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The Global Greenhouse Gas Register,
a new globalinitiative to encourage the disclosure and management
by companies of their worldwide climate emissions, was launched
in January by the World Economic Forum (WEF). Developed in partnership
with leading business and environmental organizations, the register
is intended to stimulate voluntary corporate climate action around
the world by creating a transparent, internationally consistent
framework for the disclosure of emissions inventories and reduction
targets.
Ten companies confirmed their commitment to disclose the amount
of greenhouse gases their worldwide operations produce. These companies
together account for an estimated 800 million tons of CO2-equivalent
per year (approximately five percent of global Annex-1 GHG emissions).
Participants will calculate both direct and indirect emissions of
greenhouse gases. Direct emissions include those from on-site combustion,
manufacturing processes and from company-owned transportation fleets.
Emissions associated with electricity and steam consumption are
the indirect emissions required to be reported; however, participants
are also encouraged to report additional indirect emissions.
“Many firms are being asked by their shareholders, governments
and communities to take voluntary steps to manage their impact on
the climate, but until now there has been no platform for the public
disclosure of such information on a comparable, globally consolidated
basis,” explained Rick Samans, managing director of the WEF’s
Global Institute for Partnership and Governance. “The Global
GHG Register is a collaborative effort by the business and environmental
communities to create the kind of generally-accepted framework that
can spur a broader response by businesses around the world and provide
investors with a clearer understanding of the carbon-related risk
in their portfolios.”
Why Register?
Beyond considerations of environmental concern and good corporate
citizenship, companies conducting inventories can also identify
ways to enhance their productivity and energy efficiency; support
the development of flexible, market-oriented policies such as emissions
trading or technology research; and prepare themselves to deal with
future regulatory requirements.
The California Climate Action Registry (CA Registry), which, assisted
by CH2M Hill, developed the technical infrastructure for the on-line
reporting application and database of the Global GHG Register, cites
the following “reasons why” companies should participate
in a reporting and registry initiative:
* Emissions monitoring is a powerful tool in the search for inefficiency.
Understanding that emissions indicate waste and inefficiency has
led many companies to insights for redesigning business operations
and processes, spurring innovation and improving products and services.
Efficiency saves money—especially at a time when energy costs
have soared—and improving the efficiency of operations helps
build a competitive advantage.
* Given the uncertainty about potential
regulation of GHGs, taking steps to protect early actions is a wise
risk-management strategy.
A majority of Americans believe that we should be taking steps to
reduce emissions that could lead to global warming, and recent efforts
in Congress focused on proposals designed to lower emissions to
1990 levels. One likely approach, often seen as the most cost-effective
option, is emissions trading, where companies buy “credits”
generated through excess reductions. Without a credible and transparent
measurement, verification and reporting system, emissions trading
cannot work.
* Early movers on addressing climate change
are in the best position to help influence future policy, and to
understand the most cost-effective means of managing and reducing
emissions.
Registry participants will have a unique opportunity to influence
future policy addressing GHG issues. In addition, early members
will also have the potential to influence the development of industry-specific
protocols, as well as on the accounting practices associated with
GHG emissions reporting. Participants will also gain important information
for managing their emissions in a more cost-effective manner.
“The investment community will increasingly be taking into
account what kind of carbon-related risks companies are facing and
how this may impact on company performance,” Samans noted.
“This does not stop at brand reputation and market perception
but includes risk ratings, the cost of capital as well as direct
cash flows and earnings. From a company perspective, you could say
that what gets measured gets managed. For investors, the standardized
and consolidated nature of the information will allow better comparative
analysis of company actions.”
What’s Involved?
Specific actions that companies participating in the Global GHG
Register are asked to undertake include:
* Prepare a corporate-wide inventory of GHG emissions for the six
major GHGs, in accordance with the GHG Protocol Initiative
Corporate Accounting and Reporting Standard developed by a multi-stakeholder
collaboration led by the World Resources Institute (WRI) and the
World Business Council for Sustainable Development (WBCSD). Unit-
or region-specific inventories are permitted provided a commitment
is made to develop a corporate-wide inventory by a certain date.
“We welcome the new Global GHG Register since it will make
corporate accountability for emissions more transparent,” said
Janet Ranganathan, director of the GHG Protocol Initiative. “While
companies will use the GHG Protocol as the standard to account for
their emissions, the Global GHG Registry will provide a central
platform where these individual reports can be publicly accessed.”
* Allow the reported information to be
made publicly available on a Web-based
platform, updating it annually.
* Have their inventories of GHG emissions
independently verified. If an inventory is not independently
verified at the time of registration, the company commits to having
processes in place to ensure that the information provided is verifiable.
In such situations, the company is prepared to allow for the possibility
of a random third-party spot check organized by the register.
As part of their inventories, companies may report offsets and GHG
mitigation projects that could be of interest to potential investors,
creating an added incentive for developing country firms to participate.
Starting in January, participating companies were able to enter
data into the Web-based register. Once data is vetted and accepted
by the forum, it will be displayed on the register’s Web site.
The CA Registry’s existing Web-based reporting tool, CARROT
(Climate Action Registry Reporting On-line Tool) serves as the basis
for the Global GHG Register.
