Carbon and sustainability data disclosed by companies in the FTSE 350 lack credibility, a new study claims.
The study, carried out by sustainability consultancy Smart Sustainability, identified a need for standardisation and transparency in companies’ carbon reports, and questioned why some companies do not externally verify their carbon data.
SAP, Barclays, BP, the Department for Environment, Food and Rural Affairs, British American Tobacco, CII and BPR Group sponsored the report. The study was conducted in response to investor demand for a way to compare the credibility of sustainability reports.
Smart Sustainability rated the carbon data reports against a set of criteria agreed with stakeholders and an expert indepent advisory panel. For example, in order to be considered best practice, assurance needed to be provided by an independent and qualified assurance provider, and has to accord with recognised and relevant assurance standards.
According to the study, just 75 (21 percent) companies in the FTSE 350 publish some form of assurance. Only 62 of these are conducted independently and based on a recognised assurance standard, either the AA1000AS or the ISAE3000.
Telecommunications companies, which provided 33 percent of the assurance reports, rated most highly against the best practice criteria, with an average rating of 73 percent. However, technology companies came bottom of the pile, providing just six percent of assurance statements and having an average rating of five percent.
In terms of how the companies in the FTSE 350 individually rated, those that had achieved a top rating of 74 to 100 percent included British American Tobacco, transport operator FirstGroup, B2B publisher Reed Elsevier, Royal Bank of Scotland and mobile phone company Vodafone.
In contrast, companies whose assurance statements were rated the worst, between zero and 31 percent, included consumer goods companyCadbury, construction company Carillion, Lloyds Banking Group, supermarket J Sainsbury and Home Retail Group.
The report also found that most companies are either not verifying their reported emissions or are not reporting carbon data at all. Overall, only 38 out of 350 companies say that carbon has been verified.
However, just seven of these refer to a carbon reporting criteria and only two explicitly follow a standard, ISO 14064-3, for verifying carbon.
Again, telecommunications companies rated highly in terms of carbon assurance. In contrast, utilities and oil and gas companies had the worst ratings, 45 percent and 36 percent respectively. In addition, none of the technology companies had their carbon emissions verified.
However, the report stated: "We anticipate that the arrival of the Carbon Reduction Commitment Energy Efficiency Scheme and the likelihood of mandatory GHG reporting for UK companies will increase the demand for verified carbon data."