Ready for the Global Greenhouse Gas Register?

The GHG Register will provide a framework for disclosing emissions and reduction targets. What does that mean for energy producers?

Earlier this week the UN Framework Commission on Climate Change meeting in Milan became the venue for introduction of the Global Greenhouse Gas Register by the World Economic Forum.

The GHG Register will be an internet website intended to "facilitate the disclosure and management by companies of their worldwide climate emissions," the announcement said.

The World Economic Forum is an independent international organization that "provides a framework for world leaders to collaborate and address global issues." It is impartial, not-for-profit, and not tied to political, partisan, or national interests. The organization grew out of an informal 1970 conference to discuss a strategy for European business in international markets. Over three decades it has become an institution comprising 1,000 corporations worldwide. A Forum publication says that, by providing a platform for dialogue and serving as a catalyst for action, it has played a role in achievements in various areas including: peace building, health, development, and corporate citizenship.

To develop the GHG Register, Forum planners worked with business and environmental organizations. The idea is to stimulate voluntary corporate climate action by creating a "transparent, internationally consistent framework for the disclosure of emissions inventories and reduction targets." Companies will be able to list their emissions of greenhouse gases in a standardized format.

The Forum says the first eight companies that will register this month represent nearly 5 percent of global GHG emissions. Discussions are well advanced with 12 other major corporations.

Why Should Energy Producers Care?
Many energy producers are, like the U.S. Bush Administration, in denial concerning climate change. That really doesn't matter: They need to watch this Register carefully.

In the first place, Forum stakeholders hold great influence with major financial organizations; the day may not be far off when a drilling company or a service company might have to state its corporate emissions record when bidding, or arranging prospect financing. Just as with the transparency issues now affecting concessions in oil-producing countries, when the money men get on board, there is little choice but to go along.

Rick Samans, managing director of the World Economic Forum explained, "Many firms are being asked by their shareholders, governments, and communities to take voluntary steps to manage their impact on the climate, but until now there has been no platform for the public disclosure of such information on a comparable, globally consolidated basis. The Global GHG Register is a collaborative effort by the business and environmental communities to create the kind of generally accepted framework that can spur a broader response by businesses around the world and provide investors with a clearer understanding of the carbon-related risk in their portfolios."

In the second place, the technology that will be developed to deal with a widespread movement toward GHG emission control will be worth billions of dollars to enterprising companies. The energy industries have their full share of inventive talents to make real contributions. Many U.S. engineering and technology companies are champing at the bit to get to work in this field.

The Early Participants
The eight major companies that have already committed to registering their worldwide emissions inventories account for an estimated 800 million tons of carbon dioxide-equivalents, per year. These are as follows: Anglo American, Cemex, Hewlett-Packard, Lafarge, RAO Unified UESR, RWE, ScottishPower, and Vattenfall. Company data registration will begin on the Register's website in early 2004, following the Register's announcement and operational launch at the World Economic Forum's Annual Meeting in Davos, Switzerland in January 2004.

Officials at Anglo American and Lafarge both made it clear that they consider emissions reduction a business responsibility.

John Groom, senior vice president of Safety, Health, and the Environment at Anglo American said, "Anglo American recognizes fully the challenges to its businesses and to society at large arising from greenhouse gas emissions. We are committed to reduce unit emissions through a focus on energy efficiency, continuous improvement in technology and operations, and by increasing awareness and understanding of the challenges wherever we operate. The Register represents an opportunity for us to contribute to greater corporate transparency and to benchmark our performance against others."

Chris Boyd, CEO of Lafarge Italy, said, "For good business reasons, Lafarge has committed itself to reducing its CO2 emissions well beyond business as usual. By including our commitment in the World Economic Forum's Register, we want to show that business is taking real action to cut CO2 emissions at a global level. We hope that more businesses will also join us on the Forum's Register to illustrate the enormous contribution that business as a whole is making."

Companies participating in the Global GHG Register are asked to do the following:

  • Prepare a corporate inventory of GHG emissions for the six major GHGs. The inventory is to be taken in accordance with the GHG Protocol Initiative Corporate Accounting and Reporting Standard developed by the World Resources Institute (WRI), the World Business Council for Sustainable Development (WBCSD), and other stakeholders. Unit- or region-specific inventories are permitted provided there is a commitment to develop a corporate-wide inventory by a certain date.
  • Allow the reported information to be made publicly available on a web-based platform, updating it annually.
  • Have their inventories of GHG emissions independently verified or ensure that the information is verifiable. In the latter case, allow for the possibility of a random third-party spot-check organized by the Register.

  • As part of their inventories, companies may report offsets and GHG mitigation projects that could be of interest to potential investors, creating an added incentive for developing-country firms to participate.

    "We welcome the new Global GHG Register since it will make corporate accountability for emissions more transparent," said Janet Ranganathan, director of the GHG Protocol Initiative, a project of the WRI and the WBCSD. "While companies will use the GHG Protocol as the standard to account for their emissions, the Global GHG Registry will provide a central platform where these individual reports can be publicly accessed."

    The Financial Angle
    "Stakeholders, such as investors, customers, and NGOs, are becoming increasingly interested in corporate public disclosure of GHG emissions information," Samans commented. "They want to know how companies manage climate change risks and how they are positioning themselves in the face of emerging climate change regimes."

    "Investors in particular are starting to take the risks of climate change very seriously," he said further. "They believe that GHG profiles and corporate responses to climate change will increasingly and significantly impact on company performance, not only because of the potential effect on brand reputation and market perception but also risk ratings, cost of capital, as well as direct cash flows and earnings. The Global GHG Register sets the gold standard for corporate climate disclosure to the investment community, because it requires emissions to be reported on a standardized and consolidated basis that permits comparative analysis."

    The World Economic Forum has partners in the Global GHG Register. They are: BrasilConnects, Deloitte Touche Tohmatsu, the International Emissions Trading Association, the Pew Center for Global Climate Change, the World Business Council on Sustainable Development, the World Energy Council, the World Resources Institute, and the World Wildlife Fund. Incorporated as a foundation, and based in Geneva, Switzerland, the Forum has NGO consultative status with the Economic and Social Council of the United Nations.

    Involvement by emissions trading interests makes it clear that market-based trading and credits for superior performance in emissions reduction can be anticipated in the not-too-distant future. A market-based program pioneered the emissions trading approach in the U.S. Clean Air Act's acid rain program in the 1990s, and it delivered environmental results as much as 90 percent better than economists projected. Emissions trading was also a pivotal part of the McCain–Lieberman Climate Stewardship Act of 2003 which was debated over two days in the U.S. Senate last October before the Energy Bill came up. Once the GHG Registry is in place and registration is underway, emission credits and trading just might be next.


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