“The CA Registry’s CARROT was the ideal foundation for
our GHG Register—a clear, usable, dynamic platform,” commented
Samans. “It’s a solid registry application already used
successfully by major businesses to track and report their GHG emissions.”
Companies interested in participating in or learning more about
the Global GHG Register can e-mail the register secretariat at:
ghg.register@weforum.org.
A Changing Political Climate
On October 30, 2003, in a surprisingly strong vote, 43 senators
voted for the McCain-Lieberman Climate Stewardship Act
(S. 139), a bipartisan solution to the dangers of global warming.
The nonprofit Environmental Defense calls the bill “historic”
and lauds Senators John McCain (R-AZ) and Joseph Lieberman (D-CT)
for having “broken the logjam of federal inaction on global
warming.” The bill, says Environmental Defense, “is the
first real blueprint for a comprehensive national policy for cutting
greenhouse gas emissions in the U.S.”
Although a loss, the 43-to-55 vote was much closer than expected—thus
sending a message to corporate America that mandatory reductions
could be a reality sooner rather than later. In fact, says Environmental
Defense, the bill achieved a key goal: it sent a clear message that
the days of denial about global warming are over and that support
is growing in Congress for sensible, effective solutions to reduce
greenhouse gas pollution nationwide.
This possibility might make participation in voluntary programs,
such as WEF’s Global GHG Register, even more appealing: companies
who start now will be ahead of the game when regulations kick in.
“Mandatory reduction targets combined with market mechanisms
will not only ensure real reductions in greenhouse gas emissions,
but will harness the power of the U.S. economy to find the cheapest
and most innovative ways of achieving those reductions, thus saving
the planet’s climate and life,” says the group on its
Web site.
The Natural Resources Defense Council, in a statement it issued
the day of the vote, agrees.
“The strong, bi-partisan support for the McCain-Lieberman bill
shows the growing number of senators who reject a voluntary, do-nothing
approach,” commented David Hawkins, director, NRDC Climate
Center. “The bill combines sensible standards with a proven,
market-based system that fosters maximum technological innovation
at minimum cost. It is a serious and balanced approach that has
strong support from both business and the environmental community.
The opposition to the bill is based on pessimism that is alien to
the American spirit. We don’t cover our eyes in the face of
a challenge; the American way is that when we see a problem, we
fix it.”
Environmental Defense has analyzed specific elements of the bill
as follows:
* Sets mandatory greenhouse gas pollution reductions.
In order to achieve meaningful greenhouse gas emissions, all 11
major sectors of the U.S. economy would limit greenhouse gas pollution
to year 2000 levels by 2010. While believed to be important, voluntary
efforts are important, but not enough to keep us from losing ground,
according to Environmental Defense.
* Makes the U.S. economy more energy efficient.
Real greenhouse gas pollution cuts cannot be made without an effective
plan for making the U.S. economy more energy efficient. This bill
would have encouraged companies to make new investments in energy-efficient
technologies and renewable energy.
* Uses free-market incentives to lower
costs, grow the economy and promote innovation.
The bill takes an approach first developed by Environmental Defense
for the federal acid rain program, which helped achieve larger acid
rain reductions than required at far lower costs than ever imagined.
By taking this same approach, the McCain-Lieberman bill will reduce
greenhouse gas pollution while stimulating innovation in the service
of environmental protection.
* Breaks the logjam of U.S. inaction to
fight global warming.
For years, the federal government has resisted taking action to
tackle global warming. The McCain-Lieberman bill might be the best
chance for creating a legitimate U.S. climate policy.
A recent MIT study estimated that McCain-Lieberman would cost approximately
$20 per household, and analysts predict that the impact on U.S.
GNP would be no more than .01 percent. A second study by the Tellus
Institute predicted that McCain-Lieberman would save Americans $48
billion in net savings by 2020 due to reduced energy demand. The
legislation had the support of a bipartisan group of 155 mayors
across the country, the National Farmers Union, 23 senior climate
economists and the ski industry. The leading insurance underwriter
in North America and an industry coalition that includes corporations
such as Maytag and the American Gas Association has expressed their
support for the bill as well.
American consumers have also logged in their opinion regarding a
do-nothing philosophy: According to a recent Zogby poll, 75 percent
of 1,200 citizens polled supported requiring major industries to
reduce their greenhouse gas emissions, with more than 70 percent
support in each region of the nation.
The Congressional vote, says Environmental Defense, marked a turning
point in the campaign to “undo” global warming; for the
first time ever, senators are now on record as “for” or
“against” what it describes as “a common-sense, cost-effective
approach to this potentially devastating environmental threat.”
Senators McCain and Lieberman have promised to bring the Climate
Stewardship Act back to Congress for a new vote. “We’ve
lost a battle today, but we’ll win over time because climate
change is real,” said McCain in the press announcement he issued
in October. “And we will overcome the influence of the special
interests over time. You can only win by marshaling public opinion.”
These efforts will help shape the debate over climate policy for
years to come, focusing attention in the near-term on global warming.
“Political leaders in both parties are realizing the real threat
that global warming poses to our health, to our economy and to our
environment,” commented NRDC’s Hawkins, “They also
know we have the technology to start fixing the problem today.”
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