As public policy to limit GHG emissions are created and implemented, accurate and verifiable emissions data becomes a valuable and essential requirement for managers. The ability to measure emissions on a timely basis has many benefits including:
For regulated entities, or those entities required by law to report their GHG emissions, collection and reporting of GHG emissions from operations becomes a business requirement. The efficiency and accuracy of this corporate process can have a significant impact on financial performance, reputation, and regulatory compliance. Regulatory reporting is subject to audit by the relevant government agency and failures to report accurately can result in restatement costs, fines, and other sanctions. Therefore, regulatory reporting must consider the accuracy and verifiability of the reported GHG emissions.
Whether driven by securities regulation that establishes risk disclosures or shareholder resolution, corporations are increasingly pressed to disclose their exposure to a price on carbon or regulation to limit GHG emissions. This is particularly relevant to corporations engaged in energy intensive industries and the extraction, transport and refining of fossil fuels.
Measurement of GHG emissions creates opportunities. GHG emissions are created as the result of business operations. By measuring GHG emissions, managers can identify opportunities to reduce emissions through improved efficiency.
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Risk Disclosure Requirement for Publically Traded Companies
Corporations are increasingly pressed to disclose their exposure
to a price on carbon or regulation to limit GHG emissions. These
corporations also need to account for other service vendors
engaged in producing the final product. Corporate managers
also need to understand their exposure to regulation to identify
both opportunities and material risk exposure. To meet these
demands, corporations need reliable and accurate estimates of
GHG emissions from operations.
Create Opportunities for Improved Efficiency
By measuring GHG emissions, managers can identify opportunities to reduce emissions through improved efficiency. This has the
advantage of reducing regulatory costs if the company if
required by law to reduce its GHG emissions and reduce
operating costs on a per unit of production basis. This
has been particularly effective in identifying opportunities
to reduce energy costs and improve energy efficiency,
typically a significant component of operating costs.
