of progress and plans? • Do you undertake initiatives in the community to promote environmental or low-carbon messages.

This may however simply reflect the number of nonconsumer facing companies in the about environmental performance. This may reflect the fact that some companies are only recently engaging with carbon management. which is cause for concern as without an effective programme of activities. It is important to also observe that.Conclusion This report shows that the majority of FTSE 100 companies are engaging with carbon reporting. This in itself is not surprising as consumer demand for products and services that are socially responsible is well documented and continues to | © Carbon Clear . This indicates that some companies need to work to raise ambitions and articulate a clear vision of working towards a lowercarbon way of doing business. or at least in the reporting of them. Aside from cost savings and legislative compliance. the main benefits of comprehensive carbon reporting are realised through effective engagement activities. The companies and sectors that performed best overall tend to be those that are consumerfacing. that score very highly. and near impossible to define meaningful reduction targets. Companies would seem to be already realising this value.carbon-clear. There is also evidently work to do in the development of carbon reduction activities. and so messages about carbon management form a valuable platform from which to build trust and establish a dialogue. such as Hammerson. The highest performing organisations in this area have already moved away from the provision of data and messages about organisational performance to helping their stakeholders to improve their own performance. carbon reductions will not be achieved. measurement tends to be the first step in any carbon management programme. A slighly less impressive 73% of companies achieved ‘good’ or ‘excellent’ performance rating for setting reduction targets. with 86% of companies achieving a ‘good’ or ‘excellent’ performance rating for engagement. with a promising 93% of companies achieving ‘good’ or ‘excellent’ rated perfomance. overall. Stakeholders . 11 | www. 39% of companies received a ‘poor’ score in this competency area. There is however significant variance in the extent of carbon management activities and the quality of carbon reporting between individual companies and industry sectors. There are however some consumer-facing companies which are yet to take this message on board and conversely there are non-consumer facing companies. Logically. as without good data it is hard to develop a cost-effective carbon reduction plan.from customers to staff and the general public . companies reported more engagement with other stakeholders such as the government and the wider community than engagement with consumers. Carbon footprint is the competency area in which companies scored the highest overall.

the Middle East and North America.COM 12 | www. The principles of good carbon reporting do not just apply to large FTSE 100 companies. • Communicating with all stakeholders is an important part of any carbon management programme. is is hoped that evidence of excellence in carbon reporting will increase as companies with average performance start to gain expertise and internal momentum in favour of effective carbon management. There are also significant external pressures to achieve this. • While most companies in the FTSE 100 are engaging in carbon management. reduction objectives and activities.carbon-clear. TEL: +44 (0) 845 838 7564 FAX: +44 (0) 208 181 7872 EMAIL: ENQUIRIES@CARBON-CLEAR. and indeed can be embraced by any organisation wishing to make transparent disclosure of their activies to reduce their carbon impact. there is significant room for improvement of carbon reporting. These pressures will affect non-and consumer-facing companies alike. Advancing carbon management and reporting will drive emission reductions and help companies to build sustainable commercial value. • Reporting should incorporate historical and recent carbon data. Carbon Clear is a founding member of the International Carbon Reduction and Offset Alliance (ICROA). from loss of competitiveness to shareholder pressure. Summary Recommendations • Carbon reporting should be transparent and comprehensive. CARBON CLEAR LIMITED 180-186 KINGS CROSS ROAD LONDON WC1X 9DE UNITED KINGDOM ABOUT CARBON CLEAR Carbon Clear is a world-leading carbon management company that provides advisory services and carbon offset credits to organisations across Europe. We hope this report has provided some insight into how your company can incorporate a best-practice approach to effective carbon reporting.In the future. and was on the advisory board developing the British Standards Institute’s recently released PAS 2060 specification for Carbon | © Carbon Clear .

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