Companies and organisations are making significant efforts to reduce their emissions and manage the effects of climate change, yet many organisations are not efficiently contributing to global climate targets due to disparities between national ambitions, Government guidance and available abatement options researchers at Newcastle University have shown.

This is the first study to give comprehensive analysis, capturing research and industry perspectives and insights. The study suggests introducing a carbon measurement and management process alongside a dynamic framework following a ‘Plan, Do, Check, Act’ process. This would align climate targets, climate actions, monitoring and reporting.

Author of the study, which is published in The Business Strategy and the Environment journal, Anna Christy, PhD candidate in School of Engineering, Newcastle University said: “Best practice is not universal, and companies are trying to balance conflicting standards whilst trying to improve their environmental performance. Governing bodies should enable effective reporting by harmonising international regulatory frameworks, empowering organisations to effectively assess, manage, and reduce their carbon footprints.” 

Ensuring robust assessments of their climate impact

The study found that high-level data sources and guidance are not always sufficient to define accurate accounts of greenhouse gas emissions, and that prescribing to well-known accounting standards can require inefficient interventions or suboptimal reduction strategies.

The researchers are calling on government agencies to put in place regulations and guidelines that ensure they make robust assessments of their climate impact and implement abatement technologies that materially reduce their emissions rather than relying on offsets and offshoring.

This collaborative study has bought together Newcastle University and industry partner to focus on the urgent subject of carbon accounting and measurements. The study received data and support from Northumbrian Water Limited (NWL) which already manages and reports its emissions in line with industry best practice and international standards. The research will inform the development of a new emissions inventory and reduction framework that is suitable for a regulated utility – balancing the urgency of climate action with needs of customers and stakeholders.

Currently, over 4,000 companies worldwide are setting climate targets using for example the Science Based Target initiative to be in line with the United Nations Greenhouse Gas (GHG) Protocol. However, this study reveals that differences are seen when it comes to guidance and action when companies report on avoided emissions or want to offset emissions.

The study discusses that conflicting demands of regulators, shareholders and customers are often overlooked. This presents challenges when selecting the best abatement options and can lead to inefficient decarbonisation strategies.

The study was conducted by experts in the School of Engineering and the Business School, in collaboration with Northumbrian Water. The English Water sector is a leader in Net Zero with the first sector-wide NetZero commitment, however, the researchers found that this commitment is not fully aligned with government policy and or the economic regulation for the sector.

In response to the challenge of meeting its affordability and decarbonisation priorities, Northumbrian Water engaged with Newcastle University to help ensure that they get the balance right.

Study co-author, Professor Marwa Elnahass, Professor of Accounting & Finance, Newcastle University Business School added: “Following the conclusion of the COP28 summit, it is crucial to address climate change policy. The study integrates innovative insights related to the carbon accounting methodology of Northumbrian Water Limited (NWL) and offers valuable findings that resonate not only within the English water sector but also carry broader implications for climate policy. This includes recent regulatory changes by the International Sustainability Standards Board (ISSB) concerning global sustainability and climate disclosure standards.”

Using the water sector as an example, the authors recommend a more dynamic approach that considers the multiple demands on businesses, particularly prioritising the efficient use of customer money.  The study argues that companies should be encouraged to invest sufficient resource into developing their carbon accounting methods to ensure their management strategy is attainable and aligned with global climate commitments.

Reference

Christy, A., Elnahass, M., Amezaga, J., Browne, A., & Heidrich, O. (2023). A dynamic framework to align company climate reporting and action with global climate targets. Business Strategy and the Environment. https://doi.org/10.1002/bse.3635