Although information reported through the Carbon Disclosure Project is improving, and Centre Info is running tests to see if it can use some of the data in its models, Spicher says that self-reported data on direct, and, particularly indirect, emissions remains patchy. “In an ideal world, we would not need our model,” notes Spicher.
A similar rating system was recently developed by Innovest, a New York–based investment advisory firm. Called Carbon Beta, the measure also collects information from lifecycle assessment databases, arriving at an assessment of a company’s net risk exposure to climate change relative to sector peers. In Europe, the shares of Carbon Beta leaders outperformed laggards by nearly 7% annualised, on average, over the past three years, according to Innovest. The firm’s ratings universe currently covers 750 companies, each receiving a score from AAA to CCC, similar to credit-ratings terminology. In fact, last year, JPMorgan launched a corporate bond index for investment-grade companies with high Carbon Beta scores.
“Let’s face it, these are guesstimates,” says Pierre Trevet, a managing director at Innovest in San Francisco. “They are only surrogates, because nobody outside of a company can accurately assess its carbon footprint.”
Corporate carbon disclosure needs to come a long way before Trevet and fellow analysts ditch their admittedly flawed models. For that to happen, experts say, companies need to improve the governance of footprint measurement projects, both to strengthen the internal collection and analysis of emissions data and to enhance co-operation with partners along the supply chain.
With this in mind, the Greenhouse Gas Management Institute — founded in October by Gillenwater of the Greenhouse Gas Experts Network and Baumann of ClimateCheck — is launching a “climate MBA” course this year. Going beyond the established “nuts and bolts” of emissions inventory accounting, Baumann explains, the accredited programme will target CEOs and CFOs in the hopes of “driving high-level commitment in order to drive more action.”
At Best Foot Forward, Simmons will teach the company’s first “carbon culture” course next month. “It’s about raising employee awareness, using carbon in the decision-making process, and engaging the supply chain,” he says. It’s also tailored to finance. “When I speak to various people throughout a company, it’s finance that usually gets it first,” Simmons notes. “They have the accounting skills, they understand how to define boundaries, and they know how to collect, analyse and report data.”
Despite their current workload, Simmons reckons deeper finance involvement will hasten the eventual development of truly useful carbon accounting. What’s more, when CFOs bring CO2 onto the balance sheet, they add an “exciting new element to an age-old job.”
Jason Karaian is deputy editor at CFO Europe.