Ecometrica, a sustainability and business consultancy, has become the first in the UK to have its environmental accounting software independently assured as audit ready. Accountancy firm PwC reviewed the solution in line with the International Standard on Assurance Engagements 3000 and the Institute of Chartered Accountants in England and Wales’ Code of Ethics.
The move comes because all UK companies listed on the London Stock Exchange will have to report their greenhouse gas (GHG) emissions in CO2 equivalent (CO2e) from their first financial year after April 2013. The GHG Regulations (Directors’ Reports) 2013 requires that both Scope 1 (direct) and Scope 2 (indirect, e.g. purchased electricity) emissions are reported in the Director’s Report of the Annual Report and Accounts.
While the GHG emissions themselves do not need to be audited, they do need to be clear and consistent with the rest of the Director’s Report. Organisations will be looking to avoid the need for any further calculations or re-working of the data as well as certainty that the results can withstand external stakeholder scrutiny.
Dr Richard Tipper, chief executive of Ecometrica, said: “Credible third party assurance means clients will spend less time auditing information, in the knowledge that accurate GHG data is being reported. This has been a long-standing principle with financial information, which means companies require emissions data that is fit for purpose”.
Review: One of the issues around mandatory reporting is the quality of the data. It’s not clear how much scrutiny companies will come under, but tying the figures in with the Annual Report and Accounts should certainly focus minds. If the data is questionable it could delay and/or undermine the detailed financial reporting.
So carbon reporting software and solutions are likely to come under closer scrutiny, which could favour the larger software and services players. Listed companies will most probably look to trusted suppliers with in-depth support to manage what will be increasingly sensitive data.
As I reported last year there are other repercussions of the legislation for ICT users. In particular, Scope 3 emissions, which include outsourced activities, are not counted, so any off-site IT services or third party data centres are not included. It means that companies that choose to use outside suppliers to help run their IT could reduce their reported GHG emissions at a stroke.
Since mandatory reporting is also aiming to encourage the setting of emissions reduction targets, and will inevitably fuel comparisons between corporations, those with outsourced IT may well look greener to shareholders and customers, which in turn could boost the take-up of cloud computing, and other forms of outsourcing, in the coming years.